Share Final Presentation - Total and EADS by Himanshu

Global Scarcity Report

4h June 2010

Project team – 15 students from China, India and Europe guided by EADS and TOTAL Air TOTAL

Corporate Partners CTO R&T strategy, new business EADS

China

India

Daniel

Europe

Saurabh

Shanghai Jiaotong University

Hugo

IIT-Roorkee

University of Porto Kartik Sonal

Shanghai Jiaotong University

IIM-A

IIT-Roorkee

IIM-A

IIM-I

Nikhil Harsh Himanshu

IIM-C

Mines Paris

EPFL

A 6 month projects involving several meetings between ShARE, EADS and TOTAL Materials Aluminium, Steel, Copper, Lithium, Titanium Dec

Jan

Feb

Mar

April

May

June

Output 1: Consumption Output 2: Reserve Output 3: Production Output 4: Price projection Output 5: Alternative fuels Output 6: Impact on aerospace

Review meeting Kick-off 4th June

Formal presentation of outputs

5 outputs summarized in today’s executive presentation ~40 experts interviewed

Student workshop

Output 1 Consumption

Output 2 Reserve

Output 3 Production

Output 4 Price projection

Output 5 Output 6 Alternative jet Impact on aerospace fuels Draft

Draft

Electric car in China Output 1- Government

Electric car in China Output 2- Technologies

Electric car in China Output 3 – industrial players

Electric car in China Output 4- Consumers

Electric car in China Output 5- Entrance strategy for a foreign player

Electric car in China Output 5- Entrance strategy for a foreign player Warning !!! Only 62 people have been surveyed, hence these results can not been interpreted scientifically

13th Nov 2009

13th nov 2009

7th Oct 2009

Workshop at TOTAL – oil 4th June morning

Workshop at EADS – raw material 4th June afternoon

Electric car in China Executive presentation

13th Nov 2009

Extract of the project

Agenda

 Oil and Alternative fuels  5 raw materials • Demand Analysis • Resource Mapping • Extraction and Refining • Price Analysis  Impacts on aerospace and recommendations  Appendix  Questions & Answers

In 2008, USA and EU accounted for 41% of world’s total oil consumption Consumption of oil in 2008 23%

18%

19.4

14.8 3.3% 2.8

2.7%

9.5%

2.3

2.5 Germany USA 2.8%

2.4 % in world consumption

5.7% 2.7%

Canada

Legend

Russia

4.9

2.3 2.6%

3.4%

2.2

2.9

Saudi Arabia

India

China South Japan Korea

Brazil

x Consumption in million barrels/day

Note: EU also includes Germany Source: BP Statistical Review of World Energy 2009

BRIC have the lowest per capita consumption rates of the top consuming countries Consumption of oil in 2008

20 18 16 14 12 10 8 6 4 2 0

19,4

Total consumption (million barrel/day)

Per 1000 Capita Consumption (bbl/day) 14,8

Average per 1000 capita consumption

OECD

BRIC

5.7

47 8,0

38 31

30 4,8 2,9 6

World

20 2,8

2,5

13 2,4

2,3

12.6

2,2

BRIC and rest of the world will drive demand in the next decades 140 OECD’s demand decreased 0.3% in the last 10 years

World demand declined 0.6% in 2008, first decline since 1993

Oil demand in million bbl/day CAGR 2030-2050

120

CAGR 1990-2010

CAGR 2010-2030

100

1.3%

0.7%

0.6%

1.2%

0.2%

2.3%

1.7%

World Total

80 BRIC’s demand grew 73% in the last 10 years

2.3%

2.1%

OECD Rest of World BRIC

2.3 1.1% %

0 1990 1995 2000 2005 2008 2010 2015 2020 2025 2030 2035 2040 2045 2050

Trends

 Economic growth, increase in population and vehicles driven demand until 2007 2008’s crisis caused decline in oil consumption OECD decreased due to stable population and economic stagnation

Source: BP Statistical Review of World Energy 2009, ShARE analysis International Energy Outlook 2009, World Energy Outlook 2009

Boost in economic growth, Efficiency and alternative fuels expanding transportation diminish BRIC’s consumption and industry will maintain OECD demand will decrease increase in demand due to alternative fuels and Efficiency gains, fuel environmental pressure substitution, demographics Rest of the world will increase will slow down it consumption due to population need’s pressure Copyright ©2009 ShARE. All Rights Reserved

Transportation sector will account for 74% of the increase in demand from 2010 to 2030 Global liquids demand by sector in million bbl/day

