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Mark W. Albers
Senior Vice President, Exxon Mobil Corporation
Sixth KazEnergy Eurasian Forum
Astana, Kazakhstan
October 4, 2011
Time ~14 minutes (~1,700 words @ 125 words per minute)
Opening New Frontiers
With Innovation and Investment
Thank you, Larry [Larry King, moderator].
I am delighted to be back at the KazEnergy Eurasian Energy
Forum.
Since its founding six years ago, this Forum has established
itself as one of the premier conferences for discussing the
future of global energy markets as well as the crucial role
that Eurasia must play in shaping that future.
The theme for this opening session is the “Geopolitics of
Eurasia: Challenges and New Frontiers.”
This is fitting, because in the 21st century, energy promises
to play a pivotal role in international economics and
geopolitics. And nations such as Kazakhstan will be
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increasingly important because they have the resources and
potential to respond to the energy needs of the global
economy in ways that few others can.
In considering the importance of energy – and the
importance of Kazakhstan on the world energy map – it is
imperative that we take a long-term perspective. There is an
old and well-known Kazakh proverb, which says: “There is
nothing as far as yesterday, and there is nothing closer than
tomorrow.” Nowhere is this more true than in our industry.
We must prepare now for the decades to come because like
tomorrow, they will be here before we know it.
In my remarks this morning, I will discuss the energy
challenges we face in the decades ahead … the role of
Eurasia in these energy challenges … and the new supplies
of energy that will come from forging strong partnerships,
leveraging innovative technologies, and investing over the
long term.
Let’s begin by considering the forces shaping the global
economy and energy markets. An understanding of these
forces is fundamental to building policies that support the
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investment, and collaboration required to maximize the value
of energy resources - for the Kazakh people, and for the
investors in this extraordinary nation.
Economic and Energy Outlook
To understand the full potential of Eurasian energy, we must
understand the importance of energy to the global economy.
At this moment in history, the short-term outlook for the
global economy is uncertain. Many nations throughout the
world continue to struggle with high unemployment, slow
growth, and high levels of debt, while some others face
challenges with the pace of economic growth and inflation.
Despite these short-term challenges, the long-term
prospects for the global economy remain promising.
Populations continue to grow with education levels rising and
free trade expanding. Technology and expertise are
increasingly crossing borders, improving efficiency,
opportunity, and the hope of higher standards of living for all.
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As we look toward the decades to come, we would expect
the global economy to grow by some 80 percent by the year
2030 [vs 2010], driven largely by population growth in
Eurasia. That growth will be even more impressive in
developing nations, where economic growth is expected to
expand by 150 percent. And for many nations in Asia,
growth could be even higher.
With this long-term growth comes a need for affordable and
reliable sources of energy. Energy is a fundamental building
block of developed – and developing – economies. It
powers technology, supports development, and literally
makes trade among nations possible. This essential nature
of energy is why we project that global energy demand will
be about 25 percent higher by the year 2030. Significant
gains in energy efficiency … largely technology driven …
account for the difference between economic and energy
demand growth rates.
Meeting this increase in demand for energy will require the
development of all economic sources of energy. Foremost
among these energy sources will be hydrocarbons, including
oil and natural gas. In fact, we project that oil and natural
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gas will continue to supply more than 60 percent of all
energy needs by the year 2030.
Challenges and Opportunities on New Frontiers
For the nations of Eurasia, this demand for oil and natural
gas is an extraordinary opportunity. Because nations such
as Kazakhstan have the potential to supply this energy,
these resources can be the gateway to economic growth …
job creation … technological advancement … higher levels
of education … and greater foreign trade.
In addition, the nations of Eurasia are strategically placed to
supply both the developed nations of Europe and the rising
nations of Asia and beyond.
Of course, meeting the world’s growing energy demand
brings new challenges.
As we have seen here in Kazakhstan, physical and
geological challenges can combine in ways that require
innovative thinking and novel applications of both
established and new technologies. Industry has confronted
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the challenges of extreme environmental conditions
combined with deep, high-pressure, high-H2S reservoirs. To
do so, we have incorporated cutting-edge metallurgical and
drilling technologies and pioneered development of the
world’s highest pressure sour-gas compression. And
offshore, we have developed capabilities to meet the added
challenges of seasonal ice-flow conditions, while seeking to
protect the environmentally sensitive Caspian Sea.
