Dr seong hoon kim's presentation slides from the 2010 World National Oil Companies Congress
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Transcript of Dr seong hoon kim's presentation slides from the 2010 World National Oil Companies Congress
23 June 201023 June 2010
Korea National Oil CorporationKorea National Oil Corporation
International Strategies of Korea National Oil Corporation
International Strategies of Korea National Oil Corporation
Dr. Seong Hoon KimSenior Executive Vice President
ContentsContents
1. Oil/Gas Situation Overview1. Oil/Gas Situation Overview
2. KNOC E&P Status and Strategies2. KNOC E&P Status and Strategies
3. KNOC Oil Stockpiling Status and Strategies3. KNOC Oil Stockpiling Status and Strategies
5. Concluding Remarks5. Concluding Remarks
4. Vision 4. Vision
1. Oil & Gas Situation Overview1. Oil & Gas Situation Overview
Oil Price Trends
Oil prices show gradual recovery after a sudden drop due to global recession
Long term oil price (Dubai)
$75/B('10.5.18)
Annual Average Price of Oil since 2003 ($/b)
fluctuationThe Second
fluctuationThe First
The crash in ‘86
The Gulf Crisis
The crash in ‘98 The 9.11
Sharp Rise since 2007
Influx of Speculative Capital
US Dollar Weakness
0
20
40
60
80
100
120
140
160
2000 2001 2002 2003 2004 2005 2006 2007
38
40
42
44
46
48
50
Internal Growth Limitation Internal Growth Limitation 1
Almost all giants are already being developed or producedSubstitution effect of reserve volume reduced as number of newly found oil fields are decreased
2000~2007, RRR 59% decreased59% decreased2000~2008, 55% decreased55% decreased
※ Source : IHS
No of Giants found over 100mbbl reserveNo of Giants found over 100mbbl reserve Annual Production & Reserve ReplacementAnnual Production & Reserve Replacement
0
10
20
30
40
50
60
70
2000 2001 2002 2003 2004 2005 2006 2007 2008
% 100Mbbl
Reserve replacement ratio Annual production increase
World E&P Environment World E&P Environment
Business Opportunities restricted Business Opportunities restricted 2
※ Source : IEEJ
NOC’s possession70%
Available to access 7%NOC’s holding
6%
Russian holding17%
Only 7% of reserves available to develop for IOCs owing to ‘Resource Nationalism’ & Nationalization
※ Worldwide reserve 1.4 Trillion bbl (Including Oil-sand)
World E&P Environment World E&P Environment
Emerging New Consumers’ upsurgeEmerging New Consumers’ upsurge3
Emerging New Consumers such as China & India upsurge in energy development market
CNPC acquired 49% stake of MangistauMunaiGaz,the biggest independent oil company in Kazakhstan (’09.4)
Sinopec acquired Swiss ADDAX for U$9.2 billion (’09. 6)Sinochem acquired British Emerald Energy for U$870 millionAgreement on U$25 billion loan for Russian pipeline construction (’09. 2)Singing MOU with Petrobras for U$10 billion finance support (’09.2)Expand Venezuelan investment fund to U$12 billion
China : 8~10% Economy growth since 1970’s caused consumption increaseAggressive acquisition by resource diplomacy & economic competence
ONGC acquired Imperial Energy, British independent company for U$2.6 billion(’08. 8)Announcement of Resource Security Plan by establishing sovereign wealth fund using foreign exchange reserve
India : Consumption increase by average 7% economy growth for the past 8 yearsAcquiring overseas upstream assets to ensure stable resource management
World E&P Environment World E&P Environment
Dependency on Oil/Gas will remain around 55% in 2030
Oil + Gas = 55%
* Source: EIA, International Energy Outlook(2009.5)
Coal28%
Renewables11%
Nuclear6%
2030
World marketed energy use by fuel type
World Energy Consumption
Liquids(including Biofuel32%
Natural Gas23%
Dependency on Oil & Gas in Korea : 56.4%(2008)
*Source: Korea Energy Economics Institute, Energy Statistics, 2008
Oil
41.6%Natural Gas
14.8%
Coal
27.4%
Nuclear,
Hydraulic, etc.
