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With the majority of its nuclear-related economic sanctions lifted, Iran is to all appearances open for trading with the world. However, the reality is different.
With supposedly the fourth-biggest proven reserves of crude oil estimated at 157.8 billion barrels (bb) and the second largest proven reserves of natural gas estimated at 1201 trillion cubic feet (tcf), Iran has the potential to grow into a major market in the world.
Iran’s economy with an estimated gross domestic product (GDP) of $417 bn is the third biggest in the Middle East after Saudi Arabia and the UAE. Oil accounted for 60% of Iran’s budget revenues in 2015.
Geopolitics & US Self-Interest
In imposing new sanctions on Russia, the US Congress aimed to punish Russia for its alleged meddling in the US elections in 2016. Still, these sanctions were mostly motivated by US self-interest, geopolitics and blatant US efforts to delay if not prevent Russia’s emergence as the world’s energy superpower.
The target of these sanctions as in the previous ones is Russian banks and companies as well as Russian oil and gas projects. However, the most contentious issue could well be the sanctions on pipelines. Key projects such as Nord Stream II and the TurkStream pipelines are at the very heart of the sanctions.
The US has always been opposed to Nord Stream II, which it views as Russia’s attempt to solidify its hold on Europe’s energy supplies (see Map 1).
The OPEC meeting is over and the organization has extended production cuts throughout 2018. The decision is obviously crucial to supporting oil prices, but also of the utmost importance to the vision and future of one man, Prince Mohammed bin Salman, Saudi Arabia’s de facto head of government and Crown prince (the king’s son).
The oil price is key to the success of Prince Mohammed bin Salman’s Vision 2030 which aims to build a dynamic twenty-first Saudi economy.
In an article I wrote for the Research Centre of Energy Management (RCEM) at ESCP Europe Business School on the 2nd of March 2017 under the title “Oil Prices Will Be Mostly Bullish in 2017”, I said that the oil price will break through the $60 level in 2017. This the oil price did when it has risen to more than $66.78 a barrel in December 2017.
And despite efforts by vested interests including the International Energy Agency (IEA) and the United States Energy Information Administration (EIA) to dampen oil prices, I am now projecting that the oil price could be heading towards $70/barrel or even higher during 2018 and $100 in 2020.
Russia’s cooperation with OPEC has led to the OPEC/non-OPEC production cut agreement credited with virtually rebalancing the global oil market and pushing oil prices towards almost $70/barrel and also putting a $60 floor under oil prices, up from $50 in 2017.
Russia and Saudi Arabia, the architects of the production cut agreement made it clear that the agreement will go beyond 2018 but in a format that reflects the changing market conditions such as a rebalanced market and rising oil prices. After all, both Russia and OPEC face a major rival: US Shale. It looks as if Russia could become a member of OPEC in all but name.
The 26th of March 2018 will go in history as the most momentous day for the United States’ economy, China’s economy and the petrodollar and also for China’s status as an economic superpower. In that day China launched its yuan-denominated crude oil futures in Shanghai thus challenging the petrodollar for dominance in the global oil market. And in that very day 15.4 million barrels of crude for delivery in September 2018 changed hands over two and a half hours—the length of the first-day trading session for the contract.
Exactly one week after China launched its crude oil futures, the petro-yuan surpassed Brent trading volume. How long will it take it before overtaking the petrodollar? (see Chart 1).
US President Trump announced on the 8th of May 2018 that he is walking away from the 2015 nuclear Iran deal known as the Joint Comprehensive Plan of Action (JCPOA) into which the United States had entered with Iran and the five permanent members of the United Nations Security Council plus Germany (the P5+1) in order to exclude the prospect of Iran developing an indigenous nuclear weapons capability until at least 2028.
But the Trump decision is unlikely to bring about a meaningful improvement in the security situation of the US, Israel, or the Middle East generally, nor significantly damage Iran’s strategic capabilities. However, it changes some of the dynamics with regard to the President’s anticipated summit with North Korean leader Kim Jong-Un.
US President Trump broke all norms of diplomacy and protocol during the NATO meeting in Brussels on the 11th of July 2018, when he accused Germany of being “a captive of the Russians” because of its dependence on Russian energy supplies. He went on to say that “Germany is totally controlled by Russia because they will be getting 60-70% of their energy from Russia and a new pipeline”.
