partex - oil & gas

7/21/2019 PARTEX - Oil & Gas

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“PETRÓLEO e GÁS: a Evolução dos Preços, asMudanças Estratégicas nos Mercados e as

Consequências Geopolíticas”

ORDEM dos ENGENHEIROS

Lisboa, 1 de Outubro de 2015

António Costa SilvaPresidente da Comissão Executiva



01-10-2015 2Ordem dos Engenheiros

António Costa Silva – Presidente da Comissão Executiva

Ordem dos Engenheiros

1. A GEOPOLÍTICA DA ENERGIA

2. EVOLUÇÃO dos PREÇOS do PETRÓLEO e GÁS no MUNDOe CONSEQUÊNCIAS ECONÓMICAS e GEOPOLÍTICAS

3. O PAPEL do “SHALE GAS”

4. IMPLICAÇÕES para o FUTURO

Sumário



1. A GEOPOLÍTICA DA ENERGIA

Ordem dos Engenheiros António Costa Silva – Presidente da Comissão Executiva01-10-2015 3





A GEOPOLÍTICA e aECONOMIA

. Efeitos da globalização

. Declínio do Estado-Nação

. Emergência de NovosActores

. Transferência parcial dopoder financeiro

. Crise global do sistemacapitalista

AS AMEAÇAS GLOBAIS

. Climática (migrações)

. Terrorismo

. Pirataria

. Estados falhados

. Colapso da ordem emzonas do Globo

. Proliferação Nuclear

. Armas de destruiçãomaciça

OS RECURSOS

. Recursos cada vez maisescassos

. Intensificação da lutapelos recursos:

- Minerais

- Energéticos

- Alimentares

- Água. Controle de matérias-primas estratégicas

Para onde vai o Século XXI?




Population, GDP and Primary Energy Consumption

Source: BP Statistical Review of World Energy June 2009





PLANETA TERRA

• 13 000 km de diâmetro• Mais de 100 elementos

químicos• 2 000 espécies de

minerais• Mais de 3 000 mil milhões

de barris de petróleo

A INDÚSTRIA MINEIRA• Consome hoje de 4 a 10% da energia

primária produzida no mundo• Extracção de metais exige 10 vezes mais

energia que a extracção fluídos• A barreira mineralógica

• Nos próximos 20 anos à escala do Globo épreciso extrair mais minérios que durantetoda a História anterior da Humanidade

• Declínio das descobertas e esgotamentograndes jazigos

AS TECNOLOGIAS• O paradoxo de Jevons: mais evolução

tecnológica conduz a mais consumo• As descobertas maiores do futuro virão do

fundo do mar• A robótica e os sistemas inteligentes• As nanotecnologias podem reduzir as

necessidades

• Novo paradigma industrial: Nano-máquinascom rendimentos energéticos elevados

O RITMO EXPONENCIAL DECONSUMO E OS LIMITES DA

GEOLOGIA

• Aumento significativo da procuramundial de minerais

• O sentimento de abundância éuma ilusão?

A TABELA PERIÓDICA DEMENDELEIEV

• 1980: apenas 10 elementos exploradospara aplicações industriais

• 2012: mais de 50

• Computadores, IndústriaAeroespacial, electrónica, Imagiologia,

etc.• Hoje 26 elementos da Tabela estão em

penúriaUM MUNDO DE RECURSOSFINITOS

• Debate entre cornucopianos emaltusianos

• Os eternos optimistas e oseternos pessimistas


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Ordem dos Engenheiros António Costa Silva – Presidente da Comissão Executiva

PRODUCTION PERCENT

INCREASE1950 - 2000

1950 1975 2000

Bauxite 8,370 25,401 135,000 1,513

Cobalt 7 30 33 371

Copper 2,645 6,960 13,200 399

Iron ore 250,000 887,389 1,061,148 324

Nickel 146 787 1,250 756

Titanium 814 3,298 5,187 537

Crude oil (billion barrels) 3,8 19,5 27,3 618

Natural gas (tillion cubic feet) 7,2 55,8 85,1 1,082

PRODUCTION of SELECTED COMMODITIES, 1950, 1975, and 2000(in thousand metric tons, unless otherwise noted)

Source: US Grological Survey, Minerals Yearbook; BP, Statistical Review of Weorld Energy



