Willy olsen's presentation slides from the 2010 World National Oil Companies Congress
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Transcript of Willy olsen's presentation slides from the 2010 World National Oil Companies Congress
Maximizing the value of strategic partnershipsIntroduction – setting the scene
London 21 June 2010
Willy H Olsen,
Senior advisor INTSOK
Former advisor to Statoil’s CEO
www.intsok.com
www.intsok.com
• 15 years as journalist and editor in broadcasting and newspapers
• Employed by Statoil in 1980– Head of Public and Government Affairs, Executive Committee
– Managing Director Statoil UK,
– Senior Vice President E&P Europe, Russia and Caspian,
– Senior Vice President Corporate Strategic Development,
– Advisor to the President and Executive Board
• INTSOK advisor since retiring from Statoil in 2003
• Supporting the Norwegian petroleum cluster’s internationalization
• Focus on NOC strategies, local value creation, revenue management and institutional development
What will be the short‐ and long‐
term impact of the blow out in the Gulf
of Mexico?
Moving into deeper waters
CHINA
INDIA
INDONESIA
• Proven DW discoveries
• DW gas field in production
•More emphasis on DW gas, recent emphasis on DW oil
• Large untested DW acreages
• Early exploration stage
• Proven DW discovery
• Proven DW discoveries
• Commenced development
• Large untested DW acreages
• Aggressive DW block awards and exploration drilling plans
• Proven DW discoveries
• DW oil field in production
VIETNAM
AUSTRALIA
• Bidding and award of DW blocks started (2004)
•Untested DW acreages
• Exploration to commence MALAYSIA • Proven DW discoveries
•Ongoing DW exploration and development
PHILIPPINES
• Proven DW Discoveries
• DW gas field in production
MYNAMAR
• Intensifying deepwater exploration
NOC – IOC relations1880’s – 1970:
International oil companies often more important than governments1970s
Resource owners nationalizedNOCs emerged
The historic legacy of IOCs has been a theme since
www.intsok.com
• Paradox of Plenty
• Most resource rich countries are worse off than resource poor
“The days when oil companies could simply produce and export a country’s oil are long gone
Companies need to give host countries more than revenue
and royalties”Claudio Descalzi
ENI Financial Times interview
June 2010
The world will need about 45% more energy in2030 than we consume today
Require an investment of some 25 to 30 trillion dollars
That's more than a trilliondollars a year every year for the next 20 years.
The industry challenge
Have to find ways of bringing onstream nearly 50 million b/d day of new capacity between now and
2030. That's almost double the current production in the Middle East.
The problem in meeting that goal isn't geological. It's political
The energy has to beAdequate and reliable
AffordableAcceptable
With more focus on the carbon footprint
www.intsok.com
Capturing CO2
“The greatest source of energy in the future is finding ways to use energy more
efficiently.”ExxonMobil in its 2030 outlook
Shaping forces
• Forces that may shape the development of energy in the coming generation
– State dominance of energy resources
– Might of China and India
– Global environmental awareness
– End of the “easy oil era”
• No matter how fast the progress is on alternative energies, the world will be primarily reliant on fossil fuels for at least two generations
Mill barrels/day
Source: IEA 2009
Asia will drive oil demand growth
Who will drive future gas demand?
Source: IEA 2009
Growth in oil demand 2000 ‐ 2008
Where would the oil pricehave been without the
Chinese?
China has the financial strength
Need to secure access to oil and gas
• China involved in extensive resource diplomacy.
• Signed one of its biggest ever loan deals with Rosneft and Transneft
– $25 billion oil export backed deal
– 300,000 b/d for 20 years from 2011
• Venezuela accepted $12 billion
– PDVSA will deliver 80,000 and 200,000 b/d
– China already gets some 200,000 b/d
• Petrobras secured 10 billion dollars to finance its ambitious five year plan
• Major financial deal with Kazakhstan
Opening its deep pockets
China will become the largest oil consumer
• By 2030 China will be the largest global oil consumer
• Displacing the US from a position it has held for 150 years
• India and Saudi Arabia will be among the five largest consumers
• Displacing Germany, England and France
2010 2020 2030
19Source: IEA
Where can oil and gas production grow?
Potential oil growth Potential gas growth
Access to oil Access to gas
SaudiMexico
IranIraqKuwait
Reserve data: BP’s statistical review 2008 – analysis: Willy H Olsen
RussiaTurkmenistan
Access is possible – but with equity?
Do we see a new oil producing super power emerging?
Can the industry handle the substantial risks?
www.intsok.com
" The oil map will completely change in the next six years regarding demand and production.
