Oil and Gas Profile

KPMG global energy institute
Global Oil and Gas Profile

Vision, reputation, and commitment
kpmg international
Contents
1: Vision: a leader in the field Page 02
2: Reputation: trusted advisors Page 08
3: Commitment: focusing on our firms clients
Page 20
2009 KPMG International. KPMG International is a Swiss cooperative. Member firms of the KPMG network of independent firms are affiliated with KPMG International.
KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis--vis third parties,
nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Introduction
This is a time of extraordinary global economic

turbulence. The oil price has fluctuated dramatically
and, with cost levels flat or at best decreasing
at a much slower pace, the oil and gas industry
is facing many challenges and pressures.
Businesses in this sector need forward thinking advice
and practical strategies from professionals who
understand their businesses and their challenges.
KPMGs vision: We aim to maintain our position
as a leading advisor to the oil and gas sector by
continuously developing strategic thought leadership
and practical strategies that help our firms clients
meet their challenges. Our industry-leading
initiatives include KPMGs Global Energy Institute
and Global Energy Conference.
KPMGs reputation: Through our firms national
practices and KPMGs Oil and Gas Centers
of Excellence, we constantly strive to provide
services of the highest quality and the best
available advice to clients around the world.
KPMGs commitment: Our understanding
of the demands and challenges oil and gas
companies face enables our firms to develop
services, methodologies, and original thinking that
specifically address the needs of this sector. We
look at industry challenges from multiple angles,
pooling our knowledge and resources to develop
holistic services that are designed to fit our firms
clients ever-changing requirements.
Michiel Soeting
Chairman, Global Energy
& Natural Resources
The following document aims to capture who we

are and how we can help you. Throughout, we have
included conversations with some of our people
from around the world because, first and foremost,
KPMG is a global network of people. Each of us,
wherever we operate from around the world,
is committed to the oil and gas industry and cares
deeply about the sectors continued success.
KPMGs Global Oil and Gas Profile
01
Vision
02
1: KPMGs vision
a leader in the field
KPMGs Oil & Gas practice has one clear vision:

to be the leading provider of professional services
to the oil and gas sector.
This means more than just having a strong client
base. KPMG member firms already provide
services to numerous global majors, independents,
refining and service companies, and national oil
companies across many regions. Being the leader
means investing in developing thought leadership,
spearheading industry debates to help keep our
firms clients at the forefront of progressive thinking,
and giving our people the skills and knowledge
to provide the quality, customized services our
clients want.
Our objective is consistent, high-quality, specialized
service delivered on a global basis in each region
where oil and gas companies operate.
03
Investing in the sector
KPMG member firms invest

significant time and resources
in deepening our understanding
of the sector. This enables
us to provide our clients with
strategic and insightful services
that are truly tailored to their
specific needs and based
on a real understanding of
their challenges.
Key initiatives include
The KPMG Global Energy
Institute (GEI): Launched in
2007, the GEI provides critical
insights and analysis to
the energy sector, helping
finance, tax, and risk executives
meet new energy challenges
and make the most of new
opportunities. The GEI
interacts with members
through a variety of channels,
including Webcasts, podcasts,
conferences, share forums
and a web portal: www.kpmg
globalenergyinstitute.com.
The GEI regularly produces
thought leadership and
commentaries on a wide
variety of subjects that affect
the oil and gas industry.
These publications provide
interpretations, insight, and
practical guidance, and range
from white papers, podcasts,
and surveys through to opinion
pieces and regulatory analysis.
Conference: The annual

Global Energy Conference in
Houston, Texas, US, focuses
on the industry and financial
issues that matter to senior
executives in the energy
industry, and seeks to bring
insights and understanding
of their implications for the
future of the industry.
Each year, a keynote speaker
provides his or her perspective
on the energy industry. Past
speakers have included:
Marvin Odum, President of
Shell Oil Company in the US
In addition to giving our

firms clients an opportunity
to network, the conference
also includes a selection of
interactive panel discussions
to enable participants to
focus on critical business
issues including, for example,
IFRS, cost optimization, tax
risk, energy infrastructure,
and credit liquidity.
For more information, please visit

www.kpmgglobalenergyconference.com
Fred Fowler, Group
Executive and President

of Duke Energy Gas
David Crane, President and
Chief Executive Officer, NRG

Energy (NRG)
Other attendees and speakers
include former US Secretary
of State, Madeleine Albright;
former US President George
H.W. Bush; William H.
Donaldson, 27th Chairman
of the US Securities and
Exchange Commission; and
Vicente Fox, former President
of Mexico.
04
A European perspective
A conversation with Anthony Lobo, KPMG in the UK
What are the major challenges currently

facing oil and gas businesses in Europe?
Currently, Chinese and Indian oil companies
are driving a lot of the mergers and
acquisition activity in the market. The
Chinese, in particular, are looking to secure
their supply and are using the current
financial environment, with its low oil
prices and the difficulties the independents
have in raising debt and finance, to gain
access to reserves. And, because these
are national oil companies and are
effectively supported by the governments
behind them, they are able to provide
significant debt for these transactions.
One of the areas where KPMG firms

have significant experience is around
the integration and optimization of the
businesses post-deal. We help clients
understand what value is in the deal and
then help them rapidly drive the value
out for the benefit of shareholders.
Anthony Lobo
Head of Oil & Gas
KPMG in the UK
T: + 44 20 7311 8482
E: anthony.lobo@ kpmg.co.uk
KPMG firms are helping our clients

look at this challenge from a different
perspective, assessing to whom they
are selling and their counterparty risks,
and helping them understand the profile
they have with them. As they sell
their downstream assets, our clients
exposures are changing.
The protectionism of reserves

continues to drive the agenda of
governments as they seek to retain
control of developing their reserves.
Whereas the majors previously had the

crude in the ground, which they would then
take through a refinery and sell in their own
petrol stations, this chain has been broken.
The majors are selling elements of this
chain and have customers that behave
The sector is also seeing joint ventures
in very different ways. As these customers
increasingly used as a proposed structure.
The protectionism of reserves continues
come under more financial stress, our
KPMG firms have significant experience
to drive the agenda of governments as
clients need to think very carefully about
here, having been involved in the TNK-BP
they seek to retain control of developing
how to manage this exposure.
joint venture in Russia. We help clients
their reserves. However, the lack of
think about the full life cycle of a joint
We use a combination of restructuring
financing means that they are forced to
venture when often, in the desire to do
and mergers and acquisitions skills to
look for outside help to fund the huge
the deal, issues such as how to exit the
help them think through their options
amount of capital expenditure required
joint ventures are not considered. Parent if, for example, a customer goes into
to fully bring these reserves to market.
companies should also consider how
receivership or liquidation do they
This provides opportunities for those
the venture may compete with two
sit back and let it happen; do they
companies with access to capital and
parents in different territories; it is very
understand the legal framework in each
government funds.
important that both parties have a clear
of the European countries in which they
view of the remit of the joint venture.
operate; and how do they safeguard their
How are KPMG firms helping
interests? The answer may involve buying
these companies?
On the downstream side, in Europe,
the asset back or thinking about ways to
From a mergers and acquisitions perspective, many majors continue to divest their
structure or fund the asset going forward.
we are helping these companies with the
refining and retail outlets; the capital
political and corporate risks they face in
required to maintain and invest in these
Our professionals skills sets give our
entering new territories. We look at who
assets doesnt justify the investment
firms clients options and help them to
actually owns the underlying interests, how profile so the companies are selling
make decisions based on a more complete
the production-sharing contracts work, as
their non-core activities. Many of
understanding of the ramifications and
well as identify the key counterparties and
the players that bought these assets a
potential outcomes.
the risks of doing business in these countries. couple of years ago are now struggling
We also assess the key drivers in the country, themselves. In many cases, the lack of
the issues of getting the cash out of the
access to capital and declining refining
country, and how the value will flow
margins means that these players cash
going forward.
flows are increasingly stretched.
05
Developing industry best practice
A conversation with Hilda Mulock Houwer, KPMG in South Africa
How do KPMG firms stay at the

forefront of industry best practice?
First and foremost, it is our people who push
us to the front. We really know this sector
many of us have worked in it all our
careers, and we are passionate about it.
We debate ideas, discuss services, and
listen to each other and our clients, to help
ensure we are providing answers that
consider all aspects of our clients challenges.
And this means our strategies can touch
all levels of our clients businesses.
Of course, we also recognize that
leading practices are developed in other
industries too. We regularly meet and
interact with our colleagues from across
our Energy and Natural Resources
practice, and beyond, to ensure our
clients benefit from all the best new
ideas and practices, adapted to suit
their particular challenges and needs.
How does this work in practice?
Our approach is not to present KPMG
firms clients with products, but rather to
work with them, debate and discuss issues,
and formulate services that work for them.
This approach helps not only to limit
the expectation gap between our clients
and KPMG member firms, but also helps
to ensure our clients are part of the service
provision. And, because we work with
our clients, we provide a sustainable
service offering.
For example, in our cost optimization
projects, we use a methodology combining
intensive analytics, the private equity
lens, with the broad spectrum of KPMG
firms delivery capabilities across
transaction services, business effectiveness,

financial management, restructuring,
IT advisory, and tax. The outcome is a
set of challenging change plans founded
on fact-based rationales and detailed
implementation strategies, backed
by in-depth quantitative and financial
analysis.
Hilda Mulock Houwer

