A View of the European Energy Markets

| Energy, Utilities & Chemicals Global Sector

Paris - March 5, 2012

A view of the European Energy Markets

Colette Lewiner


A view of the European energy markets

Recent events are impacting the energy markets

They are changing the electricity and gas short- and longer-term security of supply

Present and future energy mix is evolving

Focus on the French Oil & Gas industry

Conclusions

2




• Middle East events

• Fukushima accident

• Economic downturn




Conclusions

3


Global demand for oil has increased in 2011

World oil demand increased in 2011 by 0.88 million

barrels per day (mbpd), i.e. +1.01% (to 87.82 mbpd)

compared with 2010 (86.94 mbpd)

According to the latest OPEC projections, worldwide oil

consumption is expected to increase by 1.07% in

2012 (to 88.76 mbdp)

4

„000 b/d „000 b/d

Source: OPEC Monthly Oil Market Report – February 2011

Quarterly world oil demand growth

World oil demand outlook

Source: World Oil Outlook 2011, OPEC

Primary factors driving demand are economic growth and increased requirements in the developing world

Libya, Yemen, Syria, Egypt and Iran… political situation may place global production and transportation at risk

60.0

70.0

80.0

90.0

100.0

110.0

120.0

0.0

20.0

40.0

60.0

80.0

100.0

120.0

2010 2015 2020 2025 2030 2035

mbpdmbpd

Other transition economies

Russia

OPEC

China

Southeast Asia

South Asia

Middle East & Africa

Latin America

OECD Pacific

Western Europe

North America

World (right axis)


The rising political tensions in Iran are particularly worrying

for global oil supply

5

Iran‟s oil exports (Jan to June 2011)

After China, the EU is the largest importer of Iranian

oil (about 20%)

In response to the failure of the negotiations on Iran’s

nuclear program, the US and Europe decided sanctions

against Iran, who threatened to close the Strait of Hormuz:

• Strengthening of the US military presence in the Gulf

• Oil embargo from the EU (decided in January 2012 and

due to start in July) which should hit 450,000 to 550,000

barrels a day of Iranian oil exports

But Iran banned crude oil supply to France and the UK

right away

In addition, Japan, South Korea, Taiwan and India could

reduce their purchases (up to 250,000 bl/d). In total,

between 25% and 35% of Iran‟s oil exports could be

impacted

Sourc

e: F

inancia

l T

imes

Source: Financial Times

This situation is benefitting notably Russia and keeps oil prices high.

Traders estimate that if the situation deteriorates, oil prices could rise

towards $150/bl or beyond 35%

of all seaborne traded oil

20%

of oil traded worldwide

14 crude oil tankers

Almost 17 million barrels

Average daily oil flow

through the Strait of

Hormuz (2011)

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Refineries closures are putting pressure on oil price volatility

6

Global refining capacity The refinery industry in developed countries

(mainly the US and Europe) is facing an

unprecedented crisis:

• Since the 2008-2009 financial crisis, 2.6 mbd of

refining capacities have disappeared in

developed countries

• An additional cut of 1 mbd* in 2012 is expected

• In the US, refineries currently run at 86% of their

capacity vs. 93% in 2001

• Since mid 2008, nine refineries have closed in

Europe

• Refinery margin have been mostly negative in

2011

On the contrary, due to their strong economic

growth, emerging countries are developing their

refinery capacities

• Between 2008 and 20011, 36 new refinery

facilities were commissioned in India, China,

Middle East and Brazil

• 25 new other refineries are expected to be built

by 2015

Petroplus (a pure refinery player) bankruptcy

is highlighting refineries difficulties

*Merril Lynch estimation

US fuel suppliers could be forced to import gasoline from Europe due to the US

refineries‟ closure while Europe may need to buy diesel from the US, increasing

transportation costs


Oil prices are still driving many other energy prices

Oil prices forecasts uncertainty is increased by

speculation: each barrel traded on the physical

market is traded 35 times on the financial markets

There is some consumption/price elasticity

High present oil prices are linked to tensions in

Middle East and Iran

In euros, the crude oil spot price is at its highest

There is currently a $20 spread between WTI and

Brent, a the consequence of a localized logistic

phenomenon at Cushing, Oklahoma, where WTI is

priced

7

High oil prices impact economic growth (EU‟s oil import costs up 44% in 2011 compared to 2010) and trade exchanges balance

