International energy flows: The changing nature of global energy markets

Brookings Doha Energy Summit
Doha, Qatar

andrew p swiger
Andrew P. Swiger

Senior Vice President and Principal Financial Officer

Speech Feb. 20, 2012

International energy flows: The changing nature of global energy markets

Thank you.

Your Excellency Sheikh Hamad bin Jassim Bin Jabor Al-Thani…

Your Excellency Dr. Anwar Gargash…

Your Excellency Dr. Mohamed Al-Sada…

Distinguished guests…

I want to commend the Brookings Institution for sponsoring this forum examining the critical issues surrounding international energy trade flows and the changing nature of global energy markets.

You are taking on an ambitious and valuable task.

It is ambitious because the future, by its nature, is uncertain and unpredictable.

It is valuable because energy is essential to development, progress, and prosperity in every nation.

Broad Trends and the Outlook for Energy

At ExxonMobil, we believe the place to begin looking at the evolution of energy markets is to look at the people and how they use energy. We can gain valuable insights by examining the demographic changes underway around the world and the broad economic trends shaping markets.

ExxonMobil outlines the shape and scope of these challenges in our annual Outlook for Energy. The Outlook represents our assessment of key energy supply-and-demand trends out to the year 2040.

Two central points inform the foundation of our Outlook: First, the global population is set to expand.

Second, economies and individual prosperity will grow substantially around the world as these dynamic populations seek higher standards of living.

We project that the global population will rise by approximately 25 percent – reaching 8.7 billion people by the year 2040. Over this same time horizon, we anticipate that trade, transportation, and communications technology will increase the pace of economic change and advancement.

We project that the global economy will more than double in size by the year 2040.

In concert with expanding prosperity and economic development, we expect global economic energy demand will grow substantially. Even with very significant efficiency gains, worldwide demand in the year 2040 is likely to be 30 percent greater than 2010. Essentially all of this demand growth will occur in non-OECD economies, where demand will rise to fuel economic progress and the improved living standards it enables.

Oil and natural gas will continue to play a central role in meeting the world’s energy needs, by virtue of their availability, versatility, and affordability. In 2040 just oil and natural gas will continue to supply some 60 percent of global energy needs.

Over this period we will likely see the continuation of an important trend already transforming energy markets: the rise of global trade in natural gas.

This is not news in the State of Qatar, which has been at the cutting edge of this newly developing global market for natural gas.

Well over a decade ago, His Highness the Emir put forward a powerful vision for Qatar to meet this need for global natural gas. Through the establishment of Qatargas and RasGas, the establishment of wise business policies, and the welcoming of foreign investment, Qatar’s leadership helped direct more than $120 billion to develop in excess of five million barrels of oil equivalent per day of new energy supplies for markets the world over.

According to our projections, these resources will become all the more valuable as the world seeks less-carbon-intensive energy sources, like natural gas. In fact, by the year 2025, we expect natural gas to overtake coal to become the second most widely used fuel in the world, while overall demand for coal will have peaked and began a gradual decline.

The Case for Natural Gas

The increasing importance of natural gas comes from its reliability, flexibility, and its environmental advantages.

As nations develop, the global economy will continue to need increasing amounts of electric power. By 2040, demand for electricity worldwide is expected to be 80 percent higher.

This will create a growing need for fuel for power generation.

Natural gas has proven itself to be safe and reliable for meeting this need. With this successful track record and the availability of abundant economic supplies, we expect natural gas will grow to provide 30 percent of the world’s electricity-generation needs by the year 2040 – up from just over 20 percent today.

Natural gas will be increasingly attractive for another reason. It carries substantial environmental benefits. It is cleaner burning than other major energy sources, which will help meet our shared goals for reduced emissions and environmental stewardship.

The Importance of Policy in Shaping Markets

It is of course impossible to consider the future of energy markets without considering the players in those markets. Technology and capital projects are not self-executing. Success in creating value only comes as a result of innovation, cooperation, and sound execution.

In the decades ahead, the world will depend on partnerships between international oil companies and national oil companies to unlock new supplies of energy, apply high-impact technologies, and effectively manage safety and environmental risks. The world’s energy markets will also be shaped by those who understand the importance of sound energy policy in allowing these partnerships to be formed and succeed.

Nowhere is this lesson seen more clearly than here in the State of Qatar.

Thanks to the leadership of His Highness the Emir, Qatar has put in place policies that have made the State an example to the world.

When thinking about changes in energy markets, therefore, we must always consider the business climate and policies that make it possible for scientists, engineers, and investors to work together to solve challenges.

Today, Qatar is the world’s largest producer of liquefied natural gas. The State is now supplying LNG to markets all over the world and bringing diversification to the world’s energy portfolio. Most importantly, Qatar is perfectly positioned to meet the growing needs for natural gas for power generation in European and Asian markets.

A Noble Enterprise

At ExxonMobil, we’ve been proud to partner with the State of Qatar in its efforts to maximize the value of its resources in the rapidly evolving energy markets. Furthermore, we are proud to be involved in the broader and indeed noble enterprise that energy makes possible.

Author Robert Bryce has written, “It is the nature of civilization to use energy.” That simple truth reminds us of the essential nature of energy.

Thanks to the leadership of the State of Qatar, we have seen how wise policies can lead to successful partnerships of national oil companies and international oil companies.

Such cooperation can lead to the execution of capital projects and the creation of the technologies which can meet the needs of our ever-changing global energy markets – and do so in a way that is safe, secure, and environmentally responsible.

Thank you.

Related content

ExxonMobil renews support for MIT Energy Initiative's low-carbon research

IRVING, Texas – ExxonMobil said today it extended its support of the MIT Energy Initiative’s (MITEI) low-carbon energy research and education mission by renewing its status as a founding member for another five years. ExxonMobil first signed on as a member of the initiative in 2014.

Newsroom News Oct. 21, 2019

ExxonMobil expands low-emissions technology research with universities in India

IRVING, Texas – ExxonMobil said today that it has signed agreements with the Indian Institute of Technology locations in Madras and Bombay, further expanding its extensive portfolio of research collaboration with India’s universities. 

Newsroom News Oct. 14, 2019

ExxonMobil contributes $350,000 to Imelda Relief in Beaumont, Greater Houston

IRVING, Texas –  Exxon Mobil Corporation said today that it will donate $350,000 to United Way and the American Red Cross to support local flooding relief assistance associated with tropical storm Imelda in the Beaumont and greater Houston areas in Texas.

Newsroom News Sept. 26, 2019

ExxonMobil to sell Norway upstream operations for $4.5 billion

IRVING, Texas – ExxonMobil signed an agreement today with Vår Energi AS for the sale of its non-operated upstream assets in Norway for $4.5 billion as part of its previously announced plans to divest approximately $15 billion in non-strategic assets by 2021.

Newsroom News Sept. 26, 2019

ExxonMobil announces oil discovery offshore Guyana at Tripletail

IRVING, Texas – ExxonMobil said today it made an oil discovery on the Stabroek Block offshore Guyana at the Tripletail-1 well in the Turbot area. The discovery adds to the previously announced estimated recoverable resource of more than 6 billion oil-equivalent barrels on the Stabroek Block.

Newsroom News Sept. 16, 2019

ExxonMobil and Mosaic Materials to explore new carbon capture technology

IRVING, Texas – ExxonMobil and Mosaic Materials said today that they have entered into an agreement to explore the advancement of breakthrough technology that can remove carbon dioxide from emissions sources.

Newsroom News Aug. 26, 2019