Global Head of Advisory for KPMGs Energy
& Natural Resources Practice
KPMG in South Africa
T: + 27 21 408-7032
E: hilda.mulockhouwer@ kpmg.co.za
These plans have been successfully

implemented in numerous businesses,
and they are already delivering good
results. Because we get executive
buy-in at the start of each project our
interactions have top-down support
from the clients leadership.
Another example is a South African project

that deals with a challenge faced by many
oil and gas companies with downstream
businesses around the world. We were
involved in assessing the companys
management of inventory, looking
at its business processes, from purchasing
through
to the end product, from
Our approach is not to present
multiple
angles.
KPMG firms clients with products,
We see knowledge sharing as critical
to the success of any project and ensure
that, when we leave, our firms clients
are empowered to take things forward
and continue without us.
but rather to work with them, debate Inventory was the largest item on the
and discuss issues, and formulate
companys balance sheet and we were
services that work for them.
there to help make sure their assets were
being looked after. We looked at it from

a forensic point of view to assess the
Another example is our legal entity
security of their operations; we considered
reduction program. One outcome of the
the optimization of the value chain by
global financial crisis is that large global
pinpointing the risk areas to save money;
corporations are looking to simplify and
and we looked at it from an accounting
streamline their organization structures,
perspective to assess how the company
with the aim of decreasing costs and freeing
accounted for inventory. We provided a
their people from the administration burden
clear picture of what management needed
of maintaining unnecessary legal entities.
to do to protect inventory value.
The tools we have developed, such as the
During our assessment, we benchmarked
efficient selection of the jurisdiction to
the companys inventory losses against
begin legal entity reduction, enable our
other oil companies. This resulted in
firms professionals to offer clear action
an unexpected benefit for our client: the
plans aimed at developing an end state
realization that their tolerance level for
structure that considers inputs from the
inventory losses in some areas was actually
various functions within the client
higher than the rest of the industry. The
organization, such as tax, legal, controller,
results have made management rethink
and finance.
its approach to inventory losses.
06
Investing in the sector (continued)
Informing our firms clients

To maximize the benefits
our clients receive from
our investment in thought
leadership and training, KPMG
also opens up its education
programs to clients.
Institute Executive Education
program is designed to provide
energy financial executives
with current information on
trends affecting the industry
and a continuous education
forum. Program sessions cover,
for example, IFRS, cross-border
M&A, and integrating tax and
supply chain planning in the
energy industry.
The speakers and instructors for
the sessions include well-known
executives from the industry
and leading professionals
from KPMGs Energy & Natural
Resources practice.
Employers of choice
To be the leading advisor to
the oil and gas sector, KPMG
member firms must provide
the best people. We believe
there is a clear link between
our culture, the people we
hire, and the clients we work
with our people are the
fundamental reason that
our clients choose to work
with KPMG member firms.
KPMGs oil and gas
professionals all have a wealth
of experience in the sector.
This enables member firms
to provide our clients with
services tailored to their
specific challenges and needs.
Our people also have access
to ongoing professional and
industry training that together
with their experience on the
ground, provides them with the
skills and knowledge to achieve
our objectives of providing
outstanding services around
the world.
07
Reputation
08
2: KPMGs reputation
trusted advisors
KPMG member firms oil and gas clients operate

in many countries and have a diverse range of
needs. In each of these countries, we have local
practices that understand the oil and gas industrys
challenges, regulatory requirements, and
preferred practices.
It is this local knowledge, supported and
coordinated through KPMGs regional oil and gas
Centers of Excellence, which enables our firms
to work toward our objective of providing clients
high-quality services and the best available advice,
tailored to their specific challenges, conditions,
regulations, and markets.
KPMGs global footprint
KPMG firms are organized into three operating regions: the
Americas, Europe, Middle East and Africa (EMA), and Asia-Pacific
(AsPac). This structure helps us achieve a balance between
understanding and serving local markets and implementing
global strategies, methodologies, and preferred practices.
KPMG delivers a consistently high quality of service to meet
those needs on a global basis.
Our major oil and gas clients include:
KPMGs PROFESSIONAL SERVICES
KPMG member firms provide

professional services to*:
74
percent of top 50 oil and gas

companies in the Forbes 2000
72
percent of oil and gas companies

in the FT Global 500
80
percent of the largest refining

companies in the Fortune 500
Audit
Non-Audit
Abu Dhabi National Oil Company BP (UK)

(Abu Dhabi)
Chevron (US)
BHP Billiton (Australia/UK)
ENI (Italy)
Dong Energy (Denmark)
Gazprom (Russian Federation)
Halliburton (US)
Petroplus (Switzerland)
Husky Energy (Canada)
Qatar Petroleum (Qatar)
Kuwait Petroleum Corporation Repsol YPF (Spain)
(Kuwait)
Royal Dutch Shell (Netherlands)
Lukoil (Russian Federation)
Schlumberger (US)
Occidental Petroleum (US)
Statoil (Norway)
PDVSA (Venezuela)
TNK-BP (Russian Federation)
PEMEX (Mexico)
Petrobras (Brazil)
Petronas Group (Malaysia)
SASOL (South Africa)
Sinopec (China)
TOTAL (France)
Valero Energy (US)
*Source: KPMG Analysis, July 2009
09
KPMGs Centers of Excellence

A conversation with Wayne Chodzicki, KPMG in Canada
What inspired you to develop KPMGs

Oil & Gas Centers of Excellence?
In 2004, my colleagues and I created
the concept of the Centers of Excellence.
While we had tax, audit, and advisory
teams providing services to our firms
oil and gas clients around the world,
we wanted to make sure that the lessons
being learned, forward-thinking approaches
being created, and service being delivered
locally could be made available to all
clients, especially those with a global
reach and global needs.
In emerging oil and gas countries, the

network has also been used, for example,
to raise the countrys profile with our
firms clients, and demonstrate its oil
and gas experience and our international
connectivity. The Australian firm and
the Middle Eastern member firms are
great examples where they have actively
taken the Centers concept to our markets.
The Centers help clients in their countries
and across the greater oil and gas network,
and reinforce that our member firms
have the experience locally and around
the world.
How were the Centers selected?

We have over 40 member firms that actively The Centers help clients in their
focus on the oil and gas industry. It was
countries and across the greater
important to be able to raise the bar when oil and gas network, helping to
selecting those that would be part of the
reinforce that our member firms
smaller Centers of Excellence concept.
have the experience locally and
around the world.
Naturally included were Houston, Perth,
and Calgary, where oil and gas is a
dominant part of the local office client
base. London, Paris, Rotterdam, and
Probably one of the most rewarding
Moscow were also natural choices as
aspects of the Centers has been our
they work with a number of significant
increased connectivity. As significant
global clients. Johannesburg, Beijing,
service providers to the oil and gas
Muscat, and Rio de Janeiro were strategic
industry, our member firms are much
choices because of their geographic
stronger because we know each other;
location, experience, and client base.
we speak with each other frequently
and meet at our sector conferences. This
We continue to evolve the criteria to be
makes a real difference. If we are contacted
selected as a Center, while considering
by a client regarding a matter in another
the evolving needs of clients.
country or region, we know who to talk
to and who we can trust to deliver the
How is the network used?
right technical skills and level of service.
In those countries where we have
historically been known to be strong
The Centers also work closely with the
in oil and gas, it is an effective means
KPMG Global Energy Institute. Our
of sharing industry knowledge and
Centers help ensure that our firms clients
experience with the global network.
around the world have access to the benefits
Wayne Chodzicki
Global Head of Oil & Gas
KPMG in Canada
T: + 1 403 691 8004
E: wchodzicki@ kpmg.ca
offered by the Institute, inviting them

