Global Oil & Gas Update 17 October 2019 Neil Golding Head of - PowerPoint PPT Presentation

Global Oil & Gas Update 17 October 2019 Neil Golding – Head of Oil and Gas Energy Industries Council

Content of presentation • Who we are • Current state of play globally • CAPEX by country and operator • Project FIDs • Major Contracting Activity • Global upstream opportunities • Future • Current • Decommissioning – UK and globally • Opportunities in other oil and gas sectors • Summary

Who we are • Not-for-profit energy trade association, established in 1943 • For companies supplying goods and services to global energy industries • Help our members identify where global business opportunities exist and to assist them in making connections with key operators and contractors • Services that we provide include: • Market intelligence – EICDataStream, EICAssetMap, Reports, Newsbriefs • National Events – EIC Connect, Business Presentations, Export Showcases • Overseas Events – Delegations, Exhibitions • Global network of offices – Dubai, KL, Houston and Rio • Training • Approximately 60 staff in UK and overseas • Over 650 members active in various energy sectors

Current state of play – Oil and Gas • Oil price volatility remains – geopolitics; global demand projections; US-China tensions; global economic slowdown • Major operators – now very much aligning themselves as Energy companies, not Oil & Gas • Operators continue to make profits (Q2 2019), although lower than same quarter than 2018. Lower refining margins. Disciplined capital expenditure remains. Major projects moving forward. Breakeven prices down. • Positive start to the year for EPC contractors with diverse capabilities, subsea players see reduced backlog but rising levels of early engagement and tendering. Pipeline of opportunities seen to be positive. Offshore campaign increase 2020/21 • Energy majors have mentioned possibility of an EPC cost and capacity crunch in 2020

Current state of play – Oil and Gas • Rise of decommissioning opportunities in mature basins – reduction of costs and embracing of new technology • Decarbonisation of the industry – CCUS; increasing usage of renewable energy • Gas – importance growing as part of energy transition. LNG key role to play. • Oil demand will fall – EV take up. Downstream industry will continue to see an increase in demand for oil. • Waste to fuels, Hydrogen, cleaner fuels • Mergers & Acquisitions - majors continuing to sell up non-core assets, ExxonMobil

Oil and gas project CAPEX ($Billion) - country and operator 2019/2026 CAPEX by country through to 2026 ($million) CAPEX by operator through to 2026 ($million) 600.000 120.000 100.000 500.000 80.000 400.000 60.000 40.000 300.000 20.000 200.000 0 100.000 0 Downstream Midstream Upstream Downstream Midstream Upstream

Offshore Upstream project CAPEX ($Billion) - country and operator 2019/2026 CAPEX by country through to 2026 ($million) CAPEX by operator through to 2026 ($million) 80.000 60.000 70.000 50.000 60.000 40.000 50.000 30.000 40.000 30.000 20.000 20.000 10.000 10.000 0 0

Project FIDs – 2015 to 2019 Nos of Project FIDs 2015 to 2019 CAPEX ($million) on projects to reach FID in 2015 to 2019 70 80.000 70.000 60 60.000 50 50.000 40 40.000 30 30.000 20 20.000 10 10.000 0 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Downstream Midstream Upstream Downstream Midstream Upstream

Project FIDs – Countries and projects (2019) ProjectName Country Sector CAPEX $million FIDs reached by country 2018-2019 (Top 10) Amur Gas Processing Plant Russia Downstream 22400 40 Arctic LNG-2 Russia Midstream 21000 Mozambique LNG Project (Phase 1) Mozambique Midstream 15000 35 Golden Pass Products LNG Expansion Liquefaction Plant & Export Pipeline USA Midstream 10000 Gulf Coast Growth Ventures Project (GCGV) - San Patricio PetChem Facility USA Downstream 7300 30 Sitra Refinery - Upgrade Bahrain Downstream 6300 Pachpadra (Barmer) Refinery and Petrochemical Complex - Rajasthan India Downstream 6061 25 Sabine Pass LNG Export Terminal - Trains 5 & 6 USA Midstream 6000 20 Liza Oil Field (Phase 2) Guyana Upstream 6000 Azeri Central East Project Azerbaijan Upstream 6000 15 VG Calcasieu Pass LNG Export Plant USA Midstream 5800 Area 1 - Golfinho-Atum Development Mozambique Upstream 4000 10 Assa North/Ohaji South Gas Plant Nigeria Midstream 3500 Alberta Propane Dehydrogenation and Polypropylene Plant Canada Downstream 3428 5 OML 13 Cluster Development (7CGDP) Nigeria Upstream 3150 Beaumont Refinery Expansion - Third Crude Distillation Unit ("Crude C") USA Downstream 3000 0 Mero Oil & Gas Field (Phase 2) Brazil Upstream 3000 Whistler Natural Gas Pipeline USA Midstream 2400 Jurong Island Refinery Expansion (ExxonMobil Singapore Refinery) Singapore Downstream 2000 Permian to Gulf Coast Crude Oil Pipeline USA Midstream 2000 OML 18 Fields Development (Akaso, Cawthorne Channel, Alakiri) Nigeria Upstream 2000 Downstream Midstream Upstream KG-DWN-98/3 - MJ Field India Upstream 2000

