Energy in profile Number two, 1995 Shell Briefing Service The world energy scene has undergone many changes since the ?rst oil shock 20 years ago. From the mid-19705 to the mid-1980s, crude oil prices were largely controlled by OPEC. Today, they are negotiated between buyer and seller, re?ecting market perceptions of supply and demand and the potential. impact of world events. Most internationally traded crude oils are priced with reference to marker crude oils which set the price for selling into a particular market. Oil is now traded as a commodity with futures and forward markets developed as a means of managing risk. The Shell Brie?ng Service is prepared as an information brief for companies of the Royal Dutch/Shell Group. This publication is one of a range of publications and videos produced by Group Public Affairs. Shell International Petroleum Company Limited, Shell Centre, London SE1 7NA. England, covering aspects of the oil, gas, coal, chemicals and other businesses. For further copies, and for details of other titles available in English or as translations, please contact the Public Affairs department of your local Shell company. Alternatively, for publications enquiries and orders, write to the above address or fax 0171 934 5555 (London) quoting reference or telephone 0171 934 5293; for video enquiries and orders, quote reference or telephone 017.1. 934 6577. 511911 companies have their own separate identities. In this brie?ng, the collective expressions ?Shell? and 'Group? are sometimes Hood for convenience where reference is made to companies of the Royal Dutch/Shell Group in general. Those Expressions are also used where no useful purpose is served by identifying the particular company or companies. fill Shell International Petroleum Company Limited (SIPC), 1995. Permission should he sought from SIPC before any part of this publication is reproduced. stored in a retrieval system, or tt?orlsl?uittcd by any other means. Agreeman will normally be given, provided that the source is acknowledged. Designed I'll" James Cool: Graphics, iiodnlming, Surrey Printed in England by Bm?Well Colour I-?rint 133323 I 25m :4 10.95 Concern about possible shortages of fossil fuels has been replaced by concern about their environmental impact. Environmental considerations are a driving force in many countries, leading to increasing, and in some cases contradictory, environmental regulations. By minimising the environmental impact of their busi- nesses through continuous improvement in their operations, energy companies contribute to the process of striking the right balance between economic growth and environmental protection. Abbreviationsldolioiticns barrel hid barrels a day bdoe barrels a day of oil equivalent centrally planned economy dwt, deadweight tonnes EU European Union FSU Former Soviet Union GDP Gross domestic product IEA International Energy Agency kcal kilocalorio LNG Lique?ed natural gas LPG Lique?ed petroleum gas milliard equals billion (109} NGL Natural gas liquids OECIJT (il'gsnisation for Economic Cooperation and Development OPEC Organisation of Petroleum Exporting Countries (Saudi Arabia, Iran, Iraq, Qatar, United Arab Emirates. Kuwait. Venezuela. Nigeria. Libya, Algeria, Indonesia and Gabon). UAE United Arab Emirates The term is used only for convenience in the compilation of statistical data. and unless otherwise stated, applies to: Alhuniu. Bulgaria, China, the former Czechoslovakia. i-lunsory, Mongolia. North Korea, Poland, Romania. the former Soviet Union ll?iiUl and Vietnam. It is recognised that most of these countries have man away from centrally planned systems. OECD countries have included Mexico since April lililti. HoonL-r for the purpose-s of this publication CJECD statistics have been calculated excluding Mission unless otherwise stated. Primary energy demand In 1994, world demand for primary energy was around 178 million