21°Convegno Annuale Sezione Componentistica d’Impianto ANIMP · 115,000 kilometers (km) of new...

SEZIONE COMPONENTISTICA D’IMPIANTO ANIMP

Grand Hotel Villa Torretta, Sesto S.G. (Milano) 24 novembre 2015

21°Convegno Annuale Sezione Componentistica d’Impianto ANIMP

PREVISIONI DI MERCATO NEL SETTORE IMPIANTISTICO

Compilato e presentato da Daslav Brkic SVP Business & Technology Development, Saipem VP Animp

21° Convegno della Sezione Componentistica ANIMP, 24 novembre 2015 2

New investments in oil & gas industry

21° Convegno della Sezione Componentistica ANIMP, 24 novembre 2015

A highly complex situation

3

Downturn to continue also in 2016, with well grounded hopes of recovery starting in 2017

Downstream: better prospects than in upstream

Refining, Petrochemicals, Power

Sanctioned, post-FID projects to be completed

Tremendous uncertainties to persist for new initiatives

Project "delays" or cancellations?

4

Core oil & gas markets outlook



We are at the end of a very long growth cycle

(Sept. 2015)

5


But note: the negative trend is not homogenous Middle East continues to invest, even in upstream

(Sept. 2015)

6


(Sept. 2015)

New upstream investments follow the oil price

7

Crude oil price forecasts vary considerably

IHS CERA (August 2015)

8 21° Convegno della Sezione Componentistica ANIMP, 24 novembre 2015


Today, the world oil production is exceeding current demand

(Nov. 2015)

9

(*) IEA Oil Market Report 2015 (°) ‘Strongest growth in many years’ Sandi VM Petroleum - Prince ‘Abd al’Aziz bin Salam Al Saud

2014 World

Demand

92.6 (*)

Frcst 2016 World

Demand

95.6 (*)

Est. 2015 World

Demand

94.2 (*)(°)


Oil price is very sensitive to even minor imbalances in supply/demand

Source: Transmar Consult Inc. August 2015

10

11

Source: Transmar Consult Inc. August 2015

Total cost of shale gas production (for BOE)

Cumulative production from shale gas plays (BOE)

North American shale gas and tight oil players have been excellent in gaining experience and reducing costs


…with US oil producers remaining mostly very competitive

Cumulative changes in oil supply/demand (mbpd) in the periods 2010 -15 and 2015-20

But medium term the balance should reverse


13

In spite of a gradual slowdown in the growth pace, the overall energy demand should increase by ~40% over the next two decades Global energy intensity -36% Global use pro capite +12%

(Feb. 2015)

+ ~ 35 %

+ ~ 40 %


14

Oil & Gas should continue to play a fundamental and constant role

Oil&Gas: ~ 58% of total

Overal Trends

Oil Gas

Coal Renewables


Analogous forecasts also by other authoritative players

15

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

1990 2015 Rivalry Vertigo Autonomy

Oil Natural Gas Coal Hydro Nuclear Renewables Other*

Global primary energy by fuel type

Source: IHS © 2015 IHS

mill

ion

tons

of o

il eq

uiva

lent

(mto

e)

2040

IHS CERA – August 2015 EIA (US Department of Energy) – April 2015

Scenarios: Rivalry – Oil >100 $/bl by 2020 Autonomy – Oil ~ 50 $/bl throughout, significant regulation Vertigo – Crises, very cyclic oil price


Most investments in new oil production are required to outpace consequences of depletion

Source: IEA estimates (Nov. 2014)


17

Our medium and long-term forecasts remain optimistic

The world will need more investments in energy facilities

Global energy demand expected to rise ~40% by 2035

Important changes in the energy mix

Impact of: ‒ Depletion (e.g. ~30% in 5 Y) ‒ Replacement of old, obsolete facilities

