kpmg - market update on oil and gas

Oil & Gas Update

Singapore International

Energy Week Reception

Grand Palace Hotel Tokyo

July 2015

Tim Rockell

Kpmg.com/energyaspac

KPMG’s Global Energy Institute – Asia Pacific

1 © 2015 KPMG Services Pte. Ltd. (Registration No: 200003956G), a Singapore incorporated company and a member firm of the KPMG network of independent member firms

affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Oil & gas Update

Table of Contents

1 KPMG’s Global Energy Institute 2

2 Key themes for 2015 4

3 Toolkit for success 8

4 KPMG’s experiences 11

kpmg.com/energyaspac



KPMG’s Global Energy Institute – Asia Pacific

The KPMG Global Energy Institute:

Insights into current issues

Regional focus on emerging trends

Access new tools




A View from KPMG’s Global Energy Institute

Table of Contents








Regional Momentum: Association of Southeast Asian Nations

(ASEAN)

A land area of

4.46 MILLION sq km,

LARGER than the EU

A population of 626

MILLION, TWICE as

large as the United

States

A combined GDP of

US$2.4 TRILLION,

LARGER than BRAZIL,

INDIA or RUSSIA

As combined economic

potential, it would be the

7th LARGEST

ECONOMY in the world

THE COMBINED POTENTIAL OF SOUTH-EAST ASIAN MARKETS



Macro-Analysis

Observations on ASEAN supply and demand environment

Vietnam

• Oil production rising, averaging 340mbd, but upstream

environment still dominated by NOC PetroVietnam

• Vietnam’s oil production comes from fields in the South

China Sea off the country’s southern coast

• Looking to catalyse deep offshore plays

Philippines

• A target for ultra-deepwater potential, French giant Total

is spearheading exploration

• The Reed Bank, a vast offshore area disputed between

China and the Philippines in an area of exploratory

interest

• The world’s second largest geothermal producer

Brunei

• Brunei has produced oil for several decades, primarily

from two large, mature fields - Southwest Ampa and

Champion - in the offshore Baram Delta

• After reaching a recent peak of 220,000 barrels per day

b/d in 2006, Brunei's oil production has declined to

141,000 bbl/d in 2012

Indonesia

• Petroleum reserves are falling faster than those of any other

country in Asia

• Production levels descended for the tenth consecutive year,

amassing just 827,000 b/d 2013, below the government target

of 840,000 b/d

• Fiscal creativity needed to entice foreign investment and

catalyze significant deep offshore potential

Myanmar

• Opening its energy doors with an impending

tender award for over 30 oil and gas blocks

• A queue of IOC and NOC investors are

seeking a stake in this new energy frontier

• Potential deep offshore Titan

Thailand

• Second largest energy consumer in

ASEAN

• Thailand is a net importer of oil and

natural gas, although the country is a

growing producer of natural gas

Malaysia

• Hike in production driven by a number of first

productions, and new PSC’s fuelled by targeted

fiscal incentives

• Opportunity to assess fiscal system, given 27

form 68 PSCs will expire by 2018

• The world’s second largest LNG exporter, due to

its Sarawak MLNG trains

Singapore

• No oil and gas reserves

• Headquarter location for IOC’s operating in

the region

• Singapore is the world’s third largest oil and

oil products trading hub, behind New York

and London



Background

Singapore’s perspective as LNG hub Section

4.1

From Africa:

6,000,000

tonnes LNG per year

From Middle East:

44,000,000

tonnes LNG per year

From Australia:

1,900,000

tonnes LNG per year

To S Korea:

29,000,000

tonnes LNG per year To Japan: 71,000,000

tonnes LNG per year

To China:

15,000,000

tonnes LNG per

year

Pipelines from

Myanmar to Thailand

(7.4bcm/year) and

China (12bcm/year)

Pipeline from Turkmenistan

to China (30bcm/year)

Pipelines from Malaysia

& Indonesia to

Singapore

(2.6bcm/year)

Potential shale gas

import from US starting

in 2017

Units in tonnes LNG

Trade volume data recorded in 2012 Sources: IEA, IGU, EIA KPMG Analysis

Pipelines

from

Thailand to

Malaysia

(7.7bcm/year

)

Pipelines from

Thailand to Vietnam

(2.0bcm/year)

Strategic location

Establishing infrastructure to develop a hub:

− Terminal and storage, operated by SLNG

− Pavilion Energy established to acquire

assets across the entire LNG value chain

Largest bunkering port in the world.

Established bunkering standards.

Gearing up to fuel ships with LNG by 2020

Asia currently accounts for

approximately 75 percent of global LNG

consumption.

Despite the diversity of the region’s LNG

markets, that proportion is poised to

grow steadily.

Consumption Growth

15

29 71

2

6

44

7 © 2013 KPMG Siddharta Advisory, an Indonesian limited liability company and a member firm of the KPMG network of independent member firms affiliated with

KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Indonesia.