Project FID potential ProjectName Country Estimated CAPEX ($million) FIDs expected in 2019/2020 by country Alaska LNG Liquefaction Plant USA 43000 35 Ras Laffan - Qatargas - NFE - LNG Four Liquefaction Trains Qatar 18000 Driftwood LNG (Calcasieu Parish LNG Liquefaction Plant) USA 16000 30 Browse Upstream Development (Torosa, Brecknock & Calliance Fields) Australia 15000 25 Abu Dhabi North West Development - Hail and Ghasha Sour Gas Development UAE 15000 Main Pass Energy Hub (MPEH) LNG Export Terminal USA 15000 20 Lake Charles LNG Liquefaction Plant - Trunkline LNG Export USA 12300 Greater Sunrise Gas and Condensate Fields (Sunrise, Troubadour, Sunset and Australia 12000 15 Loxton) Abadi Gas Field (Masela) Indonesia 12000 10 Rovuma LNG Liquefaction Plant Mozambique 12000 Trion Offshore Oil Discovery (Perdido Fold Belt) Mexico 11000 5 Ain Sokhna - Tahrir Petrochemicals Complex Egypt 10900 Panjin Refinery & Petrochemicals Complex China 10090 0 Pertamina Bontang Refinery Indonesia 10000 Bonga Southwest & Aparo Oil Fields - OML 118 & OPLs 249 and 213 Nigeria 10000 Jordan Cove LNG Liquefaction Plant USA 10000 Port Arthur LNG Liquefaction Facility (Sempra) USA 10000 Downstream Midstream Upstream Belmont County Ethane Cracker USA 10000

Current state of play – Contract activity 2019 Major contract awards 2014 - 2019 Top 20 countries - Major awards 400 60 50 40 350 30 20 10 300 0 250 Downstream Midstream Upstream 200 Top 20 contractors since 1 January 2019 150 40 35 30 25 20 100 15 10 5 0 50 0 2014 2015 2016 2017 2018 2019 Downstream Midstream Upstream Downstream Midstream Upstream

Upstream – 2019 discoveries 5

Upstream – Early Stage Projects 2

Global Focus – Late Stage Projects

Decommissioning overview – UK • Operators to spend between £45 billion and £77 billion on decommissioning in the UKCS • Well plug and abandonment 49% of total spend • Aim to reduce cost of decommissioning by 35% • Clear regulation allows for efficient decommissioning alongside early engagement with key players • Evolution of supply chain offering • Investing in new technology to reduce cost, specialist centres developed to support this

Decommissioning overview – Global • Arabian Gulf - Over 1,000 structures and 3,000 wells in the Arabian Gulf which will be over 30 years old and in need of decommissioning by 2038. No regulation currently in place. In its infancy, Ramboll active to date. • A-PAC – Over 2,600 platforms and 35,000 wells in the APAC region and that decommissioning could cost well over £77.7 billion. Over 380 fields in the APAC region are expected to cease production by 2028. Around 833 installations in the region are at or over 20 years old. Key markets, Brunei, Indonesia, Thailand, Australia and Malaysia. • Latin America - The decommissioning pipeline in Latin America is estimated to contain over 700 structures and over 4,000 wells due to cease production by 2038. Brazil is the main market.

Opportunities in other O&G sectors

In summary • Volatility in oil price remains • Projects commercially viable at lower oil prices • Profits continue for operators • Positive FID activity continues • Contractors sounding positive in Q2 2019; Order backlog growth potential; Profits up • Cautious frontier exploration remains • Gas demand continues to grow globally; LNG liquefaction opportunities • Development of new technologies • Decarbonisation of the oil and gas industry

Global Oil & Gas Update October 2019 Neil Golding – Head of Oil and Gas neil.golding@the-eic.com