Industry demand will grow 19% between 2010 and 2030

2,3 4,8 4,9 28,6

2,1 4,7 4,8

28,0

2,1 4,8 4,6 29,2

2,1 4,6 4,7 30,7

2,2 4,5 4,8

31,9

2,2 4,4 4,8 33,2

Commercial Electrical Power Residential

Industrial 41,3

42,9

45,9

2006

2010

2015

49,6

53,3

57,3

2020

2025

2030

Transportation

Transportation demand will grow 34% between 2010 and 2030

Note: Liquids include all petroleum products, natural gas liquids, biofuels, and liquids derived from other hydrocarbon Not included are CNG, LNG and hydrogen. Source: EIAâ&#x20AC;&#x2122;s International Energy Outlook 2009 Copyright ÂŠ2009 ShARE. All Rights Reserved

Only 15 years left of cheap oil available

Average Cost USD/bbl

World oil reserves 2008 (Reserve/global production) World TOTAL 42 years Canada 6

Venezuela Russia

20 Kazakhstan 1

Iran 5

Libya 1 UAE

Legend Country

Kuwait Saudi Arabia

Iraq

3 TOTAL 15 years Years

If oil barrel reaches $100, then more 200 years of oil at current productions will be available Alternative fuel potential (Reserve/ global oil consumption)

Average Cost USD/bbl

84 3 Italy Canada

3 USA

55 50

8 6

Brazil Australia 13

USA 9 China

R/P R/P (if only converted (primary in oil) use)

Russia

India 5

Russia Venezuela

Coal to liquid

130

Gas to liquid

Oil shales

Sand oil

Russia Qatar 8

Total

Iran 9

20 Legend Country

3 Years

Low

High

Current political instability risk

Coal to Liquid Technology cost lies mainly in extraction Main Technological steps

Extraction State

Technical challenges

Solid

 Capital Intensive • Transportation costs • High investment risk

Gasification Gas

 Environmental concerns • High CO2 emissions • Lot of water needed

Fischer-Tropsch Liquid

 Disadvantages • Low conversion rate • Low gas throughput rate TOTAL

Cost

44 $/bbl

6 $/bbl

15 $/bbl

65 $/bbl

CO2 Footprint

High oil price scenario will allow for 10% of alternative jet fuel from renewable sources in 2025 and >25% in 2035 Scenario 3: High quantity of oil (price around 80$) & few alternative solutions Scenario 2: Reference quantity of oil (price over 100$ after 2035) Scenario 1: Low quantity of oil (price over 150$ in 2015, then stable at 100$) & strong alternative solutions Timeline Event

2010

2015

2020

2025

2030

2035

2040

2045

2050

First plants

5% replacement

10% replacement

25% replacement

50% replacement

100% replacement of jet fuel

Source: E4Tech, IATA, IEA; CCC Note: Prices stated in 2010 USD constant prices

Many bio-fuel projects, but only one bio-jet fuel

Company: Sinopec & Boeing Co. Cooperation: Develop BJF together Time: Passed certification of ASTM

Output: 0.1 mn tons, G1 Grain-based ethanol (corn) Company: Heilongjiang Huarun Fuel Ethanol Start year: 2001 Output: 0.3 mn tons, G1 Grain-based ethanol (corn) Company: Jilin Fuel Ethanol Start year: 2003

Output: Green diesel, bio-jet fuel, other fuels used in transportation Company: CNPC and UOP LLC MOU: 2009

Output: 0.3 mn tons, G1 Grainbased ethanol (wheat) Company: Tianguan Fuel Ethanol Start year: 2004

Institute of Nuclear & New Energy Technology Lab: Joint Lab of Renewable Aviation Biofuel Research, Qingdao Company: QIBBT & Boeing Co. Start year: May 25, 2010 Nanjing Univ of Science &Technology

East China Univ of Science & Technology CNPC & UOP LLC, Chengdu, Sichuan Province

Relevant Projects and Companies

Output: 0.32 mn tons, G1 Grain-based ethanol (corn) Company: Anhui Fengyuan Biochemical Start year: 2005

10 Demo Provinces Research Institutes Bio-jet fuel project

Bio-jet fuel feedstock plantation

Output: 75 million mu of Jatropha in China including 30 million in Sichuan Company: Boeing China Co. Time: Still negotiating with government

Source: ShARE Interviewees, Researcher KANG Liping and HAN Bing

Output: 0.2 mn tons, G1.5 No-grain ethanol (cassava) Company: COFCO-Guangxi Bio-chem. Start year: 2007

