World Oil Supply: Shaping Realities A talk for the Society of - PowerPoint PPT Presentation

World Oil Supply: Shaping Realities A talk for the Society of Petroleum Engineers by Daniel Gerber and Edgar Jones Petro-Logistics S.A.

Saudi Arabia and OPEC Call on Production Non-OPEC Production + Call-on-OPEC = Demand Call on OPEC & Call on Saudi Part Ways, At Times Saudi Surplus/Deficit Versus Observed Stock Change million b/d million b/d million b/d Call on OPEC (left) Obsrvd Chg. In Commerical 33 11.0 Call on Saudi (right) 2.0 Stocks(OECD+China+Saudi) SPR Release Saudi Production Minus Saudi 10.5 1.5 32 Call (3-mo. rolling avg) 10.0 1.0 31 9.5 0.5 30 9.0 0.0 29 Saudi Call reacts to 8.5 -0.5 ebb and flow of 28 Weak oil demand 8.0 -1.0 Iran/Libya supply offset by outages in 27 Iraq, Nigeria, Venezuela 7.5 -1.5 26 7.0 -2.0 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 CIBC Commodities Strategy, IEA, Petro-Logistics SA, gov'nt sources CIBC Commodities Strategy, IEA, Petro-Logistics SA, govn't sources Petro-Logistics SA

Supply Outages – Highest in Recent History Unplanned Oil Supply Outages Highest in Recent History kbd 3,500 3,000 OPEC Total Non-OPEC Total 2,500 2,000 1,500 1,000 500 0 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 CIBC Commodities Strategy, EIA, Petro-Logistics SA Petro-Logistics SA

Iran Overview • Recent US Sanctions – Cutting Iran out of Banking System • EU Sanctions – Prohibit the Import, Financing and Transportation of Iranian Oil • Impact of Sanctions on Exports • Suspension of Certain Sanctions Petro-Logistics SA

Iranian Deliveries to Europe & Turkey 800 ‘000 b/d 700 600 500 400 300 200 100 0 2012 2011 2 per. Mov. Avg. (2012) Petro-Logistics SA

Iranian Deliveries to South Korea 300 ‘000 b/d 250 200 150 100 50 0 2012 2011 2 per. Mov. Avg. (2012) Petro-Logistics SA

Japanese Liftings of Iranian Crude Oil 350 ‘000 b/d 300 250 200 150 100 50 0 2012 2011 2 per. Mov. Avg. (2012) Petro-Logistics SA

Indian Liftings of Iranian Crude Oil 600 ‘000 b/d 500 400 300 200 100 0 2012 2011 2 per. Mov. Avg. (2012) Petro-Logistics SA

Chinese Liftings of Iranian Crude Oil ‘000 b/d 600 500 400 300 200 100 0 2012 2011 Petro-Logistics SA

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Iran – Crude Oil Exports by Grade 000 b/d 2,500 Bahregan 2,000 Nowruz Soroosh 1,500 Lavan Blend Sirri 1,000 Faroozan Iranian Heavy 500 Iranian Light 0 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Petro-Logistics SA Petro-Logistics SA

Iran – Crude Oil Production Capacity Mb/d 4.2 4 3.8 3.6 3.4 3.2 3 2005 2006 2007 2008 2009 2010 2011 Petro-Logistics SA

Libya – Crude Oil Production million b/d 1.8 1.6 1.4 Actuals Forecast 1.2 1 0.8 0.6 0.4 0.2 0 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Petro-Logistics SA

Iraqi – Crude Oil Production million b/d 3.5 3.0 2.5 2.0 Southern Exports 1.5 1.0 0.5 Northern Exports 0.0 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Petro-Logistics S.A.

Factors Influencing Saudi Arabian Production in 2014 Upward Pressure Downward Pressure • Iraqi export & storage • Breaking down of infrastructure completion negotiations with Iran • Long-term agreements with • Continued blockades in militias in Libya Libya • Weakening of global oil • Spill-over from extremist demand growth groups in Iraq • Recovery in Nigeria • Further supply disruptions • Slim but possible chance of in Nigeria Iranian crude returning to • Non-OPEC Supply Outages the market Petro-Logistics SA

Call on Saudi Arabia in 2014 Call on OPEC & Call on Saudi million b/d million b/d Call on OPEC (left) Call on Saudi (right) 33 11.0 10.5 32 10.0 31 9.5 30 9.0 29 Saudi Call reacts to ebb and flow of Iran/Libya 8.5 supply Weak oil demand 28 8.0 offset by outages in Iraq, Nigeria, Venezuela 27 7.5 26 7.0 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 CIBC Commodities Strategy, IEA, Petro-Logistics SA, govn't sources Petro-Logistics S.A.

US UNCONVENTIONAL BROUGHT A NEW PARADIGM TO THE MARKET..... EF Bakken -The unconventional oil production boom in the US change the domestic dynamics -It also had a major impact on the Atlantic basin light crude markets -Affected primarily the West African grades going to the US, around 400 MBD reduction 2014-02-03 17 Source: EIA DOE

WESTERN CANADIAN PRODUCTION HAS CHANGED MIDCONTINTENT DYNAMICS AND WILL EVENTUALLY CHANGE PACIFIC AND US GOM TRADE..... 18 Classification: Source EIA DOE 2014-02-03

HEAVY OIL IS AN EXAMPLE OF HOW DYNAMICS ARE CHANGING 2014-02-03 19 Classification: Internal

ASIA IS HAS BECOME THE NEW GRAVITY CENTRE... Main Heavy Crude Oil Markets Top Tier 2012 Imports 4,500 4,000 3,500 3,000 ‘000 b/d 2,500 2,000 1,500 1,000 500 0 USA Asia Other Saudi Arabia Mexico Brazil West Africa Iran Venezuela Neutral Zone Canada Colombia 2014-02-03 20 Source: Oil tanker data, DOE and Government agencies Classification: Internal

Thank you Sources: Petro-Logistics SA CIBC Commodities Strategy OPEC Secretariat International Energy Agency Petro-Logistics S.A.