1. Oil & Gas Industry Introduction to the Upstream Sector

2. Agenda Oil & Gas Industry Segmentation: upstream and downstream Business Cycle The Industry in Numbers: reserves, production, consumption Useful sources of information OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9th, 2011

3. Before we start… This is an informal discussion!!! Powerpoint is just to organize it OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9th, 2011

4. Oil & Gas Industry Segmentation Upstream Refers to the searching for and the recovery and production of crude oil and natural gas. The upstream oil sector is also known as the exploration and production (E&P) sector. The upstream sector includes the searching for potential underground or underwater oil and gas fields, drilling of exploratory wells, and subsequently operating the wells that recover and bring the crude oil and/or raw natural gas to the surface. Downstream Refers to the refining of crude oil, and the selling and distribution of natural gas and products derived from crude oil. Such products include liquified petroleum gas (LPG), gasoline or petrol, jet fuel, diesel oil, etc. The downstream sector includes oil refineries, petrochemical plants, petroleum product distribution, retail outlets and natural gas distribution companies.

5. OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9th, 2011 Oil & Gas Industry Segmentation Upstream Sector

6. OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9th, 2011 Business Cycle Licensing Prospect Exploration Drilling Production Drilling Downstream -Negotiation with Governments / Individuals (US) - Different types of contracts: royalties, PSA, service contract, etc - Geological characteristics - Seismic evaluation - Infrastructure set- up. -Uncertainty - Analysis of formations and hydrocarbon characteristics Onshore / Offshore - Full scale project -Field optimization -Definition of drilling program and well profiles

7. Business Cycle – Actual Case: Exploration OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9th, 2011

8. Business Cycle – Actual Case: Development (*) Floating, production, storage and offloading vessel (*) OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9th, 2011

9. The Industry in Numbers: Reserves By Company By Country Source: BP Statistical Review Total > 2.7 Trillion Barrels of Oil Equivalent OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9th, 2011

10. The Industry in Numbers: Production The three fossil fuels are converging on market shares of 26-27%. Increasing importance of natural gas. OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9th, 2011 By Source

11. The importance of OPEC is expected to grow. As per BP’s projections, OPEC’s share of global production would increase from 40% in 2010 to 46% in 2030 (a level not reached since 1977). The Industry in Numbers: Production OPEC Role OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9th, 2011

12. The Industry in Numbers: Consumption Global Consumption Oil and Gas accounted for 33% and 23% of global energy consumption in 2010. OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9th, 2011

13. Useful Sources of Information OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9th, 2011 BP’s Statistical Review and 2030 Energy Outlook http://www.bp.com/sectionbodycopy.do?categoryId=7500&contentId=7068481 Schlumberger’s Oilfield Glossary http://www.glossary.oilfield.slb.com/ International Energy Agency http://www.iea.org/ Baker Hughes’ RigCount http://investor.shareholder.com/bhi/rig_counts/rc_index.cfm