Oil prices

Source: Focus Gaz, February 17, 2012

130

120

110

100

90

80

70

March 2011 Feb 2012 July 2011 Nov 2011

Brent

WTI

Crude oil spot – Brent vs. WTI

Source: Ycharts Source: France inflation

Crude oil spot – Brent in US dollars and in Euros


Fukushima accident first safety lessons learned

Exceptional circumstances: 9.0-magnitude undersea

earthquake off the coast of Japan on March 11, 2011

triggering a tsunami that travelled up to 10 km inland.

Fukushima nuclear plant: 6 boiling water reactors

(BWR) maintained by TEPCO have been hit by the

earthquake and tsunami:

• Reactors 4, 5 and 6 were shut down prior to the earthquake

for maintenance.

• Remaining reactors shut down automatically after the

earthquake. Grid electricity supply for cooling purposes

collapsed and then the tsunami flooded the plant, knocking

out emergency generators.

• 20 km radius evacuation around the plant from March 12

Highest rating (level 7) on the International Nuclear

Event Scale. Second level 7 rating in history, following

Chernobyl

Need to design plant infrastructures for really exceptional

earthquakes and tsunamis

Simultaneous Natural Catastrophes have to be taken

into account

Spent fuel storage and management policy to be

rethought

Emergency measures to be revisited

Cooling systems redundancy to be re-assessed

Radiological permanent control on the site and around

Crisis management and crisis communication to be re-

designed

Nuclear bodies and governance

8

In December 2011, the Japanese Prime Minister, Yoshihiko Noda, confirmed that the four Fukushima Daiichi nuclear units of Tokyo Electric Power Company have been brought to a

condition “equivalent to „cold shutdown‟”

The accident First safety lessons learned


0 50,000 100,000 150,000 200,000 250,000

Switzerland

Brazil

Czech Republic

Finland

Spain

Sweden

Turkey

Vietnam

South Africa

Germany

Saudi Arabia

UAE

Canada

Ukraine

United Kingdom

South Korea

France

Japan

India

Russia

USA

China MWe

Operable

Under construction

Planned

Proposed

Nuclear new build:

the vast majority in Asia, Russia and Middle East Worldwide, 434 reactors are in operation, 61 under construction and 495 planned or proposed

(February 2012, World Nuclear Association)

9

Source: World Nuclear Association

The vast majority of new constructions and existing plants in operation should continue with some delays and more safety focus. In addition, lifetime extension of Spanish and French

reactors has been authorized The IEA** forecasts that nuclear output will rise by more than 70% over the period to 2035

Overview of existing nuclear plants and project capacities (as of February 2012) The final number of planned or proposed reactors

is difficult to assess. However, two points are clear:

• The proportion of new, safer “Generation 3 reactor”

builds will increase

• The new projects will also be impacted by economic

factors (low gas prices)

It is worthwhile mentioning that:

• TVA in the US has decided to complete Bellefonte 1

reactor, that the Nuclear Regulatory Commission has

certified the design of Westinghouse Electric Co.'s

AP1000 reactor and that Southern Company is

building 2 new nuclear plants in Vogtle, Georgia

• Argentina inaugurated its third nuclear power plant,

Atucha II

• Finland announced a new build, the first

announcement of a new site anywhere in the world

since the Fukushima accident

• Russian Rosenergoatom has received a license for

building the Kaliningrad plant

• No.1 nuclear unit in Zhejiang Sanmen (China) has

restarted the infrastructure construction project

*IEA: International Energy Agency **World Energy Outlook 2011


1

43

1 1 1 1 12 2

1

1110

5

10

18

910

3

11

7

5

23 3

5

1

3 3

1 1

0

5

10

15

20

4 9 11 13 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 38 39 40 42 44

Nu

mb

er

of

un

its

Reactors' age (in years)

