colin welsh presentation
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December Business BreakfastTRANSCRIPT
A Global Economy – Have We Got The Energy?
AGCC Business Breakfast
Colin I. Welsh
7th December 2011
Simmons & Company International – Aberdeen
Page 2
* Aggregate value of transactions in which Simmons Aberdeen acted as advisor since 1999.Simmons & Company International Limited is authorised and regulated by the Financial Services Authority.
Overview
Page 3
Oil Demand And Supply Outlook
Spending Trends
Conclusions
Global Oil Demand Outstripping Supply
Page 4
Source: BP Statistical Review 2011
Asia Pacific
Africa
Middle East
Europe & Eurasia
S. & Cent. America
North America
90
80
70
60
50
40
30
20
10
0
1985 1990 1995 2000 2005 2010
Mil
lio
n b
bl/
d
Reservoir depletion is driving overall decline in production, impacted by recent underinvestment
Demand Contractions Are Less Painful Over Time
US & Chinese economy forecast to grow 2010-2012
Page 5
Recessionary Periods
Y/Y Demand
Changes 1974 1975 1980 1981 1982 1983 1991 2001 2008 2009
Global, mb/d -812 -469 -2524 -1868 -1642 -221 152 699 -429 -1285
OECD -1704 -1047 -2951 -2113 -1861 -429 232 11 -1558 -2090
Non-OECD 892 579 428 244 219 207 -80 688 1129 805
Global, y/y change % -1.5% -0.9%-
4.0%-
3.1%-
2.8%-0.4% 0.2% 0.9%
-0.5%
-1.5%
OECD -4.1% -2.6%-
6.7%-
5.2%-
4.8%-1.2% 0.6% 0.0% 3.1% -
4.3% Non-OECD 6.2% 3.8% 2.2% 1.2% 1.1% 1.0% -0.3% 2.4% 3.1% 2.1%
Global % of total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
OECD 72.2% 70.9% 67.0% 65.6% 64.2% 63.7% 62.9% 62.3% 55.9% 54.3%
Non-OECD 27.8% 29.1% 33.0% 34.4% 35.8% 36.3% 37.1% 37.7% 44.1% 45.7%
Spare Production Cushion Is Low Relative To History
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2010 2011 2012 2013 2014 2015 201680
85
90
95
100Demand (Reference GDP growth)
Demand (moderate GDP growth)
Supply Capacity
Oil
Su
pp
ly /
De
ma
nd
(m
illio
n b
b/d
)
Sources: IEA (2011) Medium term oil and gas markets; Schlumberger (2011) CEO Energy Power Conference.
Iraq
Venezuela
Iran
Nigeria
Libya
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5
OPEC
mb/d
Who Are We Relying On?
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41% - 52%
Potentially UnstableCountries
Source: WEO 2010
Growing Importance On Unconventional Resources
Page 8
Eastern Europe shale gas
Resource Potential
92bn barrels of oil equivalent
Maturity level
Prospect/ pending commerciality
Jordan oil shale
Resource Potential
10bn barrels of oil equivalent
Maturity level
Discovered/ commercial
Russian heavy oil/ oil sands
Resource Potential
47bn barrels of oil equivalent
Maturity level
Fully commercial
Oil Sands Heavy OilCoalbed Methane
Oil ShaleShale Gas
Canadian oil sands
Resource Potential
173bn barrels of oil equivalent
Maturity level
Fully commercial
U.S. oil shale / shale gas
Resource Potential
53.6 Tcf
Maturity level
Fully commercial
Source: Simmons Analyst Research, EIA, RBC Richardson Barr , Spears and Associates
An Increasing Share Of Oil Supply Will Come From Offshore Fields
2010 2011 2012 2013 20140
5
10
15
20
25
30
35
Africa Asia AustralasiaLatin America North America Western Europe
Ex
pe
nd
itu
re (
$ m
illio
ns
)
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Douglas Westwood 2010
Global Deep Water Capex by Region
35
30
25
20
15
10
5
2011
1966 1978 1990 2002 2014 2026
Offshore Deep
Offshore Shallow
mm
bb
l O
il /
da
y
Oil Production Outlook
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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150
20
40
60
80
100
120
140
160
180Brent WTI
$/Barrel
Impacted by Lehman's collapse and resultant global recession Recovery delayed by consequences of Macondo
• Fuelled by rising global demand for oil and strong underlying economy
1999 – 2007 Brent Average: $40
1999 – Current Brent Average: $60
High of : Brent $144.38
WTI $145.08
Low of: Brent $35.68
WTI $32.35
Oil Price Trend & Where We Are Heading
Source: CapitalIQ – September 2011
Short-term fluctuations but still expected to tighten in the longer term
E&P Spending $550bn And Growing
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E&P investment level beyond $550 Bn/yr needed to meet demand
Increasing complexity and intensity of future developments
19951996
19971998
19992000
20012002
20032004
20052006
20072008
20092010
20110
100
200
300
400
500
600
E&
P S
pe
nd
($
Bn
/yr)
2011 Estimate
Sources: IEA WEO (2010); Barclays Capital; Sanford C Bernstein; SBC Analysis; Schlumberger (2011) CEO Energy Power Conference.
Aberdeen Ideally Placed To Benefit
Exploit remaining reserves
Subsea knowledge/capability valued by impending $bn global deepwater market
As hub for operations outside Americas
Emerging decommissioning market
Fledgling renewables opportunity
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Finally...
“Give us the tools and we will finish the job.”
Winston Churchill
Modern facilities (offices/industrial estates)
Infrastructure (airports/roads/etc)
Stable tax regime
Enhanced facilities (health/entertainment/environment)
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