Creating value in times of low commodity prices Statoil gas seminar, 18 February 2016, London Classification: Internal 2012-10-24 Jens kland, EVP, Marketing, Midstream & Processing (MMP)
Our industry is in a challenging situation Low oil and gas prices Commodity prices 140 120 Climate 100 USD/boe 80 High costs 60 40 20 0 Oil and gas in a 2013 2014 2015 2016 Oil Gas (NBP) decarbonising world Costs 2…
Statoils mid- and downstream business is adding value With low commodity prices, the relative MMP1) - adjusted earnings2) importance of our mid- and downstream activity increases 25 20 Through Asset Backed Trading, the value…
Asset Backed Trading an extensive toolbox for value creation Our most successful trading activities imply Adjusted earnings 1) MMP - 2015 use of physical infrastructure or contractual assets Storages Refineries Terminals…
Resetting costs in MMP Continue efforts to become more competitive A sustained culture of continuous improvement Respond to complexity with simplicity 5
Opportunities in European gas markets Europe has a large and growing supply gap Norwegian gas is well placed as a cost-efficient supply source for the long term Due to its cleanness and versatility, gas will remain a key part of…
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European gas market outlook Statoil gas seminar, 18 February 2016, London Classification: Internal 2012-10-24 Olav Kolbeinstveit, Vice President, Statoil Market Analysis
European gas price drivers more than oil Price fall less severe than for oil Brent and global gas prices USD/MMBtu Key European gas market drivers 25 Demand Forward prices* Competing fuels 20 Temperature 15 FW market1) Supply…
Growing global LNG liquefaction capacity The LNG market is cyclical LNG production capacity BCM US LNG exports: 600 Limited volumes in 2016 500 Significant volumes contracted by 400 portfolio players Tolling contracts 300…
US LNG currently on the margin in Europe US LNG will flow according to price signals or at all Short-run marginal cost ranges for US LNG supply to Asia and Europe Asia North America Europe USD/MMBtu USD/MMBtu USD/MMBtu 5.3**…
US LNG most expensive source to Europe Financial Times 3 February 2016 12
EU28 gas consumption has bottomed out Gas to power is expected to recover EU 28 gas demand per sector BCM Historic drop in consumption mainly related to gas to power 600 500 No growth expected in the 400 buildings sector 300…
CCGTs1) in the UK competitive with coal plants Carbon tax drives gas to power recovery UK Coal switching range and gas-to-power consumption Gas to power demand is price p/th mcm/d sensitive 100 100 90 90 80 FW 80 Growing…
EU 28 natural gas imports increasing Record low indigenous production in 2015 Indigenous production EU 28 EU 28 gas imports BCM BCM 250 400 90% 200 300 80% 150 200 70% 100 100 60% 50 0 0 50% 2005 2010 2014 2015 2016E 2005…
Dutch gas production capped Seasonal flexibility hit Groningen production 60 BCM Groningen 40 Production cap 27 bcm 20 Was key source of flexibility 0 2005 2010 2014 2015 2016E Flexible Norwegian gas 8 Seasonal output…
Concluding remarks Challenging period risks to the upside LNG connecting regional markets Increasing import needs to Europe 17
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Capturing business opportunities Statoil gas seminar, 18 February 2016, London Classification: Internal 2012-10-24 Tor Martin Anfinnsen, Senior Vice President, Marketing and Trading
A major gas player with Europe as gravity point NCS NCS Melkya LNG Largest gas producer on NCS1) Pipeline gas to North West Europe Melkya LNG facility USA Shale gas production in Marcellus Deliveries of gas to Toronto and US…
Statoils gas is well positioned in Europe Access to an integrated and flexible Large gas resource potential Proximity to markets pipeline infrastructure on the NCS Polarled Pipeline LNG sgard transport Ormen Lange 1450 Norway…
Our marketing strategy Developments in gas market give new Statoils contract portfolio has changed sales channels and opportunities Oil indexed Transformation away from oil-indexing Gas indexed Unbundling of the value chain and…
Capturing value at the trading desk Capitalise on NCS Manage risk in Monetise total portfolio equity gas position contract portfolio through trading Optimising production in Keep volume commitments and Execute optimisation…
Seising upstream opportunities on the NCS Aasta Hansteen Providing services to NCS peers Polarled Gas modulation, transport and back-up services Dispatching services Blending services to meet quality specs Fuel and injection…
Taking opportunities in a global LNG market Highly flexible LNG portfolio creating new business opportunities The LNG protfolio is made up predominantly of equtiy volumes combined with third party volumes The global LNG market…
Gas meets UKs energy needs Coal phase out and falling indigenous production is creating an energy gap Gas is key to a stable energy solution Coal phase out gives energy gap in UK Growing UK import need 100% Generation gap 120…
Concluding remarks Despite current market prices, our outlook for gas in Europe remains positive Statoils gas activity has an extensive toolbox of value-creating options Coal phase out in the UK is giving new opportunities for gas…
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Longer-term gas market perspectives Statoil gas seminar, 18 February 2016, London Classification: Internal 2012-10-24 Eirik Wrness, Senior Vice President and Chief Economist
Long-term Energy Perspectives Short-term volatility long-term trends, across different scenarios Commodity prices (real Dec 2015, indexed Feb 1997=100) 800 Brent HH 600 NBP Reform, 2.8% Coal 2012 Renewal, 2.9% 400 Rivalry, 2%…
It takes decades to change the global fuel mix New renewables set for rapid growth, robust gas demand across scenarios World fuel mix 1972 - 2040 100 % Economic growth and structure Energy efficiency improvements 80 % New renewables…
Paris COP21 a breakthrough Achieving the targets entails a significant role for natural gas Significant improvement: common target Several scenarios possible The outcome is NOT given Implications for natural gas: Good news, if…
Oil and gas are here to stay Considerable supply gap in all scenarios, and gas demand increases in all Oil demand*, supply from existing fields Gas demand, supply from existing fields Mbd Bcm Demand range Supply gap Demand range…
Regional variation in long-term demand outlook Non-OECD Asia drives global markets, 500-750 bcm demand growth Gas demand development Gas demand growth by region 5 000 Bcm Reform case, Bcm Reform 5 000 Rivalry Renewal 4 000 Reform…
Europes gas imports will grow EU has to pursue a policy making Europe attractive for gas suppliers bcm 600 500 Demand 400 EU gas import requirements 300 200 Norway Indigenous 100 EC reference EC 2030 policies 0 IEA WEO…
Key long-term issues in summary It takes decades to change the fuel mix Demand driven by Non-OECD Asia COP21 an important milestone Europe needs more gas imports Gas demand increases in all scenarios Regional gas pricing globally…
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Conclusions Statoil MMP is an important value driver for Statoil Our asset backed trading model is an important tool for generating value We maintain a positive view on the long-term outlook for gas in Europe 38
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