Recent Oil and Gas Industry Update

and Career Opportunity

Ardian Nengkoda, PhD.

March, 2016
Outline

Background
Oil price crush history
Upstream: Short and Mid Term Impact on Industry
Service Company: Other Implications
Global Chemical Industry
What we can do as student, academic and professionals
Background (1)
Background (2)
Backgrou
nd (3)
Country Production
(bbVday) ~
1 C:J United States 13,973,000

2
Soudl A,obl., Vtt1t.it.1tll .liill5aud1 Arabia (OPEC) 11,624,000

OPEC share of world crude oil

reserves, 2014

A
lrt
t
4

Ecuad
or
I
R
l
r

1
1
lraq

K
,,,
,
k

Uby
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~ - China
~
- -
_ 4 4,572,00 0
-
5 lI Canada

=
3 - Russia ... 4,383,000
10,853,000
6 C: United Arab Emirates (OPEC)
3471 000
Iran (OPEC)

y.,,.,.,<4& 299.l>S i..~ lnq 14).07 11.5"!1, Ubv 48.36 ~ Alc<ria 12.20 I.~
7 3.375.000
IRlron IS1.S) t).t,t, U*.E ,1.ao a.1,i. Qata, 2s.2 2.1,i. CNM:fo, 1.27 o,,i.
8 r:fl1raq (OPEC) 3,371,000
Source ~AnnuotStotlft."'11SUat, ,01 s:
9 msrazil 2,950,000
10 lI Mexico 2,812,000
11 'i::;)Kuwalt (OPEC 2.767.000
12 - Venezuela (OPEC) 2689000
13 I I Nigena (OPEC) 2.427.000
14 rlOatar (OPEC) 2,055,000

15 :13 Norway 1,904,000

16 'ijAngola (OPEC) 1 756000

17 1Algena(OPEC) 1.721.000

18 Kazakhstan 1,719,000
1n r"r.lr,ft'lki"'t. 1 n1c nnn
 Background (4)
bp
Stylised oil production cost curve
$fbbl, Brent equivalent
At $30 WTI, its uneconomic to develop new oil almost
100 anywhere in the world except in the Middle East
80 At $30 WTI, all global offshore development
uneconomic except in Arabian Gulf
60
...
40 .._ Cl)
al

l "2cu ...
-
l) -

20 " s:Ill 0.
" :B -
Ill Cl)
.r:.
Onshore/ other conventional ~o -
Oo

0
80 90 100
0 10 20 30 40 50 60 70
Source. Based on data from PIRA a of August 2015 Production (Mb/d)
Oil price crush history

super cycle phenomena as commodity (Julian Simon, 1980)

 Crude oil prices react to a variety of geopolitical and economic
events
price per barrel (real 2010 dollars)
150
Global financial c~llapse
125

Iran-Iraq War
-Low-spare--1-11--~
100 U.S. spare capacity

----:S~a-u-d~is-a~b~a-n-d~o-n-----~g...,
75 capacity,------~-\.-
sllllingproducer role
exhausted
Asian financial crisis
50
\
OPEC cuts targets
25 4.2-mmbpn--
Iranian
revolution OPEC cuts targets
Iraq invades Kuwait
Arab Oil Embargo 1.7 mmbpd
0
1970 1975 1980 1985 1990 1995 2005 2010 2015
2000
- imported refiner acquisition cost of crude oil - WTI crude oil price

Sources: U.S. Energy lnfonnation Administration, Thomson Reuters

US Production Trend
Expectation
 Likely 2016-2017 Oil Balance

US Production will grow again if prices >$50-60

Likely no shale oil outside North America for 5 10 years
Price Prediction 2017-2018

Prices will likely no rise within 1-2 years a

head
Stable price is likely $60
Long Term $90-$100 prices unlikely
Long Term below $40 price unlikely
E&P Perspective: Short and Mid Term
Impact on Industry

