PetroJournal - April 2019

PETRO JOURNAL

MARCH 2019 EDITION JOURNALISM SPE ITS SC 2018/2019

Monthly Recap

Flash News

Company Profile

Flash Course Competition Info

INDEX

INSPECT: INTEGRATED SPE COMPANY VISIT PT SAKA Pangkah Limited 23 April 2019

MONTHLY RECAP

SCIENCE COURSE SPEAKER: Mr. Fery Sarjana, Senior Manager SCM Petronas Geomatics Engineering, GM-103 5 April 2019

MONTHLY RECAP

PIPESIM TRAINING WITH SCHLUMBERGER Schlumberger Geophysics Nusantara, Jakarta 2 April 2019

MONTHLY RECAP

FLASH NEWS

OPEC SET TO EXTEND OIL SUPPLY CUT AS IRAN ENDORSES PACT PUBLISHED IN REUTERS ON MONDAY, 1 JULY 2019

By Bozorgmehr Sharafedin and Alex Lawler

VIENNA, July 1 (Reuters) - OPEC and its allies look set to extend oil supply cuts this week at least until the end of 2019 as Iran joined top producers Saudi Arabia, Iraq and Russia in endorsing a policy aimed at propping up the price of crude amid a weakening global economy.

Iranian Oil Minister Bijan Zanganeh told reporters on Monday he would support prolonging output cuts by six to nine months. Tehran has in the past objected to policies put forward by arch-rival Saudi Arabia, saying Riyadh was too close to Washington.

“I have no problem with a production cut... It’s going to be an easy meeting as my stance is very clear,” Zanganeh told reporters upon arriving in Vienna.

The United States is not a member of OPEC, nor is it participating in the supply pact. Washington has demanded Riyadh pump more oil to compensate for lower exports from Iran after slapping fresh sanctions on Tehran over its nuclear programme.

FLASH NEWS

OPEC and its allies led by Russia have been reducing oil output since 2017 to prevent prices from sliding amid soaring production from the United States, which has become the world’s top producer this year ahead of Russia and Saudi Arabia.

Fears about weaker global demand as a result of a U.S.-China trade spat have added to the challenges faced by the 14-nation Organization of the Petroleum Exporting Countries in recent months.

Russian President Vladimir Putin said on Saturday he had agreed with Saudi Arabia to extend existing output cuts of 1.2 million barrels per day, or 1.2% of global demand, by six to nine months - until December 2019 or March 2020.

Saudi Energy Minister Khalid al-Falih said the deal would most likely be extended by nine months and no deeper reductions were needed.

“It’s a rollover and it’s happening,” Falih, whose country is the de facto leader of OPEC, told reporters on Sunday.

Benchmark Brent crude has climbed more than 25% since the start of 2019 to $65 per barrel. But prices could stall as a slowing global economy squeezes demand and U.S. oil floods the market, a Reuters poll of analysts found.

PHOTO: PEXELS.COM

FLASH NEWS

WORSENING GEOPOLITICAL RISK The output-cutting pact expired on Sunday. OPEC meets in Vienna on Monday followed by talks with Russia and other allies, a grouping known as OPEC+, on Tuesday.

Zanganeh said he would not object to deepening the cuts but would reject a proposal to sign a new charter for cooperation with non-OPEC, led by Russia.

He expressed frustration that Putin had announced the deal at a G20 summit in Osaka before waiting for OPEC to gather in Vienna.

“The important thing to me is that OPEC remains OPEC. It has lost its authority and it’s on the verge of collapse,” Zanganeh said. “Iran is not going to leave OPEC but I believe OPEC is going to die with these processes.”

Iran’s exports have plummeted to 0.3 million barrels per day in June from as much as 2.5 million bpd in April 2018 due to Washington’s fresh sanctions.

Oil output in OPEC's exempt nations tmsnrt.rs/2Fx7Lcc The sanctions are putting Iran under unprecedented pressure. Even in 2012, when the European Union joined U.S. sanctions on Tehran, the country’s exports stood at around 1 million bpd. Oil represents the lion’s share of Iran’s budget revenues.

Washington has said it wants to change what it calls a “corrupt” regime in Tehran. Iran has denounced the sanctions as illegal and says the White House is run by “mentally retarded” people.

“Worsening tensions between the U.S. and Iran add potential for oil price volatility that could be tricky for OPEC members to manage,” said Ann-Louise Hittle, vice president, macro oils, at consultancy Wood Mackenzie.

“Geopolitical risk means the supply outlook is tightening, offsetting the moderate weakening in oil demand growth thus far this year,” she added. https://uk.reuters.com/article/oil-opec/opec-set-to-extend-oil-supply-cut-as-iranendorses-pact-idUKL8N2420OF

COMPANY PROFILE

SIEMENS AG Siemens AG (Aktiengesellschaft) is a German multinational conglomerate company headquartered in Munich and the largest industrial manufacturing company in Europe with branch offices abroad.

The principal divisions of the company are Industry, Energy, Healthcare (Siemens Healthineers), and Infrastructure & Cities, which represent the main activities of the company.