to dial in and listen to current industry
thought leadership presentations and to
take part in related topical discussions. The
number of clients, targets, and industry
professionals joining the Institute is growing
significantly I believe part of this is
a direct result of our Centers and oil and
gas networks encouraging registration.
How have the Centers helped KPMG
better service our firms clients?
Our networks have identified a number
of issues that are among the most
pressing for our clients, such as the need
to be financially competitive, reducing
the number of legal entities, working
capital management, challenges around
the green agenda, and managing large
capital projects. We have approached
industry issues and our strategies from
managements perspective, not ours, and
have been developing multidisciplinary
services that are designed to directly relate
to our firms clients needs and issues.
Through the Centers, we have accessed
our internal experience in each of these
areas - people in our global network
of member firms who have already
demonstrated that our offering meets
the needs of our clients. They share
their insights with the rest of the network
during our bi-monthly global Centers
of Excellence on-line seminars. We are
taking something that has worked well
in the field, such as legal entity reduction
and working capital management, and
sharing it so that all our firms clients can
potentially benefit.
10
Oil & Gas Centers of Excellence
KPMG member firms offer

global connectivity. We have
11 dedicated Oil & Gas Centers
of Excellence in key locations
around the world, working
as part of our global network.
The Centers are located
in Beijing, Calgary, Houston,
Johannesburg, London,
Moscow, Muscat, Paris, Perth,
Rio de Janeiro and Rotterdam.
Our Centers of Excellence enable

us to transfer knowledge and
information globally, quickly,
and openly. With regular calls
and effective communications
tools, we share observations
and insights, debate new
emerging issues, and discuss
what is on our firms clients
management agendas. The
Centers also produce regular
surveys and commentary on
issues impacting the sector,
business trends, changes in
regulations, and the commercial,
risk, and financial challenges
of doing business.
We have 11 dedicated Oil & Gas Centers of Excellence in key locations

around the world, working as part of our global network.
Rotterdam
London
Calgary
Moscow
Paris
Beijing
Houston
Muscat
(for Middle
East)
Rio de Janeiro
Johannesburg
Perth
11
KPMG member firms operate in

the following countries and territories
Americas
Argentina
Brazil
Canada
Chile
Colombia
Costa Rica
Dominican Republic
Ecuador
El Salvador
Guatemala
Honduras
Israel
Mexico
Nicaragua
Panama (Republic)
Peru
United States of
America
Uruguay
Venezuela
Asia-Pacific
Australia
Brunei Darussalam
Cambodia (Kingdom of)
China
Cook Islands
Fiji Islands
Indonesia
Japan
Korea (Republic of)
Lao Peoples
Democratic Republic
Malaysia
New Zealand
Papua New Guinea
Philippines
Singapore
Taiwan
Thailand
Vietnam
Europe, Middle
East, and Africa
Algeria
Andorra (Principality of)
Austria
Belgium
Cyprus
Denmark
Finland
France
French Polynesia
Germany
Greece
Iceland
India
Ireland
Italy
Ivory Coast
Liechtenstein
Luxembourg
Monaco
Morocco
Netherlands
New Caledonia
Norway
Portugal
Senegal
Spain
Sweden
Switzerland
Tunisia
Turkey
United Kingdom
Africa
Angola
Botswana
Ghana
Kenya
Malawi
Mauritius
Mozambique
Namibia
Nigeria
Sierra Leone
South Africa
Swaziland
Tanzania
Uganda
Zambia
Zimbabwe
Central and
Eastern Europe
Albania
Belarus
Bosnia & Herzegovina
Bulgaria
Croatia
Czech Republic
Estonia
Hungary
Latvia
Lithuania
Macedonia (Republic of)
Moldova
Montenegro
Poland
Romania
Serbia
Slovakia
Slovenia
Commonwealth of
Independent States
Armenia (Republic of)
Georgia
Kazakhstan
Kyrgyzstan
Russian Federation
Ukraine
Middle East and

South Asia
Afghanistan
Bahrain
Bangladesh
Egypt
Iran
Kuwait
Lebanon
Maldives
Oman (Sultanate of)
Pakistan
Qatar
Saudi Arabia
Sri Lanka
Syria
United Arab Emirates
Yemen (Republic of)
The Offshore Group

Anguilla, BWI
Antigua and Barbuda
Aruba
Bahamas
Barbados
Bermuda
British Virgin Islands
Cayman Islands, BWI
Gibraltar
Guernsey
Isle of Man
Jamaica
Jersey
Malta
Netherlands Antilles
Suriname
St. Lucia
St. Vincent and the
Grenadines
Trinidad & Tobago
Turks & Caicos Islands,
BWI
12
A North American perspective

A conversation with Regina Mayor, KPMG in the US
What do you see as the key challenges facing

oil and gas companies in North America?
North Americas challenges mirror the
industrys global challenges, but are
exacerbated by the maturity of the sector
and the political environment.
Specifically, North America is actively
pursuing oil shale and other non-traditional
sources that make economic sense at a
higher per barrel oil cost. They are seeking
ways to find hydrocarbons in pristine,
natural settings (onshore and offshore) in
ways that will not harm the environment.
And the US will soon deal with more
stringent carbon management requirements
that will require new processes and
reporting mechanisms. While Energy
Independence (i.e., less foreign oil
dependence) is likely not attainable in
the near term (if ever), US executives and
politicians are seeking ways to drive more
hydrocarbon production in the US, a more
balanced mix with alternative energy, and
ways to better manage demand. Reducing
demand for energy is clearly a potential tool
in the policy making toolkit as evidenced
by the strong drop in gasoline purchases
once the price exceeded US$4 / gallon.
managing cash flow, and ensuring they

are achieving the benefits that are already
built into existing contracts.
We also see companies responding to
commodity price volatility by actively
hedging positions and managing risk,
to the extent that energy trading is once
again a well-accepted business model.
One sector KPMG firms see potentially
suffering from the fall in the price of crude
oil is the oilfield service companies, and in
particular, the drilling activity. If you look
at the active rig count from 2008 to 2009 in
the US, there has been a drop-off of almost
half. This dramatic shift has this sector
reducing cost structures, and driving more
innovation in pricing and customer service.
Finally, another factor limiting the US

ability to achieve Energy Independence
is the lack of expanded manufacturing
capacity. No one in the US is building
new refineries, and even expansion
projects have tailed off dramatically.
Moreover, North America faces stronger
competition from foreign markets that
will even import refined product into the
US below cost to maintain market share.
This requires US producers to improve
In response to these factors, KPMG
cost competitiveness and performance.
firms see American companies seeking
Given these pressures, we expect to see
to balance their exploration and production
further consolidation across the sector
across a mix of options both domestically
in the next 12 to 18 months.
and internationally. We see more
aggressive and real efforts to invest in
How is KPMG helping these companies?
alternative energy. And we see back to
KPMG firms have a strong oil and gas
basics in cost control and cost-reduction
performance improvement practice
measures. Many businesses are looking
and can provide practical, hands-on help.
at all aspects of their spend to find
We help businesses identify saving
opportunities. Some of the bigger focus
opportunities, and then help them take
areas include logistics and procurement,
steps to realize them. We can identify
leveraging technology investments,
Regina Mayor
Principal, Advisory
KPMG in US
T: + 1 713 319 3137
E: rmayor@ kpmg.com
the quick wins, but also work with

clients to create sustainable strategies.
What we aim to do is focused on
bottom-line results, removing costs
from the system and improving business
and financial performance.
My team and I worked with a major
integrated oil company that was having
difficulty managing its Requisition to Pay
process. We analyzed their processes and
identified that they had 10 different hand
offs, creating confusion and a lack of
visibility across the end to end activity.
We openly shared our leading practices
and advised on redesigning the process
the results were tangible with a reduction
in the invoice backlog of 95 percent.
KPMG firms can help companies with
their energy trading strategies, focusing
particulary on how to deal with commodity
price fluctuations, and how to leverage
technology for real-time deal and
transaction monitoring. We help develop
technology solutions that connect deal
transaction systems into the companys
financial systems so companies can
understand their exposures as close
to real time as possible when traders
are executing trades.
Effectively managing cash is a key
challenge, and KPMG firms have assisted
clients with improved working capital
across complex areas such as Treasury
and Cash Management, Foreign Exchange
exposure and spare parts / MRO.
Our goal is to work with our firms clients
to work across their business to help them
improve performance and achieve bottom
line efficiencies.
13
Key facts: Americas Region
Leading the way

Centers of Excellence
in Calgary, Houston,
and Rio de Janeiro
K PMG firms in the Americas
region are actively involved

in the American Petroleum
Institute, American Gas
Association, Canadian
Association of Petroleum
Producers, Energy Council
of Canada, Independent
Petroleum Association
of America, Petroleum
Equipment Supplier
Association, Small Explorers
and Producers Association
of Canada (SEPAC), and US
Energy Association
K PMGs Global Energy
Conference takes place in

