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Page added on August 28, 2013
Integrated Oil Bets Big on Demand Surge
Among the major integrated oil and gas companies, ExxonMobil’s return on capital employed is industry-leading. This lead, at least in part, is due to its in-depth understanding of energy markets. Because of this insight, it is useful to study their Outlook for Energy, a yearly publication with key findings concerning future energy demand and composition. The findings provide a good foundation for energy sector investors to evaluate development projects across the sector.
Source: ExxonMobil 2013 Annual Meeting
Growing demand
Overall Exxon projects global energy demand will grow 35 percent as the world’s population expands from 7 billion people today to 9 billion people in 2040. Energy demand in developing nations (non OECD) will rise 65 percent from 2010 to 2040. Population growth in Africa and India coupled with world real GPD growth will drive global energy demand.
The report makes two interesting sub points. First, due to efficiency gains, energy demand in developed nations will remain flat even as their economic output increases 80% by 2040. Good examples driving these gains are hybrid vehicles and high-efficiency natural gas power plants. Second, population in China will peak around 2030 due to family size policies. And as its population ages, the working age population will shrink leading to decreased economic activity and energy demand.
Shift to natural gas and diesel
Drilling, completion, storage, and transmission advances are enabling the cost-effective development of unconventional resources in oil, natural gas, and renewable energy. Oil will remain the largest segment, while cleaner burning natural gas bypasses coal to become number two. Total demand for coal will peak, then begin to decline as natural gas usage for power generation increases.
Source: ExxonMobil 2013 Outlook for Energy
For example, advances in purification, liquefaction, and safety enable Chevron to further develop large natural gas reserves off the Australian coast. The gas will be brought onshore via pipelines and liquefied. The gas will then be transported to Japan, South Korea and other growing Asian markets aboard double-hulled, insulated ships.
Exxon also believes transportation fuel demand will grow 40%, slightly faster than the energy average. Gasoline demand will remain steady as efficiency gains offset growing markets. However, as commerce increases, demand for diesel will rise and overtake gasoline.
Source: ExxonMobil 2013 Outlook for Energy
Summary
Demand for energy is growing with large shifts in market composition. The importance of insight into this demand composition is the key to the capital deployment that underpins margins and earnings. Best-of-breed Exxon has historically exploited its understanding of these markets to employ capital. While BP and Chevron also have large, innovative investments that fit the megatrends, Exxon remains the proven success story.
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8 Comments on "Integrated Oil Bets Big on Demand Surge"
BillT on Wed, 28th Aug 2013 12:14 pm
Dream on…
bobinget on Wed, 28th Aug 2013 2:04 pm
Below we see a clear indication of unbridled population growth, combined with climatic uncertainties.
India’s Rupee Plunges Most in 20 Years to Record; Bonds Decline
India’s rupee plummeted the most in two decades to a record as a surge in oil prices threatened to worsen the current account and push the economy toward its biggest crisis since 1991. Bonds fell.
The U.S., France and the U.K. are considering limited military action against Syria after concluding the regime used chemical weapons against civilians, fanning concern unrest will disrupt Middle East oil supplies. The tension has worsened a rout that’s seen global funds pull $8.7 billion from local debt since end-May on bets the Federal Reserve will pare stimulus. A 7.4 percent jump in Brent crude this month is set to boost costs for India, which imports almost 80 percent of its oil.
Enlarge image
A customer counts Indian one-thousand rupee banknotes before depositing them at a branch of the HDFC Bank Ltd. in Mumbai, India. Photographer: Dhiraj Singh/Bloomberg
4:42
Aug. 28 (Bloomberg) — Kelvin Tay, the Singapore-based chief investment officer for the southern Asia-Pacific region at UBS AG’s wealth management unit, talks about India’s economy and financial market. Tay also discusses Indonesia and China’s economies and markets. He speaks in Hong Kong with Angie Lau and Rishaad Salamat on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)
“The market is in a super-panic stage,” said Samir Lodha, senior partner at QuantArt Market Solutions Pvt. in Mumbai.
The rupee slumped 3.9 percent to an unprecedented 68.8450 per dollar in Mumbai, the biggest drop since 1993, according to prices from local banks compiled by Bloomberg. The currency lost 13.7 percent this quarter and 20.1 percent this year, headed for the worst annual loss since a balance of payments crisis in 1991 forced the nation to pawn gold to pay for imports.
