THE GLOBAL OIL & GAS INDUSTRY: PROSPECTS & CHALLENGES IN THE NEXT DECADE

1. THE GLOBAL OIL & GAS INDUSTRY: PROSPECTS
& CHALLENGES IN THE NEXT DECADE
Presented By: Theophilus Acheampong
Aberdeen
July 12, 2011

2. PRESENTATION OVERVIEW
 The Global Oil & Gas Value Chain
 Major Changes within the Oil and Gas Industry
 Company Strategy Framework
 Barriers to Change Within the Business
 Overcoming the Barriers to Change
 Summary and Conclusions
 Appendix
2

3. The Global Oil & Gas Value Chain
Upstream
Oil & Gas
Mid Stream
─ Exploration
─ Field Development
─ Production Operations
Downstream
─ Transportation
─ Processing
─ Storage & Distribution
─ Manufacturing
─ Refining & Petro-Chemicals
─ Wholesale & Marketing
3

4. Major Changes within the Oil and Gas Industry
Challenges
 Volatile energy markets on the macro-economic front
 Increased operational and logistical challenges from
tougher environments
 Increased regulatory pressure on the industry & Fiscal
regime instability
 Skills and labour supply deficit in the industry
Opportunities
 Growing market in the low-carbon sector of the economy
 Closer collaborations between contractors, operators, and
the supply chain
 Opportunities in frontier markets with newer assets and
technologies
4

5. Company Strategy Framework
DIVERSIFCATION OF REVENUE STREAMS
EFFECTIVE COST CONTROLS & CUSTOMER SERVICE FOCUS
SAFETY & HUMAN CAPITAL INVESTMENT
5

6. Company Response Strategy
DIVERSIFCATION OF EFFECTIVE COST
REVENUE STREAMS SAFETY & HUMAN
CONTROLS &
CAPITAL INVESTMENT
CUSTOMER SERVICE
• Offer a broad service
range (e.g. Logistics • Continuous Capital • Investment in Employee
supply in Renewables Expenditure and Health & Safety
such as Offshore wind & Technology investments
Turbine Installations) to improve economies of • Initiatives to ensure
scale & efficiency continuous supply of
• Consolidate & leverage talent pool (e.g.
existing business in the • Reduce operational cost Training, Leadership &
UKCS (e.g. base utilizing innovative Personal Development
Decommissioning approaches (e.g. Cut Programmes)
Projects) down on wastages,
hedge fuel price risks ) • Adequate succession
• Emerging markets planning for senior
opportunities such as • Understand customer management
Africa & Asia (e.g. J.V. requirements, ensure
Partnerships and project deadlines and
Acquisitions) service delivery are
timely
6

7. Barriers to Change
• Macro-economic factors (e.g. Oil Prices & Fiscal regime
instability)
POLITICAL &
• Non-standard legal & environmental regulatory
ECONOMICAL frameworks
• Financial and other resource constraints
• Non existence of expertise in new service offerings
SOCIAL & and emerging technologies
TECHNOLOGICAL
• Non-integrated operations at the organizational level
7

8. Overcoming the Barriers to Change
 Utilize integrated logistics policies to cut down project
timelines.
 Bespoke risk & asset management strategies to address
capital allocation decisions.
 Membership of industry bodies such as Oil & Gas UK to
advocate on behalf of industry.
 Effective communication strategies to understand employee
& customer needs.
 Training and human capital development.
8

9. Summary & Conclusions
 Price Risks, Capital Investments and Sustainable development
will be industry drivers in the coming decade.
 Company strategy should focus on:
― Diversification of Revenue Streams
― Effective Cost Controls &Customer Service Excellence
― Safety & Human Capital Investment
 Benchmarks on supply chain focus, operational excellence, &
regulatory compliance.
 UKCS will be pivotal in building on core competencies.
 Future growth in the industry will come from investments in new
assets, technology & people.
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10. Thank You:
Questions?

11. Resources & Other Useful links
Source: DECC, 2011

12. Resources & Other Useful links
Source: BP Statistical Review of World Energy 2011

13. Resources & Other Useful links
Source: BP Statistical Review of World Energy 2011

14. Resources & Other Useful links
1. http://www.oilandgasuk.co.uk/knowledgecentre/supplychain.cfm
2. http://www.spe.org/jpt/print/archives/2011/04/16TalentTechnology.pdf
3. http://www.pwc.com/en_GX/gx/transportation-logistics/pdf/hoisting-the-sails_final.pdf
4. http://ax4energy.com/LinkClick.aspx?fileticket=vbON1Pl4Kj4%3D&tabid=67
5. http://www.kpmg.no/arch/_img/9448852.pdf
6. http://www.deloitte.com/assets/Dcom-
Australia/Local%20Assets/Documents/Services/Risk%20services/220909_Deloitte_Oil_and_gas_reality_check.
pdf
7. http://www.ey.com/Publication/vwLUAssets/Top_10_risks_affecting_oil_and_gas_in_2010/$File/The%20top%
2010%20risks%20for%20oil%20and%20gas.pdf
8. http://www.energyinst.org/information-centre
9. http://www.economist.com/node/4489659
10. http://www.abdn.ac.uk/~pec144/acreef/publications.html
11. http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistica
l_energy_review_2011/STAGING/local_assets/pdf/2030_energy_outlook_booklet.pdf
12. https://www.og.decc.gov.uk/