bdoe, a rise of four per cent on 1993. Of this total, conventional fossil fuels oil, natural gas and coal accounted for nearly 150 million bdoe or 84% (Figure 1). In 1994, some 37% of primary energy demand was met by oil, 26% by coal and 21% by gas. Over the past 25 years, oil?s share has declined with non-fossil fuels taking an increasing, albeit still relatively small, share of' total energy demand. Since 1976, demand for oil has risen by 14%, coal by 47% and gas by 65%. Non-fossil fuels demand has risen most of all, by 145%, and today accounts for nearly 15% of total demand. However, oil is expected to remain the major source of energy for at least the next 25 years. OECD countries account for more than half of the world?s primary energy demand- Within the OECD, North America accounts for about half of total demand. On average, each person in the industrialised world consumes about 10 times the amount of commercial energy as one in the developing world. In the I Reserves Eatimated world reserves have grown from 625 billion barrels since 1973, as a result of tech- nical advances, continued exploration and greater knowledge of' the world?s oil resources. T011339 World proved reserves of oil and NGLs (as at 1 January 1995) are estimated at 1005 billion barrels, essentially unchanged from 1994. Future replacement or growth in these reserves is expected to come from an estimated 500 to 1000 billion barrels of oil yet to be last decade, however, per capita energy consumption in OECD countries has risen only slowly or remained constant, partly as a result of improved energy ef?ciency, while relatively modest economic growth has continued. There has also been a shift towards more service?based economies, with energy-intensive industries moving to countries. In countries, energy consump- tion is increasing more rapidly than in the DECD, ?I?he FSU and China account for more than half' of primary energy demand. wig? grimary energy demand - 130 Million boos Other Nuclear 160 Hydro -140 Natural 935 -120 '100 Coal '1980 1985 1990 1994 discovered, plus a further 400 to 500 billion barrels which are expected to be recoverable from known ?elds through the wider applica- tion of current and new technologies, but are not yet suf?ciently ?rm to be considered proved reserves. More than three-quarters of the world?s proved oil reserves are in OPEC countries and more than half lie in just four Middle Eastern countries Saudi Arabia, Iraq, Kuwait and Iran (Figure 2, page 2). Saudi Arabia alone accounts for more than one quarter of world reserves and one-third of OPEC reserves. At current rates of production, OPEC reserves are equivalent to some 85 years of supply, almost double the world?s average reserves to produc- tion ratio of some 45 years. Some OPEC members have even higher reserves/production ratiee; fer exam ple, Aha Dhahi 13:3 years and Kuwait years. Reserves in the and eastern ELI rnpe are eatimated aL Fri-i hillinn barrels, er air: per eent ei' the wetld tntal, altheuai?r these eeuld inerease eensr?derahljr given tn adraneed teeh elegy. T?rered reserves in DEDD eeuntries. whieh i'er mere than half ef the war-id?s ni] amennt Le jnat ?ve per eenL ef the werld letal and have deeiined Edit.- in reirlme Le in the last deeade. r|"he ginhal trend tewarde has had a signi?cant implant in the at] industry, and 1eesLern enmpanies eenL'rnue Le gain Le nnpertnnities in enuntries previee s13; elesed te them. aneh as the FED and Dhma. Df part-inelar signi? eanee is the return tn sneh as Venezuela and. Tram, where nrn?rd eentraeteai arrangement-a pram" de rel-eign investment ripper-nmjties wit-heat eernnremismg the prineipie ef natienai reseuree ewnershin. These new partnerships will play,r an impertant rele in maintainng eil reaertrea in the deeades tn enme- I Demand In 111311.14: werid nil demand was 67 rniilien he?dl an inerease ef same nne ar?lien hr?d ever Iaae. DEDD