Houston, Texas, every May
K PMG hosts the semi-annual
Energy CFO Share Forum

and Quarterly Oil & Gas
Update Calls
K PMG will be a gold sponsor
of the 2010 World Energy

Congress in Montreal, Canada
Thought leadership includes
Illustrative Financial
Statements Canadian Full
Cost Oil and Gas Industry,
and Impact of IFRS on
the Oil and Gas Industry.
Key clients:
Audit
Non-Audit
Anadarko Petroleum (US)

Husky Energy (Canada)
Halliburton (US)
Occidental Petroleum (US)
PDVSA (Venezuela)
PEMEX (Mexico)
Petrobras (Brazil)
Valero Energy (US)
Chevron (US)
Pride International (US)
Schlumberger (US)
KPMG PROFESSIONALS
185
KPMG firms in the Americas

region operate in 185 offices
across 19 countries
39,000
KPMG firms in the

Americas region employ
nearly 39,000 people
14
A Latin American perspective
A conversation with Antonio Ramirez, KPMG in Venezuela
What are the biggest challenges facing oil

and gas businesses in Latin America?
I think that, in order to understand the
challenges facing oil and gas businesses
in the region today, you have to understand
the history. There has been more than
a century of the hydrocarbon industry
in Latin America. The development of
our people, technology, and economies
is inextricably linked to the oil and gas
industry. This gives geo-political power
to whoever controls the sector, whether
it is the national, state-owned companies
or international organizations.
In this business, it is usually the reserves
and production that determine the
flexibility of the rules and regulations
governing the oil and gas sector. In
Venezuela, we have huge proven reserves
of oil. It is possible for the government to
use high prices in oil and gas to impose its
own terms and conditions on international
oil companies wanting to participate
in the sector.
PDVSA generate 95 percent of the oilrelated GDP in Venezuela, and in order
to produce the necessary volumes, the
national oil industry has put into effect a
mixed company scheme, where PDVSA
participates as stockholder, thus offering
the private sector the opportunity to
participate jointly with PDVSA in the
operations of such industry.
On the other hand, if you go to Colombia,
the country doesnt have enough reserves
or production so they are trying to attract
more investment and promote the
participation of the private sector.
In Mexico, the government is trying

to bring in foreign companies to help
produce more efficiently.
Brazil also produces a lot of oil, and
the national oil company, Petrobras,
is an important global player. So, while
regulations in Brazil are open to the private
sector, Petrobras is usually involved
due to its local skills and experience.
The Brazilian legal framework provides
foreign investors with incentives to
participate and the recently discovered
reserves have generated excellent
conditions for international oil companies.
Because Argentina, Bolivia, Ecuador,
and Chile dont have big oil and gas
reserves, they are trying to invest in
energy alternatives.
So, if you are an international oil company
wanting to operate in Latin America,
you should be aware of the context and
political environment of each of these
countries. In the big four oil and gas
countries Colombia, Venezuela,
Mexico, and Brazil the opportunities
for international companies include
providing technological support and
operational techniques. Because,
even if these countries have reserves
and want to keep control, they need
technical assistance to produce the oil.
What are KPMG firms doing to help?
For the last four years, my team and I have
been helping companies create the right
environment for a smooth transition from
their former contracts and association
agreements (joint ventures) with Petrleos
Antonio Ramirez
Partner
KPMG in Venezuela
T: + 58 212 2777819
E: antonioramirez@ kpmg.com
to the new mixed-company vehicles

under Venezuelan state control. This
process has been very difficult for many
of the companies because, for example,
the government may change terms
mid-way through existing long-term
contracts. If this occurs, the companies
may have to decide whether to continue
under the new terms.
We have been helping companies with
their negotiations and advising investors
on how to protect their investments using
tools such as bilateral investment treaties
and corporate structures. These treaties
are a very important area of practice
because foreign companies are trying
to use jurisdictions in which Venezuela
has bilateral investment treaties, to
protect their businesses.
In Colombia, they are looking for investors
and have introduced new regulations to
promote foreign company participation
in the oil and gas sector. The majors are
trying to operate in Colombia but the
reserves are not accessible and the
infrastructure needs to be built. KPMG in
Colombia is providing a number of majors
with tax services and helping them with
their exploration and production activities.
Brazil is growing very quickly and all the
major players are trying to operate there,
even though the Brazilian environment
is bureaucratic and taxation is complex
and on many levels national, state, and
local. KPMG in Brazil is working with
Petrobras, Chevron, BP, Shell and others
to help them deal with these substantial
tax challenges.
15
Key facts: EMA region
Leading the way

Centers of Excellence in
Johannesburg, London,
Moscow, Muscat, Paris,
and Rotterdam
K PMG in the Russian
Federation is a member
of the Russian Union
of Industrialists
K PMG in the UK hosts
twice-yearly informal dinners

for FTSE 350 and AIM-listed
companies, providing
mid-tier executives with the
opportunity to share issues,
challenges, and ideas in
a round-table format
K PMGs Oil & Gas Country
Head in Oman, Michael

Armstrong, is a Founder and
Board Member of the Oman
Society for Petroleum
Services (OPAL)
In 2008, KPMG sponsored
the World Petroleum

Congress in Madrid, Spain,
and, in 2007, the World Energy
Conference in Rome, Italy
Local thought leadership
includes Central and Eastern

European Natural Gas
Outlook and Oil & Gas
Scenario in India
Key clients:
Audit
Non-Audit
Abu Dhabi National Oil Company BP (UK)

ENI (Italy)
Dong Energy (Denmark)
Gazprom (Russian Federation)
Lukoil (Russian Federation)
Petroplus (Switzerland)
Kuwait Petroleum Corporation PetroSA (South Africa)
Repsol YPF (Spain)
(Kuwait)
TOTAL (France)
Royal Dutch Shell (Netherlands)

Statoil (Norway)

TNK-BP (Russian Federation)
(Abu Dhabi)
KPMG PROFESSIONALS
457
KPMG firms in the EMA region

operate in 457 offices across
87 countries
72,000
KPMG firms in the EMA region

employ over 72,000 people
16
A Russian perspective
A conversation with Boris Lvov, KPMG in Russia
What are the major challenges facing

oil and gas companies in Russia?
Russia has a number of the worlds largest
oil and gas companies. The sector leaders
include companies such as Gazprom,
Novatek, Rosneft, Lukoil, and others.
I think the challenges facing the
companies in Russia are two-fold. First,
there is an external challenge caused
by the volatility of global oil and gas
prices management is concerned
about balancing demand and supply.
And the oil industry?

Before 2009, the source for growth in the
Russian oil industry was from increasing
oil prices, and so cost control was not
a priority. The large integrated oil and
gas companies, such as Lukoil, Rosneft,
and TNK-BP, were expanding rapidly
and investing heavily in new oil fields
and ventures. With the drop in the price
of oil, they are now considering cost
reduction; cost control and investment
program rationalization so that they
can remain profitable.
All projects require significant capital

investment and it is difficult for
management to accurately project future
returns. For example, Gazprom and other
players in the gas sector need to develop
new gas fields and transportation capacity
in remote areas, which requires huge
capital investment. Russian companies
are spending more per unit of production
or transportation capacity than their
peers, weighing down return on capital.
At the same time, there is volatility in
demand; recently, the demand for gas
from European countries dropped by
almost 30 percent, affecting revenue
streams and companies projections.
Around 24 percent of Russian oil

production comes from fields that have
already produced 60 percent of their total
recoverable reserves. Achieving continued
growth at post-peak fields is likely to
become more problematic as oil companies
run out of easy, and less costly, opportunities
to manage the rate of decline.
The second challenge is an internal

one. Historically, Russian companies
developed locally, and rapidly grew
to become international players. They
now need to determine the best possible
organizational structure and best
delegation of duties between head office
and subsidiary companies. They should
also carefully manage their international
expansion and development projects
in Latin America, Asia, and Africa.
The production is expected to grow

through exploration of the new oil fields
in East Siberia. By 2015, the region is
estimated to produce 15 percent of all
oil in Russia, up to 20 percent by 2020.
Transneft, Russias national pipeline
company, is building a pipeline connecting
East Siberia to the Pacific Ocean, which
will enable Russia to market this oil in
China and Southeast Asia. The Russian
government is creating special
We are talking to them about new