Biggest industry restructuring since 1986

Every company is selling properties who is
buying?
Highly leveraged E&Ps will likely disappear
Service
industry will become more
concentrated
Service Company Perspective: Other Implications
MUSIM PHK
PEKERJA MIGAS
Raksasa rnigas Belanda, Shell, mengumumkan rencana pemangkasan
6.500 karyawan, pada Kamis (30/7). Pengurangan tersebut merupakan realisasi "lnl adalah periode yang penuh tantangan
pemotongan belanja modal 2015 menyusul ambruknya narga minyak dunia sejak Juli bagi industri migas. Kami mengambil langkah yang
tahun lalu. Opsi pemutusan hubungan kerja dan penghematan juga diambil oleh sangat penting dan menentukan."
perusahaan besar lainnya. -Ben van Beurden, CEO Shell

CALIFORNIA
Chevron 3.5 MBD (10) ConocciPhillips STAVANGER, NORWEGIA

2,1 MBD (21)

$ 5,5 miller TEXAS $ 2 miller

2 MBD (22) I
1.500 $1 millar
rStatoil 2.000
1.000
~-
DENHAAG
3,9 MB0(8)

z:
$ 7 miliar

f
6.500
COURBEVOIE, PRANCIS

_At PEMEX -- ,,
2.7 MBD (14)
$ 4 mlliar

Kantor pusat : MEXICO CITY LONDON 2.000

Produksi : 3,6 MBD (9) Pengnematan: $ 4 mlllar 4.1 M80(7) TOTAL.

PHK: 10.000
"PERINGl<AT BERDASARKAN PRODUKSI HARIAN YANG
S 6 mlllar
1.800
OIRIUS FORBES. OALAM JUTA BAREL PER HARi (MBO).
SUMBER: WALL STREET JOURNAi.. FlNANCW. TIMES. DAILY MAJL. CNBC, BLOOMBERG. PETROGL.08At.NEWS I NASKAH: REOAKSI
\VVv\'> katadata co ro
GLOBAL CHEMICAL INDUSTRY
Petrochemical Feedstock
Fossil Fuel

Co11<l
ensates

Natural Gas
NGL's

Time and Pressure

CHO to CH to C
Ethylene Value Chain

Film and Sheet - packaging (high clarity film markets), films;

Extrusion Coating - coating paper, paperboard for packaging;
Injection Molding - houseware.s, toys, molded furniture
Film - garbage bags, food packaging; Injection Molding -
housewares, lids, caps; Sheet - geo membranes
.iiiii~jijjiiiii Blow Molding - bottles, containers for household chemicals,
antifreeze, Injection Molding - smaller containers for
pharmaceuticals, shampoo, cosmetics , Film and Sheet -
packaging, liners ,Pipe and Tubing
Antifreeze, Polyester (fiber and PET),
Mon oethylene Household deaning., Paint & coatings,
Industrial &Institutional Cleaning,
Glycol (MEG) Per1onal
Care, lubricants, Construction,
Cosmetics,
Paper, Automotive, Consumer Electronics,
Textiles
Pipes & Fittings, Profiles &
Tube.s, Films & Sheets, Wires &
Cables, Bottles

Appliance and Electrical/Electronics, Food Packaging/Food, Service

Ware, Medical Products, Furniture Components, Foam Board and
Sheathing, Building Insulation, Rigid Packaging, Automotive
Components, Refrigerator Components, Electrical Components,
Electronics/Electrical Appliances, Paper Coating, Nonwoven Binders
Propylene Value Chain

Automottve, houseware,
pipe, conduit and fittings,
packaging, apparel

Phenolics, epoxys, polycarbonate

flexible & rigid packaging, fibers, fllm, large
Propylene molded parts, thermoformed containers
Cast film, thermoforming, blow
molding, sheet extrusion, blown film
Corrugated pipe, thin wall injection
molding, bumpers, blow molding bottle

Surface coatings, plasticizers,

Automotive, construction/roofing, polymer
modification, oil and cable Insulation, oil
additives, appliance parts, hoses
Epoxy resins, synthetic glycerin, ECHelastomers, spedalty water
treatment chemicals, wet-strength resins for paper production and
surfactants
Investment Drivers for Base Chemical/
Petrochemical
Crude oil/energy price trends
Global economic growth
Geo-political considerations
North American energy market
State of industry profit cycle
China structural changes
Non-conventional technology
Sustainability
Levels of integration
Regional CAPEX differentials
Logistics investments
Evolving Technology and Impact on Consumer Products & Markets
The impact of the oil-price drop is differentiated along the
chemicals value chain.
Impact of a 50/o oil-price Start of chemicals Middle of chemicals End of chemicals
drop on given measure value chain value chain value chain
25-50 15-30 10-20
Reduction in raw-material
spend, % of spend