Lower energy prices to foster higher demand

The oil & gas markets will continue to dominate


18

Our medium term investment forecasts remain optimistic for E&P…

…with relatively stable growth for downstream


19

Outlook for upstream, offshore and deepwater


20

Offshore and part of deepwater can be economical even at today’s oil prices

US NGLs Other NGLs

Other OPEC Onshore and

Shallow

Middle East Non-OPEC

US Tight Oil

Global Ethanol

Oil Sands Insitu

Oil Sands Mining

Venezuela Extra Heavy

GTL/CTL

,0 10000,0 20000,0 30000,0 40000,0 50000,0 60000,0 70000,0 80000,0 90000,0 100000,0$,0

$10,0

$20,0

$30,0

$40,0

$50,0

$60,0

$70,0

$80,0

$90,0

$10…

$11…

$12…

Global Liquids (Crude Oil and NGLs) Supply (mb/d)

$/barrel Full Cycle Breakeven Prices

Middle East OPEC

Deepwater

Conventional Onshore and Shallow Water

Non-OPEC

Source: IHS Global Deepwater & Growth Play Service (April 2015)

Today


21

Most oil and gas reserves recently discovered but as yet undeveloped are mainly offshore and in deep water

,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

Onshore Shallow Water(<1,000 ft)

Deep Water(>1,000 ft)

Billio

n b

arr

els

oil e

qu

ivale

nt

Undeveloped Developing Producing

Conventional oil fields, volumes discovered

Note: Data excludes Canada onshore, US lower-48 onshore, and US shallow water. Source: IHS © 2015 IHS

,0

20,0

40,0

60,0

80,0

100,0

120,0

Onshore Shallow Water(<1,000 ft)

Deep Water(>1,000 ft)

Billio

n b

arr

els

oil e

qu

ivale

nt

Undeveloped Developing Producing

Conventional gas fields, volumes discovered 2004–13 = 198 billion boe

Note: Data excludes Canada onshore, US lower-48 onshore, and US shallow water. Source: IHS

©2015 IHS


22

Under today’s circumstances new investments can still be economical in several markets onshore and offshore

IHS (September 2015)

Today


Offshore (E&C + drilling) capex by deepwater/shallow water

USD billion

Investments in deep water and shallow water exploitation will thus recover and follow the same trends

Source: IHS Upstream Spending Report - August 2015



…but will remain a mostly North American play…


…with a huge commercial and geopolitical impact

(Nov. 2015)

25

26

Tight oil production outside North America will emerge but at a much slower pace

Global Crude & Condensate Production Outlook / May 2015

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2005 2010 2015 2020 2025 2030 2035 2040

US Canada Russia Argentina China MexicoColombia Australia Libya Algeria Tunisia

Global Tight Oil Production Outlook

Source: IHS © 2015 IHS

Thou

sand

bar

rels

per

day


27

Midstream Gas


28

Major plans for new LNG capacity, based on optimistic demand forecasts

Source: IHS CERA July 2015


But, high % of LNG project mortality

Slower LNG demand increase over the next 10 years Risk of over-supply Decrease of LNG purchase prices in Far East Cost and completion overruns on recent

megaprojects Stringent environmental regulations and

conflicts with local communities Financial weakness of some investors



Proposed and approved LNG export terminal projects in the US and Canada

Source: HPI Market Data 2016 Hydrocarbon Processing

30

New liquefaction projects

Asia - Pacific Strongest CAPEX driver during the last few years Australia:

High cost escalation – less attractiveness of future projects - no further capacity increase

Asia/Pacific: Several projects under way, including FLNG

North America World largest Capex under way 5 major onshore liquefaction projects under

construction More than 40 proposed projects (over 600 MTPA)

but only 15% expected in production by 2025

Africa Significant new gas resources in

Mozambique/Tanzania Large scale LNG projects expected between 2020-

2025 (Mozambique) But:

Undeveloped countries Lack of infrastructure

Russia Significant gas resources close to Asian markets LNG export liberalization in 2013 Sanctions against Russia:

Difficulties in finding partners/off takers/financing Potential escalation to include also LNG technology