01-10-2015 8

2 0

1 2

POPULATION

7 billion people

GDP 65 trillion US$

CAR FLEET

800 million cars

OIL USE in DEVELOPED WORLD

14 barrels/person/year

OIL USE in DEVELOPING WORLD

3 barrels/person/year

WORLD ENERGY MATRIX

. Oil Production is 5 t imes greater thanin 1957

. Renewables have established a more

secure foundation. Oil/Coal /Natural Gas provide 80% ofsupply

ELECTRICITY

1,5 billion people without access

WATER

700 million people with scarce resources

2 0

3 0

POPULATION

8,5 billion people

GDP 130 trillion US

CAR FLEET

3 billion cars

OIL USE

Billions of people with better incomes

go from 3 barrels/person/year up to 3or 4 times more

WORLD ENERGY MATRIX

. Dominance of Natural Gas?

. Consolidation of Renewables

. Solution for the transport system:

(electric/biofuels/GTL//fuel-cells)?

ELECTRICITY

. Reduction or not of inequality?

WATER . Reduction or not water access?

WORLD CHALLENGES





KEYFEATURESof the OIL

and the

GASMARKETS

FINANCIALIZATIONOF OIL

• Commodity but also financialasset

• New era of oil pricing dynamics

OIL PRICE VOLATILITY

• Departure of oil prices fromeconomic fundamentals

• Oil price 25% above marginal

cost of production

GEOPOLITICAL EFFECTS

• Market instability

• Perception of “supply” disruptions

• The “fear factor”

• Long-term oil price above 70

US$/bbl

OIL-SUPPLY CAPACITYIS GROWING• Improved recovery efficiency• Role of unconventional oil• Impact of Gas Shale

Revolution• Technology improvements

• Expansion of oil output

DE-CONVENTIONALIZATIONOF OIL SUPPLY

• US Gas Shale Revolution• Impact on Oil Shale and Tight

Oil• Build-up of US, Venezuela and

Canadian production capacity

• Brazil and Atlantic Basin Pre-Salt-discoveries

GLOBALIZATION OFOIL DEMAND

• 85% of growth fromdeveloping countries

• Combined effects of income

and population growth

UNPARALLELINVESTMENT CYCLE

• From 2003 investment growing

1.5 trillion US$ every 3 years• Investment in 2012 may reach

a new record (600 billion US$)

• Strong build-up of productioncapacity





OIL ON THE EDGEBreak Throughs – and High Prices – have openedup new frontiers for Petroleum



11

CONSTRAINTS ON OIL AND GAS FLOW FROM MIDDLE EAST

Source: 21st World Upstream Conference Organizer Global Pacific & Partners01-10-2015




THE GEOPOLITCS OF OIL

Source: FT, 30th March 2011 01-10-2015





JIHAD IN AFRICATHE DANGER IN THE DESERT

Source: The Economist, January 26th - February 1st





OIL ROUTING AKTAU-MAKHACHKALA-NOVOROSSIYSK

http://upload.wikimedia.org/wikipedia/commons/a/a1/Baku_pipelines.svg





Central Asia Centre System45-55 Bcm/yrNominal Capacity 100Bcm/yr

GAS EXPORT





UNCONVENTIONAL GAS

INSTABILITY in PRODUCINGCOUNTRIES and THREATS

to SUPPLY

FUKUSHIMA NUCLEARACCIDENT

CLIMATE CHANGE andENVIRONMENTAL REVOLUTION

EMERGENCE of PACIFIC BASIN asTOP ENERGY CONSUMER

INDUSTRY CATASTROPHIC ACCIDENTS(e.g. OFFSHORE OIL Spills) and PUBLICIMAGE

ENERGY GAME CHANGERS in XXI CENTURY





2. EVOLUÇÃO dos PREÇOS do PETRÓLEO e GÁS no MUNDOe CONSEQUÊNCIAS ECONÓMICAS e GEOPOLÍTICAS




01-10-201521



22

OIL PRICESEXPLICATIVE FACTORS

BALANCESUPPLY/DEMAND

• 2015: 2 MB/Doversupply

• OPEC

• IRAN• USA

TECHNOLOGICALBREAKTHROUGHS

• Shale Gas andShale Oilrevolution

• New reserves

• New generatingcapacity

• New paradigm

GEOPOLITICAL

EFFECTS•OPEC policies

•Consumers policies

•Instability in key oïlproducers

•Terrorism attacks

•More strong whensupply/demand Balanceis tight

OIL MARKETCYCLES

•CONTANGO cycle:future prices higherthan today prices

•Backwardation cycle:today prices higher

than futures

SPECULATION in OILand COMMODITIES

MARKETS

•Sudden sales of netpositions

•Market perception

“THE DOLLAREFFECT”