The company is a prominent maker of medical diagnostics equipment and its medical health-care division, which generates about 12 percent of the company's total sales, is its secondmost profitable unit, after the industrial automation division. The company is a component of the Euro Stoxx 50 stock market index.

Siemens and its subsidiaries employ approximately 379,000 people worldwide and reported global revenue of around â‚Ź83 billion in 2018 according to its earnings release.

PHOTO: siemens.com

PHOTO: Pinterest

Founded to manufacture and install telegraphicsystems, Germany-based Siemens AG has prospered and grown over 155 years to become a multifaceted electronics and electrical engineering enterprise, and one of the most international corporations in the world.

With a presence in more than 190 countries, Siemens' primary business operations include information and communications networks, industrial automation and control, power generation and transmission, medical solutions, and lighting. Siemens was once viewed by analysts as a corporate dinosaur and urged to disband its conglomerate structure in favor of a more nimble and tightly focused enterprise.

In the 1990s, however, under the leadership of Heinrich von Pierer, the company underwent major restructuring to minimize costs and maximize efficiencies while retaining the synergistic benefits of its broad-based structure. Siemens has entered the 21st century with a new listing on the New York Stock Exchange, and a competitive foothold in the burgeoning information technologies and communications sector.

PRODUCT, SERVICES, AND CONTRIBUTION Siemens offers a wide range of electrical engineering- and electronics-related products and services. Its products can be broadly divided into the following categories: buildings-related products; drives, automation and industrial plantrelated products; energy-related products; lighting; medical products; and transportation and logistics-related products.

Siemens buildings-related products include building-automation equipment and systems; building-operations equipment and systems; building fire-safety equipment and systems; building-security equipment and systems; and low-voltage switchgear including circuit protection and distribution products.

Smart City Illustration PHOTO: unsplash.com

Siemens drives, automation and industrial plant-related products include motors and drives for conveyor belts; pumps and compressors; heavy duty motors and drives for rolling steel mills; compressors for oil and gas pipelines; mechanical components including gears for wind turbines and cement mills; automation equipment and systems and controls for production machinery and machine tools; and industrial plant for water processing and raw material processing.

COMPANY PROFILE

Renewable Energy Illustration PHOTO: unsplash.com

Siemens energy-related products include gas and steam turbines; generators; compressors; on- and offshore wind turbines; high-voltage transmission products; power transformers; high-voltage switching products and systems; alternating and direct current transmission systems; medium-voltage components and systems; and power automation products.

Lighting Illustration PHOTO: unsplash.com

Siemens OSRAM subsidiary produces lighting products including incandescent, halogen, compact fluorescent, fluorescent, high-intensity discharge and Xenon lamps; opto-electronic semiconductor light sources such as light emitting diodes (LEDs), organic LEDs, high power laser diodes, LED systems and LED luminaires; electronic equipment including electronic ballasts; lighting control and management systems; and related precision components.

COMPANY PROFILE

Medical Instrument Illustration PHOTO: unsplash.com

Siemens medical products include clinical information technology systems; hearing instruments; invitro diagnostics equipment; imaging equipment including angiography, computed tomography, fluoroscopy, magnetic resonance, mammography, molecular imaging ultrasound, and x-ray equipment; and radiation oncology and particle therapy equipment. As of 2015, Siemens finalized the sale of its hearing-aid (hearing instruments) business to Sivantos.

Siemens transportation and logistics-related products include equipment and systems for rail transportation including rail vehicles for mass transit, regional and long-distance transportation, locomotives, equipment and systems for rail electrification, central control systems, interlockings, and automated train controls; equipment and systems for road traffic including traffic detection, information and guidance; equipment and systems for airport logistics including cargo tracking and baggage handling; and equipment and systems for postal automation including letter parcel sorting.

PHOTO: http://pepcadk.pertamina.com/

Siemens also completed a world record in 2012 for the most electricity generated by bicycles in an hour. Generating 4,630 watts in an hour in Melbourne, Australia, on December 11, 2012.

OPERATIONS

RESEARCH AND DEVELOPMENT

PHOTO: siemens.com

Siemens is incorporated in Germany and has its corporate headquarters in Munich. It has operations in around 190 countries and approximately 285 production and manufacturing facilities. Siemens had around 360,000 employees as of 30 September 2011.

Electrification, automation and digitalization are the long-term growth fields of Siemens. In order to take full advantage of the market potential in these fields, Siemens businesses are bundled into nine divisions and healthcare as a separately managed business.

Power and Gas Wind Power and Renewables Power Generation Services Energy Management Building Technologies Mobility Digital Factory Process Industries and Drives Financial Services Healthineers Automation and drive system for steel Mills

In 2011, Siemens invested a total of â‚Ź3.925 billion in research and development, equivalent to 5.3% of revenues. As of 30 September 2011, Siemens had approximately 11,800 Germany-based employees engaged in research and development and approximately 16,000 in the rest of the world, of whom the majority were based in either Austria, China, Croatia, Denmark, France, India, Japan, Mexico, The Netherlands, Russia, Slovakia, Sweden, Switzerland, the United Kingdom or the United States. As of 30 September 2011, Siemens held approximately 53,300 patents worldwide.