16.2%
Korea’s Energy Consumption
Korea’s Oil Consumption
Oil Consumption : 10th country in the world
1 USA 22.5% 2 China 9.6%
3 Japan 5.6%4 India 3.4%
5 Russia 3.3%6 Germany 3.0%
7 Brazil 2.7%
9 Canada 2.6%10 Korea 2.6%
8 Saudi 2.7%
* Source : BP『Statistical Review of World Energy(2009)』
Dependency on Middle East Oil Dependency on Middle East Oil
Oil Import : 5th country in the world
2006 2007 2008
40%
60%
80%
20%
82.2% 80.7%86.3%
100%
Middle East Oil
(86.3%)
Other Oil
producingcountries(13.7%)
2008
Korea
*Source: Korea Energy Economics Institute, Energy Statistics, 2008
2. KNOC E&P Status and Strategies2. KNOC E&P Status and Strategies
Role of KNOC
Founded March 1979
ImprovingPetroleum
DistributionInfra-structure
StockpilingPetroleum
DevelopingPetroleum
Financing &Technical Support
Stabilizing Petroleum SupplyStabilizing Petroleum Supply Contributing to the Korean EconomyContributing to the Korean Economy
UK Captain
Libya Elephant
4 Inc. SES
2 Inc. Vietnam 15-1
2 Inc. Nigeria 321
3 Inc. Russia West KamchatkaChina Mahwangsan West
5 Inc. USA ANKOR
2 Inc. Uzeckistan Namangan-Chust
Production : 14Development : 3Exploration : 28
Azerbaijan Inam
Venezuela Onado
3 Inc. Peru SAVIA-PERU(Z-2B)
3 Inc. Columbia CPE7
5 Inc. Iraq Bazian2 Inc. Donghae-1 Gas
2 Inc. Harvest
Central Asia8
Middle East11
Russia3
Asia/Australia7
America14
West Africa2
6 Core Area
5 Inc. Kazakhstan Sumbe
6 Inc. Yemen 70
Overview of KNOC’s Global E&P projects
409
553 524
44.9 43.1
50.0
-
100
200
300
400
500
600
700
800
94 95 96 97 98 99 00 01 02 03 04 05 06 070.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
(mmbbl)
UK Captain
Indonesia SES
Vietnam 15-1
Lybia Elephant
Venezuela Onado
DongHae-1 Gas Field
Vietnam 11-2
Reserve
Production
Canada Blackgold
08
550
46.0
900 60.0
70.0
Yemen Marib
Peru 8Block
Average Growth Rate of Production & Reserves (recent 5years) : 146%, 124%
881
09
M&A or Producing Asset Acquisition
128.8(Mbbl/d)
KNOC’s Achievements
Active M&A to meet government’s self-sufficiency goal - Target: 300,000 boepd & 2 Bn bbls in 2012
Acquiring 100~300 million barrel reserve per year
Acquiring technology skill (operating) & experienced staff in a short time Creating Synergy effect, operating experience, new business opportunities
The merits of M&A
E&P Strategies
M&A strategy for promising oil companiesM&A strategy for promising oil companies1
USA
ANKOR
(Mar 08)
Peru
Petro-Tech
(Feb 09)
Canada
Harvest
(Dec 09)
Kazak
Sumbe
(Dec 09)
20082008 20092009
57 mb/d
128 mb/d
Production 124%
550 mil. B
Reserves 60%
1.9%
4.4%
Energy Self-Sufficiency 132%
Experienced Staffs 1,241
660
KN
OC
M&
A 543
117
568
1333
1,901
First M&AFirst Acquisition of Production Asset
Extend Biz in Central Asia
The Largest- Scale M&A in Korea
880 mil. B
20082008 20092009 20082008 20092009 20082008 20092009
M&A Experiences & Accomplishments
○ Purchase Price : 1.1 billion USD
○ Interest : KNOC 80%, Samsung 20%
○ Asset Summary
- 5 Fields of the gulf of Mexico
· Reserves (2P) : 79 million boe
· Production : 21 MBOEPD
- Experts for E&P : 117
○ Changed name to ANKOR Energy
(July 2008)
[former Taylor Energy]
Success Case # 1 Success Case # 1 –– ANKOR in U.S.A
Purchased asset of Taylor Of U.S.A (Jan. 2008)
○ Acquisition Price : 900 million USD
○ Closure : February 2009
○ Interest(%) : KNOC 50%, Ecopetrol 50%
○ Asset : 1 Production Block
10 Exploration Blocks
○ Reserves(2p) : 153 MMBOE
○ Prospective Resources : 689 MMBOE
○ Production : 18 M BOEPD
○ Experts for E&P : 688
<Future Plan>
○ Production Increase: 45M BOEPD by 2015
Success Case # 2 Success Case # 2 –– Peru SAVIA Peru SAVIA [Former Petro[Former Petro--Tech]Tech]