The yield on the benchmark 7.16 percent government bonds due May 2023 jumped 18 basis points, or 0.18 percentage point, to 8.96 percent, according to data from the Clearing Corporation of India Ltd.’s website. The S&P BSE Sensex (SENSEX) of shares closed 0.2 percent higher at 17,996.15 after falling earlier to the lowest level since September 2012. MCX gold futures climbed to a record today, as investors sought a store of value.
‘Crisis Proportions’
“India’s macro muddle is fast approaching crisis proportions,” Richard Iley, an economist at BNP Paribas SA in Singapore, wrote in a research report today. “Downward pressure on asset prices is unlikely to abate until the rupee becomes decisively cheap, maybe weaker than 70, or the authorities deliver ‘shock and awe’ tightening.”
India’s budget and current-account deficits are responsible for the rupee’s slide, Finance Minister Palaniappan Chidambaram said in New Delhi yesterday. The government is taking steps to contain the shortfall in the broadest measure of trade to within $70 billion in the year through March 2014, he added, compared with an unprecedented $87.8 billion the previous period.
Prime Minister Manmohan Singh won a rare victory by passing a landmark bill through the lower house of parliament yesterday that expands the world’s biggest food program, a key plank of his party’s re-election strategy. The plan involves spending about 1.25 trillion rupees ($18.3 billion) in subsidies each year, potentially worsening the fiscal gap.
Oil, Economy
The nation’s petroleum imports averaged $14.2 billion in the first seven months, compared with $13.9 billion a year earlier, official data show. The government will devise by mid-September a plan to cut energy imports, Oil Minister Veerappa Moily said in New Delhi today.
India’s gross domestic product probably rose 4.6 percent in the three months ended June 30, the least since the first quarter of 2009, according to the median of 41 estimates in a Bloomberg survey before official data due Aug. 30. BNP Paribas today cut its growth forecast for India for this fiscal year to 3.7 percent from 5.2 percent, after the Reserve Bank of India engineered a cash crunch last month to shore up the rupee. That would be the slowest pace since 1992.
Indian stocks may extend this year’s declines because of the nation’s external deficits and the capital flight from emerging markets, according to Goldman Sachs Group Inc.
Rising Risk
“We are not yet prepared to say we have hit the lows and therefore it’s time to go and turn more positive” on Indian shares, Timothy Moe, Chief Asia Pacific Equity Strategist at Goldman Sachs, said in an interview with Bloomberg TV India.
One-month implied volatility in the rupee, a measure of expected moves in the exchange rate used to price options, jumped 491 basis points to 22.24 percent, the highest since January 2009.
Credit-default swaps insuring the debt of State Bank of India (SBIN), considered a proxy for the sovereign, against non-payment climbed 111 basis points this month to 371 as of Aug. 27, CMA prices show. The contracts jumped 64 basis points last quarter, the most since the three months to Sept. 30, 2011.
Three-month onshore rupee forwards fell 3.3 percent to 69.76 per dollar, data compiled by Bloomberg show. Offshore non-deliverable contracts dropped 3.6 percent to 70.42. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.
Since the start of July, Indian policy makers have curbed trading in foreign-exchange derivatives, restricted cash supply and asked foreign investors to prove they aren’t speculating on the rupee, in an attempt to arrest the currency’s slide.
“Quite clearly, there is panic in the market which is exacerbated by the fact that the measures invoked so far have delivered limited results,” Madan Sabnavis and Anuja Jaripatke, economists at Credit Analysis & Research Ltd. (CARE) in Mumbai, wrote in a report today. “The Fed meeting in September will provide more clarity on currencies, and till then it is unlikely that the rupee will stabilize.”
To contact the reporters on this story: Jeanette Rodrigues in Mumbai at [email protected]; Santanu Chakraborty in Mumbai at [email protected]; Shikhar Balwani in Mumbai at [email protected]
Barry on Wed, 28th Aug 2013 2:57 pm
Another company with a marketing gimmick trying to take advantage of the hype of future oil abundance.
shortonoil on Wed, 28th Aug 2013 3:18 pm
If this outfit thinks that the developing world is going to pull their fat out of the fire, they are in for a big disappointment. The Rupee has fallen 38% in less than two years. China’s growth is now probably less than 3%, and its entire financial system is a ticking time bomb.
