The economy – what next? An oil & gas industry perspective

Leo Koot, managing director, TAQA Bratani

Who is TAQA?

• Abu Dhabi National Energy Company • 72.5% Government owned• Listed on ADX • USD 31.6 billion asset base • Strategic focus on

• Oil & Gas - 135 MMBOE/D• Building the largest European gas

storage facility • Power & Water - 6th largest

independent power producer in

the world• Geographically diversified

• Operated (100%)• North Cormorant• South Cormorant• Tern, Hudson & Falcon• Eider & Otter • Pelican• Brent System (16%)

• Non operated (17% - 24%)• Brae• Hudson• Sullom Voe Terminal

TAQA Bratani

Global supply & demand picture

0

20

40

60

80

100

120

2010 2012 2014 2016 2018 2020

Oil

flow

s (m

ln b

bl p

d)

Biofuels, other

NGLs declining at 2% pa

Crude declining at 7% pa

Flat demand

IEA Demand forecast WEO2010 (Nov '10)

Oil demand vs. supply from existing fields

38 mmbbl/d2010 demand level, 88 mln bpd

47 mmbbl/d

Source: Lambert Energy Advisory, November 2011

34 UK North Seas

Oil & Gas delivers 20% of UK’s corporation taxes

• £293 billion in tax revenues over the

last 40 years• In 2010/11, the industry paid £8.8

billion in corporate tax on production• Currently, oil and gas provide 75% of

the UK’s total primary energy• In 2020, 70% of primary energy in the

UK is still expected to come from oil

and gas, even if the 15% target for

renewable energy is met

*Source: http://www.oilandgasuk.co.uk/economics and Oil & Gas UK

Economics Report 2011

UK Government Low Carbon Transition Plan 2020 TargetsFor Power Generation

*Source: The UK Low Carbon Transition Plan, National strategy for climate and energy

Around 75% of our electricity is currently generated from gas and coal today; renewables will expand to around 30% of our generation by 2020*

The importance of the energy sector to Aberdeen City & Shire• Economic growth• Labour market• Population growth• Infrastructure• Renewable energy

UKCS remains an important province

• Just over 40 billion boe already

produced from UKCS*• 14-24 billion boe still to be recovered*

*Source: Oil & Gas UK Economic Report 2011

The business model for the future?

Operating modelPartner of choice

Capable operatorAccess to capital

• Northern North Sea

• Capital intensive

• Long investment horizon

• Material decommissioning liabilities

• Not obviously suited for PE or AIM

• ‘Lean’ business approach not enough

Operating modelPartner of choice

Capable operatorAccess to capital

An ideal operating model

• Key responsibilities in-house

• Operator

• Dutyholder

• Strategic Maintenance

Operating modelPartner of choice

Capable operatorAccess to capital

Building capability

Operating modelPartner of choice

Capable operatorAccess to capital

25,000 to 43,000 boe/d

• Make it Safe• Make it Work• Make it Grow

Mature asset strategy

• Operations• Engineering & Subsea• Development engineering

Be partner of choice

• Operate reliable assets • Extend field life• A good partner providing a

service

Operating modelPartner of choice

Capable operatorAccess to capital

Third party business is important to maximise reserves

Current and future issues

• Global debt crisis & access to capital

• Fiscal stability & field specific allowances

• Marginal new fields

• PRT paying critical infrastructure

• Increasing regulation

• Around 60 new standards/legislation

• Increased lead-time

• Decommissioning – opportunity / threat?

Post tax decommissioning security

Increasing regulation post Macondo

Fiscal stability