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Dr seong hoon kim's presentation slides from the 2010 World National Oil Companies Congress

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Dr seong hoon kim's presentation slides from the 2010 World National Oil Companies Congress that took place in June in London.

Dr seong hoon kim's presentation slides from the 2010 World National Oil Companies Congress that took place in June in London.

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  • 1. 23 June 201023 June 2010 Korea National Oil CorporationKorea National Oil Corporation International Strategies of Korea National Oil Corporation International Strategies of Korea National Oil Corporation Dr. Seong Hoon Kim Senior Executive Vice President
  • 2. ContentsContents 1. Oil/Gas Situation Overview1. Oil/Gas Situation Overview 2. KNOC E&P Status and Strategies2. KNOC E&P Status and Strategies 3. KNOC Oil Stockpiling Status and Strategies3. KNOC Oil Stockpiling Status and Strategies 5. Concluding Remarks5. Concluding Remarks 4. Vision4. Vision
  • 3. 1. Oil & Gas Situation Overview1. Oil & Gas Situation Overview
  • 4. Oil Price Trends Oil prices show gradual recovery after a sudden drop due to global recession Long term oil price (Dubai) $75/B ('10.5.18) Annual Average Price of Oil since 2003 ($/b) fluctuation The Second fluctuation The First The crash in ‘86 The Gulf Crisis The crash in ‘98 The 9.11 Sharp Rise since 2007 Influx of Speculative Capital US Dollar Weakness
  • 5. 0 20 40 60 80 100 120 140 160 2000 2001 2002 2003 2004 2005 2006 2007 38 40 42 44 46 48 50 Internal Growth LimitationInternal Growth Limitation1 Almost all giants are already being developed or produced Substitution effect of reserve volume reduced as number of newly found oil fields are decreased 2000~2007, RRR 59% decreased59% decreased2000~2008, 55% decreased55% decreased ※ Source : IHS No of Giants found over 100mbbl reserveNo of Giants found over 100mbbl reserve Annual Production & Reserve ReplacementAnnual Production & Reserve Replacement 0 10 20 30 40 50 60 70 2000 2001 2002 2003 2004 2005 2006 2007 2008 % 100Mbbl Reserve replacement ratio Annual production increase World E&P EnvironmentWorld E&P Environment
  • 6. Business Opportunities restrictedBusiness Opportunities restricted2 ※ Source : IEEJ NOC’s possession 70% Available to access 7%NOC’s holding 6% Russian holding 17% Only 7% of reserves available to develop for IOCs owing to ‘Resource Nationalism’ & Nationalization ※ Worldwide reserve 1.4 Trillion bbl (Including Oil-sand) World E&P EnvironmentWorld E&P Environment
  • 7. Emerging New Consumers’ upsurgeEmerging New Consumers’ upsurge3 Emerging New Consumers such as China & India upsurge in energy development market CNPC acquired 49% stake of MangistauMunaiGaz, the biggest independent oil company in Kazakhstan (’09.4) Sinopec acquired Swiss ADDAX for U$9.2 billion (’09. 6) Sinochem acquired British Emerald Energy for U$870 million Agreement on U$25 billion loan for Russian pipeline construction (’09. 2) Singing MOU with Petrobras for U$10 billion finance support (’09.2) Expand Venezuelan investment fund to U$12 billion China : 8~10% Economy growth since 1970’s caused consumption increase Aggressive acquisition by resource diplomacy & economic competence ONGC acquired Imperial Energy, British independent company for U$2.6 billion(’08. 8) Announcement of Resource Security Plan by establishing sovereign wealth fund using foreign exchange reserve India : Consumption increase by average 7% economy growth for the past 8 years Acquiring overseas upstream assets to ensure stable resource management World E&P EnvironmentWorld E&P Environment