Distribution of reactors under operations by age (EU-27)

Sourc

e: W

orld

Nucle

ar

Associa

tio

n

The safety inspections launched on existing plants should

lead to additional investments

Safety tests aim to assess:

• Plants’ resistance to simultaneous and exceptional catastrophes

(flooding and earthquakes)

• On site emergency preparedness and information

• Radiation protection of people and the environment

• And in Japan, change of governance around nuclear safety questions

For all 14 EU nuclearized Member States, national nuclear

regulators have released their “stress tests” reports

• No country will be required to take any of its plants off line

10

Provided reactors are run safely, the consequences of the Fukushima accident should be less important than viewed just after the accident

• France: ASN (French Safety Authorities) stated in December 2011 that no plants needed to be immediately shut down, but that steps should be

taken as "soon as possible" to improve safety at the 58 reactors (investments estimated between €10 to 15 billion)

• UK: “No fundamental weaknesses in design and resilience at UK nuclear power plants“ according to the Office for Nuclear Regulation

• Spain: according to the Nuclear Safety Council (CSN), all reactors would be able to withstand earthquakes and floods

Outside Europe, nuclear stress tests are also on-going:

• China: 34 reactors passed the safety checks of which 26 were being built. A new China National Plan for Nuclear Safety is being formulated, and

approval for new projects should follow its adoption, at a pace of three or four per year, which represents slower growth than before.

• US: inspections carried out at all 104 operating nuclear reactors. The nuclear regulator (NRC) stated that “every plant has the capability to effectively

cool down reactor cores and spent fuel pools following extreme events”

• Japan: stress tests consistent with IAEA standards. For the first 2 examined units (Ohi 3 & 4), the nuclear regulator (NISA) stated that the Utility

(Kansai Electric Power) has taken sufficient measures to prevent a similar accident to the one at the Fukushima Daiichi plant. Still, 52 reactors out of

54 are stopped

Additional CAPEX and OPEX will push nuclear electricity costs up. Nevertheless, nuclear energy stays competitive.


-2% -3%-1%

-3%-2%

0% -4%0%

1%

-2%

-5%

-10%-8%

-10%

-7%

-16%

-12%

-4%-6%

-2%-4%

-12%-14%

-22%

Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11

Electricity

Gas

There is some elasticity between the economic situation and

the energy consumption

In 2009, electricity and gas consumption dropped in Europe (-4.7% and -6.1% respectively) due to the crisis, in 2010,

they increased again (+4.1% and +7.0%) thanks to the economic recovery and colder than average winter

temperatures. Wholesale electricity and gas prices followed the same trend.

In 2011, European electricity and gas consumption decreased respectively by 2.7%* and 8-9%**, mainly due to a

mild weather. In France, electricity consumption decreased by 6.8% (weather-adjusted: +0.8%) and gas

consumption by 13.4% (weather-adjusted: -1.9%).

11

Source: ENTSO-E, BP – Capgemini analysis, EEMO13

Evolution of electricity and gas consumption (M/M-12) non-weather-adjusted

Source: SG Energy Pulse – Capgemini analysis, EEMO13

A second economic slowdown would impact negatively the energy consumption and prices

EU electricity and gas consumption

(non-weather-adjusted)

* Société Générale Energy Pulss (Focus group representing 63% of European electricity consumption) **Cedigaz provisional figure