• Negative correlationoil prices vs. Dollarvalue

•Effect of US FederalReserve Policy

LEVEL ofINVENTORIES

• US stockpiles• Europe stockpiles• Asia stockpiles



01-10-201523

O I L

Chinese NetOil Imports

• Increased 84% in 7 years (2005-2012)

Increment on OilConsumption

• Last 13 years CHINA recorded the largest incrementin the world 12 times

Chinese Oil imports • December 2012 reached 10.6 MB/D

C O A L

Domestic CoalProduction

• Increased 135% last 10 years• Every 5 days a new coal plant opens in China• 70% of Chinese Energy Matrix based on coal• Huge environment problems

World CoalConsumption

• In 2012 for the first time in History China consumedmore coal than the rest of the world (50.2%)

C

A R

F L E E T

Growth of China CarFleet

• 1 million cars in 1990• 100 million cars in 2012

Share of world newvehicles

• China share was 2% in 2002• China share was 25% in 2012

Sales of New Cars • China overcome the US in sales of new cars in 2011• 12 million vehicles in China vs. 11 million in US

E N V I R O N M E N T

Most PollutedCities in the world

• Out of the 20 most polluted cities in the world Chinahas 16

• Electric vehicle will be unavoidable• Huge geopolitical implications

CHINA ENERGY INDICATORS





Source: 21st World Upstream Conference Global Pacific & Partners



HIGH OIL

PRICEEFFECTSin the

Economy

GDP Drop (0.3%for each 8 US$/bblincrease in Euro

zone)

Risk of changesof Central Bank

policies:. Increase of interest

rates. Abandon debt

purchase

. Less financingavailable

Aggravation ofrecessionsequels:

. Unemployment

. Loss of income

. Debt increase

HIGHER OILIMPORT BILL

(more 95 billionUS$ for each 10 US$ /bbl increase In EU)

Aggravates fragilerecovery of worldeconomies

(average growth3.3% in 2011 vs3.9% in 2010)

Acceleratesprocess oftransference ofwealth fromdeveloped

countries to OPECproducers (980 bill-lion US$ in 2008)

Hígher Inflation

HigherCommodity

prices

Higher ProductionCosts

Reduction ofavailable incomefor families and

enterprises

01-10-2015 2525

DOLLARS h ’ i h h ’



01-10-2015 26

PETRO- DOLLARS: who’s rich who’s not






Rising Oil price threatens fragile recovery





Fonte: Público, 23 Agosto 2014





OIL PRICE2011-2013has beenSTABLE

( most stableperiod inindustry)

OIL PRICE CRASH?

• Next 5 years world may

experience oversupply

• Non-OPEC oil output rise by 1.7

MB/D (2014)

• Total Global demand grows by

1.4 MB/D

• Weak demand due to economic

slowdown in Europe and China

• Question: combination of

slowing demand and plentiful

supplies will overlap the

geopolitical tensions in Middle

East and North Africa?

EFFECT OF SHALEBOOM IN US• US oil production 2008: 6

MB/D• US oil production 2013: 9

MB/D• Canada added 1 MB/D• North America shale boom

has been a calming factor• Production lost in key

countries has been replacedby US shale boom andCanada increase inproduction

PRODUCTION DECLINE INSOME KEY COUNTRIES

• Libya (less 80%)

• Iran sanctions/violence (less 1.5

MB/D)• Nigeria violence/sabotage (less

0.3 MB/D)

• Venezuela (underinvestment)

• Political chaos: in total less 3.5

MB/D in production

IMPACT ON WORLD

ENERGY TRADE• US oil imports 2005: 60% of

total consumption

• US oil imports 2014: 28%

• Most oil US used to importnow goes to Asia

• Helped markets to be well-supplied and prices immuneto turmoil



30

The Economist, 18-24 October 2014

01-10-2015 30



01-10-2015 31Ordem dos Engenheiros António Costa Silva – Presidente da Comissão Executiva

OIL PRICEDROP IN 2014 __________

• Price of Brentfall below 100USD/bbl firsttime last

years

SAUDI ARABIA EFFECT• SA cutted selling prices

• Unlikely to curb production amid an excess ofcrude supply

• SA lost market share in 2013/2014 in Asiaand Mediterranean to Irak and Iran (heavydiscounts)

• Low-cost OPEC producers seeking to expandtheir market share.

