UBS global oil & gas conference, Dubai Changing relationships in … · 2020. 5. 21. · Aberdeen,...
Transcript of UBS global oil & gas conference, Dubai Changing relationships in … · 2020. 5. 21. · Aberdeen,...
UBS global oil & gas conference, Dubai
Changing relationships in the oil service sectorSeptember 2007
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Agenda
2. Petrofac: a brief introduction
3. Development of the oil service sector
4. New partnership models
5. Petrofac’s positioning
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1. Petrofac: a brief introduction
Petrofac is a leading international provider of facilities solutions to the oil & gas production and processing industry
We provide project development, engineering, construction and facilities operation, maintenance and training services; we also invest alongside our clients, delivering our engineering and operations services service capability in complete alignment
Our clients include many of the world’s leading integrated, independent and national oil and gas companies
Note: all figures presented above are for the group’s continuing operations (US$ millions)
34.3 38.446.1
75.4
121.9
2002 2003 2004 2005 2006
8851,097
1,740
3,244
4,173
2002 2003 2004 2005 2006
391
629
952
1,485
1,864
2002 2003 2004 2005 2006
Revenue Net profit Backlog
48% CAGR 37% CAGR 47% CAGR
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Aberdeen
Houston
LondonWoking
Moscow
Algiers
Lagos
Khartoum
Damascus
Baku
Tehran
Bishkek
AhmadiSharjahDoha
Abu DhabiMumbai
Kuala Lumpar
1. Petrofac: a brief introduction
Our core geographic focus is on the Middle East, North Africa, the UK Continental Shelf, the Commonwealth of Independent States and the Asia Pacific region
Petrofac operates out of four strategically located international centres, in Aberdeen, Sharjah, Woking and Mumbai and a further 16 offices worldwide :
We are a people business, with over 9,500 employees
Delivering world class competency with local resources and with strong focus on HSE
Tunis
Chennai
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1. Petrofac: a brief introduction
Petrofac designs and builds oil & gas facilities; operates and manages facilities and trains personnel; and, where it can leverage its service capability, develops and co-invests
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2. Development of the oil service sector
Integrated Major Oil Companies (IOCs)
Increasingly focusing on long-term, multi-billion-$ opportunities where national oil companies are daunted by scale &/or technical complexity
Finding access to conventional oil in conventional regions is more challenging
National Oil Companies (NOCs)
Increasingly asserting their power, dis-intermediating IOCs - both where NOCs have ready access to international finance and where they do not
Independent Oil Companies
Generally niche exploration, and less commonly, mature-asset focused
Service companies
Finding, therefore, that the customer-base is shifting
The upstream oil & gas industry has four categories of major “actors” - and their inter-relationships are changing:
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2. Development of the oil service sector: 1960s
Integrated oil: the traditional modelLarge oil companies, horizontally integrated, broad skill-set
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2. Development of the oil service sector: by 1990
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Outsourcing begins to transform the industry
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2. Development of the oil service sector: 2000s
Specialisation and the emergence of new business models:
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More capable service companies, increased integration of services
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3. New partnership models
Pre-OPEC 1, IOCs had access to equity oil throughout the world; power was based on access to technology, capital and integrative capability; relatively limited alignment of interests between IOC and NOC
Production Sharing Contract (PSC) model shifted balance of power in direction of NOCs - and somewhat improved IOC/NOC alignment
Even in a PSC, alignment is in question, particularly as fields become mature and returns more marginal:
− Tax-take is the point of friction
− Pressure has increased for sovereign governments/NOCs not to ‘sign away’ reserves
− The wealthier NOCs do not require IOC capital and are reluctant to pay high returns for it
− IOCs want to book oil & gas reserves and are focused on reserve replacement
− NOCs are primarily interested in capability, now less dependent on IOCs than pre-OPEC 1
Thus there has been a growing trend for the disintermediation of the IOC
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4. Petrofac’s positioning
Our relationships with NOCs encompass the provision of both our engineering and operations service capabilities and as development partner through Energy Developments
Malaysia, Petronas
Kuwait, Kuwait Oil Company UAE, Dubai PetroleumTunisia, ETAP
Oman, Ministry of Oil & Gas and PDO
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Algeria, Sonatrach
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4. Petrofac’s positioning
Kuwait Oil Company, Kuwait
5 year full maintenance services contract, including provision of management and technical support team and systems
Preventative, corrective and predictive maintenance execution using 650 maintenance personnel
General services including site accommodation and catering services
Major overhauls on rotating equipment
Site workshops
Reimbursable materials
Measured extra works (Brownfield Engineering)
Training of company’s personnel (nationalisation)
Engineering services and spare parts for control and shutdown systems
In addition, Petrofac is also undertaking a US$680m lump-sum facilities upgrade project for KOC