Table of Contents








Market context

The Impact of low commodity prices

Source: BP World Statistics Review

National and international resources organizations will need to deploy strategies to neutralize or limit the impact

-

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

-

20.0

40.0

60.0

80.0

100.0

120.0

1998 2000 2002 2004 2006 2008 2010 2012 2014

mm

boe/d

US

D / b

bl

Crude (Brent, USD / bbl) Natural Gas (US Henry Hub, USD / mmbtu)

2014 / 15

Over Supply

2008 / 09

Economic Crisis

Commodity Prices

Governments

Strategies deployed

Upstream Companies

Downstream Companies

Midstream Companies

Integrated Organizations

Assess Annual Infrastructure

Development

Review and Re Assess Capital

Energy Budget

Review the impact of subsidies

and incentives

Assess opportunities for

securing low cost supply

Economic review of upstream

portfolio

Exit marginal or low return

plays or / cost reduction focus

Re balance capital investments

Exploration vs. Production

Explore future growth from

assets being divested

Opportunities to secure /

renegotiate feedstock supply

Limit exposure in low demand

areas

Review and re assess trade

commodity mix

Storage facilities hold inventory

for short term price decline

Corporate Overhead

Rationalization

Business Unit Cost

Optimization

Portfolio Optimization within

Business Units

Strategic synergies across

Business Units

Optimize cost and rationalize

overheads

Opportunities for growing

downstream asset portfolio

Prepare for regulatory change

and reduced liquidity

Consolidate M&A – trend for

asset deals



Energy & Natural Resources Growth Drivers in Asia Pacific - 2015

Capital and

Project

Oversight

Regulatory

Reform and

Stability

Investments

and

Transacting

Deals

Energy and

Cyber

Security

Cost

Management

and

Transparency

Strategy and

Portfolio

Reviews

These three areas will be key tools in the armoury for success:

Successful organizations will be those who can react to these three key themes

10 © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative

(“KPMG International”), a Swiss entity. All rights reserved.

KPMG and the KPMG logo are registered trademarks of KPMG International.


Table of Contents








KPMG’s Experience

KPMG Understands the Market

Major LNG projects:

Navigating the new terrain

Liquified natural gas (LNG)

industry is venturing into

new territory as it

approaches an

unprecedented wave of

expansion. The report

introduces the breadth of

considerations needed to

successfully navigate the

new terrain.

A leader in the Oil &

Gas industry

Change is a constant

factor in the Oil & Gas

industry. The next few

years may represent a

tipping point, based on

increased demand for

energy, the growing

presence of Asian

markets and the gradual

shift from traditional to

alternative energy

sources.

No paper chase:

Transforming risk

management at energy

and natural resources

companies

Energy and natural

resources (ENR)

companies are

challenged by an ever-

growing array of threats

and opportunities, but

technology is creating

immense opportunities to

develop oil and gas

fields, in previously

unconquerable areas.

Energy at risk

Companies now not only

face cyber attacks from

hacking groups, script

kiddies and hactivists,

they are also threatened

by state-sponsored

agencies with limitless

resources. Cyber threats

have never been more

pervasive and attack

damages never more

real.

Energy Industry

Outlook Survey

Energy Industry Outlook

Survey reflects

perspectives from U.S.

energy executives on the

outlook for oil and gas

prices, business

challenges, the impact of

shale oil and gas,

alternative energy

investments, and other

industry trends.

Changing the

geopolitics of oil

This series of short white

papers have key strategic

industry topics including

the evolving role of oil

service companies,

emerging issues of

concern to African NOCs

emerging strategic

energy relationship

between Persian Gulf

producers (and NOCs)

and Asian NOCs.

KPMG’s thought leadership covers a wide range of segments and issues in the Energy & Natural Resources sector

12 © 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are

affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG

International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All

rights reserved.

Thought Leadership in Asia Pacific 2013 - 2015

Singapore

Exploring

Opportunities in

Energy Value

Chain (March 2013)

Shale

Development:

Global Update (July 2013)

The Energy Report

Philippine- Growth

and Opportunities

in Philippine

Electric Power

Sector (October 2013)

Singapore

Performance

Optimisation in

O&G Upstream (23 April 2013)

An emerging

strategic

energy

relationship (January 2014)

Singapore

Energy at Risk

Cyber Security (April 2013)

Asia Pacific

Energy Conference

Summary (April 2013)

No paper chase:

Transforming risk

management at

energy and natural

resources

companies (March 2014)

Nuclear

Power: its role

in shaping

energy

policies in

Asia Pacific (May / June 2014)

Asia Pacific's

Petrochemical

Landscape: A

Tale of

Contrasting

Regions (October 2014)

Future of

Procurement:

Keeping pace

with change in

the ENR Sector (February 2015)

Major LNG

projects:

Navigating the

new terrain (September 2014)

Clarity on

Commodities

Trading:

Transforming

with agility (April 2015)

Commodity

trading–

Meeting the

challenge of

tax and

regulatory

change (January 2014)

When one

crisis meets

another:

Focusing on

talent for the

long term (April 2015)

Floating LNG:

Revolution and

evolution for the

global

industry? (March 2015)

© 2015 KPMG Services Pte. Ltd. (Registration No: 200003956G), a Singapore

incorporated company and a member firm of the KPMG network of independent

member firms affiliated with KPMG International Cooperative ("KPMG

International"), a Swiss entity. All rights reserved.

The KPMG name, logo and ‘cutting through complexity’ are registered

trademarks or trademarks of KPMG International Cooperative (KPMG

International).

Tim Rockell

Director, KPMG Global Energy Institute

Asia Pacific

KPMG in Singapore

T: +65 6507 1998

E: [email protected]

The Global Energy Institute - ASPAC kpmg.com/energyaspac

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