Consumption in the developed world is not flat, it’s falling. Greek youth unemployment is now over 70%, and the rest of Europe is not far behind. And just in case anyone hasn’t noticed, oil prices are heading in one direction. Guess which way!
bobinget on Wed, 28th Aug 2013 3:36 pm
A real threat to oil consumption is not failing developing nation economies, no chart goes straight up.
It’s electricity storage.
General Electric Company : Just Add Water: GE, Berkeley Lab Explore Possible Key to Energy Storage for Electric Vehicles
Team awarded ARPA-E RANGE project to develop affordable energy storage solution that enables 240 mile driving range
Developing new, low-cost, water-based flow battery for EV’s
New battery could be just one-fourth the cost of comparable car batteries on the market today
It’s a little more complex than making instant oatmeal, but scientists from GE and Lawrence Berkeley National Laboratory (Berkeley Lab) may have just the recipe for next-generation electric vehicle (EV) batteries that achieve desired driving range and cost for consumers.
The GE/Berkeley Lab team is developing a water-based, flow battery capable of more than just traditional, stationary energy storage. Chemistries GE scientists are developing will enable a flow battery that derives its power from a novel electro-chemical reaction that all resides safely in a bath of water. To view a short lab video demonstrating how the technology is designed to work, click HERE or https://vine.co/v/hiJX6QlQOLQ.
Grigorii Soloveichik, project leader on the water-based flow battery project at GE Global Research and director of the GE-led Energy Frontier Research Center (EFRC), said, “We’re excited about the impact this new technology could have on electric vehicles, especially as it relates to cost and the need to recharge. Our flow battery could be just one-fourth the price of car batteries on the market today, while enabling roughly three-times the current driving range. The DOE wants a battery that can power a car for 240 miles; we think we can exceed that.”
This Labor Day weekend, AAA estimates 34.1 million drivers will travel 50 miles or more. With a 240 mile driving range, many would be able to drive their entire weekend on a single flow battery charge, saving families money while reducing emissions.
The work on this project will greatly benefit from the skills and knowledge acquired from GE’s ongoing leadership in the U.S. Dept. of Energy’s EFRC program. GE’s EFRC was designed specifically for building a fundamental base for next-generation energy storage technologies. GE scientists will be working closely with team from Berkeley Lab on development of this battery technology.
“The opportunity to expand our collaboration with GE from the EFRC to applied research under ARPA-E is of great interest,” said Adam Weber, Berkeley Lab Staff Scientist and PI for this project. “We have had great success in developing high-power traditional flow batteries, and the possibility of using that expertise for a high-energy flow battery is quite compelling.”
Aside from offering significant advantages in terms of cost and range, the flow battery GE is researching would offer safety improvements over batteries used in cars today, and could be easily integrated into current car designs; both stated goals of ARPA-E’s RANGE program.
The proposed flow battery uses water-based solutions of inorganic chemicals that are capable of transferring more than one electron, providing high-energy density. Discharge and re-charge of such flow batteries occur in electrochemical cells separated from energy storing tanks, which makes them safer.
Over the next year, the GE/Berkeley Lab team will demonstrate feasibility of this new battery concept and develop a working prototype.
About GE Global Research
GE Global Research is the hub of technology development for all of GE’s businesses. Our scientists and engineers redefine what’s possible, drive growth for our businesses, and find answers to some of the world’s toughest problems.
We innovate 24 hours a day, with sites in Niskayuna, New York; San Ramon, California; Bangalore, India; Shanghai, China; Munich, Germany; and Rio de Janeiro, Brazil.
Visit GE Global Research on the web at http://www.ge.com/research. Connect with our technologists at http://edisonsdesk.com and http://twitter.com/edisonsdesk.
(If China was only growing at a real 3% it would still be sensational given it’s population).
keith on Wed, 28th Aug 2013 6:33 pm
demand surge, peak demand, whatever they call it. This is about keeping the sheeple calm. The powers are beginning to have trouble hiding peak oil. It’s called re-branding. Corporations make the most money while the masses are calm. The more they say peak demand, the more it tells me that they accept that peak oil has arrived.
BillT on Thu, 29th Aug 2013 2:03 am
Water battery … LMAO!
BillT on Thu, 29th Aug 2013 2:03 am
Keep in mind that GE brought you Fukushima …