The document discusses the prospects and challenges facing the global oil and gas industry in the next decade. It outlines the industry value chain and major changes, including volatile markets, tougher operating environments, and skills shortages. The presentation framework discusses diversifying revenue, effective cost controls, and investing in safety and human capital as a company strategy. Barriers to change include political/economic instability, lack of expertise in new technologies, and non-integrated operations. Overcoming barriers involves integrated logistics, risk management, industry advocacy, communication, and training. Price risks, capital investments, and sustainability will drive the industry, which will see future growth from new assets, technology, and people.

1. THE GLOBAL OIL & GAS INDUSTRY: PROSPECTS
& CHALLENGES IN THE NEXT DECADE
Presented By: Theophilus Acheampong
Aberdeen
July 12, 2011

2. PRESENTATION OVERVIEW
 The Global Oil & Gas Value Chain
 Major Changes within the Oil and Gas Industry
 Company Strategy Framework
 Barriers to Change Within the Business
 Overcoming the Barriers to Change
 Summary and Conclusions
 Appendix
2

3. The Global Oil & Gas Value Chain
Upstream
Oil & Gas
Mid Stream
─ Exploration
─ Field Development
─ Production Operations
Downstream
─ Transportation
─ Processing
─ Storage & Distribution
─ Manufacturing
─ Refining & Petro-Chemicals
─ Wholesale & Marketing
3

4. Major Changes within the Oil and Gas Industry
Challenges
 Volatile energy markets on the macro-economic front
 Increased operational and logistical challenges from
tougher environments
 Increased regulatory pressure on the industry & Fiscal
regime instability
 Skills and labour supply deficit in the industry
Opportunities
 Growing market in the low-carbon sector of the economy
 Closer collaborations between contractors, operators, and
the supply chain
 Opportunities in frontier markets with newer assets and
technologies
4

5. Company Strategy Framework
DIVERSIFCATION OF REVENUE STREAMS
EFFECTIVE COST CONTROLS & CUSTOMER SERVICE FOCUS
SAFETY & HUMAN CAPITAL INVESTMENT
5

6. Company Response Strategy
DIVERSIFCATION OF EFFECTIVE COST
REVENUE STREAMS SAFETY & HUMAN
CONTROLS &
CAPITAL INVESTMENT
CUSTOMER SERVICE
• Offer a broad service
range (e.g. Logistics • Continuous Capital • Investment in Employee
supply in Renewables Expenditure and Health & Safety
such as Offshore wind & Technology investments
Turbine Installations) to improve economies of • Initiatives to ensure
scale & efficiency continuous supply of
• Consolidate & leverage talent pool (e.g.
existing business in the • Reduce operational cost Training, Leadership &
UKCS (e.g. base utilizing innovative Personal Development
Decommissioning approaches (e.g. Cut Programmes)
Projects) down on wastages,
hedge fuel price risks ) • Adequate succession
• Emerging markets planning for senior
opportunities such as • Understand customer management
Africa & Asia (e.g. J.V. requirements, ensure
Partnerships and project deadlines and
Acquisitions) service delivery are
timely
6

7. Barriers to Change
• Macro-economic factors (e.g. Oil Prices & Fiscal regime
instability)
POLITICAL &
• Non-standard legal & environmental regulatory
ECONOMICAL frameworks
• Financial and other resource constraints
• Non existence of expertise in new service offerings
SOCIAL & and emerging technologies
TECHNOLOGICAL
• Non-integrated operations at the organizational level
7

8. Overcoming the Barriers to Change
 Utilize integrated logistics policies to cut down project
timelines.
 Bespoke risk & asset management strategies to address
capital allocation decisions.
 Membership of industry bodies such as Oil & Gas UK to
advocate on behalf of industry.
 Effective communication strategies to understand employee
& customer needs.
 Training and human capital development.
8

9. Summary & Conclusions
 Price Risks, Capital Investments and Sustainable development
will be industry drivers in the coming decade.
 Company strategy should focus on:
― Diversification of Revenue Streams
― Effective Cost Controls &Customer Service Excellence
― Safety & Human Capital Investment
 Benchmarks on supply chain focus, operational excellence, &
regulatory compliance.
 UKCS will be pivotal in building on core competencies.
 Future growth in the industry will come from investments in new
assets, technology & people.
9

10. Thank You:
Questions?

11. Resources & Other Useful links
Source: DECC, 2011

12. Resources & Other Useful links
Source: BP Statistical Review of World Energy 2011

13. Resources & Other Useful links
Source: BP Statistical Review of World Energy 2011

14. Resources & Other Useful links
1. http://www.oilandgasuk.co.uk/knowledgecentre/supplychain.cfm
2. http://www.spe.org/jpt/print/archives/2011/04/16TalentTechnology.pdf
3. http://www.pwc.com/en_GX/gx/transportation-logistics/pdf/hoisting-the-sails_final.pdf
4. http://ax4energy.com/LinkClick.aspx?fileticket=vbON1Pl4Kj4%3D&tabid=67
5. http://www.kpmg.no/arch/_img/9448852.pdf
6. http://www.deloitte.com/assets/Dcom-
Australia/Local%20Assets/Documents/Services/Risk%20services/220909_Deloitte_Oil_and_gas_reality_check.
pdf
7. http://www.ey.com/Publication/vwLUAssets/Top_10_risks_affecting_oil_and_gas_in_2010/$File/The%20top%
2010%20risks%20for%20oil%20and%20gas.pdf
8. http://www.energyinst.org/information-centre
9. http://www.economist.com/node/4489659
10. http://www.abdn.ac.uk/~pec144/acreef/publications.html
11. http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistica
l_energy_review_2011/STAGING/local_assets/pdf/2030_energy_outlook_booklet.pdf
12. https://www.og.decc.gov.uk/