SEE Upstream 2015 Christian Schwarck

International Association of Oil and gas Producers

22 – 23 April 2015, Bucharest

Anadarko API Baker Hughes CAPP Chevron CNR International ConocoPhillips Devon Energy ExxonMobil Hess Corporation Husky Energy

IADC IAGC Kosmos Energy Marathon Oil Nexen Inc. Noble Energy Pemex Schluberger Suncor Talisman Energy

North America

36 members active in region

Afren plc ASSOMMINERARIA BG Group BP Cairn Energy DONG Energy E.ON Ruhrgas AS Energy Institute

Eni Fairfield Energy GALP Energia GdF Suez IOOA IPIECA Maersk Oil MOL plc

NOGEPA Norwegian Oil & Gas Oil Gas Denmark Oil & Gas UK OMV Perenco Holdings Premier Oil Repsol

RWE Dea AG Shell Statoil Total Tullow Oil WEG Wintershall

Europe

43 members active in region

ARPEL IBP Pan American

Petrobras PLUSPETROL

South America

31 members active in region

Sasol Sonangol

Africa

41 members active in region

JSOC Bashneft NCOC

Russia & Caspian region

21 members active in region

APPEA BHPBilliton Cairn India CNOOC INPEX

Origin Energy Papuan Oil Search Petronas PTTEP Woodside

Asia & Australia

32 members active in region

ADNOC Dolphin Energy Dragon Oil Kuwait Oil

Qatar Petroleum RasGas Yemen LNG

Middle East

33 members active in region

78 members around the world

1 000

2 000

3 000

4 000

5 000

1980 1990 2000 2010 2020 2030 2035

Mtoe

Oil

Coal

Gas

Biomass

Nuclear

Hydro

Other renewables

World energy demand by fuel

(IEA forecast 2014)

World Energy Demand (IEA)

Oil & Gas to remain significant in the EU energy mix for years to come

4

Figure: EU energy demand in 2011 & 2035 (NPS) Source: IEA, WEO 2013 , p. 592

Coal 17%

Oil 33% Gas

24%

Nuclear 14%

Hydro 2%

Bioenergy 8%

Other RES 2%

EU Energy Demand in 2011

Coal 9%

Oil 24%

Gas 30%

Nuclear 14%

Hydro 2%

Bioenergy 14%

Other RES 7%

EU Energy Demand in 2035

Within the EU Climate and Energy Policy beyond 2020, both oil and natural gas should have the opportunity to compete as long-term, cost-efficient energy sources.

Post-Macondo Industry Work Capping Stack Toolbox

5

Additional technical work done through: • IOGP Well Experts Committee • IOGP-IPIECA Oil Spill Response JIP • Offshore Safety Directive

implementation – IOGP on EUOAG

EU security of supply context: indigenous E&P

6

• Security of supply now an important policy issue in EU • Reference to domestic production in Energy Union Communication • European Council Conclusions: Strengthen Security of Supply

• Significant potential opportunities within EU • Black Sea, North Sea, East Mediterranean, Atlantic, conventional

onshore and unconventional (e.g. Shale Gas) • Production boom in other parts of the world: golden age of gas

• Exploration Activity across EU is at a low level • In UK, 157 exploration wells drilled in 1990 while 8 in 2014:

potentially 20 billion barrels remaining • No wells offshore Italy for last three years despite potential • IOGP report on exploration barriers established reasons for decline

• Mature basins – fiscal regime should reflect costs and size of prospects. Discovered fields not being developed.

• Southern Europe – bureaucracy and environmental constraints

Current low level of activity in EU

7

Source: Wood Mackenzie, Upstream Data Tool 2014

• Major framework for EU Energy Policy • Recognises conventional and unconventional • Importance of competitive, liquid gas hubs

• Diversification is key (Southern Corridor, LNG, Algeria, Norway) • IOGP stressed domestic production as well

• Interconnectors are priority • To transport gas around the EU

• Problematic ideas • Voluntary Demand Aggregation • Reduce demand for gas

8

Energy Union

• Competitive gas markets at the heart of Energy Union • Lessons from North Sea: domestic production leads to liquid

markets, hubs. • Black Sea production to help deliver regional competitive

market (as well as security of supply, jobs, skills) • New gas production could help shift away from

coal • Black Sea gas is an important diversification

option • Crucial to get the message across: not just imports

• Black Sea to support new infrastructure and hubs • Regional approach to create scale + financing

9

Black Sea in Energy Union

EU Member-States working with Industry for new investment

10

Wood Review in UK • ‘Exploration in urgent need of

attention’ • New ‘enabling’ regulator • Now legally committed to

maximising economic recovery of oil and gas

• Long process of industry consultation

• Ongoing fiscal review • Other reforms: ‘Wood Review could

deliver 3-4 billion boe more than would otherwise be recovered over the next 20 years’

UK Exploration Trend

Reforms in other Member-States • The Netherlands • Denmark • Poland

However: EU regulatory issues

11

• Hydrocarbons BREF • Prescriptive new regulations for all activities • Industry opposed

• Medium Combustion Plants Directive and Large Combustion Plant BREF • Air quality requirements offshore

• Financial responsibility • European Commission proposals expected

before summer • Black Sea impacted by these regulations

Conclusion: Attracting Investment

12

• Black Sea fits into the Energy Union framework

• Showcase for indigenous E&P • Focus on enforcing implementation of

existing legislations (e.g. Offshore Safety Directive), not new regulations

• Strong ETS a central tool for driving low carbon economy

• EU, Member-States and Industry to work together to encourage safe and responsible oil and gas exploration and production in EU

For more information please contact:

www.iogp.org

Registered Office Level 5 209-215 Blackfriars Rd London SE1 8NL United Kingdom T +44 (0)20 3763 9700 F +44 (0)20 3763 9701 reception@iogp.org

Brussels Office Bd du Souverain,165 4th Floor B-1160 Brussels Belgium T +32 (0)2 566 9150 F +32 (0)2 566 9159

Christian Schwarck Deputy Director, EU Affairs International Association of Oil and Gas Producers (IOGP) Email: cs@iogp.org

SEE Upstream 2015�Christian Schwarck�International Association of Oil and gas Producers��Slide Number 2Slide Number 3Oil & Gas to remain significant in the EU energy mix for years to comePost-Macondo Industry Work�Capping Stack ToolboxEU security of supply context: indigenous E&P Current low level of activity in EUEnergy UnionBlack Sea in Energy UnionEU Member-States working with Industry for new investmentHowever: EU regulatory issuesConclusion: Attracting InvestmentSlide Number 13