Speed of price change, Fast Medium Slow

monthsdelay (0-1) (1-4) (2-6)

Product-price decrease 15-30

in case of full 6-12 3-6
pass-through, % of sales

Product-price pass- Fastto Medium to Slow to none

through, monthsdelay medium (1-3) slow (2-6) (3-12+)

Higher relative impact Potential longer benefit

\1c Kinsc y&l'o1npany

 Petrochemical
Growth? Total Basic Chemical* Capacity
(Million Metric Tons)

Beyond 2020 ... Re ion 2015 2025

Where Will The
0
Delta

Next Wave Of
Capacity Be Built?

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-
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* Ethylene, Propylene, Methanol, Benzene,

Paraxylene, Chlorine

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t; ;._-. .&; ..
- "i"'-t.

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Current Indonesian Oil and Gas Issue
We are not a rich oil and gas country!
To increase reserves, aggressive exploration is essential and EOR is important
Minister Regulation (Permen ESDM No.8/2017) on Gross Split PSC effective : January 16th,
2017
The first Gross Split PSC Contract ---> PHE ONWJ (February 2017)
The successful implementation of the Gross Split PSC requires more cost efficient
contractor and less complicated government business process.
At the end, How attractive is the GS Model? Market will tell We will know it when we
see it.
Data Cadangan Minyak Indonesia
mihu baril

893
900----

700 ----~---..--....---,--- ----1--1-- ---..--,

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sumber: Kiminterian ESDM

0
skkm1ga
s
CADANGAN MINYAK DUNIA
300.0
www.eia.gov/2012
Indonesia tahun
2012: Urutan 28
Cadangan Minyak
200.0
Cadangan terbukti
3, 7 Miliar Bare I
Cadangan Mungkin dan Terkira
3,3 Miliar Bare!
100.0

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Cadangan 3, 211,2 Tidak lebih dari

Minyak 7 5%
916,445
Luas 1,904,569 km2 2 x lebih
Negara km2 luas
237,424,363
Jumlah 28,946,101 Hampir 10 x Ii pat
L
Penduduk
Cadangan Gas Indonesia
Terbesar l<e-14 Dunia
INDONESIA menempati posisi ke-14 sebagai negara
pemilik
cadangan gas alam terbesar di dunia. Data BP Staciscics2014
menunjukkan cadangan gas alam terbukti Indonesia mencapai
103,3 triliun kaki kubik (TCF).

Cadangan Gas Terbukti Dunia

(!riliun kaki kubik)

Iran
I Ru

17% JO rahu 57/J '""(r

Mesk1 punya cad.Jngan besar, Dengan tlngkat produksi seperu Seta,n memilikl cadangan gas alam
koosurns, gas m.lSlhkeol. sekarang. cadangan gas alam konvensional, Indonesia Juga mem, 1(1
hanya sek,tar 17 persen dari terbukti Indonesia biSa bertahan potens, cadangan gas non-konvens,onal,
total energ, nasiooal. untuk jangka waktu SO tahun. yakn, shale gas sebesar 574 TCF

l53 TCF Konsumsi Energi Indonesia2012

Potensi cadangan gas non
konvensional la,nnya adalah
... .)

gas metana batubara (CBM) M1nyak

sebesar 453 TCF.

1.1 Vo 27%
Bat1.1bara Energ,la,n
What we can do as oil student, academic and
professional
Career Development
Career Opportunity in Energy Industry: To Stay or Not?
Skill (graduate) Critical Skill (employment) Expert
Sinergy: Academic & Industry
Develop Digital skills
New requirements:
Agile thinking ability
Interpersonal and communication skills
Global skills
Entrepreneurship
Fun part..
Ready?
 LATAR BELAKANG PENDIDIKAN
100 ORANG TERKAYA DUNIA VERSI FORBES
Hukum ..-.-
~ Matematika
Tidok Kulioh : 32%
Sains ----, Tidak Kuliah
ngan -----.
-- Teknik : 22 %
Keua
omi--- Bisnis : 12 %
.a,nnya
Ekon t Seni : 9%
1. Ekonomi : 8%
Keuongon :3%
Soms : 2%
Motemotiko :2%
Hukum : 2%
Bisnis Teknlk loinnyo : 8%
Workshop Practice: GET ACTION NOW