approaches to budgeting and working
capital management. In my estimates, the
break-even point for Russian oil companies
today (after the cost reduction measures)
stays at US$35-40 per barrel, while in
2008 it was close to US$50 per barrel.
Boris Lvov
Partner
KPMG in Russia and CIS
T: + 7 495 937 2979 ext 13106
E: BLvov@ kpmg.ru
tax benefits to encourage oil development

in the region. This should benefit companies
such as Rosneft, Surgutneftegas, Gazprom
Neft and TNK-BP.
What are KPMG firms doing
to help these companies?
Working with KPMG in Germany, we
have recently finished two large treasury
management projects to enable the
companies to better manage the finances
in their foreign subsidiaries. We are
helping them create cash pooling offices
where they can pool the cash from all
their foreign subsidiaries around one
bank and improve their working capital.
And, to help them understand the
functionality they can get from the treasury
and budgeting systems, we arranged for
them to visit the German firms Frankfurt
office, meet the teams involved and see the
new treasury system working in practice.
In fact, we are working jointly with
a number of KPMG member firms on
projects and joint ventures. For example,
KPMG in Russia is working with a joint
venture between Sinopec and Rosneft
and we are helping them with their
understanding of Russian accounting
systems and the differences between
Russian and international accounting
standards.
The examples of KPMGs firms supporting
companies are numerous because Russia
is an important source of oil and gas
experience globally and our network of
member firms is strong. We are always
willing to share our experience, as
are our colleagues around the world.
17
Key facts: AsPac region
Leading the way

Centers of Excellence
in Beijing and Perth
K PMGs Australian firm
has an excellent relationship

with Australian Petroleum
Production and Exploration
Association (APPEA), the
leading Australian industry
body, and regularly provides
speakers for its conferences
KPMG in Japan is also the only
professional services firm that

is a member of the Japanese
Energy Association
Local thought leadership
includes Chinas Energy

Sector: A Clearer View
and Key Tax Considerations
for Australian Oil and
Gas Independents
Key clients:
Audit
Non-Audit
Brunei Shell Petroleum (Brunei)

Petronas Group (Malaysia)
Sinopec (China)
Tokyo Gas (Japan)
Chevron (Australia)
KPMG PROFESSIONALS
97
KPMG firms in the AsPac

region operate in 97 offices
across 18 countries
30,000
KPMG firms in the AsPac region

employ over 30,000 people
18
A Chinese perspective
A conversation with Peter Fung, KPMG in China
What do you see as the biggest challenges

facing Chinas oil and gas industry?
The market in China is not like that
in Western markets. The national oil
companies dominate the oil and gas
sector. They operate from upstream,
refining and chemicals, to downstream
and retailing.
It is not only the national oil

companies in China that are trying
to be more cost effective... we are
offering industry best practice to
Chinese companies from around
the world, showing them how
things can be done more efficiently.
While the market mechanism is moving
toward open markets, it is not quite there
yet. Until the beginning of this year, gas
was heavily subsidized by the central
government so the pump prices remained
stable despite fluctuating costs. This
meant that the Chinese refineries werent
making the same profits that were being
made by the internationals. Recently,
the government changed the pricing
mechanism so that the pump price became
more in line with the actual crude price.
This change in policy meant the recent
loss-making refinery businesses were,
overnight, making a profit again.
The upstream oil and gas reserves will

continue to be an issue for the national
oil companies. In China, the biggest oil
fields have been in production for many
years. Some have been producing for
50 to 60 years and the production rate has
gradually decreased as the reserves have
been depleted. It is critical for them to find
replacements, and a lot of the exploration
work has moved inland to the north and
west of the country. These areas are
not all accessible and the infrastructure
has still to be developed to support the
industry. In the longer term, the ability
of international oil companies to replace
oil will be critical for continued growth.
Peter Fung
Partner
KPMG in China
T: + 86 10 8508 7017
E: peter.fung@ kpmg.com.cn
Another area is industry best practice

knowledge sharing. It is not only the
international oil companies in China
that are trying to be more cost effective.
Many Chinese national companies are
looking to improve efficiency from
an operational and cost perspective.
We are offering industry best practice
to national and international companies
in China, sharing with them how things
can be done more efficiently.
It is highly likely that China will continue

to be dependent on imports of oil and,
over the last five years, our national oil
companies have been looking for
opportunities in Africa, Central Asia,
and South America to secure supply.
Many analysts are expecting oil prices to
rise again, so China is trying to balance
the risk of higher costs.
On a local level, what can KPMG
firms do to help our clients?
There are a couple of areas in which we
are working with clients. The nationals are
now very active in exploring joint ventures
overseas. We work with our firms clients
around the world, helping them with, for
example, their investment review process,
or assessing the tax implications of their
investments.
19
Commitment
20
3: KPMGs commitment
focusing on our firms clients
As part of our vision to be the leading provider

of professional services to the oil and gas sector,
KPMG member firms invest in understanding
the demanding economic environment and
ever-changing regulatory requirements that oil
and gas companies are facing around the world.
This enables us to develop services, methodologies
and, just as important, original thinking, that
specifically address the challenges and key
issues that matter to oil and gas companies.
Our audit, tax, and advisory services methodologies
form the foundation of our approach around the
world. KPMG recognizes that every business is
different, each with its own internal and external
pressures and challenges. These methodologies
are therefore flexible and enable our people to use
their knowledge and experience to apply them
appropriately for each client.
The services that we offer start from our clients
perspective. We look at industry challenges from
multiple angles, pooling our knowledge and
resources to develop holistic services that fit
our firms clients ever-changing challenges
and requirements.
21
Working with nationals
A conversation with Tim Rockell and Peter Hynes,

KPMG in Saudi Arabia
How do you ensure KPMG provides

services that make a tangible difference
to your Saudi clients?
Tim: Fundamentally, my role is to build
trust and grow relationships. I strongly
believe that, in order for KPMG firms
to provide clients with sustainable results
and real added value, we need to have more
than just excellent sector knowledge.
We also need excellent client knowledge
and, by this, I mean excellent knowledge
of the people, the culture, the business
strategy, the operations, the risks, the
markets, the challenges, the regulatory
landscape, everything.
As well as supporting the national

oil companies in finance and IT, we
help joint venture partners coming
into the countries. We have a good
understanding of their strategies
and requirements.
had been using the windfall from oil to

invest in large-scale infrastructure projects.
For example, Saudi Arabia has been
building new cities and Saudi Aramco
has been developing upstream exploration
and production capacity and investing
in new export refineries, some with
international joint venture partners.
One of the biggest issues they are now
facing is that costs on these projects have
also ramped up over the last few years.
There had been a shortage of services,
people, and equipment available, so
prices went up dramatically. Of course,
now that the oil price has dropped from
its peak, many of these projects need
to be re-budgeted. For example, Saudi
Arabia has postponed projects and asked
contractors to review their pricing.
In addition, many governments want

to get more value from their crude
by building refineries and using the oil
windfalls to encourage development
Peter: This is why I spend a lot of time
of secondary industries, such as plasticsvisiting clients, meeting with people across related manufacturing.
the business so that I really understand their
requirements. And then I work with our
What can KPMG firms do to help?
teams to make sure we deliver what our
Tim: As well as supporting the national
clients need. Of course, none of this is static oil companies in finance and IT, we can
so I make sure that I keep up with all the
help joint venture partners coming into
changes happening within the companies the countries. KPMG firms audit many
and in the wider markets.
national oil companies and we have
a good understanding of their strategies
What do you see as the biggest challenges and requirements.
facing national oil companies?
Our member firms also have a global
Tim: National oil companies, such as
network of oil and gas professionals working
Saudi Aramco in Saudi Arabia, tend to
with many of the major internationals.
be state owned or, if listed on local stock
These relationships mean we can help the
markets, majority owned by the state.
joint ventures be tax efficient and have
Until 2008, as oil prices increased, they
robust corporate governance frameworks
had been doing very well and governments
and effective financial systems.
Tim Rockell
Director
T: + 966 3 887 7241
E: timrockell@ kpmg.com
Peter Hynes
Partner Advisory
T: + 966 3 887 7241
E: phynes@ kpmg.com
For example, in Saudi Arabia, our local