GEOPOLITICAL TENSIONS

AND SUPPLY

• Geopolitical upheavals only in

Libya/Irak not affected significantly

production

• Excess of oil in Atlantic Basin and

North Sea

• European refineries cut back amidweak margins

• Structural changes in consumers

behaviour towards more efficient

technologies

GLOBAL ECONOMICRECOVERY• Oil is a leading indicator• Global economic recovery

weaker than forecasted

SUPPLY/ DEMANDBALANCE

• Crude demand slowedremarkably Q2 2014

• Weak economic growth in

Europe and China• Raise in global inventories

• IEA: global crude demand

slowed to below 500,000 B/D

• First significant drop in last 2.5

years MARKET STRUCTURE• Shift to Contango

(prices for future delivery

exceed spot prices)• Prompt agents to build stocks

• Given volatility of situation inthe Middle East and North Africa this is a benefit toGlobal Energy Security



3201-10-2015Source: The Economist, 05-11 September 2015



3301-10-2015

Analysis

•More complex situation

•Saudi Arabia Role

•Erosion of OPEC influence

•No control on Non-OPEC

production

•Iran in difficulties

•Russia, Iran, Venezuela and Nigeria

need oil above 100 US$bbl to avoidhuge fiscal deficits

•Undermine competitor advantages

including alternative energies

•But economics of shale oil is very

flexible

•Break-even: 57 to 65 US$/bbl

•Based on wells

•Investment one well: 1.5 M US$•Gain in productivity:

US economic pragmatism

•In the long-term shale industry may

prevail

Source: The Economist, 06-12 December 2014

Sheikhs v shale




34

The Economist, 18-24 October 2014

01-10-201534Source: The Economist, 25-31 Oct 2014



3501-10-2015

35

Source: The Economist, 05-11 September 2015




OIL PRICES

• Companies as beneficiaries?

• MSCI index world energysector down 5.5% (2014)while equities up 3%

• Oil companies cut capex andpay shareholders throughdividends and buybacks

• Keep their share price

Source: FT, 8-9 November 2014




Fonte: DGEG

Impacto Económico da Dependência Excessiva de Combustíveis Fósseis

Evolução do Consumo de Petróleo em Portugal



Fonte: BP Statistical Review of World Energy –

Junho 2015

Evolução do Consumo de Petróleo em Portugal

39

E l ã d C d Gá N t l P t l



01-10-2015 40

Evolução do Consumo de Gás Natural em Portugal

Fonte: BP Statistical Review of World Energy – Junho 2014

Fonte: BP Statistical Review of World Energy –

Junho 2015




Fonte: DGEG

Peso da Importação dos Produtos Energéticosno PIBpm ( €)




Fonte: Prof. José Sucena Paiva

Fontes de Energia Primária

Portugal, 2010




• Sector dos transportes consome 36% do total da energia final;

• Transportes rodoviários concentram 33% deste consumo e correspondema um Consumo Energético Intensivo fortemente dependente doscombustíveis fósseis;

• Geram um desperdício colossal;

• O problema agravou-se entre 1990 e 2004: aumento de consumo de 4.5% aoano com a expansão do parque automóvel;

• Nos últimos anos verificou-se tendência ligeira para a redução do consumodevido aos aumentos dos preços dos combustíveis: necessidade deconsolidação desta tendência.

PORTUGAL: O PROBLEMA-CHAVE DOS TRANSPORTES

TRANSPORTES SÃO O PRINCIPALPROBLEMA ENERGÉTICO DO PAÍS




IMAGEM TÉRMICA doDESPERDÍCIO de ENERGIA

Washington, 2012

Estrada Congestionada

Veículos em filas lentas

Só 15% da energia fornecidapela gasolina é utilizada

TRANSPORTES: QUESTÕES




• Enorme dependência externa do petróleo e seus derivados;

• Poluição elevada e emissões de CO2;

• Congestionamento do tráfego nas cidades, mais desperdício e baixa deprodutividade;

• Volume desproporcionado do transporte individual em relação ao público;

• Portugueses não têm hábito de utilizar preferencialmente os transportespúblicos;

• Desenvolver um novo paradigma para a mobilidade urbana baseado notransporte público;

• Criação de uma nova cultura com restrições na circulação do carroindividual e dificuldades de estacionamento nos centros urbanos de altadensidade;

• Rever políticas de planeamento e ordenamento urbano;

• Apelo e educação para a utilização dos transportes públicos;

• Melhor gestão de acessibilidade às cidades e soluções de integração com arede de transportes públicos.