aeenunted fer nearly;r 57% ei' tntai demand [Figure The inereaae in demand 1e-?aa due mainigr te reenter}r i?rern in. eemrtries eeupled with the enntinned streng gran-?L11 in man};r areaa, a: the Ania?Paei?e reginn- Demand began tn inerease in eastern Eurepe fellewins hut eentinnet] tn deeiine in the aiheit mere slewly Lhan in preriena Demand eentinnes Le ?whiLerf, ie demand is g?rnwing I'aater tar prednets eueh as naphtha and heresine, the iighter predueta ei' the distillatian The largest end-use aeetnr Fer eii. is whieh. fer aheet haLi'eftntal demand. "PL-later gaaniine eensempLien increased by same Eel] hr?d te 1TH miliien Dr'rD- Demand liar eil predeets differs hetween DEDD and eeuntriee. In DEDD demand ia deminate-d by meter gasehne whieh in 1994 fer aeme 12.4 n'riliien hr'd 33rd: ef tntal EDD demand Saudi Arabia Ferrner Seeiet Llnien and E. D?Ehers Dther Tetal:1??5 hiliien barrels, at 1 Januar3r_1aEl?_ Easee en ane' Gas e'earner'riata. up by areead per rent near 191-33. In nen- DEED enuntries [inelnding the iermer DPESL by r_'er_Ltrr_Lat1 gaseii and ?iei tegether aeenunt i'er rnere than half" nt tntai demand. Demand Fer meter gaseh'ne at areentl 5.5 hr?d er E?d?h ei the tetal is inwer than in the DEED eeuntries: altheugh it he inereaaing steadilgrr and grew by; areund tern" ner eent in 1331 mltaide the Fermer SimilarlyJ demand fer gaeni] rnae hf; Li?i'irt in DEDD enuntries and nearlyr three per tent i in areaa. In eentraat, ?re] Fianna a F'rerren eil reae nrea Figure 3 Werld eil demand, 1954 DEED Nerth America i Dil erpeders Either fermer .iaeanrr Australia! I New Eealand DEED Latrn I Eurene Arnenea Tetal: E'rTr' miilien are Faeifie Hirer Saute-neat Farmer Eeriet Llnien China demand remained steed},r in the DEED hut rnse by 1.5% in the I Werld nil predactinn nil, HULs end in [99-4, at just under 9T9 millinn Id shnwed an increase nf per cent (WEI. 1993. UP the, cenntrins? supply was snrne 97-9 rriillinn he'd er 499i,- ntthe tntal {Figure it}: while the ren'iainine,r {it} niilh'nn hm WEI-E pl-edueed in cenntries {Figure The three largest predacers, Saudi ?rehia: the arid the tne'ether ??mum. fer 999.9, nf prndactinn. they; w?e a small build-up nf es demand in 1994 was slightl}r helnw prednctinn particularly the Life Ferth lti-ea sectnr senelied 999t- nt' the increase in 1994. UK Sea prednct-ien rnae by 9999 tn just n'eer 9.5 LnilLinn he'd and Herway?s 199;- tn inilLien hrd. ri?he increase in [?1an See was due tn new ?elds earning nn-streaan and tn eatensiens tn the life at nlder ?elda he the epeJicatieii at new tech- enlargerr and red need enats. It-lther cntuitries signi?cantly increasing . included Argentine, indie and Yemen. Tr: acme cnnrit'ries, net-shireraentine, prieatisatien has been enennragedf. which atiirini ated increased predactien. In the FSU: despite increased tnreign investment, prednetinn cnntinned tn fell- in. 1994 was 7.9 nLillinn hi?d, a decline nfnearlj.r seven per cent. In the USA, has declined since the end-1999's apart free: a ehert henat dating the [9111' war. In 1994, it tell tn 9.9 rnillinri hi?d} jest neer per cent- The rise in nil UPEU ennritriea was just an der twe per cent. This was lnwer than the rise in ET?iUE?PI?Uductinn. maintained their erndectinn quntaa than the end nl' 1999 1994. Despite this, prednct?inri increases were recnrded in Kuwait which was still rehaildine' after the Gait war, and in Nigeria?s prnduetinn Fell as a result at stril-tea nii industry werltera during the t-11 in} nuerter e1' 1994. Sandi Arabia remains he Fer end awe}r H19 99513 single in {l PEG I at same 9-9 miliinn [including N?lia and half nf the neutral eerie] in 1994. rl?hie senta 929:3,- nf and 199:: at the Millinri era -39 25 i Iii?r -29 -15 i 19?9 1999 1995 1999 werld tntel. In 1991-: Sandi Arahia changed the This cf grades while maintaining the tetel neerell level= rnnre lighter grades. This, legal-her with increased at" light grades