3,294

5,336

3,136

5,010

3,265

5,363

3,177

4,880

Electricity Gas

2008 2009 2010 2011

-4.7%+4.1%

-6.1% +7.0%

-2.7%

-8-9%





• Electricity

• Gas



Conclusions

12


Peak loads are increasing year-on-year threatening security of

supply on cold days

Sourc

e: E

NT

SO

-E –

Capgem

ini analy

sis

, E

EM

O13

&

&

&

&

&

(&

&

&

&&

& (& & &

& &&

& & &

( & & &

9.1%

3.6%

2.1%

3.9%

1.5%

-0.1%2.2%

0.1%

0.1%

1.6%5.8% 0.3% -1.4%

9.3% 6.8% 6.6%

0.2% 10.3%0.1%

2.1% 10.2% 9.3%

-23.6% 7.9% 3.0% 1.9% 1.5%

&

&

&

&

&

&

& &

&

(

&

&

&

& & &&

&&

& & &

( & ( & &

9.5%

4.7%

8.8%

0.1%

2.6%

6.2%3.2% 9.3%

1.0%

-0.6%1.7%

4.8%

3.6%

1.1% 2.0% 2.6%1.0%

0.3%1.1% 1.1% 4.1% 5.1%

-0.4% 1.8% -1.3% 4.9% 6.8%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

DE FR IT ES UK SE PL NO NL AT BE CH FI CZ PT RO DK GR BG HU IE SK LT SI LV EE LU

Tota

l genera

tion c

apacity

and p

eak lo

ad [

MW

]

CO2 emitting generation capacityNon-CO2 emitting generation capacityPeak load 2010Total generation capacity evolution 2010 vs. 2009 (notified if below or above +/-3%: +3.4%)Peak load evolution 2010 vs. 2009 (notified if below or above +/-3%: +3.4%)

Total installed capacity for Europe in 2010: 882,712 MW(+3.7% compared to 2009)

Peak load, generation capacity and electricity mix (2010)

Nine countries registered an all-time high peak loads in 2010 due to cold temperatures. During the cold wave early 2012, France and Poland recorded all time record electricity

demands and Germany has activated its reserve coal power plants

13

Peak load 2012: 101,700 MW

Peak load 2012: 25,844 MW


France recorded a new peak load on February 8, 2012 due to

the cold spell

14

A holistic approach to manage the peak load needs to be implemented. It should encompass: • Generation capacities

• Demand response: tariffs or other types of demand response programs • Incentives to build peak generation capacities

• Grids reinforcement • Incentives for energy savings

Oil-fired + peak

capacities5%

Coal5%

Gas3%

Nuclear58%

Wind2%

Hydro13%

Others6%

Imports8%

Source: RTE

Generation mix on February 8, 2012 at 19:00 The French peak load reached 101,700 MW at 19:00

• Nuclear plants‟ availability largely contributed: 59,165 MW (55 reactors

out of the 58 were in operation)

• France imported 7,845 MW from all its neighboring countries

• On EPEX Spot, day-ahead electricity prices jumped to €1,938/MWh

• RTE activated it EcoWatt demand response program in Brittany and PACA

regions which resulted in a consumption reduction of respectively 2% and 3%

• EnergyPool curtailed 20 MW of industrial consumption which have been

used for Brittany region

In 2011, net new generation capacities have been added:

• 850 MW of CCGT

• 1,250 MW of renewable energies

• 450 MW of fossil-fired plant have been decommissioned

In the meantime, tariff-related demand response capacities have

decreased from 6,000 MW in 2004 to 2,000 MW in 2011


NO

DK

LIBYA

FR

ES

GR

IT

RO

BG

PL

SK

CZ

AT HU

SI

DE

LU

CH

FI

EE

LT

LV

IE

BE

RUSSIA

MedgazGALSI

SE

TGI

BBLNL

UK

ALGERIA

Interconnector projects –

AFRICA-EUROPE

GALSI

Capacity (bcm) 8

To be commissioned 2015

Interconnector projects – NORTH-

EAST EUROPE

Nord Stream

Capacity 2 x 27.5 bcm

To be commissionedEnd 2011

and 2012

TAP

PT

Interconnector projects - SOUTH-EAST EUROPE

NabuccoSouth

Stream

White

StreamTGI TAP

South-East

Europe

Capacity (bcm) 26-31 63 32 12 10+10 10

To be commissioned 2017End

20152016 2017 2017 n.a.