knowledge can help ensure joint ventures
are fully cognizant of the tax implications
of operating in the Kingdom. Many people
assume that there is limited taxation in
Saudi Arabia, but there is a wide range
of taxes and joint venture partners can
overlook and misunderstand these costs.
Our firms have local and international
tax experience that can ensure that all
taxes are considered.
Peter: We have worked hard to build the
capabilities of our teams in the Kingdom.
As well as the audit, tax, and more
traditional areas of advisory work (such
as financial risk management and mergers
and acquisitions) for which we are known,
we provide IT, business process, strategy,
HR, and people and change services.
Each department is headed by a very
experienced director. And, if we dont
have the exact knowledge or skill within
the Kingdom, we pull in people from
KPMGs network of member firms to
help. We have had, for example, teams
from the UK and South African firms
on risk management, a resource from
our Indian firm on a technical segregation
of duties project, and our UK firms
corporate finance team is working with
the municipal government to develop
new phases of city growth, looking
at secondary industries that can be
established and developed.
I think this is one of the great benefits
of KPMGs global network of member
firms: because we communicate and
meet so often, we can identify people with
direct experience of providing similar
services to help our clients, from IT
advice to specialist investigative work.
22
Audit
KPMGs Global
Engagement Approach
To ensure we have a positive
impact on our firms clients
in all their locations, we use a
Global Engagement Approach.
The approach provides a
structured framework for
undertaking projects, from
initial contact through to project
review and assessment.
Our Global Engagement
Approach is designed to provide
our firms clients with sustainable
results and change. Before we
begin, we talk to our clients to
help ensure we understand
their aims and requirements.
Using our extensive experience
in the sector, we work with our
clients to define the scope, key
performance indicators, and
success factors.
Our approach is designed
around a common global risk
management and engagement
methodology. While providing
our firms professionals with
technological tools to help
them better manage our
engagements, manage risk,
and meet our quality objectives,
our approach still allows for
flexibility. This enables us to
adapt to our clients project
management methodology,
creating a shared platform
for adding value to their
organizations.
On completion of assignments,
we aim to leave our firms clients
with greater knowledge and
capabilities than when we arrived.
We do not seek to create
operational dependencies.
Continuous improvement
To help ensure we continuously
improve and adapt our service to
our firms clients needs, KPMG
teams regularly review our
performance using independent
client service reviews. Conducted
by an independent reviewer
at KPMGs expense, these
reviews enable our clients to
provide open feedback on their
KPMG team.
KPMG member firms use
these reviews to measure the
performance of our teams and
improve our service delivery.
We address the feedback
with the team and discuss
how we can better meet our
clients needs by developing
and agreeing upon an action
plan with them.
Independence
Our audits are independent.
Our audit and advisory
teams adhere to our clients
independence rules, our
own independence rules,
and the independence rules
of local regulatory authorities.
This is also enhanced by
our technology and strong
central control.
23
A focus on IFRS
A conversation with Jimmy Daboo, KPMG in the UK
How important is it that

the US adopts IFRS?
I believe that it is critical that the industry
moves to a single set of global accounting
standards. And I believe the best way
to achieve this is to continue and, indeed,
accelerate the convergence between
IFRS and US GAAP. The US should
commit to moving to IFRS relatively
soon otherwise there is a risk that it
will be left out in the cold. Of course,
a pre-requisite is that the IASB remains
a truly independent accounting standard
setter, and recent events show that this
is not yet completely secure.
Jimmy Daboo
Global Head of Audit for KPMGs
Energy & Natural Resources Practice
KPMG in the UK
T: + 44 20 7311 8350
E: jimmy.daboo@ kpmg.co.uk
discussions around difficult areas, such

as accounting for derivatives, production
sharing contracts, and taxes. This worked
very well.
What about cost?

The experience in Europe was very mixed
because the approach taken to transition
varied greatly. Where significant system
changes were required, in areas such as
I think some commentators were surprised
derivatives valuation, in some cases this
by how little disruption the transition
was very expensive. Where a company
caused to the capital markets but, given my
had to retrain a large global finance team,
close contact with those preparing accounts
this too was likely to be expensive, though
in the sector, I was not at all surprised.
taking a graduated approach spread
the cost over time. However, overall,
Because IFRS is less specific than US
companies in Europe did not end up
GAAP, will it be more difficult to deal
spending large amounts unless they used
with regulators such as the SEC?
the transition to IFRS as a trigger for
Accountants in oil and gas companies in
already necessary systems upgrades.
the US are concerned about operating in an
accounting environment where there is
Having worked with many European
What areas should companies
less specificity about how to account for
companies going through IFRS conversion,
watch out for?
transactions. There is a legitimate concern
what do you see as the critical success
The oil business is a specialist sector
that this could make companies accounts
factors for US companies?
and it would be natural to focus on the
less comparable, and there is certainly
I think the overarching lesson was that
industry-specific accounting areas.
the potential for this.
the transition is somewhat transformational
However, this would be a mistake. There
for a companys finance department
From what I hear though, a greater
is also much complexity in accounting
and has multiple aspects that can involve
concern is that people worry about
for areas, such as post-retirement benefits
many areas of the business beyond
being second-guessed on areas in which employee share awards, and deferred
finance. Careful planning and regular
they will have to use judgment. Many
taxes, which apply regardless of industry.
communication are critical.
could criticize the plethora of detailed
Companies should also look around the
rules and guidance in US GAAP
There was also a great fear that a big bang
business for areas that use accounting data
as creating so much complexity that
and ensure any issues are addressed early.
transition would leave analysts unclear
it is far too easy to get things wrong
For instance, are there debt covenants
on underlying business performance and
by not finding a critical, but small, rule
that would be affected by the changed
how to assess relative performance with
somewhere in the literature.
accounting? Do your employee bonus
peers. This was driven by the potential
plans have accounting profit-based targets?
accounting policy choices that companies Others, though, see the potential benefit
could make under IFRS.
of being able to find that rule and prove Do your tax payments change? There can
be quite unexpected consequences, and
they have done the right thing. This will
However, companies in the sector
identifying these areas early, and planning
require a mindset change from not only
collaborated so that, while not everyone
for them, definitely contributed to
the US accounting profession, but also
made the same choices, each was clear
the regulators. The SEC, in particular, will smoothing the transition in Europe.
what the others would be doing and
have a huge influence on how IFRS is
could brief their analysts accordingly.
adopted in the US.
Oil and gas companies had quite detailed
24
Audit (continued)
Robust audits that deliver

real assurance
A high-quality audit is a great deal
more than a set of mechanical
procedures. Professional
judgment and skepticism,
combined with thorough
knowledge, must be exercised
continuously in every area.
Our firms oil and gas audit
professionals bring integrity
and exceptional rigor to a
process that has been refined
over many years of serving
global leaders and smaller
businesses.
Our robust procedures and
established methodologies
support our audit process; it is
the knowledge and experience
of our integrated teams of
auditors and specialists that
enables KPMG member firms
to deliver an audit that adds real
value to our clients operations.
Our understanding of their
businesses, and the oil and
gas sector as a whole, drives
the focus of our audit, as
we seek to provide proactive,
constructive advice and a robust
and efficient audit.
We use proprietary audit software

applications to perform audits
in a controls-based manner. Our
technology enables our member
firms to effectively share and
coordinate our evaluations,
allowing us to capture a global
view of our clients controls,
highlighting shared issues
and key exceptions.
Throughout the year, we also
talk to our clients and reassess
their risks and the focus of our
audit. This flexible approach
is designed to ensure an
audit that continually evolves
to deliver assurance over our
firms clients emerging risks
and challenges.
Timely strategies,
consistently applied
As global businesses, it
is important for many of our
firms oil and gas clients to
have consistent accounting
approaches that are both
pragmatic and compliant
with applicable accounting
standards. We monitor and
control our firms response
to audit and accounting
matters, with the aim of
ensuring that a consistent
approach is taken with clients.
Our robust procedures and established methodologies support our audit

process; it is the knowledge and experience of our integrated teams
of auditors and specialists that enables KPMG member firms to deliver
an audit that adds real value to our clients operations.
25
Audit (continued)
The challenges facing

the sector
In todays environment,
shareholders, through audit
committees, are demanding
more of auditors in terms
of stress testing financial
statements determining
the impact of changing price
outlook for oil and gas, cost
escalation, liquidity shortages,
frontier technologies and
unconventional resources
and changing relationships
with host governments.
The same is also true of
management, who are looking
increasingly to KPMG firms for
assurance over areas such as
project risk management and
cost control, the effectiveness
of their risk management and
internal audit processes, and
compliance with ever more
complex accounting standards,
whether in the field of revenue
recognition or joint ventures
(including production sharing
and risk sharing contracts).
Working together, we focus

on key areas of risk and the
adequacy of internal controls,
helping to save our firms
clients time and money
while delivering robust
assurance over their controls.
Reserves: reporting of oil
and gas reserves continues

to be a critical issue for
our firms oil and gas clients.
Rules are changing in the
US and evolving under the
International Accounting
Standards Board. Oil and
gas companies continue
to stretch the boundaries
of their businesses and
need to communicate
effectively the impact on
their future cash streams.
KPMG firms continue
to provide leading input to
oil and gas companies and
to regulators, combining
our knowledge of the capital
markets and current trends
in reserve engineering
and financial reporting.
Enterprise Resource
Planning (ERP): One of

the key challenges currently
affecting our firms oil
and gas clients is the
implementation of global ERP
systems in shared-service
centers to help reduce costs.
KPMG has developed audit
tools for these ERP systems
that can help to reduce audit
costs while delivering
systems auditing. We use
integrated audit teams from
a range of disciplines: forensic,
internal control, information
risk management, business
transactions, and tax.
Leading the way