the Herth Sea, was a niajcr factnr in enact-sine? rclincrs? temples: margins. Gil prices remained week during the ?rst quarter at 191-161: the sent price nf Erent Blend tenc cf the main averaging 5 $14 a harrel. I-Tneire?rrerF a partial recn?eerjr i_n ?pr? that yeah and during the Asia-Pacific E951 |Li?eritral arin Snuth America _Tnta|: 4t] millinn are Hen?Ea? States Either Gulf States Hawaii Iraq Iran Saudi Arabia thre 4? cradefNGL pradactinn 1994 Figure 5 nrndaminn, 1994 Ameriea Western Earnee remainder of 1994 prices ?uctuated in the range $15 to $17.5/bbl. The recovery re?ected market perceptions of an improved balance between oil supply and demand following OPEC's decision at the end of March to extend its production agreement until the end of the year. Prices were also supported for a time by market concerns about production disruptions in Yemen and Nigeria. However, for the year as a whole, spot Brent averaged approximately $15.80/bbl, a reduction of some $1.20/bhl compared with 1993. In comparison a typical Gulf crude (Dubai), averaged in 1994, down from $14.90 in 1993 (Figure 6). I Transportation Since many oil resources are located far from the oil markets they serve, transportation is a vital sepect of the all business. Today, some 60% of the world?s crude oil is carried by sea in around 3000 ocean-going tankers with a total tonnage of more than 270 million dwt. Very Large Crude Carriers account for around half of this tonnage. These were intro? duced in the late 1960s to offer economics of scale, especially on long-haul rciutes. Between 1970 and 1974, freight costs fell from almost 60% to just ?ve per cent of the total cost. of acquiring crude and shipping it from the Arabian Gulf to north-west Europe. However, falling oil demand and a shift of emphasis to short-haul routes from areas of production such as the North Sea and Alaska, led to a surplus of? tonnage. ?l?ho slump continued until the end of the 1980s (Figure 7) when the call on OPEC production and hence long-haul routes increased, leading to orders for new tankers. In 1994, the supply of VLCC tonnage was more than adequate to meet demand, partly as a result of the mini-boom of' 1991 which resulted in several new orders. (A VLCC takes an average of 18 months to build.) However, accelerated scrapping is likely, since refurbish- ment is often not cost-effective due to low freight rates, and as much of the fleet is ageing there is only limited remaining trading life in the older tonnage. Notwithstanding the anticip pated increase in demand for VLCC tonnage, large increases in freight rates are unlikely as 1 signi?cant improvements in freight rates are expected to trigger orders for new tonnage. 4 50 r? 70 Heal terms I 19943 Money of as the day ?913 ?971$ ?999 I Re?ning World, primary distillation capacity (excluding ?rnothballed? capacity) was estimated at some 3.8 billion tonnes a year in 1994, an increase atone per cent compared to 1993. Conversion capacity increased more than 3.5% from 1.47 billion tonnes a year in 1.999 to 1-53 billion tonnes a year in 1994. Figure 8 gives a regional breakdown of distillation and cenvorsion capacities. North America has the world?s largest and most Million Figure 6 Crude oil pnces Figure 7 Tankers and freight rates 1994 US $/barrel (MOD) 120 100 r- surplus 30 r? ED r- Freight 40 r" rate 20 r? tonnage 0.5 sophisticated re?ning industry, with primary distillation and conversion capacities of 970 and 680 million tonnes a year respectively. Africa I I Following a period of rationalisation in "mary damnation the early 1980s, total primary distillation south g; . come-ism? came-ill? America capacity is now at the same level as at the end ?Exoressed in terms of catalytic . crack ulvslenlcapaclly of the 1970s, though with a different regional Egg?? a spread. Primary distillation capacity in the Middle East, the Asia?Paci?c region and the Asia; I I