More Related Content

Energy Transformation - Adi Karev keynote address

  1. Energy transformation Keynote address: Petroleum economist energy strategy forum Adi Karev, EY Global Oil & Gas Leader 2017 Kuwait, 31 January 2018
  2. 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
  3. 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
  4. 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
  5. 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)
  6. 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
  7. 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
  8. 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.