PHOTO: siemens.com Source: https://en.wikipedia.org/wiki/Sie mens#Products,_services_and_contributi on https://www.referenceforbusiness.com/hi story2/89/Siemens-AG.html

FLASH COURSE

5 BIGGEST RISKS FACED BY OIL AND GAS COMPANIES

BY ANDREW BEATTIE Updated Jun 25, 2019

Whenever an investor approaches a new industry, it is good to know what the risks are that a company in that sector must face to be successful. General risks apply to every stock, such as management risk, but there are also more concentrated risks that affect that specific industry. In this article, we'll look at the biggest risks faced by oil and gas companies.

Political Risk The primary way that politics can affect oil is in the regulatory sense, but it's not necessarily the only way. Typically, an oil and gas company is covered by a range of regulations that limit where, when and how extraction is done. This interpretation of laws and regulations can also differ from state to state. That said, political riskgenerally increases when oil and gas companies are working on deposits abroad.

Burning Oil Tanker PHOTO: nytimes.com

Oil and gas companies tend to prefer countries with stable political systems and a history of granting and enforcing long-term leases.

However, some companies simply go where the oil and gas is, even if a particular country doesn't quite match their preferences. Numerous issues may arise from this, including sudden nationalization and/or shifting political winds that change the regulatory environment. Depending on what country the oil is being extracted from, the deal a company starts with is not always the deal it ends up with, as the government may change its mind after the capital is invested, in order to take more profit for itself.

FLASH COURSE

Political risk can be obvious, such as developing in countries with an unstable dictatorship and a history of sudden nationalization, or more subtle, as found in nations that adjust foreign ownership rules to guarantee that domestic corporations gain an interest. An important approach that a company takes in mitigating this risk includes careful analysis and building sustainable relationships with international oil and gas partners – if it hopes to remain in business for the long run.

Abandoned Oil Rigs PHOTO: thetyee.ca

Abandoned Oil Rigs PHOTO: shutterstock.com

Geological Risk Many of the easy-to-get oil and gas is already tapped out, or in the process of being tapped out. Exploration has moved on to areas that involve drilling in less friendly environments, such as on a platform in the middle of an undulating ocean.

There is a wide variety of unconventional oil and gas extraction techniques that have helped squeeze out resources in areas where it would have otherwise been impossible.

Geological risk refers to both the difficulty of extraction and the possibility that the accessible reserves in any deposit will be smaller than estimated. Oil and gas geologists work hard to minimize geological risk by testing frequently, and so it is rare that estimates are way off. In fact, they use the terms "proven," "probable" and "possible" before reserve estimates, to express their level of confidence in the findings.

FLASH COURSE

Price Risk Beyond the geological risk, the price of oil and gas is the primary factor in deciding whether a reserve is economically feasible. Basically, the higher the geological barriers to easy extraction, the more price risk a given project faces.

This is because unconventional extraction usually costs more than a vertical drill down to a deposit. This doesn't mean that oil and gas companies automatically cease operations on a project that becomes unprofitable due to a price dip. Often, these projects can't be quickly shut down and then restarted. Instead, O&G companies attempt to forecast the likely prices over the term of the project in order to decide whether to begin. Once a project has begun, price risk is a constant companion.

Oil Price Chart PHOTO: macrotrends.net

Supply and Demand Risks Supply and demand shocks are a very real risk for oil and gas companies. As mentioned above, operations take a lot of capital and time to get going, and they are not easy to shut down when prices go south or to ramp up when they go north.

The uneven nature of production is part of what makes the price of oil and gas so volatile.

Other economic factors also play into this, as financial crises and macroeconomic factors can dry up capital or otherwise affect the industry independently of the usual price risks.

FLASH COURSE

World Distribution of Petroleum and Mineral Oil PHOTO: pmfias.com

Cost Risk All of these preceding risks feed into the biggest of them all: operational costs. The more onerous the regulation and the more difficult the drill, the more expensive a project becomes. Couple this with uncertain prices due to worldwide production beyond any one company's control, and you have some real cost concerns. This is not the end, however, as many oil and gas companies struggle to find and retain the qualified workers that they need during boom times, so payroll can quickly rise to add another cost to the overall picture. These costs, in turn, have made oil and gas a very capitalintensive industry, with fewer players all the time.

The Bottom Line Oil and gas investing does not appear to be going anywhere. Despite the risks, there is still a very real demand for energy, and oil and gas fills part of that demand. Investors can still find rewards in oil and gas, but it helps to know the potential risks that go along with those potential rewards.

https://www.investopedia.com/articles/fundamental-analysis/12/5-biggestrisks-faced-by-gas-and-oil-companies.asp

COMPETITION INFO

"I am thankful for all of those who said NO to me. It’s because of them I’m doing it myself"

Albert Einstein 1879 - 1955 German Physicist

PHOTO: unsplash.com

Crude oil is considered the "mother of all commodities" because of its use in the manufacturing of numerous products, including gasoline, synthetic fabrics, plastics and pharmaceuticals.

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