Delivering sustainable results through cycles Jens Økland, EVP, Marketing, Midstream and Processing (MMP) London, 22 February 218
Always safe High value Low carbon Serious incident frequency 1 2.2 1.9 USD/bbl Above 1.4 1.1 1..8.6.6.8.6 USD/bbl mw 28 29 21 211 212 213 214 215 216 217 bn USD 3
217 MMP demonstrating resilience through cycles Adj. earnings 12.6 bn USD NOI 13.8 bn USD 1) Free Cash Flow 3.1 bn USD 1) RRR 15% Record high NCS gas production Value uplift on products High regularity and margins on our refineries 1. MMP Guiding range USD 1-2bn 4
Gas outlook Strong demand and continued volatility W E S E E T H A T : Energy and climate policy impact on markets US seasonality and production increase LNG going to Asia Reduced indigenous EU production $/MMBtu 14 12 1 Brent Henry Hub JKM NBP W E B E L I E V E I N : Further globalization of gas markets Electricity sector a driver for gas demand growth Continued demand growth in Asia and US Substantial investments needed to meet demand Continued market volatility and seasonality 8 6 4 2 216 217 218 219 22 5 Source: S&P Global Platts, ICIS Heren
Statoil response Flexible contract portfolio and growth in key markets C O N T R A C T P O R T F O L I O M I D S T R E A M A N D T R A D I N G F O C U S G R O W I N G O U T S I D E E U R O P E Modernized Flexible Diversified pricing Premium markets Regional value chain focus NCS maximization US Brazil Capture global trading opportunities 6
Long-term energy markets Eirik Wærness, Senior Vice President and Chief Economist Classification: Internal 212-1-24
Policy uncertainty continues in energy markets The global economy is however shielded as momentum gains Policy uncertainty relatively high Macroeconomics and financial markets signs of uncertainty Politics and economics in 218 325 225 125 Global economic policy uncertainty (index) Asian and Russian Financial Crises 11 Sep Gulf War II Global Financial Crisis Eurozone crises, US fiscal fights European immigration crisis Trump election, North Korea conflict Brexit referendum 13 115 1 US equities, dollars, and risk (indexed 3 Dec 216=1, index (rhs)) S&P 5 USD index vs other currencies VIX (rhs) 45 3 15 Key themes: Trade policy Fiscal and monetary policy Energy and climate policy Key events: Elections in Europe and the US G2 summit COP24 25 1997 22 27 212 217 85 Jan-17 May-17 Sep-17 Jan-18 8 Sources: www.policyuncertainty.com, Thomson Reuters Datastream
28 211 214 217 222 23 28 211 214 217 222 23 Bcm Prices are up from the bottom uncertainty prevails Important: Substantial need for new investments to satisfy demand Brent price Gas prices Need for new gas to satisfy demand USD/bbl 16 14 12 1 8 6 4 2 75 8 USD/MMBtu 14 12 1 8 6 4 2 8 6.8 4 4 5 4 3 2 1 Production Demand range New supplies Decline range 215 22 23 24 25 Planning assumptions 1 HH NBP Planning assumptions 1 9 Sources: Platts, ICE, ICIS, NYMEX 1 Planning assumptions are 216 real
Asia, and China, play an important role in our energy future Growing gas demand in all scenarios part of the energy transition 5 4 China energy mix Bn toe 2 214 25 35 3 25 Changes in Chinese gas demand Bcm 29 25 25 Electricity & Heat Non-Energy 3 2 Other Transport 2 1 Ref Ren Riv New RES Biomass Hydro Nuclear Gas Oil Coal 15 1 5-5 Reform Renewal Rivalry Maritime Aviation LDV Others Total change 1 Source: IEA (history), Statoil (projections)
Twitter aside, Trump s energy agenda has three tracks E C O N O M I C P O L I T I C A L Increase US energy production in service of energy security, economic growth, and as a foreign policy tool I N T E R N A T I O N A L 11
EU: Improving energy efficiency, and fuel mix changes Electricity sector demand change key for gas development 2, EU Energy Mix Bn toe 1 Change in gas demand 214-25 Bcm 199 214 25 5 1,5 New RES -5-9 -35 Electricity & Heat 1, Biomass -1 Non-Energy,5 Hydro Nuclear Gas -15-2 -215 Other Transport Maritime Aviation Oil -25 LDV, Ref Ren Riv Coal -3 Reform Renewal Rivalry Others Total change 12 Source: IEA (history), Statoil (projections)
