UNDER WATER TORRENT

OIL DEMAND:

Global Economy Disruptive Technology

01 02

2

Global Economy Disruptive Technology

01 02

3

01 Global Economy

ECONOMIC GROWTH REMAINS SUPPORT IN TO OIL DEMAND

-5%

0%

5%

10%

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Oil Demand Growth (YoY) [LHS] GDP Growth [RHS]

MMBD GLOBAL OIL DEMAND VS. GDP GROWTH

Sources: IEA, EIA, OPEC and IMF 4

01 Global Economy

2019 GLOBAL ECONOMY DRIVEN BY DEVELOPING ECONOMIES

2.3 2.4

[VALU…

2017 2018 2019

% Growth

4.7 4.7

[VALU…

2017 2018 2019

Developing Economies

3.7 %

Sources: IMF

% Growth

5

01 Global Economic

GLOBAL OIL DEMAND GROWTH MAINLY DRIVEN BY ASIA

Sources: IEA, EIA, OPEC

GLOBAL OIL DEMAND GROWTH

Unit: KBD

2017/2018/2019

200 350

180

America

Africa 24 81 30

Europe 244

147 53

Middle East 31 47

152

891 613 650 Asia Asia

America

6

01 Global Economic

GLOBAL OIL DEMAND GROWTH MAINLY DRIVEN BY ASIA

Sources: IEA, EIA, OPEC

GLOBAL OIL DEMAND GROWTH

Unit: KBD

2017/2018/2019

200 350

180

America

Africa 24 81 30

Europe 244

147 53

Middle East 31 47

152

891 613 650 Asia

7

U.S. Unemployment Rate

2008 2010 2012 2014 2016 2018

fallen to

3.7%

270

400

140

2017 2018 2019

ECONOMIC EXPANSION

OIL DEMAND GROWTH

UNIT : KBD

2.9 2.5 2018 Growth

% % VS.

2019 Growth

Sources: IEA, EIA, OPEC and IMF

01 Global Economic

U.S. ECONOMY AND DEMAND GROWTH IN 2019

EXPANDING AT HEALTHY PACE AMID TIGHTENING LABOR MARKET

U.S. Car Sales & Miles Driven

+0.3% Car Sales Miles Driven

+ 1-2 % (Jan-Sep’18)

Consumer Spending

+2.1% (Jan-Sep’18)

Spending remains STRONG and DRIVING DOMESTIC OIL CONSUMPTION

8

01 Global Economic

UNCERTAINTIES UNDER TRADE DISPUTE FROM U.S. POLICY

Redefining Global Trade

NAFTA agreement renegotiation

Pull out from Trans-Pacific Partner

Steel and Aluminum Tariff

Next step , Deficit trade with China

In 2017, U.S. import from China $505 bn

China only import from US $130 bn

9

01 Global Economic

TIME LINE AND IMPACT FROM TRADE WAR

15 Nov Round 1

started on Apr,2018

$U.S. 8.5 billion

30 Nov

TIMELINE OF U.S.- CHINA TRADE DISPUTES

Round 2

started on Jul,2018

$U.S. 4 billion

Round 3

started, Sep,2018

$U.S. 25 billion

China US$6 billion

G20 meeting

IMPACT OF TARIFF

Panic in Financial Markets

New global trade balance

SHORT-TERM IMPACT

0.2-0.4 %

Economic Impact on GDP

MEDIUM-TERM IMPACT

10

01 Global Economic

U.S. FED RATE HIKES ARE TRUMP’s ‘BIGGEST THREAT’

FED REMAINS ON TRACK TO RAISE RATES

Sources : Reuters, IMF, Bloomberg

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

Oct/16 Feb/17 Jun/17 Oct/17 Feb/18 Jun/18 Oct/18

0

2

4

6

8

10

12

Q3 17 Q4 17 Q1 18 Q2 18 Q3 18

FED’s tightened policy pushes high lending rate and suppress

U.S. business spending.

U.S. Private Investment $ bn Former FED Chairman

Current FED Chairman

U.S. Interest rate

11

01 Global Economic

GLOBAL OIL DEMAND GROWTH MAINLY DRIVEN BY ASIA

Sources: IEA, EIA, OPEC

GLOBAL OIL DEMAND GROWTH

Unit: KBD

2017/2018/2019

200 350

180

America

Africa 24 81 30

Europe 244

147 53

Middle East 31 47

152

891 613 650 Asia

12

Sources: IEA, EIA, OPEC and IMF

01 Global Economic

CHINA ECONOMIC AND OIL DEMAND OUTLOOK

SUSTAINABLE GROWING DURING REFORMS

496 510 471

2017 2018 2019

ECONOMIC EXPANSION

OIL DEMAND GROWTH UNIT : KBD

6.6 6.2 2018 Growth

% % VS.

2019 Growth

Economic Transition : Shift in China’s economy

35%

45%

55%

2006 2008 2010 2012 2014 2016 2018

Service

Manufacturing

Key Sectors Drive Oil Demand in 2019

+4.0% Transportation

Residential & Commercial

+2.5%

“Made In China”

by 2025

19th National Congress:

13

Sources: IEA, EIA, OPEC and IMF

01 Global Economic

INDIA ECONOMIC AND OIL DEMAND OUTLOOK

CONTINUOUS ECONOMIC GROWTH TO DRIVE DEMAND

150 250 200

2017 2018 2019

ECONOMIC EXPANSION

OIL DEMAND GROWTH UNIT : KBD

7.3 7.4 2018 Growth

% % VS.

2019 Growth

Make in India

Key Sectors in 2019

Encourage domestic companies and multinationals to manufacture in India

+7.0% Transportation

Residential & Commercial

+4.1%

Expanding Middle Class

14

Global Economy Disruptive Technology

01 02

15

Global Economy Disruptive Technology

01 02

16

02 Disruptive Technology

CLEARER POLICY COMMITMENT

195 nations Agreed to fight CO2

“WELL BELOW 2⁰C”

Keep Global Temperature Increase

by 2100

&

No defined punishment for breaking the agreement

No clear detail on how these countries should do

RISK OVER BAILING ON

THE PARIS CLIMATE DEAL

17

02 Disruptive Technology

SLOW PENETRATION OF DISRUPTIVE TECHNOLOGY

ONLY 1% OF OIL TO BE DISPLACED BY EV IN 2025

2019 ICE sales 90 Millions Cars

Only 2% or 2 millions are EVs Sources: Bloomberg

90.0

94.0

98.0

102.0

106.0

2015 2017 2019 2021 2023 2025

Oil Demand Oil Demand Displacement by EV

GLOBAL OIL DEMAND MBD

18

02 Disruptive Technology

BIG BARRIERS OF EV DEVELOPMENT

Country Policy

Emission standards Waivers on access restrictions Purchasing incentives

Consumer Consumer awareness Consumer trend for disruptive

innovation

Technology Battery costs and lifetime Charging infrastructure Range limits 01

02 03

19

CONCLUSION : OIL DEMAND GROWTH

Global Economy

Driven by developing economies

Disruptive Technology Big barriers on EVs adoption

2019 OIL DEMAND GROWTH 1.1 – 1.3 MMBD

20