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Ahmed E MAZIGHI Director Planning and Studies SONATRACH Marketing Activity

THE ROLE OF NOCS AND IOCS IN STABILIZING ENERGY MARKETS . Ahmed E MAZIGHI Director Planning and Studies SONATRACH Marketing Activity.

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Ahmed E MAZIGHI Director Planning and Studies SONATRACH Marketing Activity

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  1. THE ROLE OF NOCS AND IOCS IN STABILIZING ENERGY MARKETS Ahmed E MAZIGHI Director Planning and Studies SONATRACH Marketing Activity 9th Arab Energy Congress Doha, 9th-12th May 2010

  2. 9th Arab Energy Congress Doha, 9th-12th May 2010 OUTLINE • I. The rationale for cooperation between IOCs and NOcs • II. The relation between technology and market stabilisation • III. Technology and Cooperation between IOCs and NOCs • IV. The way forward

  3. 9th Arab Energy Congress Doha, 9th-12th May 2010 I. The Rationale for cooperation between IOCs and NOCs SUPPLY DEMAND 1- Conventional reserves concentrated in NOCs 2- Non-conventional and high carbon intensity product (EOR, Tight and Shale Gas, …) 3- Bio-Fuels & Renewable Energy • GDP • More efficiency Quantitative • Green products • Low carbon intensity • High non fuel content (Brand,…..) Qualitative

  4. 9th Arab Energy Congress Doha, 9th-12th May 2010 I. The Rationale for cooperation between IOCs and NOCs NOCs Vs IOCs objectives IOCs NOCs • Maximizing dividend to shareholders • Value based management • Maximizing revenue to the Nation • Maximizing the well being of the future generation LEVERAGES • Growth (limited by reserves access) • Business management (limited by their assets) • Innovation / Technology (Process, product) Conventionnal resources Cooperation is creating a common objective. Ex : PSC, PSA in the upstream

  5. 9th Arab Energy Congress Doha, 9th-12th May 2010 I. The Rationale for cooperation between IOCs and NOCs IOCs and NOCs have a common challenge : Providing clean products TECHNOLOGY + COOPERATION IOC’s and NOCs More and more « difficult » resources

  6. 9th Arab Energy Congress Doha, 9th-12th May 2010 II. The relation between technology and market stabilisation Traditional models depict the equilibrium between supply and demand of energy as a question of price flexibility. Price flexibility never explains more than 50% of the movements . Innovationis also a key driver. Equilibrium Innovation Price Flexibility

  7. 9th Arab Energy Congress Doha, 9th-12th May 2010 II. The relation between technology and market stabilisation A good ilustration of this phenomenom is the correlation between Price movements and technology in the oil and gas industry.

  8. 9th Arab Energy Congress Doha, 9th-12th May 2010 II. The relation between technology and market stabilisation REN Power A schematic costs curve for fueling transportation sector Power Current Level of demand GTL, CTL Biofuels Shale, tight USD/ BOE EOR Venezuelan Heavy FSU Other conventional NOCs Conventional reserves The more we move to the right side, the more there is incentive to cooperate and the more the call on technology is high. Source : Using a Conoco Philips presentation of 2009

  9. 9th Arab Energy Congress Doha, 9th-12th May 2010 I. The Rationale for cooperation between IOCs and NOCs

  10. 9th Arab Energy Congress Doha, 9th-12th May 2010 III. Technology and cooperation between NOCs and IOCs Yesterday : Technology was mainly concentrated in the R&D departments of IOCs

  11. 9th Arab Energy Congress Doha, 9th-12th May 2010 III. Technology and cooperation between NOCs and IOCs Today : The game has changed 1- Most of R&D departments of IOCs have been transformed into Business Units Chevron Technology Ventures, Shell Technology Ventures…..their main business is to make discoveries and sell licences. 2- ISCs have merged and their main obective is to provide equipment and services to the Oil gas Industry with scale effects. 3- Some NOCshave madebreakthroughs : Petrobras in the Offshore, PDVSA with the Oremulsion. 4- Other NOCs (ARAMCO) created their own R&D unit (KUST).

  12. 9th Arab Energy Congress Doha, 9th-12th May 2010 III. Technology and cooperation between NOCs and IOCs Yesterday - A good example of cooperation was the Production sharing agreements (PSAs) Today - Advanced models of cooperation in the form of integrated projects from the upstream to the downstream + marketing.

  13. 9th Arab Energy Congress Doha, 9th-12th May 2010 IV. The way forward • Some examples of Cooperation potential between IOC and NOCs : • - CCS : CCS alone has already been experienced with success in • Insalah Field in Algeria. • CCS for EOR • Reservoir fracturing • Tight gas • Gas recovery technologies • Fuel craking technologies (reconversion)

  14. 9th Arab Energy Congress Doha, 9th-12th May 2010 IV. The way forward • Technology is the raw material of the oil and gas industry • It is essential to maintain the equilibrium of the industry

  15. 9th Arab Energy Congress Doha, 9th-12th May 2010 THANK YOU FOR YOUR ATTENTION

  16. 9th Arab Energy Congress Doha, 9th-12th May 2010 R&D expenses as a percentage of sales Petrobras Petrochina Source : IFP

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