To help businesses maintain
good corporate governance,
KPMG established the Audit
Committee Institute (ACI)
with chapters in the Americas,
EMA, and AsPac regions. The
ACI is a forum for the exchange
of ideas and research into
audit effectiveness and good
governance. The ACI now
has 1,800 members, many of
them chairs or senior members
of audit committees.
Audit Committee Institute
1,800
The ACI now has 1,800 members, many of them

chairs or senior members of audit committees
26
An overview of our audit services
Client business issues/risks
KPMG services Service description
Preparing and helping clients manage

Compliance with
International Financial Reporting
accounting standards
Standards (IFRS) advisory the change to IFRS
Provision of training

Compliance with US GAAP an

US accounts and reporting
SEC requirements
Provision of training

Cost audits
Cost assurance and audit
Audit of costs incurred by contractors

or being claimed as variations
Hydrocarbon emissions
Hydrocarbon emission audits
Audit of hydrocarbon emissions,

carbon storage, and carbon credits
Pre- and post-implementation

IT projects implementation
IT risk management
reviews of major ERP systems
Automated controls reviews

Audit of JV statements
Joint ventures
Joint venture audit
Assurance over costs subject to

cost recovery under production
sharing agreements
Major project assurance
Financial management
Provide assurance to senior

management that major projects
are well managed and issues are
flagged early
Project governance
Established approach on all major

projects, including IT implementation,
outsourcing of back- and middleoffice functions, major refinery
builds, liquefied natural gas projects,
and offshore oil field developments
Quality reporting
Financial statement audit
Provision of statutory financial

statements audits
HSE report
Provision of assurance services

in relation to HSE reports
27
A focus on carbon trading and

the Cap and Trade Program
A conversation with Cathy Lewis, KPMG in the US
How is KPMG involved in current

discussions around the Cap and Trade
Program in the US?
For the last couple of years, we have
been helping to frame the debate around
the Cap and Trade Program, holding
a lot of discussions, leading Webcasts,
and participating in share forums with
interested parties across the industry
and political arena.
What should companies be doing

to prepare for the implementation?
Companies should understand that
the Cap and Trade system is different
to carbon trading in Europe. Europe
started off by providing emissions at low
cost to various constituents. The pricing
mechanisms werent strong enough and
trading volume was virtually zero. There
is the belief here that, if you overcome
the pricing challenges, the US system
can begin with a trading model that
would support the Cap and Trade model.
At one of our recent Webcasts I led a

discussion on the Cap and Trade Program.
This discussion attracted a lot of interest
from within KPMG and the industry,
KPMG in the US is conducting
with over 850 people registered for the
a whole plethora of readiness
call. We provided an overview of the
activities, such as considering
Cap and Trade system and discussed the
tax laws and issues as well as
Waxman-Markey Energy and Climate
potential solutions.
Bill, the risk management challenges,
and federal income tax implications and
considerations, followed by a questionOf course, implementing a system like
and-answer session, which was lively
this at such a difficult time in the world
and extensive.
economy creates its own challenges;
The industry is trying to understand
any type of Cap and Trade program is a
the various pieces of legislation and
significant cost to some of our key business
appointing resources with responsibility sectors, such as utilities and manufacturing.
for sustainability or climate change.
It is essential these businesses are protected,
Businesses are focusing on understanding as the costs will be passed on to consumers.
the most likely outcomes of a Cap and
There are also a number of tax issues
Trade bill an auction mechanism for
and business issues to bottom out before
allocation (at least in part), an upstream
participation in any program, such
model for measuring the point of emission,
as determining the current base level
and the formation of a secondary market
of a companys emissions, ensuring the
for trading emission allowances.
correct appropriation of carbon credits,
and identifying ways for businesses
to improve their carbon footprint so
that they can meet reduction targets.
Cathy Lewis
Global Head of Tax for KPMGs
Energy & Natural Resources Practice
KPMG in the US
T: + 1 816 802 5240
E: calewis@ kpmg.com
KPMG in the US is conducting a whole

plethora of readiness activities, such as
considering tax laws and issues as well
as potential solutions. Our firms have
also done similar work with European
businesses and so are well placed
to help our clients here in the US and,
eventually, the rest of the Americas
when they implement their own systems.
We are talking to our firms clients
about the possible affects of the Program;
as businesses make investments, they
should also consider the implications
of Cap and Trade. I think a first step for
many businesses is to leverage existing
structures for managing the business
risks or opportunities surrounding Cap
and Trade. Enterprise risk management
is a good framework that most companies
have already established.
The system, whatever its final detail,
will to have a major impact on companies
across the sector.
28
Tax services
Organizations tax decisions

are under scrutiny like never
before. With numerous and
changing tax laws, policies,
accounting and commercial
principles, and international
tax treaties, it is a major task for
global oil and gas businesses to
develop tax-efficient strategies
to support their operations.
Our firms understanding of tax
governance, specialist skills, and
deep industry knowledge help
our clients to be competitive
and compliant. KPMGs Oil
& Gas Global Tax professionals
provide services to oil and
gas businesses, analyzing
our clients operations
and identifying tax-related
challenges and opportunities.
We are forward thinking,
anticipating and responding
to changes in the tax
environment and helping our
clients understand and plan
for their potential impact. We
understand, for example, how
the taxes and tax regulations
shape the environment for
strategy formulation and active
portfolio management. This
is necessary to turn assets
into cash in mature regions in
order to finance development
projects elsewhere.
Tax and duty savings: We
We have a global mindset,

providing our firms clients
with insights into tax trends
beyond their home countries.
We understand the vital
importance of, for example,
managing profits, and recognize
the growing tax management
challenges associated with
the geographical mismatch
between cash-generating and
cash-consuming territories.
And we are value adding,
seeking to provide advice
that is timely, practical, and
can stand up to scrutiny in
the future. We recognize, for
example, the need to protect
intellectual property in the
form of brands, processes,
and technical know-how.
Some of the challenges facing
the sector include the following
Reducing tax complexities:
Following the stronger

position of many governments
on tax avoidance and the
need to reduce the cost of
tax functions, many oil and
gas companies are looking
to simplify their tax position.
KPMG member firms
can help companies reach
accelerated tax settlements
covering all outstanding
items in a jurisdiction.
have identified significant

tax and duty savings for
our firms clients in the oil
and gas industry, focusing
on processes within supply
chains, retail operations,
warehousing, customer
loyalty campaigns, IT
systems, procurement,
terms of business, and
general accounting processes.
These savings can have a
direct impact on cash flow
and are especially relevant
to multinational oil and
gas companies with shared
service operations, which
can be very remote from
their operating locations.
Leading the way

KPMG firms work with many
decision makers in national
and international tax authorities.
These relationships are
complemented by our firms
participation in various
organizations, including the
Organisation for Economic
Co-operation and Development,
World Trade Organization,
and European Commission
tax-related working parties.
This involvement enables
us to help shape policy and
provide regulatory insight.
Global mobility: With the
mobility of senior executives

in the oil and gas industry,
managing the tax and
compensation affairs for
international transferees can
be a demanding and complex
business, with the risk of
failing to comply with local
tax laws always in the
background. KPMG firms
have a coordinated global
approach to delivering a
wide range of expatriate
tax services, as well as visa
and work permit services, for
many major global oil and gas
companies. These services
are designed to save a great
deal of personal time for
international executives and
money for their companies.
Our firms understanding of tax governance,

specialist skills and deep industry knowledge help
our clients to be competitive and compliant.
29
An overview of our tax services

to the oil and gas sector
Business issues and risks
KPMG firms services What we can do
Clean development mechanism issues

Engaging the green agenda
Regulatory and sustainability
Re-emergence of nuclear energy and

business strategies
tax incentives in certain jurisdictions
for nuclear energy
Tax incentives for renewable energy

and renewable fuel projects

Windfall profits
The potential impact on profits

resulting from government-imposed
fuel taxes being implemented or
contemplated
Trading energy and emissions
Tax characteristics of carbon credits
Implications of Certified Emissions