In 2008, China and USA accounted for 40% of world’s total Copper consumption Consumption of Copper in 2008

Legend

100% % in world consumption 18 Consumption in million metric 11.2% tons/year

3.5% 3.6% 0.64

7.8%

0.65

28.8% 3.2%

5.2 4.3%

1.4

2.02

Italy

0.58

Russia 0.78

Taiwan

Germany USA

2.3% 0.41

France

South 6.6% 2.9% China Korea 1.18 0.52

India

Japan

Electrical and electronic application account for 45% of total consumption Global Copper demand by sector in million metric tons Use of Plastics,

Extensive use of Nanotubes, NEMs for electricity conduction

Biomaterials, synthetic materials

Industrial Machinery

1,9

1,5 1,5 2,0

4,8

1,7 1,7

2,2

5,2

1,7 1,7 2,4 5,5

1,8 1,8 2,6

5,5

1,9 2,8 5,4

7,2

7,8

8,6

9,5

10,5

2006

2008

2010

2015

2020

2025

2,0

2,1

3,0

3,2

2,1

2,2

2,1

2,0

1,8

3,3

3,4

3,5

Consumer/General

Transportation Construction

4,8

4,7

5,2

5,0

11,5

11,6

12,8

13,3

13,0

2030

2035

2040

2045

2050

Electrical/Electronic

Investment in Power Sector, Construction in Developing countries to fuel Copper Demand

Electrical & Electronics

Driver for further growth

Drivers for decline

Expected CAGR 2010-2030

Renewable energy sources (excellent conductivity) • Average 2.9 % growth p.a. from 2006 to 20301 Increasing Power sector investments in BRIC Demand for telecommunication cables

Recession hit demand Slump in telecom sector Aluminium substitute in power cables, electrical equipment Optical fiber substitutes in some telecommunications applications

Construction

Transportation

Construction spree in BRIC GDP growth in developing countries Infrastructure Development Housing Sector would start rising in US

BRIC nations encouraging automobile production • Regional economic development of undeveloped areas Electric vehicles to fuel the Copper Demand

Slump in OECD countries in housing sector Plastics substitute in water pipe, drain pipe, and plumbing fixtures

Al substitute in automobile radiators, cooling and refrigeration tube

1.4%

1.2% 18

While Codelco is the largest SoE, Freeport-McMoRan Copper & Gold Inc is the largest public listed company Total Copper Production in percentage by major companies, 2008

In 2008, 57% of worldâ&#x20AC;&#x2122;s Copper production was done by these group of companies

Total Copper Production in 2008 (thousand metric tons/year) 1828 1665

81% Private

1200

952

SoE

699

641 506

489

19%

2007 data

2009 data

3 Different scenarios Scenario 1: Low demand – Sustainable growth, decreasing reliance on copper, plastics and other substitutes Scenario 2: Reference demand – Business as usual scenario, few clean technologies, slow growth Scenario 3: High demand – Increasing demand on copper, high economic growth, huge power infrastructure

2030

Sc 3

% Renewable energy

20%

30%

40%

25%

35%

50%

+140$

+ 500$

+ 1000$

+600$

+800$

+ 1200$

11%

- 120$

+750$

+ 1200$

- 180$

+ 900$

+ 1500$

40%

25%

15%

50%

30%

20%

+780$

+ 400$

+200$

+1200$

+400$

+ 300$

30%

20%

10%

40%

30%

20%

- 200$

+ 45$

+ 240$

- 670$

-100$

+ 250$

15%

10%

25%

12%

10%

- 340$

+ 200$

+900$

- 500$

+ 200$

+ 1250$

Impact % GDP Growth (BRIC)

Impact % Emission Cuts

Environment tax Impact

Production

Sc 2

Sc 1

Demand Economic Growth

Sc 1

Metric

Drivers Electrical / Electronics

Sc 2

2050 Sc 3

Recycling Capacity

% Capacity Growth

Reserves availability

% Reserves Increase

Impact

$6860

Base Price 2010 +7120$ Source: Share Team Analysis, ICSG Note: Population grows up to 9 billion in all scenarios

+8755$

+10400$

+7310$

+9060$

+11380$ 20

Some photos

Saurabh arriving at TOTAL headquarter

Hugo presenting for 2 hours in TOTAL morning workshop

The lunch before EADS workshop

Before arriving at EADS quarter

After the D-DAY- relaxing at Louvre Museum

After the D-DAY- diner

After the D-DAY- sight seeing in Paris

Meeting with ShARE- Paris Alumni