Production
Exploration
Acquisition of Petro-tech (May. 2009)
○ Acquisition Price : 4.1 billion CAD○ Asset Summary- Oil field in Midwest of Canada
Oilsand, CBM Projects· Reserves(2P): 201 MMBOE· Production: 50 MBOEPD
- Oil Refinery in East of Canada· Refining capacity: 120 MBOPD· Stockpiling: 7 MMBOE· Petrol Station: 64
- Experts·E&P 379, Oil-Refining 570
Purchased Harvest Energy of Canada (Dec. 2009)
Success Case # 3 Success Case # 3 –– Canada HarvestCanada Harvest
○ Acquisition Price : 335million USD
○ Interest : KNOC 85%, Kazakhstan partner 15%
○ Asset Summary
- 2 Development blocks & 1 Exploration block
in Western Kazakhstan
· Reserves(2P): 58MMBOE
· Risked Prospective Resources: 20MMBOE
· Production increase: 20 MBOPD by 2012
- Experts for E&P : 149
Purchased asset of Sumbe of Kazakhstan(Dec. 2009)
Success Case # 4 Success Case # 4 –– Kazakhstan Kazakhstan SumbeSumbe
Oil Projects in Kurdistan Region (Iraq)- Agreement date : 2008.11.17- Basic scheme of contract
KRG KNOC
Five oil Blocks
Infra building Projects
- KRG (Kurdistan Regional Government) grants KNOC participating interests in five oil exploration blocks
- In return, KNOC provides KRG with infrastructure construction in the Kurdistan Region
Korea has Industrial sectors’ strengths attractive to oil producing countries (ex: Electricity, IT, Plant, Construction etc)→improve infrastructure Continue to apply this strategy for the future biddings in other regions
Package deal
Developing new business model in producing countries or oil companiesDeveloping new business model in producing countries or oil companies
2
Calgary
Edmonton
AthabascaPeace River
ColdLake
Fort McMurray
Long-term R&D plans and organization to develop new energy resource
GTL(Gas to liquid): Building GTL plant(10,000b/d) by 2015Oil sand: Commercial production by 2012Gas hydrates: Exploration and R&D stage
100% stake in the Blackgold (oil sand, 250 million barrels) in Alberta, Canada
Construct the full-scale producing facilities from 2010Produce up to 30,000 barrels per day by 2016
Canada oilsand
Blackgoldoilfield
Diversifying
Diversifying business by non-conventional energy sectorsDiversifying business by non-conventional energy sectors3
3. KNOC’s Oil Stockpiling Status and Strategies
3. KNOC’s Oil Stockpiling Status and Strategies
Petroleum-Dependent
Industry Structure
Need Risk Management
Possibility of Oil Shock
Promote Petroleum Stockpilingfor Energy Security
60
0
10
20
30
40
50
69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05
The Secondfluctuation The Gulf Crisis
The 9.11
Sharp rise
Introduction to Petroleum Stockpile
Seoul
Crude 11 Products 3.6Crude 4.6(7.3) Products 0.3(2.4)
(Unit : MMB)
CapacityOperation stocks
Products 1.1Products 0.9
Products 3.0Products 2.9
Crude 19.3Crude 9.7 (10.9)
Crude 47.5Crude 39.3(46.1)
Products 2.5Products 1.9
Crude 49.7Crude 15.1(41.0)
Products 2.1Products 2.0
Products 6.2Products 3.8
Stockpile capacity : 146 MMBOperation stocks : 119 MMB (39MMB of International joint stockpile)
Pyeongtaek
Seosan
Gokseong
Yeosu
Guri
Yongin
Donghae
Ulsan
Geoje
Jeju
Stockpile Facilities
Government’s plan (141million barrels by 2011) will be achieved with
the help of IJS (40million barrels)
Long-term contract with oil companies to minimize the price fluctuations
Providing facilitiesMutualbenefits
Oil-producing countries
Diversifying Markets
Reinforce the ability to cope withoil crisis (Emergency purchasing right)
Improve the economics of the oil storage
Use our facilities as sales hub to increase the market share in Northeast Asia
Use oil market trend(Buy Low & Sell High)