  • 8. Dependency on Oil/Gas will remain around 55% in 2030 Oil + Gas = 55% * Source: EIA, International Energy Outlook(2009.5) Coal 28% Renewables 11% Nuclear 6% 2030 World marketed energy use by fuel type World Energy Consumption Liquids (including Biofuel 32% Natural Gas 23%
  • 9. Dependency on Oil & Gas in Korea : 56.4%(2008) *Source: Korea Energy Economics Institute, Energy Statistics, 2008 Oil 41.6% Natural Gas 14.8% Coal 27.4% Nuclear, Hydraulic, etc. 16.2% Korea’s Energy Consumption
  • 10. Korea’s Oil Consumption Oil Consumption : 10th country in the world 1 USA 22.5% 2 China 9.6% 3 Japan 5.6% 4 India 3.4% 5 Russia 3.3% 6 Germany 3.0% 7 Brazil 2.7% 9 Canada 2.6% 10 Korea 2.6% 8 Saudi 2.7% * Source : BP『Statistical Review of World Energy(2009)』
  • 11. Dependency on Middle East OilDependency on Middle East Oil Oil Import : 5th country in the world 2006 2007 2008 40% 60% 80% 20% 82.2% 80.7% 86.3% 100% Middle East Oil (86.3%) Other Oil producing countries (13.7%) 2008 Korea *Source: Korea Energy Economics Institute, Energy Statistics, 2008
  • 12. 2. KNOC E&P Status and Strategies2. KNOC E&P Status and Strategies
  • 13. Role of KNOC Founded March 1979 Improving Petroleum Distribution Infra-structure Stockpiling Petroleum Developing Petroleum Financing & Technical Support Stabilizing Petroleum SupplyStabilizing Petroleum Supply Contributing to the Korean EconomyContributing to the Korean Economy
  • 14. UK Captain Libya Elephant 4 Inc. SES 2 Inc. Vietnam 15-1 2 Inc. Nigeria 321 3 Inc. Russia West Kamchatka China Mahwangsan West 5 Inc. USA ANKOR 2 Inc. Uzeckistan Namangan-Chust Production : 14 Development : 3 Exploration : 28 Azerbaijan Inam Venezuela Onado 3 Inc. Peru SAVIA-PERU (Z-2B) 3 Inc. Columbia CPE7 5 Inc. Iraq Bazian 2 Inc. Donghae-1 Gas 2 Inc. Harvest Central Asia 8 Middle East 11 Russia 3 Asia/Australia 7 America 14 West Africa 2 6 Core Area 5 Inc. Kazakhstan Sumbe 6 Inc. Yemen 70 Overview of KNOC’s Global E&P projects
  • 15. 409 553 524 44.9 43.1 50.0 - 100 200 300 400 500 600 700 800 94 95 96 97 98 99 00 01 02 03 04 05 06 07 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0 (mmbbl) UK Captain Indonesia SES Vietnam 15-1 Lybia Elephant Venezuela Onado DongHae-1 Gas Field Vietnam 11-2 Reserve Production Canada Blackgold 08 550 46.0 900 60.0 70.0 Yemen Marib Peru 8Block Average Growth Rate of Production & Reserves (recent 5years) : 146%, 124% 881 09 M&A or Producing Asset Acquisition 128.8 (Mbbl/d) KNOC’s Achievements
  • 16. Active M&A to meet government’s self-sufficiency goal - Target: 300,000 boepd & 2 Bn bbls in 2012 Acquiring 100~300 million barrel reserve per year Acquiring technology skill (operating) & experienced staff in a short time Creating Synergy effect, operating experience, new business opportunities The merits of M&A E&P Strategies M&A strategy for promising oil companiesM&A strategy for promising oil companies1
  • 17. USA ANKOR (Mar 08) Peru Petro-Tech (Feb 09) Canada Harvest (Dec 09) Kazak Sumbe (Dec 09) 20082008 20092009 57 mb/d 128 mb/d Production 124% 550 mil. B Reserves 60% 1.9% 4.4% Energy Self- Sufficiency 132% Experienced Staffs 1,241 660 KNOC M&A 543 117 568 1333 1,901 First M&AFirst Acquisition of Production Asset Extend Biz in Central Asia The Largest- Scale M&A in Korea 880 mil. B 20082008 20092009 20082008 20092009 20082008 20092009 M&A Experiences & Accomplishments
  • 18. ○ Purchase Price : 1.1 billion USD ○ Interest : KNOC 80%, Samsung 20% ○ Asset Summary - 5 Fields of the gulf of Mexico · Reserves (2P) : 79 million boe · Production : 21 MBOEPD - Experts for E&P : 117 ○ Changed name to ANKOR Energy (July 2008) [former Taylor Energy] Success Case # 1Success Case # 1 –– ANKOR in U.S.A Purchased asset of Taylor Of U.S.A (Jan. 2008)