TRANSPORTES: QUESTÕES

SOLUÇÕES




A world class source rock and a potentialshale gas reservoir – the Devonian-Mississippian Woodford Shale

What is the SHALE GAS?

PRODUCTION SOLUTION:




PRODUCTION SOLUTION:HYDRAULIC FRACTURING

• Fracture Technology is responsible forUSA success in gas shales

Use large amount ofwater in a short periodof time to develop a gas well

Addition of sand or othermaterial (proppants) to thefluid to keep induced fracturesopen

Most wells are horizontal withone or more horizontal legsextending to the target sections

The legs may extend more than2 Km from the surface locationof the well




Source: The Economist, 6th August 2011

WORLD TOTAL GAS RESERVES

The U S may be the world’s fastest developing shale gas industry



51

China's shale gas basins are massive. The orange depictsprospective basins while the yellow shows proven grounds. The red

lines are pipelines. International Energy Agency

The U.S. may be the world’s fastest-developing shale gas industry,but China is thought have more of the cleaner alternative to coal.




Fonte: The Economist, 14th June 2014

The IEA calculates that electricity prices for German industry have tripled since 2000

Private Ownershipof the Land US ENERGY LAWDYNAMICS of US

ENERGY MARKETS




SUCCESS FACTORS of US

SHALE GAS MODEL.

Can it be exported?

ENVIRONMENTALREGULATIONS

• Identityenvironmentalimpacts

• Act throughregulation notthrough prohibition

GEOLOGY• Huge basins with vast

resources

• Ability to designincentives to tapresources

CREATIVITY/ /INNOVATION

• Ability to challengeexisting paradigms

• Invent new concepts

of the Land

• Fosters dynamismand individualinitiative

• Avoids burocracy andcomplication

INFRASTRUCTURE

• Availability ofpipelines andtransmission/distribution system

• Easy access• Use based on a “pay

tariff” • No Monopolies

ACCESS toFINANCING

• Easy• Simplified• Supportive

PRODUCTIONSYSTEM

• Active and matureindustry

• Production close topipelines andconsumers

• Water needs

SERVICECOMPANIES

• Drilling/Fracturing• Logging/Operations• Very active• Easy access

• PromotesEntrepreneurship

• Design mechanisms• Incentives

ENERGY MARKETS

• Role of small/mediumsize IndependentCompanies

US OIL SHALE: TEXAS HEARTLAND HEADS THE US OIL REVIVAL




Source: FT, 8th July 2013





Source: BP

FOOTPRINT CONCERNS





AIR: Emissions (CO2 & others…) Noise and dust (trucks , operations…)

LAND: Disposals (solid waste…)

Wildlife/Habitat disruptionSurface FootprintRoads & TrafficInduced SeismicityPipelinesSoil erosion

WATER: Aquifers quality / contamination

Availability / supplySustainable management (flow back…)

Transparency in OperationsRegulatory Response

ENVIRONMENT SOUND WAY?





ENVIRONMENT SOUND WAY?

APPLICATIONS

DR

DR





GAS

DRIVERS

DECARBONIZATION OF ECONOMY

. Gas is the least poluent of fossil

fuels

. May play key role in transition of

energy paradigm

APPLICATIONS

. Gas is most versatile of fossil fuels

. Used both in power generation andtransportation

. GTL may be competitive solution for

transport in Medium Term

EFFECTS OF JAPAN NUCLEAR CRISIS

. Decision of some countries to slowdownnuclear power (Germany, Italy, Japan)

. Opens a more decisive role for Gas

RIVERS

FOR

FURTHE

R

GAS

DEVE

LOPMENTS

RIVERS

FOR

FURTHE

R

GAS

DEVE

LOPMENTS

O d d E h i





4. IMPLICAÇÕES para o FUTURO




01-10-2015 60





01-10-2015 61

Source: ExxonMobil 2015 Outlook for Energy



01-10-2015 62Source: ExxonMobil 2015 Outlook for Energy



01-10-2015 63



01-10-2015 64



Source: Exxon, The Outlook for Energy: A View to 2040

ENERGY MIX CONTINUES TO EVOLVE





TRANSPORTATION FUELS TO SEE RISING DEMAND

Source: Exxon Mobil, the 2010 Outlook for Energy: A view to 2030

THE GASEIFICATION of



01-10-2015 66

THE GASEIFICATION ofUS ECONOMY

• Gas replacing coal-power plants

• GAS in the transport sector(cities/trucks)

SECULAR DOWNTURN of USFUEL CONSUMPTION

• Peak oil consumption in 2005• Last 7 years US oil demand dropped

by 14%

SHIFT in HABITS?• Car-pooling schemes more

popular in US• ZIPCAR more than 800,000 users

• No car taxes, no parking fees, nomechanics bill, no cardependence

• New generation with new vision?

