| Global Oil and Gas Capital Expenditure Outlook – | | | | 2010 |
| 2010: National Oil Companies (NOCs) to Drive | | | | The second half of 2008 was a highly volatile period |
| Investment | | | | for the global oil and gas industry. Following the high |
| This report provides an in-depth analysis and insights | | | | deal activity in 2007, global mergers, acquisitions and |
| into oil and gas sector capital expenditure outlook for | | | | asset transactions started to fall in 2008. The fall in the |
| 2010. The report provides a detailed analysis of the | | | | commodity prices, the credit crisis which led to the |
| current and future capital expenditure position of | | | | financial crisis and the global economic recession |
| national oil companies, and integrated, and independent | | | | decreased the appetite for deal activity by the end of |
| oil and gas companies. It presents detailed Information | | | | 2008. Deteriorating asset values caused more financial |
| and analysis of capital expenditure in oil and gas | | | | difficulties leading to a decrease in the ability of the |
| segments; Upstream and Midstream. It also provides | | | | financial institutions to continue lending which is hindering |
| detailed information on capital expenditure across | | | | the flow of required investments across industries. The |
| various regions; North America, South and Central | | | | global economic slowdown resulted in reduced |
| America, Europe, Middle East & Africa and | | | | demand for oil and gas. As a natural response to the |
| Asia-Pacific. The report also covers the planned oil and | | | | falling demand, the appetite for risk decreased leading |
| gas projects in upstream, refining, pipeline, LNG and | | | | to a low deal activity from the fourth quarter of 2008. |
| petrochemical projects. ( ) | | | | With crude oil prices stabilizing above $75 a barrel, |
| Global Oil and Gas Sector Spending to Rise 12% in | | | | M&A activities are expected to increase in 2010 with |
| 2010, Driven By NOCs’ Investments | | | | the Chinese and Indian NOCs expected to be the |
| A drop of over $100 per barrel in oil prices late last | | | | major players. These companies will look to acquire |
| year bringing it to around $32 per barrel prompted | | | | overseas assets to expand their footprint and secure |
| many national oil companies, which depend on oil for | | | | future energy supplies. The unconventional resource |
| most of their revenue, to cut spending, delay and | | | | deposits will offer significant growth prospects and |
| cancel oil and gas projects. However, most NOCs | | | | attract huge investments from both International Oil |
| have the necessary financial strength to fund their | | | | Companies (IOCs) and NOCs. |
| capital-intensive projects and they continued to spend | | | | Global refining industry’s capacity growth will be |
| during the ongoing economic downturn. The capital | | | | driven through NOCs |
| expenditure of oil and gas companies witnessed a | | | | The global refining capacity has grown at an AAGR |
| significant decrease in 2009 after the surge in | | | | of 1.05% from 2000 to 2008 and is expected to grow |
| 2007–08. However, in 2010 capex activity is | | | | further at an AAGR of 3.5% from 2008 to 2013, |
| expected to rise, driven mainly by large National Oil | | | | based on committed projects. In the next few years, |
| Companies (NOCs). Oil and gas spending in 2010 is | | | | the global refining industry’s capacity growth will be |
| expected to increase largely driven by: China | | | | driven through NOCs while poor market conditions will |
| Petroleum & Chemical Corporation, Ecopetrol, Petroleo | | | | reduce private company investments. The global |
| Brasileiro S.A., Petroleos de Venezuela S.A., Petroleos | | | | refining industry has traditionally been dominated by |
| Mexicanos (PEMEX), PetroEcuador, PTT Exploration | | | | private, independent oil companies (IOCs). Even after |
| and Production Public Company Limited, Nigerian | | | | the nationalization of the oil industry in many countries, |
| National Petroleum Corp, Sonangol and Libya's National | | | | these companies maintained their dominance by |
| Oil Corp. Modest reductions in spending are likely to be | | | | capitalizing on their technological competence. Many |
| implemented by Saudi Aramco and Qatar Petroluem | | | | countries, especially in Asia and the Middle East, have |
| Co. | | | | specific national priorities for pursuing refining projects. |
| Developing New Discoveries in More Geologically | | | | China is going ahead with its refining projects to meet |
| Challenging Regions Will Entail Higher Capital | | | | its surging domestic demand for refined products and |
| Expenditure | | | | to reduce dependence on imports. The Middle East is |
| In 2009, over 350 oil and gas discoveries were | | | | investing heavily to become a major petroleum |
| announced worldwide. The majority of these | | | | products export hub by utilizing its domestic heavy and |
| discoveries were in South and Central America (29%), | | | | sour crude as well as satisfying its increasing domestic |
| followed by Middle East & Africa (26%), Asia-Pacific | | | | light distillate demand. Such national objectives are |
| (23%), Europe (18%) and North America (5%). | | | | being met through the NOCs in these countries. For |
| Petrobras was the leading company with 50 | | | | example, Iran is planning to invest $10-15 billion on |
| discoveries. To capitalize on the new discoveries, | | | | building new refineries and renovation of existing |
| companies will be required to increase their capital | | | | refineries. Future investments and refining capacity |
| budgets for 2010 and beyond. Some of the | | | | growth will be driven by NOCs as they will be |
| discoveries in Angola, Brazil and Nigeria require | | | | financially supported by national governments to |
| significant development and lifting costs, which require | | | | pursue their cost intensive refining projects. Seven of |
| a long-term oil price in excess of $70 per barrel. | | | | the top 10 planned refineries in the next four years are |
| Corporate M&A Deals Will Drive M&A Investment in | | | | operated by national oil companies. |