He was, of course, referring to the jointly European and Russian-financed Nord Stream 2 gas pipeline that would deliver a total of 110 billion cubic metres per year of Russian gas supplies under the Baltic Sea, to Germany and the European Union (EU) thus bypassing the Ukraine. It will be completed by the end of 2019.
The recent attack by the Houthi rebels in Yemen on two Saudi oil tankers each carrying 1 million barrels of oil in the Strait of Bab al-Mandeb and Saudi Arabia’s suspension of oil shipments through the Strait have demonstrated how vulnerable the world’s key oil chokepoints are and how easy it is to disrupt global oil traffic.
Since the withdrawal of the United States from the Nuclear Deal with Iran and its decision to re-introduce sanctions on Iran particularly Iranian oil exports, analysts and experts alike have been competing with each other in their projections about how much Iran will lose from its oil exports as a result of the sanctions. Their projections have ranged from 500,000 barrels a day (b/d) to 1.5 million barrels a day (mbd) out of estimated Iranian oil exports of 2.125 mbd.
Most of these projections were, in my opinion, based on faulty assumptions and lack of understanding of the dynamics of the global oil market and virtually bordering on daydreaming and wishful thinking.
The Founding of OPEC
The Organisation of the Petroleum Exporting Countries (OPEC) is an intergovernmental organisation of 15 nations founded in 1960 in Baghdad by the first five members (Iran, Iraq, Kuwait, Saudi Arabia and Venezuela) and headquartered since 1965 in Vienna, Austria. OPEC accounts for an estimated 42.6% of global oil production and 71.8% of the world’s proven oil reserves giving it a major influence on the global oil market and prices that were previously controlled by the so-called “Seven Sisters” (Exxon, Mobil, Chevron, Gulf Oil, Texaco, BP & Shell) cartel of the world’s largest multinational oil companies.
The global oil market and its leaders
2018 had seen oil prices buffeted by bullish and bearish influences with oil prices seesawing from $66.87 a barrel on the first day of the year, to a high of $87 in early November then slumping before Christmas to a disappointing $54.10.
Who gets what?
But there were other forces at play that significantly influenced the price of oil in 2018. These forces were personalities whose decisions, utterances and in some cases farsightedness impacted directly on oil prices and the global oil market and may equally do so in 2019 as well.
Last month Saudi Aramco hit the news when it was named as the world’s most profitable company with revenue of $224 bn, a net income of $111 bn and a free cash flow of $86 bn against a total debt of $27 bn in 2018.
There was a lot of fanfare about Saudi Aramco created by investment banks which benefited hugely from Saudi Aramco’s launch of a major bond issuance to help finance its acquisition of 70% stake in Saudi petrochemical Basic Industries Corporation (SABIC).
Despite efforts by John Bolton the hawkish neo-conservative National Security Adviser to President Trump and Israel’s Prime Minister Benjamin Natanyahu to push the United States to go to war with Iran, war is neither an option for Iran nor for the United States.
Iran is not seeking a war with the United States but it will retaliate if its crude oil exports were prevented from passing through the Strait of Hormuz. And while it will be virtually impossible to block the Strait completely, Iran can nevertheless mine it and wait for an oil tanker loaded with oil to hit a mine. That alone could deter oil tanker owners and insurance companies from sending their tankers across the Strait. Alternatively, Iran could threaten to sink an oil tanker. That could have the same effect like mining the Strait.
The great rivalry between the United States and China will shape the 21st century. It is a truth universally acknowledged that a great power will never voluntarily surrender pride of place to a challenger. The United States is the pre-eminent great power. China is now its challenger.
The escalating trade war has been casting dark clouds over the global economy creating uncertainty and depressing the global demand for oil and therefore oil prices.
There is a great hype aboutBrazil's pre-salt oil potential and the impact it will eventually have on the global oil market. Some sources say that it could vault Brazil to seventh place in the world rankings in terms of proven oil reserves behind Saudi Arabia, Venezuela, Iran, Iraq, Kuwait and United Arab Emirates. Others claim that Brazil could emerge as a major oil producer and exporter and that will certainly change the balance of oil distribution in the world.
The crude oil price has lost 54% of its value since September 2014 and there are no indications that it will stop there in the absence of a major production cut by OPEC. It is not inconceivable that the price could even slide to $40 a barrel.
