ENERGY TRANSITION: COOPERATION, RESEARCH AND INNOVATION OPPORTUNITIES FOR THE OIL & GAS SECTOR

37TH JCCP INTERNATIONAL SYMPOSIUM

24th JANUARY 2019

DIDIER HOUSSIN

CHAIRMAN AND CEO

IFP Energies nouvelles

2 | © 2 0 1 8 I F P E N

OUTLINE

Energy market trends

Technology impacts on the oil & gas chain

The role of cooperation at international level based on IFPEN experience

3 | © 2 0 1 8 I F P E N

OIL DEMAND

Source : IEA WEO 2018

World oil demand by scenario2016 / 2040

Source : IEA WEO 2018

0.5

3.0

4.6 4.6

-1.2-2

-1

0

1

2

3

4

5

Cars Trucks Aviation /Shipping

Petrochemicals Others

Mb/d

World oil demand growth (NPS scenario)2017-2040: +0,5%/y (+ 11 Mb/d)

Mainly transport (excluding personal cars)and petrochemicals

Continuous growth in the New Policies scenario

NPS: New Policies scenario - Reference Scenario for the IEA

SDS: Sustainable Development Scenario, 2°C target

No “peak oil demand” in the baseline scenario

0

20

40

60

80

100

120

2015 2020 2025 2030 2035 2040

Mb/d

NPS

SDS

4 | © 2 0 1 8 I F P E N

NATURAL GAS DEMAND

Source : IEA WEO 2018 Source : IEA WEO 2018

World natural gas demand growth2017-2040: +1,6%/y (+ 1630 bcm)

Industry and Power: 60% of the growth

550

450

250200 200

0

100

200

300

400

500

600

Industry Power Transport Buildinds Own use

Bcm

World natural gas demand by scenario2016 / 2040

Increase of Natural gas demand in both scenarios

NPS: New Policies scenario - Reference Scenario for the IEA

SDS: Sustainable Development Scenario, 2°C target

The only fossil energy to grow even in the SDS scenario

Buildings

0

1,000

2,000

3,000

4,000

5,000

6,000

2015 2020 2025 2030 2035 2040

Bcm

NPS

SDS

5 | © 2 0 1 8 I F P E N

ENERGY TRILEMMA (OR THREE E’S): HOW TO COMBINE THEM ?

Energy security

Environmental protection

Economic development

6 | © 2 0 1 8 I F P E N

OIL & GAS VALUE CHAIN

Optimization of discoveries

Higher recovery rates CCUS

Electrification and alternative fuels

Research and Innovation

Exploration Drilling Surface processing O&G production Venting/Flaring Transport Refinery Final use

More efficient processes

7 | © 2 0 1 8 I F P E N

OPTIMIZING EXPLORATION AND PRODUCTION

HPC - Parallel computing

Automatic dynamic gridding

Fine-scale simulation

Digital technologies for basin and reservoir modeling

8 | © 2 0 1 8 I F P E N

THE EOR™ ALLIANCE

Integrated offer covering enhanced oil recovery (EOR), from formulation to field application and monitoring

9 | © 2 0 1 8 I F P E N

REDUCING THE CO2 EMISSIONS WITH CCUS

10

15

20

25

30

35

40

2010 2020 2030 2040

Gt C

O2-

eq New Policies Scenario

Sustainable Development Scenario

Bridge measures

37% Efficiency andfossil fuel subsidy reform

20% Other: nuclear, CCUS,fuel-switching

8% Reducing upstream oil and gas methane

36% Renewables and reducing least-efficient coal power

Further action in SDS

CCUS needed to reach the objective of the Paris Agreement

Objective:2.5 Gt of CO2 stored in 2040

Source : IEA WEO 2018

NPS: New Policies scenario - Reference Scenario for the IEA

SDS: Sustainable Development Scenario, 2°C target

CCUS : 13% of total CO2 reduction

10 | © 2 0 1 8 I F P E N

REFINERY OPTIMIZATIONMORE EFFICIENT PROCESSES

Innovative solutions, catalysts, processes and other cutting-edge technologyto reduce environmental impacts

Source : IFPENAXENS GROUPTechnologies and catalysts for the refining and petrochemicals sectors for the production of clean fuels and major intermediates

42% of the world’s refineries equipped with technology developed by Axens

11 | © 2 0 1 8 I F P E N

ALTERNATIVE FUELS FOR TRUCKS / AVIATION / MARITIME / …

Second-generation biofuels Natural gas / Biogas Hydrogen

H2

12 | © 2 0 1 8 I F P E N

DIGITALo Web serviceso Software as a serviceo AI interpretationo Cloud computing

Digital outcropmodels

Web and smartphone services for mobility

Connected vehicles

13 | © 2 0 1 8 I F P E N

A public-sector R&I body

An industrial groupA training center

IFP ENERGIES NOUVELLES

NEW ENERGIESSUSTAINABLE MOBILITY

Producing fuels, chemical intermediates

and energy from renewable sources

Developing effective, environmentally friendly

solutions for the transport sector

RESPONSIBLE OIL AND GAS

Proposing technologies that meet

the demand for energy and chemical products while improving energy efficiency and reducing environmental impact

RESEARCH & INNOVATION AREAS

14 | © 2 0 1 8 I F P E N

A PARTNERSHIP-DRIVEN INNOVATION STRATEGY IN FRANCE AND ON THE INTERNATIONAL SCENE

IFPEN has developed industrial partnershipsin order to:

Be in line with market requirements and speed up the innovation process

Develop and disseminate innovations

Create innovative products and services

Sust

aina

ble

mob

ility

New

en

ergi

esRe

spon

sibl

eoi

land

gas

15 | © 2 0 1 8 I F P E N

ACADEMIC PARTNERSHIPSREGIONAL, NATIONAL, EUROPEAN AND INTERNATIONAL

Accessing skills, knowledge, project finance

French Research and Innovation System

French National Research Agency

International cooperation

• European Technology Platforms• European Energy Research Alliance • European Association of Research

and Technology Organisations• European Green Vehicles Initiative

16 | © 2 0 1 8 I F P E N

Training: A major challenge for the future of oil & gas

TRAINING & EDUCATION

Forecast for strong demand for training in the O&G sector

Industry/university collaboration is needed to improve the attractiveness of the sector

Multicultural strategies must be a priority

IFP School

• 17 master’s level programs

• More than 500 graduates per year from all around the world (50% non-French)

• 80% of students sponsored by industry

www.ifpenergiesnouvelles.com

@IFPENinnovation

Find us on:

17 | © 2 0 1 7 I F P E N