Concept of IJS
Oil Stockpiling Strategies
Expanding International Joint Stockpile (IJS) projectsExpanding International Joint Stockpile (IJS) projects1
Improve marketing capabilities on overseas production oil→ Create new biz opportunities and improve KNOC’s global statusCreate synergy effect by connecting both oil trading and overseas produced oil marketing
Harvest
IndonesiaSESUSA
ANKOR
Expand direct marketing oil fields gradually
3,4232,410530--Black Gold
36,50036,50036,50036,500-Harvest
57,06557,00355,43841,1132,661Total
11,00011,00011,000--YeosuTankage
817851555--Yemen
883883883--ADA
316393425--Indonesia SES
9731,1151,4131,679-UK Captain
3,1533,8504,1322,9342,661US Ankor
20142013201220112010Category
Marketing Amount (thousand barrels)
Reinforce marketing for crude oil produced in overseas by KNOCReinforce marketing for crude oil produced in overseas by KNOC2
The pilot project(4.6million barrels) in Yeosu ready by 2011
The main project(23million barrels) in Ulsan port ready by 2014~2015
Government on-going support necessary on the oil hub project(Benchmark: Singapore took 10 yrs to complete the construction)
Unlike IJS, providing additional Services to meet the required spec of buying countries
Crude OilProducts
Sakhalin
Canada
U.S
South America
ChinaChina
Singapore
Middle East, etc
India
4 countries in NEA (China, Korea, Japan, Taiwan), Future Oil price uncertain→ demand for oil storage increase
Exporters (Canada, SA, ME, Sakhalin)Importers (China, India, US)
Storage facilitiesin Korea
Becoming the oil distribution hub in Northeast AsiaBecoming the oil distribution hub in Northeast Asia3
Collecting and distributing center of petroleum - located in main transportation route
Hub for logistic activities by refinery, trader, tankage companies-- producing, supplying, discharging, storing, value added treatinproducing, supplying, discharging, storing, value added treating, trading g, trading
Supply and Demand: SE Asia, Korea, China, Japan, USA, and etc.
HarborInfra
Oil Exchange Market
Infra for Financing/ Information
Refinery
TradersTank Terminal
Oil Hub
* Overview of Oil Hub
Crude OilProducts
Korea
Singapore Market
Focusing on India, South-East Asia
and West-South Asia
New Market in NEA
Independent Market for the Pacific Rim inclusive of
China, Japan, USA and Canada
Asia’s possibility to divide into two Oil Markets
ARA
Singapore
Gulf
* Prospective of Asian Oil Hub
4. Vision4. Vision
Production :
50-150 M B/DPlan: Exploration Success & Acquire AssetsRanking: around 70th
Production: 300 M B/D
By Increase of
Exploration Success
& M&A
Ranking: around 60th
Production: 500 M B/D
Plan: Integrated big oil
company
Ranking: around 40th
Enhance a competitiveness
Local Major
Global Oil Company
Future of KNOC
38
World Ranking
98th60th
X 5
Production(1000 b/d)
60300
X 3
Asset(Billion U$)
9.430
X 4
Reserves(Billion bbl)
0.62
Become a Regional Oil Major
KNOC’s Targets by 2012
20082008 20122012 20082008 2012201220082008 20122012 20082008 20122012
5. Concluding Remarks5. Concluding Remarks
■ KNOC as a state-owned company responsible for oil/gas supply security in Korea :
- Needs to increase the investment in upstream
- Needs to contribute to improve physical oil distribution system in the Far East
- Needs to develop human resources and technical specialties to
achieve KNOC’s mission
■ KNOC will overcome the challenging situation in upstream by :
- Globalizing its own management
- Mutual cooperation with host countries and IOCs
- Enhanced E&P Activities
- Diversified investment in the lines of business
Korea National Oil CorporationKorea National Oil Corporation