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

Presented By: Theophilus AcheampongAberdeen

July 12, 2011

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

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The Global Oil & Gas Value ChainUpstreamOil & Gas

Mid Stream

Downstream

─ Exploration─ Field Development ─ Production Operations

─ Transportation─ Processing─ Storage & Distribution

─ Manufacturing─ Refining & Petro-Chemicals─ Wholesale & Marketing

Raw Crude/Gas

Feedstock

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Major Changes within the Oil and Gas IndustryChallenges 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

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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

Company Strategy Framework

DIVERSIFCATION OF REVENUE STREAMS

EFFECTIVE COST CONTROLS & CUSTOMER SERVICE FOCUS

SAFETY & HUMAN CAPITAL INVESTMENT

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Company Response StrategyDIVERSIFCATION OF REVENUE STREAMS

• Offer a broad service range (e.g. Logistics supply in Renewables such as Offshore wind & Turbine Installations)

• Consolidate & leverage existing business in the UKCS (e.g. Decommissioning Projects)

• Emerging markets opportunities such as Africa & Asia (e.g. J.V. Partnerships and Acquisitions)

EFFECTIVE COST CONTROLS &

CUSTOMER SERVICE

• Continuous Capital Expenditure and Technology investments to improve economies of scale & efficiency

• Reduce operational cost base utilizing innovative approaches (e.g. Cut down on wastages, hedge fuel price risks )

• Understand customer requirements, ensure project deadlines and service delivery are timely

SAFETY & HUMAN CAPITAL INVESTMENT

• Investment in Employee Health & Safety

• Initiatives to ensure continuous supply of talent pool (e.g. Training, Leadership & Personal Development Programmes)

• Adequate succession planning for senior management

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Barriers to Change

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• Macro-economic factors (e.g. Oil Prices & Fiscal regime instability)

• Non-standard legal & environmental regulatory frameworks

• Financial and other resource constraints

POLITICAL & ECONOMICAL

• Non existence of expertise in new service offerings and emerging technologies

• Non-integrated operations at the organizational level

SOCIAL & TECHNOLOGICAL

Overcoming the Barriers to Change

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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.

Summary & Conclusions

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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.

Thank You:

Questions?

Resources & Other Useful links

Source: DECC, 2011

Resources & Other Useful links

Source: BP Statistical Review of World Energy 2011

Resources & Other Useful links

Source: BP Statistical Review of World Energy 2011

Resources & Other Useful links1. 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_Del

oitte_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/statistical_ener

gy_review_2011/STAGING/local_assets/pdf/2030_energy_outlook_booklet.pdf

12. https://www.og.decc.gov.uk/