  • 19. ○ Acquisition Price : 900 million USD ○ Closure : February 2009 ○ Interest(%) : KNOC 50%, Ecopetrol 50% ○ Asset : 1 Production Block 10 Exploration Blocks ○ Reserves(2p) : 153 MMBOE ○ Prospective Resources : 689 MMBOE ○ Production : 18 M BOEPD ○ Experts for E&P : 688 <Future Plan> ○ Production Increase: 45M BOEPD by 2015 Success Case # 2Success Case # 2 –– Peru SAVIAPeru SAVIA [Former Petro[Former Petro--Tech]Tech] Production Exploration Acquisition of Petro-tech (May. 2009)
  • 20. ○ Acquisition Price : 4.1 billion CAD ○ Asset Summary - Oil field in Midwest of Canada Oilsand, CBM Projects · Reserves(2P): 201 MMBOE · Production: 50 MBOEPD - Oil Refinery in East of Canada · Refining capacity: 120 MBOPD · Stockpiling: 7 MMBOE · Petrol Station: 64 - Experts ·E&P 379, Oil-Refining 570 Purchased Harvest Energy of Canada (Dec. 2009) Success Case # 3Success Case # 3 –– Canada HarvestCanada Harvest
  • 21. ○ Acquisition Price : 335million USD ○ Interest : KNOC 85%, Kazakhstan partner 15% ○ Asset Summary - 2 Development blocks & 1 Exploration block in Western Kazakhstan · Reserves(2P): 58MMBOE · Risked Prospective Resources: 20MMBOE · Production increase: 20 MBOPD by 2012 - Experts for E&P : 149 Purchased asset of Sumbe of Kazakhstan(Dec. 2009) Success Case # 4Success Case # 4 –– KazakhstanKazakhstan SumbeSumbe
  • 22. Oil Projects in Kurdistan Region (Iraq) - Agreement date : 2008.11.17 - Basic scheme of contract KRG KNOC Five oil Blocks Infra building Projects - KRG (Kurdistan Regional Government) grants KNOC participating interests in five oil exploration blocks - In return, KNOC provides KRG with infrastructure construction in the Kurdistan Region Korea has Industrial sectors’ strengths attractive to oil producing countries (ex: Electricity, IT, Plant, Construction etc)→improve infrastructure Continue to apply this strategy for the future biddings in other regions Package deal Developing new business model in producing countries or oil companies Developing new business model in producing countries or oil companies 2
  • 23. Calgary Edmonton Athabasca Peace River Cold Lake Fort McMurray Long-term R&D plans and organization to develop new energy resource GTL(Gas to liquid): Building GTL plant(10,000b/d) by 2015 Oil sand: Commercial production by 2012 Gas hydrates: Exploration and R&D stage 100% stake in the Blackgold (oil sand, 250 million barrels) in Alberta, Canada Construct the full-scale producing facilities from 2010 Produce up to 30,000 barrels per day by 2016 Canada oilsand Blackgold oilfield Diversifying Diversifying business by non-conventional energy sectorsDiversifying business by non-conventional energy sectors3
  • 24. 3. KNOC’s Oil Stockpiling Status and Strategies 3. KNOC’s Oil Stockpiling Status and Strategies
  • 25. Petroleum- Dependent Industry Structure Need Risk Management Possibility of Oil Shock Promote Petroleum Stockpiling for Energy Security 60 0 10 20 30 40 50 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 The Second fluctuation The Gulf Crisis The 9.11 Sharp rise Introduction to Petroleum Stockpile
  • 26. Seoul Crude 11 Products 3.6 Crude 4.6(7.3) Products 0.3(2.4) (Unit : MMB) Capacity Operation stocks Products 1.1 Products 0.9 Products 3.0 Products 2.9 Crude 19.3 Crude 9.7 (10.9) Crude 47.5 Crude 39.3(46.1) Products 2.5 Products 1.9 Crude 49.7 Crude 15.1(41.0) Products 2.1 Products 2.0 Products 6.2 Products 3.8 Stockpile capacity : 146 MMB Operation stocks : 119 MMB (39MMB of International joint stockpile) Pyeongtaek Seosan Gokseong Yeosu Guri Yongin Donghae Ulsan Geoje Jeju Stockpile Facilities
  • 27. Government’s plan (141million barrels by 2011) will be achieved with the help of IJS (40million barrels) Long-term contract with oil companies to minimize the price fluctuations Providing facilities Mutual benefits Oil-producing countries Diversifying Markets Reinforce the ability to cope with oil crisis (Emergency purchasing right) Improve the economics of the oil storage Use our facilities as sales hub to increase the market share in Northeast Asia Use oil market trend (Buy Low & Sell High) Concept of IJS Oil Stockpiling Strategies Expanding International Joint Stockpile (IJS) projectsExpanding International Joint Stockpile (IJS) projects1
