Energy
transformation
Keynote address: Petroleum
economist energy strategy forum
Adi Karev, EY Global Oil & Gas Leader
2017
Kuwait, 31 January 2018

Page 2 Petroleum Economist Energy Strategy Forum – Energy Transformation
Rising economic confidence and investor expectations
to drive M&A as sector boundaries fall
Confidence in the economy is very strong
Outlook positive for corporate earnings and
market stability
Companies taking proactive measures to deal
with digital transformation
Private equity returns to challenge corporates
on the buyside, with new investment models
and a longer horizon
Deal-making intentions remain at
near-record levels
EY Oil & Gas Capital Confidence Barometer,
17th edition – November 2017

Page 3 Petroleum Economist Energy Strategy Forum – Energy Transformation
Global Oil & Gas Capital Confidence Barometer
Key findings – 17th edition
Macroeconomic environment and
M&A outlook
Acceleration in developed markets
underpins buoyant economic outlook,
with deal-making intentions remaining
at near-record level.
95%
see the global economy as
improving or stable
96%
see the M&A market as
improving or stable
69%
intend to pursue
acquisitions
Growth and portfolio strategy
Deal-making combined with digital at the
forefront of boardroom thinking as private
equity rebounds and companies
recognize the need for a clear, inclusive
growth strategy.
45%
of companies expect
increasing competition for
assets from private equity
78%
review their portfolio every
six months or less
43%
recognize the need to
ensure they have a broader
narrative to engage all
stakeholders
Digital transformation
Executives look to be on the front foot
in the face of disruption and building
venture capital models to invest in
the future.
62%
take proactive measures to
counter the impact of digital
transformation on their
business model
41%
are developing digital
capabilities in house, while
33% are buying, forming
alliances or creating JVs
with digital companies
45%
are developing corporate
venture capital arms to drive
better access to new
capabilities and technologies

Page 4 Petroleum Economist Energy Strategy Forum – Energy Transformation
Energy reimagined scenarios
Scenarios will evolve as conditions permit
Energy mix forecasts scenario spectrum
Share of
energy supply
Non-fossil
fuels
Fossil
fuels
Source: EY analysis based on: International Energy Agency EA-World Energy Outlook 2016, Exxon-Outlook for Energy 2017, BP Energy Outlook 2017, US
Energy Information Administration-Annual Energy Outlook 2017, Wood Mackenzie-Global Energy Forecast to 2030 and Statoil-Energy Perspectives 2017

Page 5 Petroleum Economist Energy Strategy Forum – Energy Transformation
Crude trade flows are shifting, bringing challenges and
opportunities for Middle Eastern exporters
Middle East exports to India and China are on the rise and competition is
increasing from the US and Russia
2.8 3.7
1.9 1.8
2.52.5
ChinaIndia
US
Middle
East
1.0 1.1
October 2017: 0.45 mb/d – historically the highest
2.2 2.7
Europe
Russia*
* Russia represents former Soviet Union
2011 2016Volume of oil exports (mb/d)

Page 6 Petroleum Economist Energy Strategy Forum – Energy TransformationQ1 | January 2018 Global oil and gas market outlookPage 6
Business strategic flexibility will increasingly come to
the fore as a new energy-enabled future emerges
Energy
enabled
future
Economic growth
Efficiency
ElectrificationGovernment
Technology
Consumers behavior
?
What does the market want?
How do we serve it?
De-carbonization
Forces shaping our market

Page 7 Petroleum Economist Energy Strategy Forum – Energy Transformation
Differentiation through un-commoditization would be the
answer to changing considerations of customers
Customer considerations are changing
The customer …
Alternatives
Sustainability
Transparency
Cost competitiveness
Control
has
values
demands
seeks
wants
Transition from a commodity-product approach to a differentiated product/service business model is necessary
Increased
customer-
centricity
through
differentiation
Undifferentiated
commodity
Oil
Oil
Oil
Differentiated products
Petrochemicals
Battery
Solar panels
Differentiated services
Retail
Electricity
EV charging

EY | Assurance | Tax | Transactions | Advisory
How EY’s Global Oil & Gas Sector can help your business
The oil and gas sector is constantly changing. Increasingly uncertain
energy policies, geopolitical complexities, cost management and climate
change all present significant challenges. EY’s Global Oil & Gas Sector
supports a global network of more than 10,000 oil and gas professionals
with extensive experience in providing assurance, tax, transaction and
advisory services across the upstream, midstream, downstream and oil
field subsectors. The Sector team works to anticipate market trends,
execute the mobility of our global resources and articulate points of view
on relevant sector issues. With our deep sector focus, we can help your
organization drive down costs and compete more effectively.
Ernst & Young LLP is a client-serving member firm of
Ernst & Young Global Limited operating in the US.
© 2018 Ernst & Young LLP.
All Rights Reserved.
1801-2546819
EYG no: 00868-184GBL
ED None
This material has been prepared for general informational purposes only and is not intended to be
relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific
advice.
ey.com/oilandgas