We expect Iraq to be among the top tier of the oil producing states”
Oil minister Hussein al‐ShahristaniBelieve in 10 million b/d within 6‐7 years
BP/CNPCExxon/Shell
Lukoil/Statoil
ENIShell/Petronas
Mill fat/dag
Current production
Promised production
Why did companies agree in Iraq?
• Iraq has agreed 11 service contracts for 14 field
• Asian NOCs involved in nearly all fields
• CNPC, CNOCC, Petronas = more reserves than the IOCs
• IOCs happy to have NOCs as partners
• Many of them super giants with low technical risks
• 65 billion barrels of reserves
– From heavy oil to ultra light
• Potential production could be 11 million barrels per day
• International companies in charge of planning under supervision by Iraq
• Early production from the agreements within two years
• Needs rapid build up and huge volumes to make it a success
Super giant to be developed
• Iraq has not forgotten its past
• Achieved terms that was unthinkable
• Addressed the national sensitivity issues
• National ownership
• Almost all revenues to government
• Penalty if companies cannot deliver
• Iraq needs technology and management skills
• Large market for service and drilling companies
• No exploration risks
• Limited evacuation risks – close to pipelines and sea port
Why service contracts
www.intsok.com
Government owns the oil and get the revenues
Brazil has moved from the periphery to the major
league…..
Delivering samba beat to the global oil industry
Thou
sand
barrels per day
Pre‐salt to contribute more than 1,2 mill b/dto the growth between 2013 and 2020
High ambitions for production growth
They control a major share of global
conventional gas reservesThey have suddenly got
competition
Gas markets becoming more global
Illustration: ExxonMobil
• The global gas system has changed since 2000
• Used to be dominated by national or regional markets
• LNG growth since 2005 has begun to change the markets
• Gas markets still not fully global
• Moving in that direction
The game changer in global gas
Source: EIA
• Shale gas changed the US gas market
• Influenced the European markets
• And also impacting Asian markets
A changing oil and gas industry
www.intsok.com
Resources now belong to host governments
Source: Oil & Gas Journal, BP
• They are still the world’s largest companies
– Leading frontier resource development
– Leveraging capabilities ‐ technology, know‐how, major projects
– Managing efficient hydrocarbon movements and infrastructure
– Investing for the future• alternatives, efficiency
– Managing risk ‐ strong balance sheets, diversified global asset bases
• Some NOC’s may gradually fill part of the space…
The role of international oil companies
35
They no longer have the same oil productionMillion b/d
They are challenging the old hegemony of the super
majors
• More than 100 NOCs around the world
– They control most of the reserves
– They are very different
– Many have become commercialized
– Many are in dire need of reforms
• Most NOCs were created with a mandate to implement government energy policies
• The overall mission was to increase state revenues and act as an economic engine
• They will be the local content driver
37
NOCs are the nations custodians
States operate with different models
Illustration: Farouk Al Kasim
More
More
Less
Less
Ope
ration
al auton
omy
Strategic autonomy
Rosneft
Sonatrach
ADNOC, QP,
Gazprom
CNPC, CNOOC, Sinopec
SonangolONGC
KNOCPertamina
PetronasPetrobras
StatoilHydroAramco
PDVSA
LNOCKPC
NNPC
Pemex
NIOC
They have far from the same autonomy
Challenging thesuper majors
Petronas is in unconventionalgas – CNPC in unconventional oil
Petronas is in 40 countriesCNPC /PetroChina in 35
Many are becoming international
Some of the largest Chinese acquisitions
Sinopec
CNOOC
CNPC
$billion
Sinochem
KNOC’s international portfolio
The country spent $5.18 billion on oil and gas projects in 2009Up 32% from the previous yearAim to spend $12 billion in 2010
ONGC’s international expansion
Many are ambitious, but not all NOC have the money
Source: PFC Energy
The most valuable listed oil companies
Subsidiaries of the Chinese NOCs, Petrobras and Statoil were listed less than a decade agoBP, Total and ENI have a history as NOCs
The trends in the gas market
www.intsok.com
The national policy agenda
Managing revenuesand opportunities
Government’s oil and gaspolicies
• Impact on local communities
• Supply chain
– Employment
– Training
– Skills
– Equipment
– Technology
– Capital
• Use the feedstock
– Power
– Industry
– Petrochem
– Jobs
– Add value
Managing revenuesand opportunities
www.intsok.com
www.intsok.com
What will oil do to Uganda?
