Global Oil & Gas Update 17 October 2019 Neil Golding Head of - - PowerPoint PPT Presentation

Global Oil & Gas Update

17 October 2019 Neil Golding – Head of Oil and Gas Energy Industries Council

Content of presentation

• Who we are
• Current state of play globally
• CAPEX by country and operator
• Project FIDs
• Major Contracting Activity
• Global upstream opportunities
• Future
• Current
• Decommissioning – UK and globally
• Opportunities in other oil and gas sectors
• Summary

Who we are

• Not-for-profit energy trade association, established in 1943
• For companies supplying goods and services to global energy industries
• Help our members identify where global business opportunities exist and to assist them in

making connections with key operators and contractors

• Services that we provide include:
• Market intelligence – EICDataStream, EICAssetMap, Reports, Newsbriefs
• National Events – EIC Connect, Business Presentations, Export Showcases
• Overseas Events – Delegations, Exhibitions
• Global network of offices – Dubai, KL, Houston and Rio
• Training
• Approximately 60 staff in UK and overseas
• Over 650 members active in various energy sectors

Current state of play – Oil and Gas

• Oil price volatility remains – geopolitics; global demand projections; US-China tensions;

global economic slowdown

• Major operators – now very much aligning themselves as Energy companies, not Oil &

Gas

• Operators continue to make profits (Q2 2019), although lower than same quarter than
• 2018. Lower refining margins. Disciplined capital expenditure remains. Major projects

moving forward. Breakeven prices down.

• Positive start to the year for EPC contractors with diverse capabilities, subsea players

see reduced backlog but rising levels of early engagement and tendering. Pipeline of

• pportunities seen to be positive. Offshore campaign increase 2020/21
• Energy majors have mentioned possibility of an EPC cost and capacity crunch in 2020

Current state of play – Oil and Gas

• Rise of decommissioning opportunities in mature basins – reduction of costs and

embracing of new technology

• Decarbonisation of the industry – CCUS; increasing usage of renewable energy
• Gas – importance growing as part of energy transition. LNG key role to play.
• Oil demand will fall – EV take up. Downstream industry will continue to see an

increase in demand for oil.

• Waste to fuels, Hydrogen, cleaner fuels
• Mergers & Acquisitions - majors continuing to sell up non-core assets, ExxonMobil

Oil and gas project CAPEX ($Billion) - country and operator 2019/2026

100.000 200.000 300.000 400.000 500.000 600.000

CAPEX by country through to 2026 ($million)

Downstream Midstream Upstream 20.000 40.000 60.000 80.000 100.000 120.000

CAPEX by operator through to 2026 ($million)

Downstream Midstream Upstream

Offshore Upstream project CAPEX ($Billion) - country and operator 2019/2026

10.000 20.000 30.000 40.000 50.000 60.000

CAPEX by operator through to 2026 ($million)

10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000

CAPEX by country through to 2026 ($million)

Project FIDs – 2015 to 2019

10 20 30 40 50 60 70 2015 2016 2017 2018 2019

Nos of Project FIDs 2015 to 2019

Downstream Midstream Upstream 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 2015 2016 2017 2018 2019

CAPEX ($million) on projects to reach FID in 2015 to 2019

Downstream Midstream Upstream

Project FIDs – Countries and projects (2019)

5 10 15 20 25 30 35 40

FIDs reached by country 2018-2019 (Top 10)

Downstream Midstream Upstream

ProjectName Country Sector CAPEX $million Amur Gas Processing Plant Russia Downstream 22400 Arctic LNG-2 Russia Midstream 21000 Mozambique LNG Project (Phase 1) Mozambique Midstream 15000 Golden Pass Products LNG Expansion Liquefaction Plant & Export Pipeline USA Midstream 10000 Gulf Coast Growth Ventures Project (GCGV) - San Patricio PetChem Facility USA Downstream 7300 Sitra Refinery - Upgrade Bahrain Downstream 6300 Pachpadra (Barmer) Refinery and Petrochemical Complex - Rajasthan India Downstream 6061 Sabine Pass LNG Export Terminal - Trains 5 & 6 USA Midstream 6000 Liza Oil Field (Phase 2) Guyana Upstream 6000 Azeri Central East Project Azerbaijan Upstream 6000 VG Calcasieu Pass LNG Export Plant USA Midstream 5800 Area 1 - Golfinho-Atum Development Mozambique Upstream 4000 Assa North/Ohaji South Gas Plant Nigeria Midstream 3500 Alberta Propane Dehydrogenation and Polypropylene Plant Canada Downstream 3428 OML 13 Cluster Development (7CGDP) Nigeria Upstream 3150 Beaumont Refinery Expansion - Third Crude Distillation Unit ("Crude C") USA Downstream 3000 Mero Oil & Gas Field (Phase 2) Brazil Upstream 3000 Whistler Natural Gas Pipeline USA Midstream 2400 Jurong Island Refinery Expansion (ExxonMobil Singapore Refinery) Singapore Downstream 2000 Permian to Gulf Coast Crude Oil Pipeline USA Midstream 2000 OML 18 Fields Development (Akaso, Cawthorne Channel, Alakiri) Nigeria Upstream 2000 KG-DWN-98/3 - MJ Field India Upstream 2000