Pipeline projects

Projects of new pipelines (planned or under construction)

Built segments of pipelines under construction

Interconnection projects financially supported by the European Energy Recovery Plan (EERP)

LNG terminals

Existing

Under construction and/or included within Mandatory Planning

Under study or proposed

GALSIATLANTIC

65.9

123.3

EAST. MED

21.3

62.3

WEST. MED

56.2

87.9

BALTIC & NORTH SEA

33.1

108.7

Nominal annual capacity by receiving zone

(in bcm)

Existing Forecast by 2015

Source: GIE gle, IEA WEO 2011 – Gas, Capgemini analysis, EEMO13

Multiple southern pipelines routes are in competition. Their future will depend on gas substitution to nuclear generation,

unconventional gas development pace and economy

Map of pipelines and LNG

terminals projects (2010)

New pipelines and LNG terminals are increasing gas security

of supply

Nord Stream delivers

Russian gas since November

2011 (27.5 bcm/year

capacity, to double by the

end of 2012)

South Stream (63 bcm/year,

to be finalized in 2015)

• March 2011: EDF and

Wintershall (BASF subsidiary)

acquired 15% stake each. Eni

has 20% and Gazprom 50%.

Nabucco (31 bcm/year

expected capacity by 2018)

• Budget of €7.9 billion to

potentially rise to €15 billion

Trans Adriatic Pipeline

(TAP), supported by Statoil

TGI, supported by Edison

and DEPA

15

South-East Europe (10 bcm/year),

supported by BP


Unconventional gas is changing the picture

Unconventional gas accounts for 4% of the world total of proven gas reserves and for 12% of global production in

2010 (to increase to 30% by 2040*).

The US account for 3/4 of global unconventional output, increasing production 4 fold since 1990 (420 bcm in 2010).

The latest US Energy Information Administration report shows significantly larger unconventional gas resources in Europe

• France: resources estimated at 5,000 bcm (around 100 years of consumption). They are equally situated in two basins (North and South-East)

• Germany: resources amount to 20 times less and British resources to 9 times less

• Only Poland would have equivalent resources to France

It would be regrettable if the present French decision to cancel exploration permits prevents shale gas exploration

16

Shale gas changes the gas perspective: • It increases the total gas resources to 250 years of consumption

• It is widely distributed • It is cheap ($3/Mbtu in the US)

• It allows to repatriate gas consuming industries as chemicals and to fight against deindustrialization

Source: EIA

Global unconventional natural gas resources (tcm)

16

* ExxonMobil Energy Outlook, December 2011

NO: 2,324

FR: 5,040

PL: 5,236

SE: 1,148

FR: 5,040 Largest technically recoverable shale gas resources (bcm)






• Gas

• Renewables

• Electricity costs


Conclusions

17


The Fukushima accident has triggered a debate on the

present and future energy mix

There is a debate on nuclear phase-

out. Before asking ourselves if it is

feasible, one needs to ask if it is

desirable. An immediate nuclear

phase-out is challenging.

A long-term phase-out is possible but

needs to be assessed against the

following criteria:

• Sustained development: global

warming / greenhouse gas emissions

decrease

• Security of supply

• Electricity generation costs

• Social acceptance

The IEA* has examined a Low Nuclear

Scenario (no new nuclear plant is built

in OECD countries, non-OECD

countries build only half of the projected

nuclear plants and the operating

lifespan of existing nuclear plants is

limited to 45 years) which

consequences would be to:

18

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

BE BG CH CZ DE ES FI FR UK HU IT LT NL PL RO SE SI SK

Solar + Biomass

Wind

Hydro

Other fossil

Gas

Lignite + Coal

Nuclear

2010 mix: lef t-hand side bar

2025 mix: right-hand side bar

2010 and 2025 electricity mix (as of June 2011)

Nuclear energy should slightly decrease its worldwide share while gas and renewables should

increase theirs, leading to electricity costs increase

Source: ENTSO-E – Capgemini analysis and estimations, EEMO13

* AIE: Agence Internationale de l‟énergie , WEO 2011

• Put additional upward pressure on energy prices

• Raise additional concerns about energy security

• Make it harder and more expensive to combat

climate change:


Power plant’s consumption is the main cause for gas demand

growth

In the new IEA GAS* scenario:

• Gas share of primary energy consumption

reaches 25% in 2035 (more than coal, slightly

less than oil)

• CO2 emissions are not compliant with

climate change objectives and lead to a high

+3.5°C temperature increase instead of an

acceptable +2°C

19

On the longer term, increased gas consumption for flexible electricity

generation will require more flexibility in storage and pipeline management

* GAS: Golden Age of Gas, IEA WEO 2011

World primary natural gas demand by sector and scenario

Source: World Energy Outlook 2011: Golden Age of Gas Report

CO2 emissions in the GAS relative to the New Policies, 2035

Source: World Energy Outlook 2011: Golden Age of Gas Report


Long-term contracts price Spot price

Gas is not a global market. Very different regional pricing systems

US spot prices could go up on the mid-term triggered by the new EPA

(Environment Protection Agency) regulation on air pollution (Cross State Air

Pollution Rule) that could lead to 20% of US coal-fired plants phase-out and their

replacement by gas

Beginning of 2012, Gazprom has agreed to reduce by 10% the price of its

long-term contracts to Europe

20

US spot gas prices are 1/3 of long-term European gas prices. For how long?

Source: Focus Gaz January 2012

Source: Gas Exchanges web sites, SG Commodities Research, BMWI – Capgemini analysis, EEMO13

Gas spot prices Gas prices evolution

In €/MWh ($4.4/MBtu=€10.6 /MWh)

Europe versus US gas prices 0

20

40

60

80

100

0

10

20

30

40

50

Bre

nt p

rice

[€/b

l]

Ga

s p

rice

s [€

/MW

h]

DE - Import price NL - TTF

BE - Zeebrugge UK - NBP

DE - NCG FR - PEG Nord

Brent month ahead


Renewable energies have continued their development

21

A stable governmental policy is key for renewables development as they still need governmental subsidies.

The eurozone sovereign debt issues should lead to a decrease of those subsidies

Sourc

e: E

ur’O

bserv

er

baro

mete

rs –

Capgem

ini analy

sis

, E

EM

O13

Growth rate of renewable energy sources

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150

Gro

wth

(%

)

Electricity production (TWh)

Solar PV

Growth (abs.)Capacity Growth (%)

DE

IT

CZ

SK

FR

SI

DE

CZ

FR

2005

2010

2009

2008

2007

2006

Top 3 countries ranked by:

Capacity installed* Growth** (absolute)

2. ES

1. DE

3. IT

2. FR

1. SK

3. SI

* Volume for wind, small hydro, geothermal and solar PV in MW and for biogas and biomass in TWh

** Relative growth additionally displayed for solar PV and wind

Wind

Growth (abs.)Capacity Growth (%)

DE

ES

IT

ES

DE

FR

RO

BG

PL

Biomass

DE

FI

SE

PL

SE

NL

+

2005 2006

2007 2008 2009

2010

2009

As of May 2011, 10% of the

generation plants under

construction are from renewable

energy sources (vs. 7% in 2009)

In 2010, wind power provided the

largest output (147 TWh) but had a

declining growth due to onshore

favorable sites saturation and local

negative reactions

Many governments have or are

launching large offshore wind

programs

• September 2010: 300 MW offshore

wind farm inaugurated in the UK

• In July 2011, France launched a

tender for 3,000 MW

• North Sea: 400 MW (Germany) and

325 MW (Belgium) under

construction

• Nuclear phase out in Germany should

boost wind power

In 2010, solar PV power had the

fastest growth (+80%)

Fluctuating governmental policies

on solar subsidies are damageable

(Germany, Spain, France, Italy, …).

