Tilstanden i den norske oljebransjen Energyworld, Stavanger, 12 mars 2015 Eirik Wærness, Chief Economist

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40

60

80

100

120

140

160

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

A reminder of the fundamentals of our industry

2012-10-24 2 Classification: Internal

1970s │Big discoveries 2000s │Credit crunch and shale 1980s │The oil glut 1990s │Middle East

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ge Fr

am

Glit

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Gud

run

Gul

lfaks

Sta

tfjor

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fisk

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a Per

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hvit

Volatility is the name of the game

Long perspective

•  Long lead times

•  Long-lived assets

•  Long-term demand

… as in other commodity markets …

Source: Thomson Reuters Datastream

The current situation not necessarily a good indicator about the future

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Brent prices – significant short-end changes High storages – contango – more moderate medium-term changes

Commercial oil stocks in US, Europe and Japan Million barrels

ICE Brent Future USD/bbl

2050

2100

2150

2200

2250

2300

2350

2400

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

5 years range

2014

2015

Source: PIRA Energy , MT Oil Market Analysis

40  

50  

60  

70  

80  

90  

100  

110  

120  

M01   M13   M25   M37   M49   M61   M73  

23.01.14   05.06.14   26.11.14  

20.01.15   04.03.15  

We are coming off record highs…

Source: Statistics Norway

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50

100

150

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250

1985 1990 1995 2000 2005 2010

Transport via pipelines

Onshore activites

Fields on stream

Field development

Exploration

* excl. shutdown and removal

Norwegian oil and gas investments* Billion NOK

5

0

50

100

150

200

250

2Q 3Q 4Q 1Q 2Q 3Q 4Q Final

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Estimates made in the year before the

investment year

Estimates made in the year of

investments

Accrued

Estimated oil and gas investments Billion NOK

One year ago “everyone” was worried about cost levels, salaries, dichotomy

Cost increase requires change in activity level

Source: Statoil; Wood Mackenzie; Barclays Capital; JP Morgan Peer group includes: BG, BP, Chevron, ConocoPhillips, Eni, ExxonMobil, Shell, Statoil, Total

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200

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800

30 1,200

10

1,000

20

05 07 06 04 10 12 09 11 08 13

Capital employed ROACE

Peer group capital employed and return on capital Total capital employed USD bn (LHS),

Adjusted ROACE1 last 12 months % (RHS)

Brent($/bbl)

Year 0

200

400

600

110 100

2012

2005

2003

2011

2006

2002

2008 2009

2004

2010

2001

2007

2013

Peer group development spend vs production Total peer group annual development cost incurred (y-axis,

rebased) vs. production (x-axis, rebased)

38 55 65 72 97 62 80 111 108 111

Increased  investments  

Decreased  margins  

Increased    oil  price  

The industry is running faster, but moving backwards

www.statoil.com/energyperspectives

• Our long-term macro and market outlook

•  The global economy

–  Growth close to historic average (3%)

–  Two speeds – non-OECD catching up

• Overall energy market outlook

–  1.3% annual growth (oil 0.6%, coal: 1.1%)

–  Moderate greening of energy mix

• Global oil and gas markets

–  Oil demand peaks around 2030

–  Gas demand increasing (1.4% per year)

•  Strong growth in new renewables (8%)

–  … but CO2 emissions grow until around 2030…

Energy Perspectives 2014

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Source: Reddit, IEA, Statoil (projections)

A strong trend affecting economics and energy

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Economic gravity moves (back) to the east, and so does energy demand

The global centre of population Shifting energy demand Growth in TPED 2011-40, bn toe

There is more than one possible future

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Low carbon scenario Policy paralysis scenario

Source: IEA (history), Statoil (projections)

… depending on growth, efficiency, technology and policies Energy demand and energy mix differ

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World energy mix Share of total energy demand in 2010 and 2040, %

World energy demand per fuel Bn toe

2020 2040 2010

Fossil fuels are here to stay

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Roads are made of asphalt, Teslas contain polymers, kids have toys…

Source: National Geographic

* Excl. Bio-fuels Source: IEA (history), Statoil (projections)

Global gas demand Bcm

Fossil fuels are here to stay

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Global oil demand* Mbd

Considerable need for investments, irrespective of scenario, in risky places

Fossil fuels are here to stay

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Considerable need for investments, irrespective of scenario

Global oil production* and demand Mbd

* Excl. NGLs Source: IEA (production), Statoil (demand)

Cumulative global production of oil and gas 2014-2035

* Fossil fuels, transmission and distribution Source: IEA World Energy Investment Outlook 2014

Large investments needed in all scenarios

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Especially in oil, gas, power and efficiency – can they be delivered?

Cumulative investments in energy 2014-35, tn 2012-USD

… driven by energy intensity, fuel mix and CCS

Source: Statoil, IEA WEO 2013

Energy related CO2 emissions vary considerably

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World CO2 emissions Bn tons

China CO2 emissions Bn tons

2014-09-22 16 Classification: Internal

A lot can change in 26 years….

1988

… so our forecasts will only be vaguely right…

2014…and what about 2040?

2014-09-22 17 Classification: Internal

… and hopefully not precisely wrong…

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Thank you!