The reasons given so far for the steep oil price decline is glut in the global oil market caused by rising US shale oil production and a slowdown in economic growth in China and the European Union (EU) reducing the demand for oil. This was exacerbated by OPEC's very wrong decision not to cut production by at least 2 million barrels a day (mbd) to absorb the glut in the oil market. Had they cut their production, Russia and Mexico would have joined them and cut production by 500,000 barrels a day (b/d) and 300,000 b/d respectively, a total of 2.8 mbd capable of removing the glut and stabilizing the oil price. It is not too late for OPEC to reverse their earlier decision and cut production. Failure to do so could push the oil price down possibly to $40/barrel.
Oil is at the heart of Iran’s nuclear programme. Iran needs nuclear energy to replace the crude oil and natural gas currently being used to generate electricity, thus allowing more oil and gas to be exported. Without nuclear power, Iran could be relegated to the ranks of small exporters by 2020 with catastrophic implications for its economy and also the price of oil.
Iran would doubtless not be averse to possessing nuclear weapons. There is an element of security and also logic involved with Iran’s quest for nuclear weapons. Even the recent nuclear agreement will not shift Iran an iota from its determination to acquire nuclear weapons.
From a peak production of 6 million barrels a day (mbd) and crude oil exports of 5.7 mbd in 1974, Iran in 2014 was struggling even to produce 3.00 mbd with net exports down to 1.00 mbd. And if the current trend continues, Iran could cease to remain an oil exporter altogether by 2030. For the last fifteen years Iran has failed miserably to achieve its OPEC production quota of 4 mbd.
The decline in Iran’s oil exports over the last few years was not solely due to tighter sanctions but mainly to fast-depleting old oilfields whose reservoirs were damaged in the 1970s from excessive production under the Shah. Since then Iran has never had the chance to repair its damaged oil industry what with war with Iraq from 1980-1988 followed by stringent sanctions because of its nuclear programme.
Japan might have stolen a march on other countries and oil companies considering investing in post-sanctions Iran. The foreign ministers of Iran and Japan have agreed in discussions in Tehran on the 19th of October to expedite the conclusion of a bilateral investment agreement. A statement issued after the conclusion of their discussions also called for close cooperation between the two countries in the implementation of the International Atomic Energy Agency’s (IAEA) safeguards in order to help Iran implement its part of the nuclear deal reached last month with the major powers (P5+1) – namely the United States, Russia, China, France, Britain and Germany.
On the 28th of December, 2015, Saudi Arabia published its 2016 budget. The budget showed a decline in spending by 16% down from 2015 and amounting to $36 bn. When this reduction in government spending is added to their declared $98 bn deficit, we come to a realistic budget deficit of $134 bn which is not far off from the International Monetary Fund’s (IMF) projection of $140 bn or 20% of GDP. The budget shows just how much the global crude oil glut is affecting the finances of the OPEC kingpin. The new budget was based on an oil price of $50/barrel in 2016 but an OPEC study projected that oil prices could range from $30-$40/barrel.
The Saudi budget showed that the country’s earnings in 2016 are forecast at $137 bn, $25 bn down from 2015 against a spending of $224 bn. However, it is believed that the fall in government expenditure will be sharper than implied in the budget.
On the 7th of January 2016, Saudi deputy crown prince, Mohammed bin Salman, the King’s son, told the Economist magazine that ”the Saudi government is considering whether to sell shares in state oil giant Saudi Aramco as part of a privatisation drive to raise money in an era of cheap oil”.
Saudi Aramco is the world's largest oil company with crude reserves reported to be 267 billion barrels, over 16% of all global oil deposits. It employs 60,000 people worldwide and produces 10 million barrels a day (mbd), three times Exxon Mobil’s. If it went public, it could become the first listed company valued at more than $1 trillion or more, almost three times as much as the world's largest listed oil company, Exxon Mobil, analysts have estimated.
Since the discovery of oil in commercial quantities at Dammam oil well No.7 in March 4, 1938, Saudi Arabia has been almost totally dependent on the oil-export revenues. Seventy eight years later and a cumulative production of 146 billion barrels of oil (bb) since then, Saudi Arabia’s budget is still dependent on the oil revenues to the tune of 90%.
This is a moment of high anxiety in Saudi Arabia. Oil prices, currently $48/barrel, are less than half the level the Saudi government needs in order to balance its books. Moreover, its financial reserves are depleting very fast.