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4. Petrofac’s positioning
Service operator contract for the provision of well and facilities management services for all offshore oil & gas assets
Assets comprise four offshore fields, 70 platforms, 400 wells, approximately 600 full-time employees and 500 contractors
Full operating responsibility transferred to Petrofac in April 2007
Alignment through profit sharing of upside
Material increase in scale for Petrofac’s international Operations Services business
Dubai Petroleum, UAE
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4. Petrofac’s positioning
Why Dubai Petroleum is important
First time a government entity has chosen to exploit its hydrocarbon resources through direct contracting with an international service provider
Dubai gets the capability it requires without relinquishing reserves or control of reserves
Though the fields are mature, because they were initially quite large, considerable potential remains
In contrast to most UKCS mature-field examples therefore, there are major developments planned alongside the rejuvenation of the mature operation itself
For Petrofac - a reputation-making opportunity
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4. Petrofac’s positioning
Early days yet, but…
As expected, the inherited organisation itself - its attitude to business - bore the imprint of more than 35 years of “business as usual”
Many opportunities for short-term production increase have been identified, and some already secured
The economics are different pre- and post-changeover: governments are looking at “100% economics” and this makes a lot more investment opportunities attractive
We have demonstrated that the risks of transfer of operatorship - the area of most concern to any resource owner contemplating change - are manageable
This transition activity has been carried out by Petrofac many times in UK but never before in an international context with an international workforce
The ability to do this - and particularly, the track record of having done it so many times - is a key Petrofac differentiator
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4. Petrofac’s positioning
Where next?
Not all governments are as action-oriented as Dubai - so complete replication will not be easy
This example however - and others where service companies are extending the boundaries of previous service provision - are beginning to catch the attention of some more forward-thinking NOCs
We know that many NOC-operated operations where IOCs have largely been absent for decades are inefficient; considerable scope exists for efficiency improvement leading to increased productivity
It is possible that other regional players will conduct experiments in ring-fenced areas in the use of turn-key service provision
Against this theoretical opportunity has to be set the conservatism and the “old-think” contractor relationship attitudes still prevalent in many NOCs
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Appendix 1: Petrofac’s positioning, examples
ETAP, Tunisia
Chergui gas field
Petrofac owns a 45% interest in the Chergui gas concession from ETAP for a cash consideration of approximately US$30m; ETAP hold 55% interest
Commencement of production from the field is expected early 2008, with plateau rates expected to be maintained for around four years with a further eight years of operation beyond that
Hasdrubal gas plant
US$400m lump-sum turnkey contract for BG Group and Entreprise Tunisienne d’Activites Petrolieres (ETAP)
Scope includes: project management, detailed design, procurement, construction, pre-commissioning and start-up performance testing of the new gas plant processing facility and the liquefied petroleum gas production facility
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Appendix 1: Petrofac’s positioning, examples
Cendor PM304 field undeveloped for years but with proven reserves estimated at 24.6m barrels
Petrofac is operator with a 30% interest; partners are Petronas Carigali, Kuwait Foreign Petroleum Exploration Company and PetroVietnam Investment Development Company
Petrofac’s full range of capabilities, Engineering & Construction, Operations Services and asset management, deployed to provide optimal solution
Asset management focus on developing innovative solutions for smaller fields
From farm-in to full production in less than two years, ahead of the prescribed timetable and below budget
First oil achieved in September 2006; daily production approximately 14,000 barrels
Petronas, Malaysia
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Appendix 1: Petrofac’s positioning, examples
Ministry of Oil & Gas and PDO, Oman
Harweel development cluster, PDO
Turnkey project value approximately US$1 billion
Scope includes: project management, detailed engineering, procurement, construction and pre-commissioning
Training and support during commissioning of the project
Kauther gas plant, Ministry of Oil & Gas
US$246m lump-sum engineering, procurement and construction project with (initial) one-year operation
Will draw capability across the Petrofac Group from Engineering & Construction to Operation Services
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Appendix 1: Petrofac’s positioning, examples
Ohanet is a large gas field development located in Illizi province
Risk Services Contract (RSC) with Sonatrach; partners are BHP Billiton (Operator), Japan Ohanet Oil & Gas Co and Woodside Energy
Average daily production is approximately 14.6 million m3/d gas, 24,240 bpd condensate, 2,770 tonnes per day LPG
Petrofac investment US$100 million; US$1 billion total project value
Pioneered the partnership business model
First time non-recourse financing used in Algeria
Sonatrach, Algeria
UBS global oil & gas conference, Dubai
Changing relationships in the oil service sectorSeptember 2007