Official Power point presentation by Mr Neeraj Batra ,Chairman of infinity business school and one of India's leading investment bankers.The presentation determines the future oil outlook.

1. GCMI
2010
GLOBONOMICS &
SE USSI
CONTEMPORARY
MACRO-ECONOMIC
ISSUES
Oil Outlook 2012
L AB O G YE K
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© 2010 INFINITY BUSINESS SCHOOL GLOBAL ISSUES OF SIGNIFICANCE Neeraj Batra: Term I

2. GCMI
2010
GLOBONOMICS &
SE USSI
CONTEMPORARY
MACRO-ECONOMIC An Oily Political World
ISSUES
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Between 1970 and 1980 The world Faced Its First Oil Crisis As
Oil Prices Zoomed Form $4 to $40 (i.e. Tenfold increase in 10 years)
This Virtually Brought Importing economies To Bankruptcy.
 It created a Huge USD Bank For The USSR and Created New Synergies
Between The Saudis and The US.
The Saudis Agreed To Flood the market with Oil To starve the Russians
of Hard Currency.
By 1985 the Price of Oil Slid Back all the way to USD 24
© 2010 INFINITY BUSINESS SCHOOL GLOBAL ISSUES OF SIGNIFICANCE Neeraj Batra: Term I

3. GCMI
2010
SE USSI
L AB O G YE K
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© 2010 INFINITY BUSINESS SCHOOL GLOBAL ISSUES OF SIGNIFICANCE Neeraj Batra: Term I

4. GCMI
2010 Oil Consumption since the last 40 years
SE USSI
Year MB/Day Annual Bn Growth Price Inflation
Consumption Barrels YoY % US/Barrel Adjusted
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(2007 Base)
1965 31.24 11.40 1.80 11.89
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1970 46.07 16.82 8.10% 1.80 9.65
1975 54.99 20.07 3.60% 11.53 44.64
1980 61.84 22.57 2.40% 36.83 93.08
1985 59.39 21.68 -0.75% 27.56 53.21
1990 66.85 24.40 2.40% 23.73 37.82
1995 69.84 25.49 0.85% 17.02 23.40
2000 76.34 27.86 1.80% 28.50 34.92
2005 83.32 30.41 1.75% 54.52 57.90
2006 84.23 30.74 0.25% 65.14 67.03
2007 85.22 31.11 0.25% 72.39 72.39
Current 86.90 31.72 0.40% 120.00 116.50
© 2010 INFINITY BUSINESS SCHOOL GLOBAL ISSUES OF SIGNIFICANCE Neeraj Batra: Term I

5. GCMI
2010
Annual Consumption CAGR summary for Oil
SE USSI
5 Year Cagr 1.83%
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8 Year Cagr 1.51%
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10 Year Cagr 1.48%
12 Year Cagr 1.67%
15 Year Cagr 1.54%
20 Year Cagr 1.56%
That implies the last 5 year CAGR is only 26 basis points higher than
he 20 year average.
© 2010 INFINITY BUSINESS SCHOOL GLOBAL ISSUES OF SIGNIFICANCE Neeraj Batra: Term I

6. GCMI
2010
I
• At these prices the OPEC cartel will continue to pump a lot of Oil to
SE USS
maintain their economies.
• Most GCC countries are now used to the annual revenues at current prices.
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• The Cartel may pump more oil as prices rise to grow their GDP.
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• Unexplored Iraq, Alaska, Outer Continental Shelf US, Santos Basin. Brazil
are likely to be add new reserves.
• Assuming Oil demand grows at 1.4 % CAGR for the next 10 years over 340
Billion barrels of Oil will be consumed.
• Compare this to known reserves of 1230 Bn Barrels and new discoveries of
170 Bn barrels.
• This is roughly 1060 Bn barrels by 2018 compared to 35 Bn barrels annual
consumption.
• Alternate Sources of energy and cost cuts will only improve this position.
© 2010 INFINITY BUSINESS SCHOOL GLOBAL ISSUES OF SIGNIFICANCE Neeraj Batra: Term I

7. GCMI
2010 • The US consumes 24 % of global Oil and imports over 60 % of its
SE USSI
requirement.
• China in comparison only consumes 10 % of Global Oil.
• India only consumes 3.5 % of Global Oil Consumption.
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• Almost all Sovereign Govt. are absorbing Oil Subsidies.
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• China and India is unlikely to have a consumption growth rate
above 7 to 8 % CAGR in 2011
• US on the other hand is likely to have a CAGR of 2.50 %.
• The rest of the World will grow at 1.50 % at best.
• This gives an average CAGR of below 3.50 % for 2010/11.
• Interestingly the Reserve to Production ratio is currently 41 years .
• This range has been maintained between 30 to 40 years since the
last 3 decades.
• Unlikely that the fossil fuels theory will play up over the next 100
years or so.
© 2010 INFINITY BUSINESS SCHOOL GLOBAL ISSUES OF SIGNIFICANCE Neeraj Batra: Term I

8. GCMI
2010
SE USSI
L AB O G YE K
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• Global crisis likely to test Nations repeatedly going into 2011.
• Credit Problems In Europe Likely to tighten Spending
• Credit likely to tighten. Interest rates to remain low.
• Write-Offs In Banking In 2009 exceeded USD 1.2 Trillion.
• Slow down enveloping Japan and Europe.
© 2010 INFINITY BUSINESS SCHOOL GLOBAL ISSUES OF SIGNIFICANCE Neeraj Batra: Term I

9. GCMI
2010
SE USSI
• India and China unlikely to makeup for the combined
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Fall In US/Europe/Japan Demand.
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• Major discovery drive around the world from Russia, Brazil and India.
• Thus Fundamentally a rally in Oil Beyond $90 looks unlikely in 2011.
• However the weakness in the USD is likely to keep Oil prices firm
over the next 12 months, despite weakening of Key economies.
• A weakening USD is a key factor that will keep Commodities strong.
• Commodity Importing Economies (India) will be adversely affected in
Case Oil/Commodities shoot up. Brazil and Russia will benefit the most.
© 2010 INFINITY BUSINESS SCHOOL GLOBAL ISSUES OF SIGNIFICANCE Neeraj Batra: Term I

10. GCMI
2010
GLOBONOMICS &
SE USSI
CONTEMPORARY
MACRO-ECONOMIC
ISSUES
Oil Outlook 2013
L AB O G YE K
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OIL PRICES LIKELY TO CROSS $135 IN 2013
Neeraj Batra
© 2010 INFINITY BUSINESS SCHOOL GLOBAL ISSUES OF SIGNIFICANCE Neeraj Batra: Term I