• The growing “virtualization” of life

and Internet shopping

US LOVE AFFAIR withCARS SHIFTING?

• Effect of high oil prices andfinancial crisis

• Number of passengers inAmtrak in 2012 the highestsince 1971

• Oil consumption in Californiain 2012 the lowest since 1998

• Chicago and other cities:growing “PEDESTRIAN” and

more bicycle lanes

• LA public transport sector

reaching records (9 millionpassengers per month in2012)

EMERGING TRENDS in USTRANSPORT SECTOR

• Even so US DRIVERS reached

in 2012 4.8 trillion km (14 000trips to the sun)

TECHNOLOGY ISCHANGING THE WAY WE

LIVE, THE WAY WE WORKAND THE WAY WE PLAY

• The change in way we live,change the use of energy

• Growing urbanization



Energy Road Map and Solutions:





Many Possible Paths Leading to Same “Destination””

RISE OF THE AUTOMOTIVE PATENT TECH WARS





BUILDINGSE i T h l i

TRANSPORTATIONSYSTEMS



01-10-2015 69



ELECTRICAL AND THERMALGENERATION

. Sequestration and storage of CO2:

- Post-Combustion

- Pre-Combustion

- Oxy-Fuel

. Electricity 30% plus expensive

"CLEAN COAL" FutureGen (USA):

1st Integrated Central

- Electricity Production+ Hydrogen with CO2 sequestration. Coal Gasification: Conversion in

gas (H + OC). Hydrogen Production. Renewables: Wind / Solar / Waves/Geothermal / Biomass/Nuclear Energy: 3rd and 4thGeneration

. Lighting 20% of world electricity

. LED / SSL

. Buildings: context

. Energetic Performance

. "Zero-Energy Homes"- Micro-generation

NANOTECHNOLOGIES

. Production / Storage of Energy

. Energy Efficiency

. New techniques to processhydrocarbons

Emerging Technologies:Decarbonisation Economy

. Energy Efficiency

. Economic Competitiveness

. Security

. Environmental Sustainability

. Batteries and plug-in cars

. Electric vehicles

. Advanced biofuels

. Natural gas vehicles

. Evolving smart grids

. Advances in internal combustion

. Increasing fuel efficiency

. Advanced diesels. New lighter materials

. Chemical Propulsion:- Space Industry

“SMART GRIDS”

. Producer / Consumer

. Decentralized and distributednetworks

NEW ENERGY LANDSCAPEServices provided: U

R E

New Entrants

N T Traditional Utilities

OLD MODEL



• Send high voltages over long--distances to passivecustomers

• Main concerns: supplyelectricity and meet peaks indemand

• Vertical Integrated

• Big

• Centralized

• Regulated

• High Costs

• Deal with the most inefficientpart of the power industry:

the generating capacity thatis held in reserves to meetPeak Demand

• Old Business Model ofdelivering through the gridover long-distances is inretreat

• Need to take a long view

• Model under pressure: newentrants and new forms ofSTORAGE and GENERATIONare “eating” the OLDBusiness Model

• Analogy to computingindustry: switch from mainframes and terminals toCLOUD STORAGE and theInternet

• Need to do new things and

respond to COMPETITION

• Era of abundance in Energy

• Revolution of shale gas andshale oil

• Abundant gas reserves (2 to 3 xconventional)

• Renewables playing anincreasing role

• Solar energy impressive costreduction (75% decline last 6years)

• The “Hawaii” core example

• Technological breakthroughsin Storage, Energy Efficiency,Management of Demand,Intelligent Consumption

• The revolution of “NegaWatts”:the unused electricity

• Clever technology withincreased efficiency is shapingthe future

• Capital markets more tilted infinancing solar, storage, energyefficiency

• Costs of pollution:

“decarbonisation” • Demand for energy: increase

37% over next 25 years(“Internet of the Things” ; newdevices to be connected)

p• Demand response

• Supply

• Storage

• Energy efficiency

• Algorithms• Sensors• Processing power• Good Marketing

• Cheaper power + better storage +increased resilience: shape the gridof the future