Gas pipelines development: often a better alternative


LNG Capacity in North America by 2025

LNG Regasification

Growing global need for additional capacity - mainly in Asia and Europe

By 2020: 42 countries with regasification capacity

Asia: Moderate increase, almost 60% of the worldwide capacity by 2020

Europe Moderate increase: 20% of the world

capacity by 2020 25 exist. terminals - 5 under completion

(2017) - 13 planned by 2020 Permitting: often a strong constraint

Floating storage and regasification units

(FSRU) Currently 70 MTPA (10% of global capacity) Expected : 100 MTPA by 2017 - 130 MTPA by 2020 Main users in: Asia-Pacific (esp. Japan and Korea),

Europe and Latin America


Limited growth due to: Significant fall in oil prices Lower-than-expected economic growth in Asia + unconventional production slowdown in North America Environmental and geopolitical issues

Onshore pipeline expenditure: US$170b between 2015 - 2018 vs. $155b between 2011 - 2014 Increase limited to 10%

115,000 kilometers (km) of new oil and gas pipeline to be built between 2015 - 2018

Major investors: Gazprom, CNPC, TransCanada, Enbridge and Kinder Morgan

Midstreastream Pipelines - short term (2015 -2018) (1/2)


EMEA (ME, Africa, Europe incl. FSU except Caspian) Longest Oil and Gas Pipeline additions

New projects to provide access to natural gas from the Caspian and Central Asia

Constraint: local communities’ negative attitude/permitting

North America

Drivers: unconventional production growth

Constraint: local communities negative attitude/permitting

Asia-Pacific

Most of the gas pipelines to be constructed in India, Georgia, China (15.000km) and Australia.

Driver factor: need to secure energy for developing economies with rapidly growing energy consumption

10%

60

46

40

Additions by 2018 (in 1000 km)

EMEA Americans Asia/Pacific


Midstreastream Pipelines - short term (2015 -2018) (2/2)

34

35

Refining


Refining: A growing industry

From 96 to 102 MMbpd by 2020 - 550 B$ in Capex

Growing fuel demand in non-OECD nations (mostly in Asia, ME)

World-class export mega-refineries

‘Clean Fuels’ legislation a major driver everywhere Less emissions, more stringent product quality

Revamps/modernizations: flexibility for broader crude choice, declining residual fuel oil

markets

Emphasis on conversion and residue upgrading

Availability of cheap gas to influence future refinery configurations

More stringent Marine Fuel Oil specifications will require more investments in bottom-

of-the-barrel processing


Gasoline

0 ppm 15-30 ppm 30-80 ppm

200-600 ppm Up to 2500 ppm

100-150 ppm

Source: IFQC

0 ppm 10 or 15 ppm 50 ppm 350 ppm

>2000 ppm 2000 ppm

500 ppm

Source: IFQC

Diesel

Environmental regulations will impact refining investment plans


38

The fuel global demand could plateau by 2035

July 2015


39

Petrochemicals


2014 World Polymer Demand = 235 M Tons

PC, 2%HDPE, 17%

LLDPE, 12%

LDPE, 9%

PP, 26%

PS, 4%

ABS, 4%

PVC, 18%

PET, 9%

Focus on PE and PP: 64% of the global polymer demand

Source: IHS June 2015 21° Convegno della Sezione Componentistica ANIMP, 24 novembre 2015 40

Polyethylene (PE) – Additional Production / Capacity

Source: IHS June 2015

Middle East traditional and

growing market

Global Demand: 84.7 MMT (2014) 105.7 MMT (2019)

MMT

Demand Change

America C.E. Europe

SE Asia M.East

C.E. Europe Indian Subc.

W. Europe Africa NE Asia


New Projects in North America driven by shale

gas price advantage

China decreasing imports while developing new

technologies (CTO, MTO)

41

Polypropylene (PP) - Additional Production / Capacity

Source: IHS June 2015

Middle East facing shortage of ethane

Global Demand: 58.8 MMT (2014) 75.1 MMT (2019) MMT


New Projects mainly in China

CIS growing in PP market

42

Overall Polyolefines market outlook

PE and PP demand growth of 4.4 and 4.7 %/y to exceed world GDP growth (expected 3.6 %/y in 2016)

Start-ups in 2015 – 2017 of already initiated projects in USA, China, Russia and ME (often based on shale gas and coal) will add to existing capacity