I former CPEs has increased signi?cantly, mainly at the expense of western Europe. Europe Conversion capacity has grown steadily by more than 50% over the past 15 years. This Eggstrend is set to continue as re?neries increase - - - - . North COHVETSIOH Of I?ti?ldu?l 01] fractions ti) meet America market demands for higher?value products such as automotive fuels, lubricants and chem- 200 400 600 800 1000 I I ical feedstocks- Processes such as residue Million tonnes a year catalytic cracking and residue hydroconVersion will help to meet these demands. . Fl' ure 8 Environmental concerns will continue to . . 1 World rellnery have a signi?cant effect on re?neries as a result 0f I?eVe?ue rm" OPEL Geumrlee- capacity, 1994 of the need to improve environmental perfor? Export-?3 from Demo-[3E0 countrlee have mance in refining and meet the demand for Eteedily Since the 19705 and products which conferm to increasingly stringent exceeded 13 mime" b/d in 1994-A1?0und half environmental legislation. In many parts of the "f these came iuet three eeurceei the wan-1dI Signi?cant investment is being made in FSU, Norway and Mexico. Other important re?nery upgrade facilities to meet a growing exporters are the UK: Angela. Omen end demand for cleaner products such as oxygenated Egypt: all Of Whleh expel-"t Home 0-5 millien b/d- gasoline and low sulphur diesels. Such invest- The World's main 0? are the meat represents a heavy ?nancial burden, USA: Japan, Germanyi France: Italy and especially tn smaller re?neries], South Korea, which together account for some . . Figure 9 two-thirds of total imports. . OII experts I Trade World oil trade (including NGLs) amounted to some 35 million b/d in 1994, a three per cent increase compared to 1993. Almost two-thirds Millie? bid of this was exported from OPEC countries. 35 Since the early 1970s, exports from OPEC countries have varied considerably, 30 Toial exports ranging from more than 99 million b/d, or almost 85% oi'total trade in 1979, to less than 25 14 million b/d, just over 60% of total trade in - . . 20 1985 (Figure 9). Since the mid-19805, OPEC OPEC exports exports have gradually increased, reaching 15 oVer 22 million b/d in 1994. More than two- thirds of the 1994 total were from the Gulf ?3 r? States with 7.6 million b/d coming from the main OPEC exporter, Saudi Arabia. Experts from Iraq remained minimal in 1994 l5- result of continuing UN sanctions. ?919 N959 seq? ?99 Some four-fifths of OPEC production is exported, and it thus represents a key source Werld pretred gas reserves are esthnated at 135 ll?ll nlr'd n13? {Figure At current levels, resenres are adequate fer a. l'u r?ther Er? Fears. l't-lere than are cancentrated in the FELT and the Middle East- The FELT has the werld?s largest natural gas reserves estimated at arr-surrd 54 Elm} rnilliard Inrt er same sea.- at the Intel thllewed. by Iran with Ell Dill} milliard 1113 er 15:94.: at the tatal- ?l?he USAF. the werldh ascend largest natural gas eensln'ner a?et? the FEU1 has just three per cent eFtatsl reserves. a staun?cant prepurtinn at" gas reserves is te he Island in giant ?elds. Dut- at the tep- l1 ?elds, sir-t are in the and the remainder in Qatar, Iran, nlget'ia; the Netherlands and Nerwajr. Natural. gas reserves are abundant: as a result ef increased erelet'atlen, estimates have alrnest dnuhled ever]: years since the ltl'??s. This upward trend is likely ta centinue? since current estimates at" Fretted reserves dn talse inter aceeuut tespeciall}: in the FEU and. Iran}I which hat-'e net yet been full}? appraised and se are net fret classi?ed pressed. The nurnher et' cnuntTr'iee with I gas reserves is alse increasing: l'rern aheut an in lean tn are'und Elli] teday. I Precluetinn The largest natural gas prnducers are the FELT and the USA which tegether accerutt fer areund el' eredtletien. [n 1334, natural gas erreductlen increased slightl?t.r Le sass mill iard at?t {Figure 11], as centinucd grewth in western Itlurepe and Earth America was el'fset lesser eutpnt in the FELT. In Eerepef. nr?eduetden rnse he has per cent te 21G rn-3 as nearr eFFshere ?elds in Nerwagr, the UK and Italy; started up it] 199%. Preductinn increased hf; Ihur per cent in Nerth America in mere than and 1113. Prnductl'an in the FELT, which la. the 1ares a *All gas unlumes qurIIr-td in this including lt'ig'nrea [ll-11!, are adjttared El heat-"1113. Farmer Sesiet Unien and 3f E. Eurepe Western I Eurepe . Middle efrrca a? East AsiaaF?acific ll Western Hemisphere Tetal: 1351303 milliard r'r?r5i ?gure til Presed natural gas farce ler the stead}r Inerease 1n tetal werld resewesl 199,; preductinn, declined Fer a n?naacutiv? freer ta sen're rnilh'ard n13 mare than ?st; per cent hean the level in 1993. I Cnnsumptinn Meet natural gas is lncally since the high seats at transnet'tattnn {eumpared lu- these at etll lnnit internatienal trade. In 1994, seurcea supplied same 339%: at demand. Meat natural gas is aeld 1'1 under leng?ter'rn centraets, ef Ell} years er ?gure Natural gas net predectinn" Hilliard m3 - E?Ull-i ?a Asia-Pacific Africa-?Middle East - Western Eurcne . Herth . America I 5?3? Farmer saris Llnien Eastern Ehina - HTS 1385 1990 1994 I Excludes re?ected-Three gas and shrinkage clue to the attracts-F- nf MEL more, except in the USA where about 40% of the volume traded is on ?spot market? terms. Consumption patterns generally follow those of production, except in the case of Japan, which relies almost entirely on imported LNG, mainly for power generation. In 1994, consumption in Japan rose principally due to higher use of air conditioning in the hot dry summer. Economic restructuring in the FSU continues to reduce gas consumption, which declined to 570 m3 in 1994, eight per cent below 1993. In central and eastern Europe, gas consumption remained constant at some 68 milliard m3. In the USA, the market for gas rose two per cent to 576 milliard m3 due to continued strong industrial and commercial growth. In western Europe, overall demand increased by two per cent over 1.993 as economies recovered. The milder weather in the second hali'of' 1994 reduced demand in the Netherlands and ltaly. However, in the UK, gas use for power generation increased, and in Germany additional connections raised gas consumption for public distribution. Weather variations can affect consump- tion, especially in the temperature-sensitive residential and commercial sectors. Gas storage is becoming an increasingly important Factor in load balancing For seasonal demand. In the USA, for instance, theoretical stomge capacity is believed to he almost half'of total annual production. I Trade International trade in natural gas (Figures 12 and 13) rose ?ve per cent to 344 milliard m3 in 1994. Both pipeline gas and liquefied natural gas (LNG) trade continued to rise in 1994 and together account for some 17% of total world consumption- Of this, three?quarters is pipeline gas and the remainder LNG. The FSU is still the world?s biggest gas exporter, accounting for some 30% of total exports, ibIIOured by Canada with 20%. The main importer is the USA, with some 20% of total trade followed by Germany and Japan. In 1994 pipeline exports to western Europe from the FSU and Norway increased and Canadian pipeline exports to the USA continued to rise. LNG trade is centred mainly in the Asia- Paci?c region with about two-thirds of exports destined for Japan, principally from Indonesia, Brunei, Malaysia and Australia, but also from Abu Dhahi and the USA. Some 40% of? LNG exports are from just one country, Indonesia. Pipeline LNG Former Soviet Indonesia Union Canada Others Netherlands Norway Total pipeline exports: 255.5 milliard m3 LNG trade as a proportion of world natural gas trade has more than doubled since the mid? 1970s. In 1994, it rose to some 89 milliard m3, 26% of? total trade. This