Several solar companies went bust

and China is dominating the market


1,450

1,500

1,550

1,600

1,650

1,700

1,750

1,800

1,850

1990 1995 2000 2005 2010 2015 2020

EU

-27

Pri

ma

ry e

ne

rgy c

on

su

mp

tio

n [M

toe

]

Historical evolution of primary energy consumptionPath to reach 2020 target2020 target for EU-27

Projection with current measures in place(as per the March 2011 EU Energy Ef f iciency Plan)

-20%

-9%

80

85

90

95

100

105

110

1990 1995 2000 2005 2010 2015 2020

EU

-27

GH

G e

mis

sio

ns [b

ase

ye

ar=

10

0] Historical evolution of GHG emissions

Path to reach 2020 target2020 target for EU-27

-20%

Status on the 2020 EU objectives

The 2009 economic crisis and its consumption reduction

had a positive effect on EU greenhouse gases (GHG)

emissions that dropped by 7.1%

In 2010, with the economic recovery, GHG emissions

increased by 2.4% (+3.8% for the ETS sectors). For

2011, experts project a slight increase of the CO2

emissions for the ETS sector (+2.6%*)

In its March 2011 Energy Efficiency plan, the EU

estimated that with current measures only half of the

objective would be attained and developed a new draft

Directive in June 2011 focusing on:

• Triggering better energy efficiency of public buildings

• Demand response programs through smart meters roll out

• White Certificates mechanisms

• Better usage of cogeneration especially for district heating

• In 2013, the EU will re-assess the situation

22

Sourc

e: B

P s

tatistical r

eport

2011,

Euro

pean E

nvironm

ent

Agency,

Eur’O

bserv

er

– C

apgem

ini analy

sis

, E

EM

O13

An economic slowdown would push CO2 emissions and energy consumption down but would negatively impact

renewable‟s share in the final consumption

EU-27 GHG emissions

EU-27 primary energy consumption

*Deutsche Bank Forecast


39 4249.5 49.5 54.45 56.95 57.5

35

554.95

2.5 0.5

43

75

0

10

20

30

40

50

60

70

80€/MWh

Champsaur ARENH

French Court of Auditors

2010

Lifetime extension 2011-25

Decommissioning Radioactive waste management

Full cost

Energies 2050

Historical nuclear 2030

New nuclear 2030

Extensive analysis have been carried out on the nuclear

generation costs and energy mix scenarios in France

23

Nuclear generation costs in France

Source: Les coûts de la filière nucléaire, January 2012 and Energies 2050, February 2012 – Capgemini analysis

A working group, Energies 2050, set up by the

French Minister of Industry, Energy and the Digital

Economy examined four energy scenarios:

1. Lifespan extension of existing reactors

2. Quicker adoption of 3rd generation nuclear reactors

3. Progressive reduction of nuclear energy in the mix

4. a. Nuclear phase out (more fossil fuel energy)

4. b. Nuclear phase out (more RES)

The final price to end-customers is a combination of:

• Energy generation: 40%

• Transportation and distribution: 33%

• Taxes: 27%

50 60 70 80 90 100 110

Nuclear phase out (more RES)

Nuclear phase out (more fossil fuel energy)

Progressive reduction of nuclear energy in the mix

Quicker adoption of 3rd generation nuclear reactors

Lifespan extension of existing nuclear reactors

Source: Energies 2050, February 2012 – Capgemini analysis

Assumptions on electricity generation costs by 2030 (€/MWh w/o taxes)

Energies 2050 commission recommends extending nuclear

reactors lifespan

1

2

3

4a

4b







Conclusions

24


France produces only a fraction of its oil and gas

consumption

25

Final energy consumption in France (2010)

Oil

Natural gas

Coal

Electricity (81% from

nuclear energy)

Other

Source: UFIP

Oil Natural gas

Oil and gas fields in France

In addition to Total, foreign players are

operating on the oil and gas E&P

French market:

• Vermilion (Canadian-based company)

already the first E&P operator in France,

has increased its market share (reaching

75% of the French oil production) thanks

to the purchase of a large part of Total’s

assets in November 2011

French oil and natural gas production

covers respectively only 1% and 2% of

the country‟s needs (annual oil

production of 896,000 t and natural gas

production of 745 mcm, however:

Providing hydraulic fracturing prohibition law is revisited, allowing shale gas exploration and production and the

discovery off the French Guiana materializes, France could improve its energy security

