Andy brogan's presentation slides from the 2010 World National Oil Companies Congress

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Andy brogan's presentation slides from the 2010 World National Oil Companies Congress that took place in June in London.

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Andy brogan's presentation slides from the 2010 World National Oil Companies Congress

  1. 1. World NOC Congress Andy Brogan
  2. 2. Andy Brogan, Ernst & Young World National Oil Companies Congress Page 2 Increasing global trade in oil South America 0.3 US 7.1 Europe 11.8 5.0 8.4 Africa N/A 6.9 Russia China -0.2 4.8 Japan Pacific Region 5.6 5.0 17.8 Net oil importers Net oil exporters Figures = mb/d of oil imports/exports Source: IEA 11.1 9.0 6.3 7.0 23.0 Middle East 3.8 2.3 1980 2015
  3. 3. Andy Brogan, Ernst & Young World National Oil Companies Congress Page 3 Upward trend in oil trade movements over longer-term Oil exports
  4. 4. Andy Brogan, Ernst & Young World National Oil Companies Congress Page 4 Growing importance of natural gas Net inter-regional trade flows between major regions 2007
  5. 5. Andy Brogan, Ernst & Young World National Oil Companies Congress Page 5 Increasing globalisation in gas trade Net inter-regional trade flows between major regions 2007 2030
  6. 6. Andy Brogan, Ernst & Young World National Oil Companies Congress Page 6 Mounting governmental intervention “China Oil Firms Find Partners Ease Deals” Wall Street Journal, 23 March 2010 “President reverses offshore drilling expansion” The Australian, 28 May 2010 “Australian resource tax may delay CSG to LNG projects” Platts Commodity News, 18 May 2010 “Taking gentle aim at oil sands; negative global image may force Ottawa's hand” National Post, 2 February 2010 “Lawmakers again taking aim at liability caps for oil spills” MarketWatch, 25 May 2010 “CNPC's Verenex Acquisition Falters in Increasingly Politicised Libya” IHS Global Insight, 9 September 2009
  7. 7. Heightened oversight of oil and gas industry ► Greater compliance and regulatory burden ► Cross border complexity in operations ► Varying reserves/financial reporting standards ► Corporate governance structure ► The expectations of minority shareholders ► Need for greater transparency (especially if capital raising) ► Opposition from special interest groups Andy Brogan, Ernst & Young World National Oil Companies Congress Page 7
  8. 8. Andy Brogan, Ernst & Young World National Oil Companies Congress Page 8 Evolving business models ► Independent E&P ► Junior oil and gas ► Private equity ► NOCS ► Oil traders ► Independent refiners ► Private equity ► Terminal/storage owners ► Petrochemical companies ► Product traders ► Distributors ► Independent marketers ► Supermarkets ► Private equity ► Franchises Typical Hydrocarbon Supply Chain Refining and blending Trading and distributionE&P Marketing CDU upgrade Treat Blend Ship Pipeline Industrial Construction Transport WholesalerSmall customersTerminal Products trading
  9. 9. A changing industry For decades the leading industry players have focused on ► Global market coverage ► Vertical integration ► Economies of scale ► Operational supply chain efficiency This model is currently undergoing change and an alternative model based upon the following themes is emerging: ► Focus on core markets ► Divesting of ‘non core’ assets and businesses ► Relationship and contractor management ► Capital efficiency The changing of this model presents opportunities/risks for NOCs as they consider whether to enter new markets and new businesses Andy Brogan, Ernst & Young World National Oil Companies Congress Page 9
  10. 10. There are both opportunities and risks Key opportunities ► Access to new markets and resources ► Acquisition of skills/technology ► Strengthening and internationalising of the brand and organisation ► Synergies with existing businesses ► cost and efficiency savings ► supply chain benefits ► Buying at the right time in the economic cycle Andy Brogan, Ernst & Young World National Oil Companies Congress Page 10 Key risks ► Management skills ► Does current management have the skills to manage the acquired asset(s) effectively? ► Current liabilities and potential future liabilities ► Are these fully understood and factored into the purchase agreement and ongoing business plan ► Political risks and reputational risks ► Moving into overseas markets has a different risk profile. Is this risk profile fully understood and can it be managed effectively? ► Buying at the wrong time in the economic cycle
  11. 11. Andy Brogan, Ernst & Young World National Oil Companies Congress Page 11 Currently there are many opportunities for well capitalised NOCs Chevron Puts Its Last European Refinery On The Market 3 March 2010 Business Monitor Online Shell has agreed to sell its downstream business in New Zealand 29 March 2010 All Business Exxon Mobil sells petrol station network to 7- Eleven 27 May 2010 The Australian BP AFRICA will sell its marketing operations in five southern African countries 3 March 2010 AllAfrica.com Statoil sells Brazil oil field stake to Sinochem 21 May 2010 Bullfax.com Shell to divest 15% of its refining capacity 16 March 2010 Oil & Gas Journal ConocoPhillips To Shed Refining Capacity 24 March 2010 Downstream Today OMV In Talks To Divest Exploration Assets In Russia 20 May 2010 Businessweek Total sells its interests in the Valhall and Hod fields 27 April 2010 Total.com
  12. 12. Andy Brogan, Ernst & Young World National Oil Companies Congress Page 12 JVs help to spread the risk Source: IHS Herold
  13. 13. Future projects may look different ► Increased use of JVs to pool capital and mitigate risks in large projects ► Governments are becoming increasingly active in encouraging and brokering alliances in the oil & gas sector ► New partnerships emerging between reserves-rich NOCs and those of import-dependent nations ► NOCs buying into existing joint ventures to gain access to markets/generate new revenue streams ► Increased number of JV partners in individual projects due to their cost and complexity ► There will be fewer listed upstream and oilfield services companies at the end of the year than the start of the year Andy Brogan, Ernst & Young World National Oil Companies Congress Page 13
  14. 14. Thank you

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