rise of over ?ve per cent From 1993, is explained by a recovery in Japanese imports and increased imports to South Korea and Taiwan. Lower LNG exports from Algeria, due to plant refurbishment, combined with surplus LNG capacity among exporters traditionally supplying Japan, contributed to the growth in spot and short? term LNG transactions. Pipeline United Kingdom United States Other W. Europe Total pipeline imports: 255.5 milliard m3 Algeria Brunei Malaysia Total LNG experts: 98.9 milliard m3 Figure 12 Natural gas exports, 1994 Figure 13 Natural gas imports, 1994 LNG Japan France United States Total LNG imports: 88.9 milliard m3 I Resources and reserves Proved world reserves of? economically recover- able hard coal?l? are currently estimated at 528 billion tonnes coal equivalent?: (Figure 14). In addition, economically recoverable proved reserves of lignite* are estimated at 136 billion tonnes of' coal equivalent. The total for economn ically recoverable reserves of coal is therefore 664 billion tonnes of coal equivalent- These reserves represent more than 200 years oi" use at current production rates. Total coal resources, which include estimated additional reserves and coal that is not considered recov- erable under current or anticipated local economic conditions, are estimated at more than 6700 billion tonnes of coal equivalent. I Production World hard coal production was estimated at 3565 million tonnes in 1994, an increase of 109 million tonnes from 1993 production (Figure 15). There were further declines in Europe, speci?cally the UK (down 20 million tonnes) and Germany (down six million tonnes) as high-cost production was closed, and in the FSU (down 30 million tonnes) as a result of changing economic conditions and equipment deterioration. All other major producing countries remained steady or increased production, as in China where production rose 71 million tonnes to 1.21 billion tonnes, and in the USA where production also rose by 71 million tonnes as the industry recovered from a strike in 1993. Production in China and the USA accounts for 58% of world production. In 1995, *Ilard coal includes bituminous coal and anthracite. It covers the geologically more mature dcnsor coals having mnl?t. Mil-free calorific values above 5700 kitting in the Internati?nal Classification system. Brown coal (lignits) is low rank C021. having a gross calori?c value below 41-600 kcui?ta- Sub-bituminous coal is intermediate between brown coal and hard (?nal, but is generally classi?ed with the latter. tonne of coal equivalent is an energy unit which has a coal calori?c value of 7000 [coal/kg not. as received and equals 0.7 tonnes oi'oii equivalent. 3 North America Former Soviet Union Others Latin . America Chma Western Europe Asia-Pacific India South Africa Total: 528 billion tonnes coal equivalent Figure 14 Hard coal production trends in the EU and USA will fallen/35' 1994 stabilise while output will continue to decline. In China, where the energy economy is coal based, production will continue to grow in. response to the dynamic growth that is occur- ring and the consequential ever?increasing demand for energy and electricity. World brown coal production in 1994 is estimated at 1091 million tonnes, marginally lower than the 1993 production of 1101 million mnneg' Figure 15 Hard coal production Million tonnes - 3500 Others - 3000 Australia South Africa 2500 India Former Soviet Union - 2000 United States 1500 - 1000 500 China - 0 . 