The document discusses trends in global energy markets and their implications. It notes that oil markets are gradually returning to balance as low prices reduce supply. However, upstream oil and gas investment continues to fall, particularly in high-cost regions, raising the prospect of increased reliance on the Middle East in the future. The document also discusses challenges facing major oil producing countries from lower export revenues, risks to LNG supply security, and the massive investments needed in efficiency, renewables and other technologies to achieve a 2 degree Celsius pathway and meet environmental objectives.

1. © OECD/IEA 2016
Global Energy Markets
in Transition: Implications
for the economy, environment
& geopolitics
Dr. Fatih Birol
Executive Director, International Energy Agency
Analysis Meeting on International Finance and Economy
Tokyo, 21 April 2016

2. © OECD/IEA 2016
Oil markets are gradually returning
to balance as low prices take their toll
In 2014 and 2015, oil supply greatly exceeded demand; the oil market is likely to
return to balance in 2017, with high stock levels dampening any price recovery
-2
-1
0
1
2
3
2014 2015 2016 2017 2018 2019 2020 2021
mb/d
Demand Growth Supply Growth Stock change

3. © OECD/IEA 2016
Upstream oil and gas investment
continues to fall
Upstream oil and gas investment continues to fall, particularly in high-cost regions;
this raises the prospect of increasing reliance on the Middle East in the future
Upstream oil and gas investment
-18%
0
100
200
300
400
500
600
700
800
900
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
USDbillion(nominal)
-24%

4. © OECD/IEA 2016
Middle East oil export revenues
If oil prices average USD 40 a barrel in 2016, Middle East oil export revenues
would fall to some USD 310 billion, half the average level in the ten years to 2014
200
400
600
800
1 000
2011 2012 2013 2014 2015 2016 (est.)
USDbillion(2015dollars)
Lower oil revenues pose social &
economic challenges for major producers

5. © OECD/IEA 2016
Cross border supply cut
Terrorist attack - sabotage
Natural disaster
Technical disruption
Tight market / shortages
Algeria
2013/2016
Egypt/Sinaï 2011-
2015
Libya 2011-2013
Nigeria 2014-2016
Yemen
2012-2016
Argentina -
Chile 2004
Russian-Ukrainian
conflict
2006/2009/2014
India-Nepal
2015Katrina & Rita 2005
Japan 2011
Angola 2014
Argentina 2004-
2015
Polar Vortex
2014-2015
Mexico
2012-2014
Italy
2006/2012
Chile
2004-2007
Brazil
2014-2015
UK 2006/
2010/
2013
China
2009/2013/2015
Indonesia 2007
Canada 2014
India 2013
Pakistan
2011-2015
Egypt 2014Venezuela
2010-2011 Barbados
2015
Trinidad &
Tobago
2010-2015
Lots of new LNG is coming online,
but safeguarding gas security is important
Unavailable LNG capacity has almost tripled over the past four years, highlighting
security & investment challenges in key producer countries

6. © OECD/IEA 2016
Massive additional investments in efficiency, renewables, nuclear power
and other low-carbon technologies are required to reach a 2°C pathway
16
20
24
28
32
36
40
2010 2015 2020 2025 2030 2035 2040
Gt
Trend post-COP21
2°C Scenario
17.9 Gt
Energy efficiency
Fuel & technology
switching in end-uses
Renewables
Nuclear
CCS
Other
CO2 emissions in a post-COP21 world
A 2°C pathway requires more technological
innovation, investment & policy ambition

7. © OECD/IEA 2016
Final remarks
 Energy investment decisions have long-term implications
as sector depends on large-scale, high-cost capital assets
 Today’s cuts in upstream oil & gas investment pose threats
to energy security & could lead to greater price volatility
 Risks to global energy security exacerbated by geopolitics
 Environmental objectives will be met only through more
investment in clean & resilient energy infrastructure
 With looming energy security & environmental challenges,
international co-operation is vital
 including to overcome investment barriers & shortfalls