While it is true that low oil prices could reduce the cost of manufacturing, thus helping the global economy to grow, it is a short-term benefit as this is offset by a curtailment of global investment which forces companies around the world to cut spending, sell assets and make thousands, if not millions, of people redundant.
Therefore, it is doubtful whether the steep decline in oil prices would provide a boost to the US economic recovery. While the price decline would certainly provide the equivalent of a sizable tax cut for US consumers, it will deliver a major blow to the increasingly important US oil industry.
A new claim has been made about the size of the United States proven oil reserves. The claim comes this time not from BP Statistical Review of World Energy but from a Norwegian Consulting Group Rystad Energy.
The United Arab Emirates (UAE) gained independence from the United Kingdom in December, 1971. It is a federation of seven emirates: Abu Dhabi, Dubai, Sharjah, Fujairah, Ras al-Khaimah, Ajman and Umm al-Quwain. Each emirate is governed by its own ruler; together, they jointly form the Federal Supreme Council.
The UAE has accumulated so many accolades that no other country in the world could have done so in such a short period of its history. It has the world’s eighth largest proven oil reserves amounting to 97.8 billion barrels (bb) and is the third biggest exporter of oil after Saudi Arabia and Russia exporting more than 2 million barrels a day (mbd). It also has the seventh largest proven natural gas reserves in the world estimated at 215.1 trillion cubic feet (tcf). Moreover, the UAE’s economy is the second biggest in the Arab world after Saudi Arabia. It is also the most diversified economy among the Gulf Cooperation Council (GCC) countries.
Twenty seven months since Saudi Arabia launched its war of attrition against US shale oil production, it has still failed to break the back of US shale industry. This failure is starting to haunt Saudi Arabia.
By flooding the global oil market with oil, Saudi Arabia and its allies in the Gulf have certainly succeeded in killing a string of global offshore mega-projects. Investment in upstream exploration from 2014 to 2020 will be $1.8 trillion less than previously assumed, according to leading US consultants IHS. But this is a bitter victory at best.
The amazing age of oil
When Edwin Drake drilled one of the world’s first commercial oil wells in Titusville, Pennsylvania in 1859, he definitely could not have anticipated the tremendous impact his drilling would have on the global economy, civilization and warfare in the years that followed.
Who gets what?
Since then, oil has been the lifeblood of the industrial world’s progress and standard of living. Innumerable everyday products – from pharmaceuticals to computers- depend on oil and its refining into complex chemicals and plastics. Modern industrial farming, which feeds much of the world, would grind to a halt if it were deprived of diesel-powered tractors, oil-and gas-based fertilizers to grow and harvest crops and the fossil fuels to process, package and ship food worldwide to feed a world population that has skyrocketed from 1.5 billion at the start of the oil age to 7 billion now.
On June 10, 2014, the Islamic State of Iraq and al-Sham (ISIS) – surprised the world by advancing into several territories of central and northern Iraq. Most notably, ISIS has taken over Iraq’s second biggest city, Mosul. ISIS has also tried to gain control of the oil-rich area of Kirkuk (which is now under the control of Iraqi Kurdish forces). ISIS’ offensive has left Iraq in a dire situation, ridden by sectarian and ethnic conflict.
However, an overwhelmingly Iraqi force of 30,000 with a contribution from Iraqi Kurdish (Peshmerga) forces are now closing on Mosul with Western air support.
Despite developments in renewable energy, it will take 50 years for electric cars to impact global oil demand in transport, according to Dr Mamdouh G Salameh, professor of energy economics at the ESCP Europe Business School.
In his recent paper, ‘Is oil supremacy on the wane?’ Dr Salameh says the enabling technologies of renewable energy are not developed enough to properly impact consumption levels of oil in the transport sector.
Predictions of a post-oil era are also unlikely as in 2015, renewable energy accounted for only 2.8% of the global primary energy consumption.
For the first time in eight years, the Organization of Petroleum Exporting Countries (OPEC) has decided to cut crude oil production to bolster the oil price having suffered huge losses since the collapse of the oil price in July 2014.
