JANAF's International Oil Conference

Transcription

1 Client logos should not be used on title page unless it is required by client to maintain brand continuity. To add a color block or a picture here, select from alternate title pages in A.T. Kearney Library tab. If a client logo is used, position centered to this box, left aligned at guide 0.27 (0,68 cm). Trends and challenges for oil industry in Central and South-Eastern Europe JANAF's International Oil Conference 24 November 2016 Jerome Sevin, Partner, Energy industries

2 The future global oil prices are unpredictable due to uncertainties on the oil supply & demand sides A.T. Kearney oil model scenarios (USD/bbl) Unaffordable Oil OPEC s back The New Normal A Distressed Industry Industry meltdown Jan.-14 Juil.-14 Jan.-15 Juil.-15 Jan.-16 Juil.-16 Jan.-17 Supply side OPEC role: traditional or market led? Return of Iran, Libya and other low cost producers when, how much? Unconventional: Light tight oil players role Timing? Demand side Geopolitical response? Chinese demand New technology and economics (e.g. solar) + regulation for lower emissions Source: A.T. Kearney A.T. Kearney18/#17197/Pract.EPI/CD/ll/25 2

3 Oil industry players must transform their business Overview of business transformation scenarios for oil industry players A Focus on cash Quick oil price rebound DELAY projects Secure cash from market / covenants Prolonged distressed industry OPTIMISE portfolio Digitalisation solutions B Reduce cost RE-NEGOTIATE with suppliers RE-ORGANISE RESET full value chain RESHAPE operating model COLLABORATE cross-operator/ OFS C M&A opportunities Not a focus for many companies Explore M&A options and opportunities Source: A.T. Kearney A.T. Kearney18/#17197/Pract.EPI/CD/ll/25 3

4 Central and South Eastern European (SEE) countries are confronted to limited proven oil reserves Overview of Central and SEE proven oil reserves (millions of bbl, January 2015) Russian oil reserves represent 133x Romania s ones Limited proven Oil reserves Romania Turkey Germany Albania Poland Serbia Croatia Greece Bulgaria Russia Oil reserves trend The crude oil reserves have been flat in Central and SEE countries over the past 5 years Sources: United States Energy Information Administration, AT Kearney A.T. Kearney18/#17197/Pract.EPI/CD/ll/25 4

5 Central and SEE countries are highly dependent on crude oil imports Evolution of crude oil imports per country per year 1 (% calculated from bbl/day, ) Domestic crude oil supplydemand imbalance -2% -1% +1% -1% -5% 97% 95% 96% 94% 92% 93% 92% 91% 93% 89% +1% +2% 73% 73% 70% 71% -61% +2% 58% 44% 45% 22% Greece Bulgaria Turkey Germany Poland Serbia Croatia Romania Albania Willingness to reduce the dependency on Russia 100% dependence for the three Baltic states, Slovakia and Bulgaria 50% dependence for the Czech Republic, Poland and Hungary 1. Percentage calculation based on the difference between oil production and oil consumption in bbl/day Sources: Institute of energy for South East Europe, AT Kearney A.T. Kearney18/#17197/Pract.EPI/CD/ll/25 5

6 They also have to deal with limited proper oil infrastructure which could lead to disruptions Overview of JANAF pipeline in SEE Disruptions Physical ruptures of energy transport networks following crisis with transit countries: Ukraine in 2006 and 2008, Belarus in 2007 Sources: European Parliament report on Industry, Research and Energy, A.T. Kearney A.T. Kearney18/#17197/Pract.EPI/CD/ll/25 6

7 What are Central and SEE countries challenges? CAPEX investments To economically develop oil reserves To foster new infrastructures How to secure the energy supply in the Central / SEE region? Decrease dependency To encourage interconnections with neighbouring markets EU regulations To conclude agreements with neighbouring countries To promote new sources of energy Source: A.T. Kearney A.T. Kearney18/#17197/Pract.EPI/CD/ll/25 7

8 Central and SEE countries have launched the right initiatives but this is a long journey New infrastructure Sourcing Reserve Development Energy mix Diversification of energy routes Diversification of energy suppliers Increase of production from indigenous energy sources Broadening of energy mix 2015 EU Projects of common interests (PCI) from the European Commission in discussions Memorandum of Understanding signatures between EU and Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan to promote new oil suppliers Economically develop the crude oil reserves (capabilities, CAPEX) Significant increasing use of gas & renewables Natural Gas Oil Renew Energy % 36% 11% % 30% 14% North-South Infrastructure corridor development still in discussion European initiative with the INOGATE program to enhance energy security by addressing supply diversification New exploration concessions eg. Croatia in the Adriatic Coast region in 2014 EU initiatives: 4Biomass project ( ) Target in Romania by 2020 : 20% of energy mix Renewable energy Source: Desk research, A.T. Kearney A.T. Kearney18/#17197/Pract.EPI/CD/ll/25 8

9 A.T. Kearney is a global management consulting firm with deep expertise and track record in the Oil and Gas industry Who we are? Global and diversified management consulting firm Founded in offices in more than 40 countries with over 3,500 consultants worldwide A.T. Kearney is Private and 100% Partner owned from Jan 2006 What we do? Energy and Process Industries (EPI) spanning Oil & Gas (upstream & downstream), Chemicals, Utilities and Metals & Mining is the largest practice in A.T. Kearney Over 500 professionals with Oil & Gas (upstream & downstream), Petrochemical & Chemical Industries experience led ~500 projects in the sector over the past 5 years with the most large companies around the globe We have a track record of working with many players in the industry 4 out of top-5 global Oil & Gas majors 6 out of top-10 leading NOCs Many of the leading EPC players Equipment & oil field services companies National governments of oil & gas rich countries Many independent players in Oil & Gas Extensive project experience across a broad range of services including Strategy, Operations/Supply Chain, Procurement, Organisation & Transformation, Marketing & Sales, Strategic IT, Analytics and Sustainability and along the entire Oil & Gas value chain from exploration & production to marketing & distribution Our consultants have conducted more than 500 projects in all types of value chain players in the sector over the past 5 years Our consultants have conducted more than 500 projects in all types of value chain players in the sector over the past 5 years Source: A.T. Kearney A.T. Kearney18/#17197/Pract.EPI/CD/ll/25 9

10 For more information please contact: A.T. Kearney Ljubljana, Marko Derča, Associated Vice president, / Jerome Sevin, Partner, jerome.sevin@atkearney.com A.T. Kearney is a leading global management consulting firm with offices in more than 40 countries. Since 1926, we have been trusted advisors to the world's foremost organizations. A.T. Kearney is a partner-owned firm, committed to helping clients achieve immediate impact and growing advantage on their most missioncritical issues. For more information, visit Americas Atlanta Bogotá Boston Calgary Chicago Dallas Detroit Houston Mexico City New York Palo Alto San Francisco São Paulo Toronto Washington, D.C. Asia Pacific Bangkok Beijing Brisbane Hong Kong Jakarta Kuala Lumpur Melbourne Mumbai New Delhi Perth Seoul Shanghai Singapore Sydney Taipei Tokyo Europe Amsterdam Berlin Brussels Bucharest Budapest Copenhagen Düsseldorf Frankfurt Helsinki Istanbul Kiev Lisbon Ljubljana London Madrid Milan Moscow Munich Oslo Paris Prague Rome Stockholm Stuttgart Vienna Warsaw Zurich Middle East and Africa Abu Dhabi Doha Dubai Johannesburg Riyadh A.T. Kearney18/#17197/Pract.EPI/CD/ll/25 10