Whats in Store for the Asia Pacific Oil & Gas Markets in 2012?

Subramanya Bettadapura, Director Energy and Power Systems 9/12/2011

Executive SummaryCEOs Perspective

Average oil prices (Brent crude) forecast to be above $ 90 in 2012

Exploration & Production capital spending to increase in 2012

Deepwater market to see increased activity in 2012

LNG imports to Southeast Asia set to increase

Asia refining capacity additions in 2012 double of 2011 levels

Source: Frost & Sullivan analysis. 2

Opportunities Highlights

Highlights: Southeast Asia Upstream Sector

2 1 3

1-2 Years
4

3-6 Years

7-10 Years

4.5
0 5

Growth Potential 2012

High Growth Medium Growth Low Growth Segments to Watch

Anticipated Investments
E&P Capital Expenditure, Southeast Asia (2012): $38.7 billion

Growth Rate in 2012

Attractive Countries

10.6%

Deepwater Enhanced Oil Recovery (EOR) Marginal Fields

Malaysia Indonesia

Decreasing

Stable

Increasing

Source: Frost & Sullivan analysis.

Highlights: Malaysia and Indonesia Upstream Sector

Anticipated Investments Growth Rate in 2012

Segments to Watch

Malaysia Upstream Sector

E&P Expenditure,

Malaysia (2012): ~ $15 billion

16.6%

Deepwater Projects Enhanced Oil Recovery (EOR) Marginal Fields

Anticipated Investments

Growth Rate in 2012

Segments to Watch

Indonesia Upstream Sector

E&P Expenditure, Indonesia (2012): ~ $21 billion

23.5%

Deepwater Projects

Decreasing

Stable

Increasing
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OUTLOOK EXPLAINED

Oil Price Outlook

Oil Prices Brent crude average price to remain upwards of $90 , even in weak economy

120 100

96.8 79.5 72.5 61.5

111. 7

105

The wide range forecast for Brent crude in 2012 is $90 - $115 per barrel (annual average) Even if the global economy contracts by 1%, Brent crude to average over $90 Demand for petroleum products from China and India expected to remain strong thereby increasing the average oil price to $ 115

$ / Barrel

80 60

40 20
0

2007

2008

2009

2010

2011

2012E

Brent Crude, Spot Prices (Annual Average)

Global E&P Capital Spending Outlook

E&P Capital Spending Global E&P capital spending to increase in 2012 to $545 billion

$600 $500 $400

13.5%

11.9%

10.9%

11.2%

15.0% 10.0% 5.0% 0.0%

Some independent E&P companies in North America have indicated that they may spend less in 2012 compared to 2011
Growth Rate

$ Bn

400
$300

454

395

442

490

545

Increased spending in Middle East and South America Increased spending in Asia Pacific, specifically in Southeast Asia F&S forecasts the global E&P capital spending to increase to $545 billion.

$200 $100

-5.0% -10.0%

(13.0)%
$0 -15.0%

2007

2008

2009

2010

2011 (e)

2012 (e)

Source: Barclays Capital E&P Spending Survey; Frost & Sullivan estimates for 2012

Southeast Asia Capital Spending Outlook

E&P Capital Spending E&P capital spending in Southeast Asia to be around $ 38.7billion New areas being explored
18.6 % 13.7 %

$45 $40 $35

17.2 % 38. 7 35. 0 10.6 %

20.0% 18.0%

Exploration and development of deepwater blocks

Growth Rate

16.0% 14.0% 12.0%

10.0% 8.0% 6.0% 4.0% 2.0% 0.0%

$ Bn

$30 $25

11.1 % 25. 1 29. 8

Rejuvenation of mature fields especially in Indonesia and Malaysia Development of marginal fields in Malaysia and Indonesia

$20 $15 $10

$5 $0

19. 9

22. 6

2007

2008

2009

2010

2011 (e)

2012 (e)

Increased complexity of projects driving up costs

Source: Frost & Sullivan estimates based on annual reports of E&P companies and NOCs
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Southeast Asia Offshore Rigs Outlook

Offshore Rigs Orders A record number of rigs that were ordered in 2010 will enter the fleet beginning mid-2012
End of 2010 Global Jack-up Fleet 356 End of 2011 (e) 380 End of 2012 (e) 395

Concerns about tightening supply of high specification rigs led to the swelling of orders in 2010 Though there are indications of oversupply globally, rig demand, especially for high spec rigs, is expected to increase in 2012 High-end Jack-up utilization is over 75% in Southeast Asia Rigs operating in Southeast Asia are currently posting dayrates that exceed the global average for jackups

Drillship

Drivers for Rig Construction

Semisub 5

Tender

To upgrade to High Spec Rigs for Enhanced Technical Capabilities Higher Operational and Safety Standards

Jackup

42

10

20

30

40

50

Rigs under Construction in the Southeast Asian Region

The outlook for high end Jack-ups and Drillships looks good as dayrates and utilization rates improve
Source: Compiled by Frost & Sullivan
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Asia Pacific LNG Re-gasification Sector Outlook

LNG Imports LNG Exports LNG Imports to the Asia Pacific Region Set to Increase Further in 2012 Australia to add the largest LNG liquefaction capacity during 2012 to 2016
Location Start up Capacity Location Start up Capacity : Jieyang, China : ~ 2012/2013 : 2.0 MTPA

: Zhuhai, China : Phase 1, 2013 : 3.5 MTPA

Location Start up Capacity Location Start up Capacity

: Dabhol, India : 2011 : 1.2 MMTPA : Kochi, India : 2012 : 5.0 MTPA Location Start up Capacity : Jakarta Bay, West Java, Indonesia : 2012 : 3 MTPA

Location Start up Capacity Location Start up Capacity

: Map Ta Phut, Thailand : Phase 1, 2011 : 5.0 MTPA : Melaka, Malaysia : 2012 : 3.8 MTPA : Jurong Island, Singapore : 2013 : 3 MTPA

Location Start up Capacity

LNG Re-gasification Terminals ongoing projects; Commission period during Q3, 2011-2013

Source: Compiled by Frost & Sullivan

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Asia Pacific Refining Capacity Outlook

Refining Capacity
30.0 29.5

Asian refining capacity to increase by 850,000 barrels per day in 2012 compared to 400,000 barrels per day in 2011 A major portion of the capacity addition investment is by NOCs
29.6

Million Barrels/Day

29.0
28.5 28.0 27.5

28.8 28.4

China is expected to add 600,000 barrels per day refining capacity in 2012 China and India adding refinery capacity in a bid to become self-sufficient India to become the second largest refiner in Asia overtaking Japan

27.6

27.0
26.5

2009

2010

2011E

2012E

BP Statistical Review, F&S Forecast

Asia Pacific Refining Capacity

With refining capacity projected to increase by 3.1% and demand in major export markets projected to stay flat in 2012, margins are expected to be under pressure

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For Additional Information

Donna Jeremiah Corporate Communications Asia Pacific +603 6204 5832 djeremiah@frost.com

Carrie Low Corporate Communications Asia Pacific +603 6204 5910 carrie.low@frost.com

Subramanya Bettadapura Director Energy & Power Systems apacfrost@frost.com

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