Brazil
Nigeria
Kazakhstan
Russia
T&T
Angola
Libya Iran
Saudi
Canada
Australia
Venezuela Malaysia
Norway
AzerbaijanAlgeria
Old timers Newcomers
TanzaniaTimor LesteEcuador
Bolivia
Ghana Indonesia
PNG
UK
Mexico
The drive for local content
Iraq
Source: Willy H Olsen
“Everything which can be done in Brazil should be done
in Brazil”
52
Multinationaloil companies
Technologysuppliers
National OilCompanies
The global supply chain
“Maximizing the benefits of local content is not the same as to maximize local
content”
Impacts must be measureable in terms of employment, training, infrastructure, well
being of host communities
Not seen as a percentage only
What happened to resource nationalism?
[email protected]@yahoo.no
www.intsok.com
Russia
PeruEcuador
Columbia
Venezuela
Cuba
Brazil
Indonesia
Vietnam
Myanmar
Kazakhstan
Libya Egypt
Iran
Sudan
Chad
West Africa: Angola, Nigeria, Gabon, CongoMauritania
The aggressive global expansion
Restoring the role of China and India
• Asia’s economic powerhouses—China and India—are restoring positions they held two centuries ago
• China then produced 30 % and India 15% of the world’s wealth
• Will be the largest contributors to worldwide economic growth for the first time since the 18th century
• Likely to surpass the GDP of all other economies except the US and Japan by 2025
• Continue to lag in per capita income for decades
• Many Chinese and Indians will feel left out
www.intsok.com
China does not
trust the
market to
deliver
Building pipelines
to the resources
to secure access
Project Location Capacity Operator start
Dapeng Shenzhen 3,7 CNOOC 2006
Fujian Quanzhoue 2.6 CNOOC 2008
Shanghai Shanghai 3 CNOOC 2009
Rudong Rudong 3,5 CNPC 2011
Dalian Dalian 3 CNPC 2011
Tangshan Tangshan 3 CNPC 2012
Zhuhai Zhuhai 3 CNOOC 2010
Zhuhai Zhuhai 2 Sinopec 2012
Zhejiang Ningbo 3 CNOOC 2013
Shenzhen Shenzhen 2 CNPC 2012
Hainan Qingdao 3 Sinopec 2012
Xuedong Shantou 2 CNOOC 2012
Yuexi Jiejang 2 CNOOC 2014
China is building receiving plants for LNG
• Value Creation
Value Added
Knowledge retention
Economic multiplier effect
• Economically Sound
Local content definition and basic premises
• Equal or Better
Quality
Cost
Delivery
Safety & Environment
• Nurture not Subsidize
“What is the extra mile that you need to take?”
Key definition features Basic premises
• Revenues from oil and gas are not enough
• Greater emphasis on industrialization, economic development and diversification, job creation, and prosperity for their citizens
Resource owners want more …..
imports
imports
Current Demand Future Demand
1. Increase productivity capacity of highly competitive sectors
2. Develop competition among medium competitive sectors
3. Incentive for new national entrants
4. Incentive for association between national and international companies
5. Incentive for settling down international companies in Brazil
Increase in National Supply Capacity of G&S
Domestic capacity will not be large enough
Greater Plutonio 45 Wells
Rosa 23 Wells
Jumper + ManifoldFabrication
Jumper FabricationInvestment in Base
Jumper +Manifold FabricationXmas Tree Assembly investment in base
Pazflorfirst subseaseparation
Largest FMC contract everFurther expansionof local productionand support
Girassol/Jasmin 45 Wells
Nemba7 wells
FMC’s fabrication expansion in Angola
Gradual local expansion since first contract in 199722 Angolans employed in 2000 – now 25080% of workforce are Angolans – aim to have 97% by 2013
Local content NOCs more assertiveLocal content important
Efficiency driveIndustry structure changeNo local content
Oil price will influence local content strategies
Your challenge –Building a sustainable industry
• The discovery of oil and gas can herald an era of economic opportunity
• Will take time to filter through to the man on the street
• Something can filter through quickly with the right policies!
• The challenge– High‐tech industry with large capital investments– Not a big job generator compared to the money that is spend
• Government must use revenues to revitalize other sectors and add jobs
• Local companies must co‐operate• Oil companies and Government have to get their act
together, but also manage expectations to gain people’s trust
Manage expectation is crucial
• “We are positioning Ghana for a major industrial take‐off.
• Laying the foundation for:
– an integrated aluminium industry
– a petrochemical industry
– a fertilizer industry to give impetus to agro development
– consumer products and exports based on oil and gas
• Dependence on traditional raw material exports of cocoa, gold and timber should be a thing of the past in 2016”
Your President’s ambitions….
President John Atta‐Millsoutlined his ambitions in the State of the NationAddress 2010
Growing liquefaction capacitymmtpa
Based on operators announcedstart‐up dates