1. Success VS Happiness
2. Identify our needs
3. Identify our STRENGTH and WEAKNESS
4. Team Project
Success & Happiness

Success is getting what you want; happiness is wanting

what you get.- Ingrid Bergman
Success is an achievement, but happiness is the only
achievement.
Success should come as a byproduct of happiness
a factor that comes from happiness, derives from it.
 Success is all the money in the world; happiness is having people to spend it on.

Success is measurable; happiness is limitless.

Success is a fancy car; happiness is a great ride.

Success is working hard; happiness is loving the work.

Success is the fame; happiness is the rise.

Success is the race; happiness is the finish line.

Success is being right; happiness is being true.

Success is earned, happiness is achieved.

Success is awards; happiness is its own reward.

Success is money in the bank; happiness can't be deposited.

Success is private jets; happiness is flying high.

Success is never easy; happiness will never feel difficult.

Success is money; happiness is value.

Success is sacrifice; happiness is plentiful.

Success is second homes; happiness is always home.

Success is material things; happiness is in the materials.

Success is pursuing your dreams; happiness is living your dreams.

Success is reaching the top; happiness has no ceiling.

Success is all the money in the world; happiness is needing none of it.

Success is doing what you love; happiness is loving what you do.

Success is just ahead; happiness was never behind.

Success is envied; happiness is shared.

MASLOW'S
HIERARCHY Abraham Harold Maslow (AP!i 1. 1908.Junes. 19101
was a psychologist who studied positive
OF t--lEEDS human qualities and the fives of ex
ry people.I n 1954. Maslow create
empla
d the
Hierarchy of Human Needs and
expressed his theories in his book,
ABRAHAM SELF-ESTUM. COMA~CE. Motivati on and Personal ity.
ACHIEVEMEHT, RESPECT OF
MASU)W OTHERS. ltSPCT 8Y OTIERS

( ESTEEM )
Self-Actualizatfon - A erson's
p
FRIEl'IOSHIP. FAMILY, motivation to reach h
SEXUAL ltl"TIMACY is or
her full potential. As shown
in Maslow's Hierar chy of
( LOVE /BELOt-tG\t-tG ) Needs. a person's basic
needs must be met
SECURITY Of 80DY, Of EMPI..OYMEln". Of before self-ac tualiza
RESOURCES. Of MORAUTY. Of THE FAMILY. tion can be
Of HEALTH. Of PROPERTY
achieved.
( SAFETY )

8UA1HIMG, ,ooo. WAffll, sax.......

HOMEOSl'ASIS, UCltETIC)M

( PHYS\OLOG\CAL )
Strength VS Weakness
Strength Weakness

Enthusiasm
Being too critical of yourself
Trustworthiness Attempting to please everyone
Creativity Being unfamiliar with the latest
Discipline software
Patience
Respectfulness
Determination
Dedication
Honesty
Versatility
Team Project (1 month)
you are not an engineer if you can not write a
technical report
Work in a group Project Title:
1. A review of latest H2S removal technology in oil and gas industry
2. A review of current Indonesia petrochemical project
3. A review of EOR technology application in Middle East and Canada: what is the different?
4. A review of latest technology in industrial water treatment
5. A review of mercury removal technology from natural gas in Indonesia
6. A review of latest Syngas technology
7. A review of GTL technology in Qatar
8. A review of latest soap manufacturing process technology
9. A review of gold mining process and technology in Africa
10. A review of geothermal project in Indonesia: what is the challenges?
11. A review of renewable energy project in China
12. A review of ice cream process manufacturing: what we can improve?
The roles
Make it in 3 pages max. report (Bahasa Indonesia/ Inggris)
Methodology:
literature study (library, internet, book, journal, magazines, etc)
questionnaire to industry,
make a summary and share the opinion
Within 1 month of study. Submit to: Ardian Nengkoda, PhD. Via email:
petroche@gmail.com
Meet the date line and comply with the methodology.
Successful team will receive project certificate