Overcoming such challenges are a fact of life in today’s
energy industry. The world’s new energy frontiers are
increasingly found in hard-to-reach places that require
significant capital investment and breakthrough
technologies. In our industry, we face financial risks,
geopolitical risks, and technical risks associated with
exploration, development, and production. In addition to
these many challenges, we must unlock new energy sources
in ways that are safe, secure, and environmentally
responsible.
The key to achieving these goals is effective risk
management.
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Simply put, effective risk management is an operations
imperative and the cornerstone of safe, sustainable
cooperation between resource owners and energy
producers.
Maximizing Value Together
For more than 125 years, we have proven that there are
ways to manage risk so we can achieve our shared goals.
We know that effective risk management can be
strengthened by long-term planning, sustained investment,
and technological innovation and rapid deployment.
We have also learned to strengthen risk management with
teamwork, international cooperation, and a relentless
commitment to implement best practices.
Finally, we can strengthen risk management by recognizing
and building on the strengths of our national oil company
partners while building a clear understanding and strong
support from leaders in government.
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As we look to the future in Kazakhstan, Eurasia, and
beyond, it is clear that we all have a role to play in opening
up new energy opportunities in ways that make them
sustainable and competitive in the market place for decades
to come.
For example, international oil companies have an
opportunity to share cutting edge technology and expertise
in national content development. In markets all around the
world, we have proven we have the ability to add value along
the entire energy value chain. And we have found, with the
right policies in place, we can do this while contributing to
local communities and economies through mentoring,
knowledge transfer, and interaction with international
scientific and engineering experts.
National oil companies bring a deep understanding of local
geology, operating and environmental conditions …
established relationships with government and community
leaders … and a desire to invest in the long-term education
and development of their people.
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And in this global effort, we have seen time and time again
that governments also have a crucial role to play.
Importance of Government Policies
In the development of future energy supplies, government
policies will determine how competitive and how sustainable
new sources will be.
When governments build stable policy frameworks, uphold
the rule of law, encourage free trade and the flow of
technology, they create an environment that allows for longterm planning, long-term investing, and long-range
partnerships.
The energy industry has proven that with such policies in
place, we can bring energy to the global marketplace in a
way that maximizes value … creates economic and
educational opportunity … and protects lives and the
environment.
Here in Kazakhstan, President Nazarbayev has a vision for
the nation and the people, and he sees the potential of
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energy development in further building a thriving economy
with opportunity for all.
In order to achieve the president’s vision, government and
industry must continue to work collaboratively to address the
full range of risk management issues … support policies that
advance technology deployment … welcome international
experts in developing a globally competitive resource … and
engage in a consultative process to ensure legislation can
achieve governmental objectives and encourage economic
growth.
By aligning our efforts through open and mutually supportive
dialogue, investments by global industry and local Kazakh
business-development can be accelerated.
Such open dialogue and sound policy development will help
create the business environment that encourages
international companies to invest their time and money with
confidence. For the national workforce, these policies will
lead to training and mentoring in high-tech industries by
international experts, including management systems and
processes. And for local businesses and local suppliers,
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international investment can lead to new markets for
expansion and development of globally competitive
businesses.
Industry and government have worked together this year on
legislation impacting expatriate work permits. Our
collaborative dialogue to find pragmatic solutions to satisfy
National Workforce Development objectives is an example of
what we must do to achieve more, together. In this dialogue,
we have striven to balance the need for workforce skill
development and the experience requirements needed to
implement challenging projects.
We believe that international managers and technical
experts living and working in country can have an invaluable
multiplier effect, helping accelerate the training and
mentoring of more Kazakh citizens to be the scientists,
engineers, and business leaders of the future.
Finally, government can help by ensuring timely decision
making to support the project implementation schedules
necessary for commercial viability.
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Conclusion
This December, the Republic of Kazakhstan will celebrate its
20th anniversary as an independent and sovereign nation.
We congratulate the president, the leaders, and the people
of Kazakhstan.
Industry and governments have proven that by working
together we can invest, innovate, and open up opportunities
that create a better future here in Kazakhstan, Eurasia, and
around the world.
Thank you.
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