1. Oil and Gas market Thina Margrethe Saltvedt, Chief Analyst Macro/Oil (Ph. D.) @ThinaSaltvedt October 2015

2. 3 trends reshaping the oil market Shale Oil Revolution OPEC: From dominating cartel to market share Growing competition in transport

3. Oil prices – lower for longer… 3 Source: Nordea Markets

4. US tight oil production exploded in 2008 4

5. From Cartel to Market Share – a new price era 5 Cartel price USD 110/barrel

6. Low oil prices put pressure on OPEC countries. Breakeven oil price needed to balance the fiscal budgets 6 Source: IMF

7. States bordering Isis territory (in red) accounts for 24.3% of total world oil production or around 22 mb/d. Countries with large supply outages after Arab Spring (in lilac) 7 Source: British Petroleum Algeria 1.6% Libya 0.6% Egypt 0.8% Sudan 0.1% South Sudan 0.2% Tunisia 0.1% Saudi Arabia 12.9% Iran 4% Iraq 3.8% Yemen 0.2% Oman 1.1% UAE 4.0% Qatar 2.0% Syria Kuwait 3.6% Turkey Lebanon Israel Jordan Marocco

8. World Oil Transit Chokepoints – Critical for global energy security 8 Source: EIA

9. E&P spending falls sharply in the period 2014-2017 9 Source: Rystad Energy

10. Russia’s Oil/Gas sector development highly dependent on foreign technology/expertise going forward 10 Dependence on Foreign Firms Potential Partner Onshore/ Offshore Seismic Only dependent offshoreOnshore/Offshore DrillingHighly dependentOnshore/Offshore Field Infrastruct. Construction Produced in RussiaOnshore Hydrofacking Semi-dependent High-pressureOnshore Wellwork Equip./Couplings Not produced in RussiaOnshore/Offshore Platform/FPSO Highly dependent Lack experienceOffshore Other Support services produced in RussiaOnshore/Offshore

11. How oil dependent are we? 11 Transport 54% Petrochemicals 12% Other 13% Buildings 9% Industry 5.5% Power generation 6.5% Source: IEA

12. Technological development faster than we can imagine… 12 Source: Norsk Elbilforening (2014) og Nykvist og Nilsson, 2015 Electric cars Norway Cost development el-car batteries

13. 3 trends reshaping the natural gas market Shale Oil Revolution From regional towards international markets Moving away from oil-linked pricing

14. EU Natural gas production/consumption gap widening. How should we fill the gap? Imported gas, Shale, Renewables? 14 Consumption Production Source: British Petroleum

15. Main Russian Natural Gas Pipelines to Europe Is diversification the solution to energy security? 15 Source: Bloomberg Turk Stream

16. Global LNG export and regasification capacity growing, but low gas prices make the future expansion uncertain 16 Source: IEA Global Export Capacity between 2014- 2020

17. Most likely US LNG export terminals by 2020 + key shale plays 17 US shale production – not unaffected by the oil price fall Source: PIRA Source: IEA/Baker Hughes

18. Shale oil and the 10 largest shale gas reserves (in circles – tcf) 18 1,115 285 665 802 707 573 545 437390 245 Source: EIA

19. Thina Margrethe Saltvedt Chief Analyst Macro/Oil (Ph. D.) Economic Research Nordea Markets Twitter: @ThinaSaltvedt Phone: +47 22 48 79 93 Mobile: +47 90 63 40 75 Thina.margrethe.saltvedt@nordea.com Thina.margrethe.saltvedt@nordea.com

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