Globalizing gas flows according to price signals US LNG in the money; prices driven by other factors as well Short-run marginal cost ranges for US 218 LNG supply to Asia and Europe, and prices today and over the last 2 years Asia USD/MMBtu North America USD/MMBtu Europe USD/MMBtu 11.7 3) 9.9 3) 9. 2) 6.6 2) 4. 3) 4.6-5.3 1.5 2.2.4 2.7 1).8-1.2 2.7 2) 3.9-4.3 JKM Shipping HH Shipping/Regas NBP 13 Source: NYMEX, ICE, Platts, Pira, Statoil ASA 1) NYMEX Henry Hub Forward curve for Calendar 218 19 Feb 218 2) ICE NBP Forward curve for Calendar 218-19 Feb 218, high and low trading range over the last 2 years 3) Platts JKM (Asia spot LNG, March deliveries) - 19 Feb 218, high and low trading range over the last 2 years
CONCLUDING REMARKS Gas is crucial in the energy transition, to reduce emissions while securing energy, and to facilitate renewables Globalizing gas increasing flows between surplus and deficit regions. Demand for LNG and new pipelines Substantial need for new investments to satisfy demand, irrespective of scenario 14
Global gas markets Elisabeth Aarrestad, Vice President Market Analysis
What happened since our 217 gas seminar? U S G A S : Coal displacement continues Cold snap breaks records 14 12 $/MMBtu Brent Henry Hub JKM NBP A S I A N G A S : China absorbs LNG increase New emerging markets E U R O P E A N G A S : Gas flexible source for electricity Strengthened demand levels Increased import dependence 1 8 6 4 2 216 217 218 219 22 16 Source: S&P Global Platts, ICIS Heren
US gas demand Short-term spikes, long-term growth Domestic demand Lower 48 cold snap demand Cold snap regional prices Bcm Mcm/d $/MMBtu Res'l & Com'l Ind'l 4 5 Winter 17-18 1 Electricity LNG Exports 2-Year Average 9 Exports to Mexico Winter 213-214 4 8 75 6 45 3 15 213 215 217 F22 3 5 3 2 5 2 1 des 15 des 29 des 12 jan 6 4 2 Henry Hub (lhs) TGP Z4 (lhs) Chicago (lhs) Tetco M3 (rhs) 1 des 15 des 29 des 12 jan 1 8 6 4 2 Gas displacing coal in electricity Industrial demand is rising Growing exports (LNG and Mexico) Records due to strong gas-to-electricity and space heating needs Surpassed 213-214 vortex levels Henry Hub hit a multi-year high The NYC downstream market price reached an all-time high 17 Source: EIA, IHS, Platts Bentek, Genscape, Statoil
Chinese gas demand growth exceeds expectations Emission reduction targets drive gas demand Five year plan Household gas conversions Seasonal gas demand Bcm 4 3 2 Industry Electricity & Heat Residential & Commercial Transport Other Total 2,5 2, 1,5 1, Millions of households converted to gas in 217 Bcm 14 12 1 8 6 1,5 4 2 28 21 212 214 216 218 22, Winter 16/17 Winter 17/18E 1 Bcm increase to 22 Demand growth exceeds US LNG export growth Air quality targets 28 cities ordered to switch end-users from coal to gas 15% increase estimated for current winter Low storage capacity drives the need for flexible gas imports 18 Source: CNPC Research institute of Economics and Technology, IHS, National Bureau of Statistics, Reuters
European gas market drivers 19 Source: Statoil
European demand factors Gas flexible source for electricity and replacing coal Bcm 5 4 3 2 1 - Demand by sector Res & Com Others Economic recovery Gains from coal switching Buoyant demand Industry Electricity/Heat 211 213 215 F217 F22 /MWh 35 3 25 2 15 1 5 Continental coal switching Coal Switching Range TTF Gas price ( /MWh) 21 212 214 216 218 22 UK carbon tax France nuclear maintenance Coal prices gas is competitive Forward market Change in electricity generation 214-217 TWh 15 1 5-5 -1-15 Spain Italy UK Germany Coal Gas CCGT increasing more than 12 TWh Coal decreasing more than 115 TWh Largest change in the UK 2 Source: TFS/GDM, Argus, ICIS Heren, ICE, Eurostat, TSO s Forward market 13 Feb 218