• Transmission costs for electricity aredeclining

• Energy efficiency + Renewables +shale gas provide abundance ofenergy, accessible with newtechnologies

• More effective management ofsupply and demand: sensors,computer power and algorithms

• Pressure and changes on Business

Models: Management of demandresponse; microgrids; “Prosumers”

• Storage business is booming:biggest advantage avoids need ofgenerating capacity held in reservesto meet peak demand

• 1 Mw of storage replaces 10 Mw ofsuch generating capacity

• Batteries approaching crucial

benchmark: cost of storage 100US$/Kwh

P R E S E N T / F U T

P A S T / P R E S E N

Competitive Advantages

(the Internet Model”

OLD MODEL




FINANCE ENERGY FORUM

ABUNDANT ENERGY TECHNOLOGICAL



72

HOW the WORLD of ENERGY

is CHANCHING:CURRENT BUSINESS MODEL

UNDER PRESSURE

STORAGE• Getting cheaper and better

• If intermittent energy can be storedits economics drastically improved

• Big advantage of storage: avoid mostinefficient part of power industry -the generating capacity held inreserve to meet peaks of demand

• 1 Mw storage replaces 10 Mw ofsuch generating capacity

• Electrical batteries: GIGAFACTORYapproaching key benchmark – 100US$/Kwh

• Close to grid parity

ABUNDANT ENERGY• Cycle of low oil prices• Shale gas revolution: gas more abundant

and easier to trade• Gas reserves 2 to 3 times the

conventional; global gas market

• Role of renewables• Solar renaissance• Resilience of supply• China effect on renewables: 2013

investment over 56 billion US$• Renewables energy became a serious

part of energy mix• World investment on renewables (2013)

214 billion US$ (53% for solar)• Costs of Solar: 75% reduction in 6 years

TECHNOLOGICALBREAKTHROUGHS

• Intelligent Consumption: usersgenerate, store and manage dataefficiently

• Clever technology + Energy Efficiencylead the change

• Greater efficiency, local productionand storage

• More effective management ofsupply and demand

• Micro Grids: new way of usingelectricity; cheaper; better design;data processing; changes inbehaviour

• The Grid is getting smarter “NEGAWATTS” and DEMAND-

RESPONSE REVOLUTION

• Deal with unused electricity

• Adjust consumption to meet supply

• Most expensive electricity consumedat peak time

• Technique of demand response: paycostumers to switch off at peak level

(2013 US 11.8 billion US$)• For the grid operator the spare power

gained is very useful• US/Japan examples: may lead to huge

small power savings from a largenumber of consumers.

• “Rush Hour Rewards”

• Spare capacity in Europe in Winter 10GW (19% of countries combined peakload)



73

NEW BUSINESS MODELS

• Demand-response• Big data/processing• Sensors, Computing Power,

Algorithms• Energy efficiency: invisible fuel

DISTRIBUTION

• Transmission costs for electricity

are declining (solid-statetechnology)

• With new Technology demandcan be managed to matchsupply

• Analogy to computing industry:switch from main frames and

terminals to cloud storage andthe internet• Small producers and storage

creates resilience in the network• Innovation more fast

CAPITAL MARKETS

• Understanding disruptive effectof distributed and intermittentgeneration combined withcheaper storage and intelligentconsumption

• Growth of a bond market to payfor energy efficiency (40 billionUS$ in 2014)

• Solar City (USA) Model• Price of oil fluctuates; solar is

bound to get cheaper• Business models for new energy

systems are proven and a waveof money is breaking over the oldmodel

HOW the WORLD of ENERGY

is CHANCHING:

CURRENT BUSINESS MODEL

UNDER PRESSURE

01-10-2015



THE FUTURE OF NATURAL GAS



01-10-2015 74



THE FUTURE OF NATURAL GAS

Source: The Economist, 6th August 2011

Gas should make the world a cleaner, safer place



01-10-2015 75



INTERLIGAÇÕES DA REDE DE GASODUTOS



01-10-2015 76



Fonte: Expresso, 30 Agosto 2014

MAJOR ROLE of GAS

• Increasing share of world energy matrix

FOUR MAJOR TRENDSCHANGING WORLD ENERGY

MATRIX



01-10-201577



GROWTH

and

SUSTAINABILITY

Increasing share of world energy matrix

• Shale Gas revolution and magnitude ofreserves

• Gas is most versatile of fossil fuels andleast poluent

• Used both in power generation andtransportation (GTL)