In the short term, considerable uncertainties in new investments Temporary overcapacity – till 2017? Slow-down of some key economies and cash strategy (China, CIS, Brazil, M.East) Political instabilities Sanctions on Russia and Iran

But, in the short-medium term also projects in newly industrialized countries: Oman, Malaysia, Caspian …

Some plant modernization opportunities in Europe

In the medium term, a 2nd investment wave in USA, Russia, China


44

Power


46

Impact of new policies for the limitation of greenhouse gases emissions

Not a Plant built by an Italian E&C Contractor


47

CO2 emissions policies (1/3)

USA: -28% emissions vs. 2005, by 2025 -80% emissions by 2050

US - China Agreement: Emission to peak by 2030

China: Introduce Carbon Tax certificates in 2017 20% of non-fossil energy by 2030

Indonesia: 23% energy supply from renewables by 2030 -29% emissions by 2030, - 41% with international support

Brasil: Reforestation renewables -37% emissions vs. 2005 by 2025, -43% by 2030

Examples

India: Reforestation, 40% non-fossil energy by 2030 -33% energy intensity per unit GDP vs. 2005 by 2030

Statements

of Intent

New

Policies New

Projects


Waiting for the outcome

of COP 21

Paris

https://www.google.it/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwi7vJ73kJ_JAhXDTBQKHRAdDVoQjRwIBw&url=https://www.youtube.com/channel/UCsQYAaRER07qFTLg6ZGGTGg&psig=AFQjCNESqEH9MSbBo7_LIADJYMgl_ckaOg&ust=1448113394176989

48


New

Policies

EU 20/20/20 by 2020 (vs. 1990) -20% CO2 emissions (achieved - 23÷24%) +20% Renewable energy sources (15% today, 18÷19 by 2020) +20% Energy efficiency by 2030 -43% Concentrated emissions -30% Other emissions

Examples

USA: EPA ‘Carbon Polution Standards for New Power Plants’ (Aug. 3, 2015) For automotive vehicles, 2012 rule: -35% by 2025 vs. 2016 For trucks, new rules in preparation

New

Projects

Statements

of Intent


49

European share of renewable energy

Source: EuroStat (2015)


50

Greenhouse Gas Emissions in the European Union

Source: EuroStat (2015)


51


Emissions abatement from existing traditional power plants

Novel power and energy generation approaches

New

Projects

New modern gas fired power plants

Integrated Gasification Combined Cycle

New

Policies

Statements

of Intent

Opportunities for major E&C contractors


Future C02 emissions policies could greatly influence energy sources

World primary energy demand by fuel and scenario (Mtoe)

(*) Includes tradidional and modern uses of biomass

52

Source: IEA World Energy Outlook (Nov. 2014)

2012

3879

4194

2844

642

316

1344

142

13361

5860

5337

4742

1005

504

1933

658

20039

4448

4761

4418

1210

535

2002

918

18293

2590

3242

3462

1677

597

2535

1526

15629

2040

New Policies

Current Policies

450 scenario

Coal

Oil

Gas

Nuclear

Hydro

Bioenergy

Other renewables

Total

+ 27% + 14% - 23%

+ 50% + 37% + 17%

+ 67% + 55% - 22%



Conclusions

In Upstream markets, we are in the middle of an oil&gas industry downturn, to worsen in 2016

Significant recovery prospects after 2017

Downstream markets affected, but

generally, buoyant

NA, ME and Asia/China continue to grow strongly

Major industry effort required (Owners/E&C Contractors/Suppliers) to reduce the cost of new future investments

We need to weather the storm and become more cost-effective

http://www.google.it/url?sa=i&source=imgres&cd=&cad=rja&uact=8&ved=0ahUKEwj24eW8lJ_JAhWK8RQKHSoLBZEQjRwICTAA&url=http://www.albanesi.it/raziologia/effetto_cornice.htm&psig=AFQjCNG9ux0dF-TRPOSvm8UrUNPDjs2hJw&ust=1448114350347404

grazie per la cortese attenzione

21° Convegno Sezione Componentistica ANIMP 24 novembre 2015

21°Convegno Annuale Sezione Componentistica d’Impianto ANIMP · 115,000 kilometers (km) of new...

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