The continued weakness of oil prices has inflicted a huge damage on the global economy, the economies of the oil-producing countries and global investments. There has been a loss of 0.75%-1.00% annually in global economic growth since 2014. Investment in upstream exploration from 2014 to 2020 is projected to be $1.8 trillion less than previously assumed, according to leading US consultants IHS. The Arab Gulf oil producers have lost an estimated $443 bn in oil revenues between July 2014 and December 2016. And the US shale oil industry took a major blow by losing some 1.5 million barrels a day (mbd) of oil production and also risking major defaults on the $200 billion in loans that have been extended to the domestic shale oil industry.
Among notable promises made by US President-elect Donald Trump during his presidential elections were four particular ones that attracted the attention of the world because of their geopolitical implications and their impact on the price of oil. These were the dismantling of the nuclear deal with Iran, lifting the sanctions on Russia, enhancing US oil production and a strong dollar.
Whilst most declarations made by US presidential candidates during their election campaigning would be quickly forgotten once they are installed inside the White House, it might be wise to analyse these promises in case Mr Trump stuns the world by fulfilling some or all of them.
Despite a 91% compliance by OPEC members with the production cuts implemented in January 2017 and the removal of more than 1 million barrels a day (mbd) from the global oil market, the oil price has seen a lot of volatility ranging between $53 and $57 a barrel.
And although US oil inventories have declined for the last five months consecutively according to the International Energy Agency (IEA), their levels are still close to record high. This could be due to two factors: one is rising Shale oil production and second, the glut in the global oil market might have been bigger than what was previously estimated.
Despite very positive signs in the global oil market, oil prices have never managed to break through the $60/barrel barrier since the OPEC production cuts were implemented in January 2017. On the contrary, they have declined from $57/barrel two weeks ago to just over $50/barrel today.
On the face of it, this could be due to two factors: one is rising Shale oil production and the second is that the glut in the global oil market might have been bigger than what was previously estimated. But circumstantial evidence suggests there could be a third factor, namely concerted efforts by the International Energy Agency (IEA), BP through its annual Statistical Review of world energy, the US Energy Information Administration (EIA) and the Financial Times (FT) to prevent the oil price breaking through the $60/barrel barrier. The rationale is that a price under $60/barrel is good enough for US shale oil production to breakeven and not high enough to slow global economic growth. Let us analyse these three factors to find out where the truth lies.
The US shale revolution and the rising shale oil production have had a seismic impact on the global oil market contributing in no small measure to the steep decline in crude oil prices since July 2014. Equally US liquefied natural gas (LNG) exports could have a similar impact on the global gas market possibly weakening further current low gas prices. The irony, however, is that without relatively higher gas prices, the potential and prospects of sizeable US LNG exports could be restricted.
In 2008 the United States overtook Russia to become the leading natural gas producer in the world. Just a few years ago the US was expected to be a major importer of natural gas. The shale revolution has virtually reversed that trend and enabled the US to start exporting LNG.
In the run-up to 2014 sanctions, US oil giant ExxonMobil led by its then CEO Mr Rex Tillerson, and Russia’s oil giant Rosneft invested $3.2 billion in a project for drilling for oil in the Kara Sea in the Russian sector of the Arctic — a region that Rosneft estimated it could have more oil than the entire Gulf of Mexico. But the sanctions forced Exxon Mobil to halt drilling.
With oil prices ebbing and flowing against a background of OPEC and non-OPEC production cuts’ extension and US shale oil production inching up, nobody is paying enough attention to the fast-approaching oil supply gap.
Despite the recent dip in oil prices, industry experts are predicting a supply gap and rising oil prices by 2020. This is due in large part to an oil investment drought marked by almost three years of consecutive decline in oil prices, a statistic that has no precedent in the oil industry. This year a report by the International Energy Agency (IEA) projected that if oil investment remains stagnant over the next few years, by 2020 we will see a significant increase in the price of oil as global demand continues to climb.
Since the discovery of oil in Saudi Arabia seventy nine years ago, the country has been synonymous with oil. But now the sands under which 16% of the global proven oil reserves lie are beginning to shift under the feet of its leaders.
Saudi Arabia whose beneficence, peace-making efforts, soft power and great oil wealth brought it to the forefront of influential countries in the world over a period of more than half a century, is now embroiled in a crescent of conflicts involving Iran, Iraq, Syria, Yemen and now Qatar not to mention its uneasy relations with the United States.
With oil prices alternating so frequently between bullish and bearish conditions, a global oil deficit could be making its way stealthily through the global oil market.