Project FID potential

ProjectName Country Estimated CAPEX ($million) Alaska LNG Liquefaction Plant USA 43000 Ras Laffan - Qatargas - NFE - LNG Four Liquefaction Trains Qatar 18000 Driftwood LNG (Calcasieu Parish LNG Liquefaction Plant) USA 16000 Browse Upstream Development (Torosa, Brecknock & Calliance Fields) Australia 15000 Abu Dhabi North West Development - Hail and Ghasha Sour Gas Development UAE 15000 Main Pass Energy Hub (MPEH) LNG Export Terminal USA 15000 Lake Charles LNG Liquefaction Plant - Trunkline LNG Export USA 12300 Greater Sunrise Gas and Condensate Fields (Sunrise, Troubadour, Sunset and Loxton) Australia 12000 Abadi Gas Field (Masela) Indonesia 12000 Rovuma LNG Liquefaction Plant Mozambique 12000 Trion Offshore Oil Discovery (Perdido Fold Belt) Mexico 11000 Ain Sokhna - Tahrir Petrochemicals Complex Egypt 10900 Panjin Refinery & Petrochemicals Complex China 10090 Pertamina Bontang Refinery Indonesia 10000 Bonga Southwest & Aparo Oil Fields - OML 118 & OPLs 249 and 213 Nigeria 10000 Jordan Cove LNG Liquefaction Plant USA 10000 Port Arthur LNG Liquefaction Facility (Sempra) USA 10000 Belmont County Ethane Cracker USA 10000

5 10 15 20 25 30 35

FIDs expected in 2019/2020 by country

Downstream Midstream Upstream

Current state of play – Contract activity 2019

5 10 15 20 25 30 35 40

Top 20 contractors since 1 January 2019

Downstream Midstream Upstream 50 100 150 200 250 300 350 400 2014 2015 2016 2017 2018 2019

Major contract awards 2014 - 2019

Downstream Midstream Upstream 10 20 30 40 50 60

Top 20 countries - Major awards

Downstream Midstream Upstream

Upstream – 2019 discoveries

5

Upstream – Early Stage Projects

2

Global Focus – Late Stage Projects

Decommissioning overview – UK

• Operators to spend between £45 billion and

£77 billion on decommissioning in the UKCS

• Well plug and abandonment 49% of total

spend

• Aim to reduce cost of decommissioning by

35%

• Clear regulation allows for efficient

decommissioning alongside early engagement with key players

• Evolution of supply chain offering
• Investing in new technology to reduce cost,

specialist centres developed to support this

Decommissioning overview – Global

• Arabian Gulf - Over 1,000 structures and 3,000 wells in the Arabian Gulf which

will be over 30 years old and in need of decommissioning by 2038. No regulation currently in place. In its infancy, Ramboll active to date.

• A-PAC – Over 2,600 platforms and 35,000 wells in the APAC region and that

decommissioning could cost well over £77.7 billion. Over 380 fields in the APAC region are expected to cease production by 2028. Around 833 installations in the region are at or over 20 years old. Key markets, Brunei, Indonesia, Thailand, Australia and Malaysia.

• Latin America - The decommissioning pipeline in Latin America is estimated to

contain over 700 structures and over 4,000 wells due to cease production by

• 2038. Brazil is the main market.

Opportunities in other O&G sectors

In summary

• Volatility in oil price remains
• Projects commercially viable at lower oil prices
• Profits continue for operators
• Positive FID activity continues
• Contractors sounding positive in Q2 2019; Order backlog growth

potential; Profits up

• Cautious frontier exploration remains
• Gas demand continues to grow globally; LNG liquefaction opportunities
• Development of new technologies
• Decarbonisation of the oil and gas industry

Global Oil & Gas Update

October 2019 Neil Golding – Head of Oil and Gas neil.golding@the-eic.com