European supply factors Imports compensating for reduced indigenous production Bcm 25 2 15 1 5 EU production NL UK Others 21 212 214 216 Further Groningen constraints Potential further reductions UKCS plateau for near term Bcm 8 7 6 5 4 European storage 3 5-year range 2 Average 217 1 218 jan mar mai jul sep nov Mild January has eased pressure Regional difference in stock level Risk remains for balance of winter Bcm 35 3 25 2 15 1 5 Pipeline supply Norway Russia* North Africa 21 212 214 216 Record pipeline imports Limited flexibility NCS adaptability 21 *Excluding exports to Turkey and the Baltic region Source: NAM, GSE, TSO s in Europe, Gassco, Statoil
Global fundamentals LNG production is increasing, but competition remains LNG changes vs 215 Global pricing Expectations vs 215 Bcm 25 2 15 1 5-5 216 217 Eastern Asia NW Europe Southern Europe $/MMBtu 14 12 1 8 6 4 JKM Spain 2 NBP TTF mar 17 mai 17 jul 17 sep 17 nov 17 jan 18 Bcm 4 35 3 25 2 15 1 5 Reform Rivalry 22 225 Renewal LNG Reduced LNG to NW Europe Attractive Southern European markets Strong Asian demand JKM driven by market tightness Southern Europe reliant on LNG Global competition for supply Global gas demand increase continue to absorb supply Europe - deficit widening, competition for global LNG 22 Source: IHS, Pira, S&P Global Platts, ICIS Heren, Statoil
CONCLUDING REMARKS Gas important flexible source for electricity in key regions China s gas demand growth substantially exceeds US LNG exports Europe increasingly reliant on gas import and must compete for LNG 23
Capturing value in volatile markets Tor Martin Anfinnsen, Senior Vice President, Marketing and Trading
Norwegian gas competitive and reliable Cost competitive supply Increasing volumes Committed to perform Picture: Gassco 25
Prices and liquidity in Europe E u r o p e a n g a s p r i c e s ( N B P ) L i q u i d i t y o f E u r o p e a n h u b s 26 Source: ICIS Heren, Statoil
USA: Bottlenecks still playing a role T e t c o M 3 v e r s u s T r a n s c o Z 6 N Y M a r c e l l u s a r e a s p o t t r a d i n g p o i n t s USD/MMBtu* 8 7 6 Tetco M3 (Northeast MidAtlantic) Transco Z6 - NY Henry Hub 5 4 3 2 1 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Transco Z6 N-NY *The prices are capped 27 Source: Platts Bentek
Statoil s LNG activities S t a t o i l s c a r g o e s i n 217 Expand Atlantic LNG footprint Develop position in Asia 28
Growing outside Europe US Now producing ~ 1 BCM a year 6 % volume sold through longterm pipeline commitments towards Toronto, New York City and the Gulf of Mexico B R A Z I L The largest international operator in Brazil Operator and partner of two large associated gas fields To deliver 15 2% of internal gas market 29
Digitalisation - driver for material value creation Models and algorithms to support commercial decisions Blockchain digital platform 3
Focus 218 NCS M E L K Ø Y A L N G Premium markets Regional value chains Statoil offices with natural gas business activities NCS maximization U S S H A L E G A S B R A Z I L 31
CONCLUDING REMARKS Norwegian gas is competitive and reliable, also when urgent supply is needed US Gas bottlenecks and price variations creating trading opportunities Focus on growth in premium markets, regional value chains and NCS maximization 32
Closing remarks by EVP Jens Økland Global economic growth and gas to power trend is spurring gas demand growth globally Asian and especially Chinese gas demand to exceed expectations supporting European gas prices Statoil s mid- and downstream business is in good shape to deliver strong profits going forward 33
Investor Relations in Statoil E-mail: irpost@statoil.com Investor Relations Europe Peter Hutton Senior Vice President phutt@statoil.com +44 788 191 8792 Lars Valdresbråten IR Officer lava@statoil.com +47 4 28 17 89 Erik Gonder IR Officer ergon@statoil.com +47 99 56 26 11 Anca Jalba IR Officer ancj@statoil.com +47 41 8 79 88 Marius Javier Sandnes Senior Consultant mjsan@statoil.com +47 9 15 5 93 Anne Sofie Dahle Senior Consultant asda@statoil.com +47 9 88 75 54 Investor Relations USA & Canada Helge Hove Haldorsen Vice President hehh@statoil.com +1 281 224 14 Ieva Ozola IR Officer ioz@statoil.com +1 713 485 2682 Page 34
Forward-looking statements Page 35