Last November, the International Energy Agency (IEA) warned that a shortage could set in as soon as 2020, as the investment shrinkage brought on by the 2014 oil price crash bears fruit. Prices, the IEA had said at the time, could jump significantly at the end of the decade. The IEA reiterated its concerns more recently in its World Energy Investment 2017 Report adding that the rate of new oil discoveries is at its lowest level in more than 70 years. Overall, global spending on oil and gas will rise by a moderate 3% this year, compared to the 44% between 2014 and 2016.
Venezuela’s Deepening Crisis
With 300.9 billion barrels (bb) of proven oil reserves, Venezuela holds the biggest reserves in the world and also accounts for 92% of Latin America’s reserves. This is 13% bigger than Saudi Arabia’s. Still, the United States Geological Survey (USGS) estimates that there may be more than 513 bb of extra-heavy crude oil and bitumen deposits in Venezuela’s Orinoco belt region.
Venezuela, a country that should be one of the wealthiest in the world, remains mired in deepening crisis. Its currency (the bolívar) has virtually collapsed while its economy shrank by 10% in 2016 and annual inflation is poised to exceed 720% in 2017.
Independence has been a lifelong dream for many Iraqi Kurds and so the 25th of September 2017 referendum was met with understandable jubilation across Iraqi Kurdistan with over 90% voting for secession from Iraq.
Although the referendum was non-binding, it pointed to a deteriorating geopolitical situation between the Kurdistan Regional Government (KRG) and neighbouring countries. Baghdad urged neighbouring countries to shut down flights into the region and threatened a blockade. Iran stopped oil trade with Iraqi Kurdistan and also banned flights to the region. And Turkey, which fears stirring separatism among its own Kurdish population, has threatened similar action. Turkish President Recep Tayyip Erdogan called the vote “treachery” and suggested the region would "not find food or clothing" if sanctions were implemented.
Oil is like a coin: one side is Economics and the other is geopolitics and the two are inseparable.
The petrodollar came into existence in 1973 in the wake of the collapse of the international gold standard which was created in the aftermath of World War II under the Bretton Woods agreements. These agreements also established the US dollar as the reserve currency of the world.
In February 2018, an international consortium led by France’s Total and also comprising Italy’s Eni and Russia’s Novatek, signed two exploration and production agreements covering Blocks 4 and 9 offshore Lebanon, providing for the drilling of at least one well per block in the first three years. The consortium’s priority will be to drill a first exploration well on Block 4 next year, Total said.
As for Block 9, Total and its partners are fully aware of the Israeli-Lebanese maritime border dispute in the southern part of the block that covers only a very limited area (less than 8% of the block’s surface). Given that the main prospects are located more than 25km from the disputed area, the consortium confirms that the exploration well on Block 9 will have no interference at all with any fields or prospects located south of the border area,” the French company said (see Figure 1).
Oil prices don’t lie. They reflect the true picture in the global oil market from an economic and geopolitical angles. In the aftermath of the historic summit between US President Trump and North Korean Leader Kim Jong Un, oil prices were flat. What does this tell us?
The fact that the oil markets largely ignored the much-anticipated summit could mean that they viewed the summit as all flash with little substance. And though both sides hailed the summit as a breakthrough, there was nothing to show except a declaration pledging to work towards denuclearization with no details about how this is to be achieved.
Some experts are projecting a peak oil demand by 2036. Others like Fitch Ratings are saying that greater product awareness and technological changes could fast track the adoption of electric vehicles (EVs) that could plausibly lead to a peak oil demand before 2030.
It is, however, debatable as to whether a peak oil demand could be reached during the 21st century. The one certain thing is that oil is expected to remain the world’s primary energy source throughout the 21st century and probably far beyond. A major underpinning factor is the growing world population.
Sustainability is the practice of maintaining processes of productivity indefinitely—natural or human made—by replacing resources used with resources of equal or greater value without degrading or endangering natural biotic systems. Sustainable development binds together concern for the natural systems with the social, political, and economic challenges faced by humanity.
The three pillars of sustainable development are the economy, energy and the environment. Interaction between these three pillars sustains a growing global economy which provides employment for millions of people and a decent standard of living in a healthy environment and the energy means that help enhance the quality of our life and mobility. The global economy has to be in a continuous state of healthy growth if it is to be able to feed 7.5 billion of people.