• “Gaseification” of economy

LNG and EFFECTS of JAPAN

NUCLEAR CRISIS

• Decision of some countries to slowdown

nuclear power (Germany, Italy, Japan)

• Open more decisive role for gas andspecially LNG

OIL & GAS INDUSTRYPUBLIC IMAGE

• Recent record of catastrophic accidentsdoes not help

• Need to improve risk management toaddress public concerns

• Industry engaged in environmental andemissions cutting technologies

• Better communication with the public

• Better environmental regulations without jeopardizing expansion of requiredprojects

Clean Technologies andReduction of CO2 Emissions

• Tolerance zero for Gas Flaring

• CO2 sequestration and injection intooil reservoirs (win-win approach)

• Control/reduction of VOC emissions(surface facilities)

• Improve Market “design mechanisms”to promote energy efficiency

LOW CARBON SOLUTIONS

• Buildings

• Electric/Thermal Generation

• Transportation systems

MATRIX

• Growing electrification

• Decarbonization

• Localization

• Optimization





CITIES are BESTINVENTION of MAN



01-10-2015 79

THE NEED of aPARADIGM SHIFT for

WORLD CITIES

• Cities occupy 2% of planet surface • 50% of world population • Consume 75% of energy produced

• Responsible for 80% of CO2 emissions

CITIES with CURRENTLANDSCAPE IMPLY

HUGE RISKS

•Frenetic urban growth•Difficulties in resourcesmanagement

•Drivers of atmospheric pollution•“Heat-Islands” •Negative impact on earth climaticsystem

•Key issue: transport system

INVENTION of MAN •Mark death of distance•Rotating platform for markets andcultures

•Connect human capital•Cities are main drivers of innovation

NEW MODEL for CITIES

• Water management• Energy management• Residuals treatment• New role of transport system based

on public transport + electric cars +evaporation of traffic jams

• New modes of access and

distribution of resources

CHALLENGES for FUTURECITIES

•More sustainable models• Address energy security

•Smart grids•New model for mobility•There is no sustainability for futurewithout a new vision for thedevelopment of more intelligentcities

•Sustainability is a multidimensionalconcept and needs to question theexcess of the constant growthlogic and fight the waste ofresources



01-10-2015 80



GROWING ENERGY CONSUMPTION and URBANISATION:

HOW TO RUN CITIES, DELIVER SOLUTIONS

and MINIMIZE POLLUTION?

Source: The National, 9 November 2014

DATA SERVICES



01-10-2015 81

THE MULTIPLEXEDMETROPOLIS

• Big data

• Processing• Conversion into knowledge

• Ubiquos data services

DATA SERVICES

• Can change cities inXXI century as much aselectricity did in lastcentury

GREATER AMOUNTOF EASILY

AVAILABLE DATA

• Can change urban life

DANGERS ON FUTURECITIES

• Electronic panopticians(everybody is watched)

• Hackers / cyber attacks

• Labirinthic software• Further ways to exclude the

poor

• Serendipity at risk

CITIES XXI CENTURY

• Wealth• Novelty• Human Interfaces• Data

ERA OF MASS

URBANIZATION

• Major opportunities

• Major threats/risks

• Cyberterrorism

TRANSPORT SECTOR

• Major changes

• Automation

• Self-driving cars

• IT protection

ADDRESS FINANCIAL andREGULATORY RISKS

•Carbon price uncertainty



01-10-2015

ENERGY

COMPANIESin theFUTURE

p y•Increasing legislation and standards onemissions

•Consumer pressure for CO2 emissionsreduction

•Government policies on energy pricing

•Impact of pricing fluctuations on investment

decisions• Renewal energy policy uncertainty

REPUTATIONAL RISKS

•Environment pollution and liabilities

•Delivery of services compromised by energydisruptions

•Increasing control on emissions performancestandards

•Cost and stability of services

TECHNOLOGICAL RISKS

•Uncertain political commitmentto technological incentives

•Policy change undermining theviability of investment•New technology revolution maychange all aspects of energyservices from sources tostorage

•Impact on user-technologies(light/vehicles/electric motors)

•Impact on investment structure

OPERATIONALand

SUPPLY CHAIN RISKS

•Future demand uncertainties•Fuel and electricity supply

disruptions

•Infrastructure failure in changingclimatic conditions

•Transition to cleaner technologiesmaking infrastructure obsolete

•Cyber threats to smart grids

82



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