Oil production by company as of

January 2011

Source: UFIP

• Recent discovery made by Tullow, Total, Shell and Northpet off the French

Guiana coast could multiply by 5 the current oil production

• Shale gas reserves could be of 5,000 bcm, i.e. 100 years of consumption. The

figure is still theoretical since the government repealed all shale gas permits for

exploration in October 2011


The French refinery industry is facing an unprecedented crisis

with negative refining margins

26

Final oil products consumption in France (2010)

Source: UFIP

Gasoline

Jet fuel

Diesel fuel

Heating fuel

Heavy fuel

Naphtha

The five operators (Total, Esso, Petroplus, Petrochina-Ineos and

LyondellBasell) have a total refining capacity of 81.8 Mt/year, in line

with the demand (82 Mt/year) but unbalanced (France produces mainly

gasoline but consumes mainly diesel fuel)

• In 2010, France imported 18 Mt of diesel fuel (i.e. half of its consumption) and

exported 5 Mt of gasoline (i.e. 39% of its production)

• France implemented the most favorable fiscal policy to diesel fuel in Europe,

resulting in 2010 in 73% of registration of diesel vehicles (vs. 50% in Europe)

Overcapacity in refinery due to energy efficiency improvements, oil

products substitution and industrial activity decrease has worsened

since 2009 in Europe and in France

• Refined products are sometimes sold at a price close to the crude oil price

on the Rotterdam market

• In Europe, refining margins dropped by 60% since 2009

• In France, the refining margin stood at €14/t in 2011 vs. fixed and variable

costs between €20 and €25/t

• The US is a traditional importer of European gasoline but the demand is

expected to decrease by 2020 and US refineries turned again competitive due to

the rapid shale gas development

Shell has agreed to help Petroplus French refinery of Petite Couronne

to restart activity for six months

Since 2009, the French refining industry lost over €2 billion. It is estimated that over €8 billion are needed to transform

the European refinery facilities to produce more diesel

European oil products demand in 2030 vs.

refinery production in 2007

European

production in 2007

European demand

in 2030

LPG

Naphtha

Gasoline

Jet fuel

Diesel fuel /

Heating fuel

Lubricants and

specialties

Heavy fuel

So

urc

e: U

FIP







Conclusions

27


Conclusions

Recent events are putting Energy questions in the spot light

• BP accident in Gulf of Mexico highlighting the deepwater production

difficulties and strengthening regulations

• Nuclear Fukushima plant accident slowing down the nuclear

« renaissance »

• Middle East and Arab countries political instability threatening oil and

gas supply

In the short-term: the energy consumption (post 2009 economic

crisis) growth could be stalled by EU country’s recession

In the long-term, we can expect:

• Higher energy prices

• Decreased security of supply

• More greenhouse gases emissions

• Increased need for investments

In all cases, customers in developed countries should change

their behavior and increase their energy savings focus

28

Governments and Regulators have a key role to play: • To make the needed investments happen

• To implement a sound energy and CO2 savings policy

« Energy Orb » (PG&E) gives visual

indications to clients involved in energy

demand management programs


With around 120,000 people in 40 countries, Capgemini is one of the world's foremost providers of

consulting, technology and outsourcing services. The Group reported 2011 global revenues of EUR 9.7

billion. Together with its clients, Capgemini creates and delivers business and technology solutions that fit

their needs and drive the results they want.

A deeply multicultural organization, Capgemini has developed its own way of working, the Collaborative

Business ExperienceTM, and draws on Rightshore ®, its worldwide delivery model.

With EUR 670 million revenue in 2011 and 8,400 dedicated consultants engaged in Utilities projects

across Europe, North & South America and Asia Pacific, Capgemini's Global Utilities Sector serves the

business consulting and information technology needs of many of the world’s largest players of this

industry.

More information is available at www.capgemini.com/energy.

Rightshore® is a trademark belonging to Capgemini

Rightshore® is a trademark belonging to Capgemini

About Capgemini

29

http://www.capgemini.com/energy


Q & As

A View of the European Energy Markets

Technology

gas industry conclusions

world nuclear association

future energy mix

existing nuclear plants

french oil

fossil fuel energy

existing plants

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