1980 1935 1999 1994 I Con5umpti0n Total hard one] consumption in 1994 was esti- mated at 35-46 million tonnes, a rise over the 1993 ?gure of 3490 million tonnes (Figure 16). In 1994, consumption declined again in the EU and the FSU, rose in the USA, South Africa and China and remained virtually unchanged elsewhere. The increases in the USA, South Africa and China accounted for 93 million tonnes of the total rise in consumption. In 1995, consumption in the Asian region is expected to continue to grow both in the domestic use of hard coal as in China and in the use of imported coal in expanding coal- ?red utility capacity in the Asia-Pacific region. Further declines will occur in the FSU, while EU Consumption will stabilise. I Trade In 1994, international trade in anthracite, thermal and metallurgical coals?r rose from 1993 levels by 19 million tonnes to reach 407 million tonnes (Figure 17). This represents some 11% of total world production in tonnage terms. Demand for imparted seaborne thermal coal in the EU rose in 1994 following a sharp decline in 1993. Demand elsewhere in the Atlantic Basin edged up. The on-going increase in Pacific Basin demand continued as newly constructed power plants were put into opera- tion. Slight declines in exports from the USA and FSU coupled with near-static exports from Australia and Colombia kept the market reasonably tight on supply and allowed South Africa to expand exports into the Atlantic Basin, and Indonesia and China into the Paci?c Basin. Overall demand rose by 10 million tonnes in 1994 to 208 million tonnes with the increase evenly split between the Atlantic and Pacific Basins. The tightening of the demandfsupply balance resulted in prices rising throughout the year. 1' This term thermal coal (or steam coal) is used to distin- Emile considered particularly suitable for under-boiler use from those suitable for the iron and steel industry. Coal ?and to manufacture iron and steel is termed metallurgical coal. Most metallurgical coals have coking properties and those are termed coking coals. Anthracite, used primarily in the thermal coal industry, is the cool of highest ?rank'. Rank indicates maturity in terms of' general chemical and Physical properties, By region indigenous v. traded China Indigenous United States Former Soviet Union South Others United Kingdom Airlca Overland Seaborne Poland Japan International trade Total: 35-46 million tonnes Figure 16 Hard coal The trade in seaborne metallurgical coal was weak at the beginning of 1994 but strengthened through the year as improving economic conditions gave rise to increasing steel production. Total trade in 1994 was similar to that of 1993 at 159 million tonnes. The outlook for seaborne coal in 1995 is of strengthening demand both for thermal coal in the Atlantic and Paci?c Basins and for metallurgical coal in the Paci?c. Seaborne coal trade is projected to increase by seven per cent over 1994. Figure 17 Coal trade, 1994 Exports Imports Australia United Far East? States Other Others South Afr'c Former I a Other Soviet Union Canada The EU Atlantic China Poland Total trade: 40? million tonnes "Japan. Taiwan. Hong Kong, South Korea consumption, 1994 Pacific r. in lunch I |l1n rquvv-J?I I'uliv mi' Iiu-ullwn-i In em Irmum-n lrnu ?ml Irmi .l I: in "guru" pro?le J. Thu-?ing tirmlpilny. p. Lubricants iqu I y: Zea-lite catalysis; . driven by tech alogy and it" the Nets today an virenmenlai Eng - - -- ne- Shall Brie?ng Service Energy in profile we r; two 1995 Related publications Energy in profile is an annual issue of the Shell . Riga: The offshore challenge I Th9 r018 0f anvill'?nmemal Brie?ng Service. It describes developments in the . 4,92: Lique?ed natural gas preleclieri by JenhanS Oil, natural gas and coal businesses and discusses Fossil fuel energy ledey and lemon-cw highlight? Of the prwious year?s Statlsucs- Speeches: by A I Halaled publications which may be of inieresi . me 935 {industry I Facing Up 10 N13 by Jam?ings malwe' by Jennings Videos: She? BriEfing I The energy industry and gevernmehl Energy . 1/95: Pepulal?fon, energy and me environmem parlners in progress by A Herksirdier I Quest for energy 4/943 I Energy investment in greening world Information on ordering these and other I 3?94: Oil trading by Peter Kassie-r can be found on ihe inside erhI cover of "1'5 bllelng-