  • 28. Improve marketing capabilities on overseas production oil → Create new biz opportunities and improve KNOC’s global status Create synergy effect by connecting both oil trading and overseas produced oil marketing Harvest Indonesia SESUSA ANKOR Expand direct marketing oil fields gradually 3,4232,410530--Black Gold 36,50036,50036,50036,500-Harvest 57,06557,00355,43841,1132,661Total 11,00011,00011,000-- Yeosu Tankage 817851555--Yemen 883883883--ADA 316393425--Indonesia SES 9731,1151,4131,679-UK Captain 3,1533,8504,1322,9342,661US Ankor 20142013201220112010Category Marketing Amount (thousand barrels) Reinforce marketing for crude oil produced in overseas by KNOCReinforce marketing for crude oil produced in overseas by KNOC2
  • 29. The pilot project(4.6million barrels) in Yeosu ready by 2011 The main project(23million barrels) in Ulsan port ready by 2014~2015 Government on-going support necessary on the oil hub project (Benchmark: Singapore took 10 yrs to complete the construction) Unlike IJS, providing additional Services to meet the required spec of buying countries Crude Oil Products Sakhalin Canada U.S South America China China Singapore Middle East, etc India 4 countries in NEA (China, Korea, Japan, Taiwan), Future Oil price uncertain → demand for oil storage increase Exporters (Canada, SA, ME, Sakhalin) Importers (China, India, US) Storage facilities in Korea Becoming the oil distribution hub in Northeast AsiaBecoming the oil distribution hub in Northeast Asia3
  • 30. Collecting and distributing center of petroleum - located in main transportation route Hub for logistic activities by refinery, trader, tankage companies -- producing, supplying, discharging, storing, value added treatinproducing, supplying, discharging, storing, value added treating, tradingg, trading Supply and Demand: SE Asia, Korea, China, Japan, USA, and etc. Harbor Infra Oil Exchange Market Infra for Financing/ Information Refinery TradersTank Terminal Oil Hub * Overview of Oil Hub
  • 31. Crude Oil Products Korea Singapore Market Focusing on India, South-East Asia and West-South Asia New Market in NEA Independent Market for the Pacific Rim inclusive of China, Japan, USA and Canada Asia’s possibility to divide into two Oil Markets ARA Singapore Gulf * Prospective of Asian Oil Hub
  • 32. 4. Vision4. Vision
  • 33. Production : 50-150 M B/D Plan: Exploration Success & Acquire Assets Ranking: around 70th Production: 300 M B/D By Increase of Exploration Success & M&A Ranking: around 60th Production: 500 M B/D Plan: Integrated big oil company Ranking: around 40th Enhance a competitiveness Local Major Global Oil Company Future of KNOC
  • 34. 38 World Ranking 98th 60th X 5 Production (1000 b/d) 60 300 X 3 Asset (Billion U$) 9.4 30 X 4 Reserves (Billion bbl) 0.6 2 Become a Regional Oil Major KNOC’s Targets by 2012 20082008 20122012 20082008 2012201220082008 20122012 20082008 20122012
  • 35. 5. Concluding Remarks5. Concluding Remarks
  • 36. ■ KNOC as a state-owned company responsible for oil/gas supply security in Korea : - Needs to increase the investment in upstream - Needs to contribute to improve physical oil distribution system in the Far East - Needs to develop human resources and technical specialties to achieve KNOC’s mission ■ KNOC will overcome the challenging situation in upstream by : - Globalizing its own management - Mutual cooperation with host countries and IOCs - Enhanced E&P Activities - Diversified investment in the lines of business
  • 37. Korea National Oil CorporationKorea National Oil Corporation