Transfer pricing
Reduction (CER) forward contracts

Indirect tax
Managing joint ventures and

Tax due diligence
other third-party relationships

Tax credits for production or

purchase of green products
Addressing tax exposures items
Partnership agreements review
Tax implications of financial instruments
Worldwide income tax considerations

Tax-efficient structuring
Modeling cash implications

Business entity selection

Communicating tax planning

to the board and management
Purchase price considerations

Assistance with local tax authorities

Implementation assistance
Monitoring key tax issues included

in contracts
Registration and approval assistance

Post-venture tax structuring

Tax structure simplification

Dissolution
Recovery of VAT expenditures

Managing major capital
Indirect taxes
Identification of VAT tied up in
expenditure projects and energy
investment requirements financing transactions impacting
working capital and cash flows
Debt-to-equity requirements

Structured financing
and characterization
Principal payments, interest expenses,

and cash flow implications of debt
and deemed debt obligations
Related-party and cross-border

transactions
Indemnity clauses and

default provisions
Required opinions and filing

requirements
30
KPMG firms services What we can do
Meeting the increasing

Assessment
regulatory, government, and
multiple stakeholder demands

Tax process documentation

Internal control testing
Personnel and process interviews
Identifying opportunities
Provide detailed picture of global

Quantification and aggregation
tax regulatory and compliance obligation
Gap analysis

Participate in designing

an aggregated model
Create concept for mitigation

End user training

Thorough global tax examination

Monitoring and reporting
work plans
Formalize appropriate global

communication channels to support
tax process
Build key performance indicators

and metrics to measure progress
Controversy

Ongoing monitoring and testing

Review technical merits of planning

Controls
approaches
Provide methodologies to help

mitigate taxes and penalties associated
with exposures
Key findings and recommendations

discussions
Tax aligned with corporate goals

Security of supply
Transfer pricing

Tax efficient supply chain management

Evaluation services
Documentation and reporting
Customs, trade, and excise duties

Indirect taxes
Value-added, excise, and sales

and use taxes
Severance

Ad valorem taxes

Mergers and acquisitions in

Mergers & acquisitions
new supply and demand markets
Tax-efficient structuring

Integrating business objectives

Managing operational efficiency
with tax objectives
Manufacturing deductions

Tax credits for energy-efficient

technologies
Tax credits and deductions for

research and experimentation
Costs: expenditures vs. capitalization

Trading energy and emissions
Merchant trading
Tax implications of

Tax due diligence
financing instruments
31
Advisory services
KPMG firms work with

businesses to tackle challenges
in growth, governance,
and performance, combining
specialist skills around the
world to provide objective
advice and services to help
preserve and improve value.
We recognize that our firms
clients may need assistance
in three broad areas: improving
performance, especially
by harnessing technology;
executing transactions and
restructuring; and handling
risk and compliance.
Our Advisory practice directly

aligns to these needs:
Performance & Technology:
Business Performance
Services and IT Advisory
Transactions &
Restructuring: Corporate
Finance, Restructuring
and Transaction Services
Risk & Compliance:
Accounting Advisory Services,

Financial Risk Management,
Forensic, Internal Audit, Risk
& Compliance Services and
IT Advisory
Because we are structured
according to our clients needs,
our international network
of member firms can deploy
oil and gas professionals with
the right industry credentials
and technical knowledge.
Because we are structured according

to our clients needs, our international
network of member firms can deploy
oil and gas professionals with the
right industry credentials and technical
knowledge.
32
Challenges facing the sector

C ash optimization: With the
drop in crude prices and the
cost inflation experienced
in the industry, oil companies
have difficulties funding
their CapEx and dividend
streams. We can assess
and benchmark companies
and work with them to develop
a sustainable approach to
working capital, including
discovery, diagnostic and
design, and implementation.
Cost reduction: We have
developed a methodology,
Private Equity lens, which
combines transaction skills
with activity-based costing
to help companies assess
their expenditure.
In addition, many oil and gas
companies have become
complex organizations. As a
consequence, simplification
is seen as a driver for
taking out costs. KPMG
has developed a top-down
methodology designed to
significantly reduce legal
entities on a global scale.
C apital projects: Due to
arrangements and covenant

compliance. We can also
forecast and identify future
financing needs and funding
options and provide liquidity
and treasury management,
and economic modeling
to predict future elasticity
of demand, pricing and costs.
Distressed players in the
supply chain: The liquidity

of key suppliers, customers
and third parties has an effect
on oil and gas companies.
KPMG firms can profile
and advise on managing
customer and supplier risks.
Implication of accounting
issues: Application of fair

value accounting in todays
illiquid and highly volatile
market raises a number of
complex issues. KPMG firms
can assess the adequacy
of reserves according to
guidelines, review asset
impairments, assess the
decline of the value of
investment securities
and pension plan assets,
and monitor changes
to standards affecting
oil and gas companies.
the volatility in commodity

Contract assurance: To
prices, organizations have
to consider the adequacy
make the most of the value
of their projected cash flow
and manage the risks within
for funding and decide on
commercial relationships
abandonment or deferral.
and contracts to help ensure
KPMGs project management
compliance with payment
methodology includes
and other terms, KPMG
identifying risks, managing
has developed a step-by-step
costs, and managing suppliers.
methodology that includes
audit programs.
Current and projected
A nti-bribery and corruption:
liquidity needs: Due to
the availability of funding
Traditionally, oil and gas
in the market, organizations
companies operate in
should assess their access
countries that are high
to the commercial paper
on the corruption index.*
market or other short-term
KPMG can provide forensic
funding. KPMG firms can
methodologies to detect
help by considering the
and assess bribery in
maturity dates of term loans
remote countries, develop
as well as revolving credit
preventive strategies, and
suggest risk management
methodologies to address
bribery and corruption.
*Source: Transparency International, July 2009
33
An Indian perspective
A conversation with Arvind Mahajan, KPMG in India
What do you see as the major challenges

facing the sector at this time?
In India, the challenges faced by national
oil and gas companies are quite different
to those faced by private companies,
particularly as the prices of key petroleum
products are artificially regulated and
maintained by the government. This
became particularly important when the
crude oil price was rising dramatically
for the consumer, the prices of products
such as petrol and diesel didnt rise to
the same extent; and, instead, the losses
were borne by the national oil companies,
particularly at the refining and retail
segments of the market.
While the government shared part
of the losses of the national oil and gas
companies by providing them subsidies
and oil bonds, this was not the case for
the private companies. This resulted
in many private companies leaving
the market as there was no incentive to
stay. So, the downstream sectors main
challenges have been cost optimization
and operational excellence, reducing
costs while mitigating risks, particularly
from a capability perspective.
The gas sector has traditionally not been
regulated, but the government has now
set up a gas regulatory authority, the
Petroleum and Natural Gas Regulatory
Board, which will have a role from
mid-stream through to down-stream,
as well as a role in city gas distribution.
While the regulatory framework has
been set up, the boards policies are still
evolving. As it is independent, the industry
believes there will now be a greater
degree of impartiality in the governance
of the sector going forward.
With oil prices rising, there has also

been a lot of pressure for companies
to look at renewable sources of energy.
The government has suggested to the
oil companies that a certain proportion
of petrol and diesel should be mixed
with ethanol to reduce our dependence
on oil five percent immediately and,
in due course, 10 percent would be
substituted. This means that a process
needs to be developed, involving both
the sugar industry and oil companies.
Many companies, including some of
the national oil companies, have been
looking at jatropha plantations and other
mechanisms for combining biodiesel
and other forms of renewables.
How are KPMG firms working
with the sector?
We have been providing a number of
business, financial, risk management,
technology, and tax advisory services
to clients. One of these clients is a
state-owned company that has presence
in exploration and production, gas
transmission, city gas distribution,
and the downstream power sector.
My team and I have been involved with
this organization from the beginning,
helping it define its business plan and
then working on some of the key
initiatives identified as part this plan.
These include systems implementation
to improve performance from a cost
perspective; enhancing the way management
looks at financial management and
budgeting processes, balance forecasting
and performance management systems,
and reviewing the IT and technology
capabilities. We have also helped
companies review their organization
Arvind Mahajan
Partner
KPMG in India
T: + 91 22 3983 6206
E: arvindmahajan@ kpmg.com
structure and talent management; a large

number of different parts of our advisory
practice have been involved.
We dont sit on a pedestal; we give

independent advice while making
sure things get done.
The state is also trying to develop the skills
of people working in the oil and gas sector
by setting up universities, such as Pandit
Deendayal Petroleum University (PDPU),
that focus on education in the energy
sector, particularly oil and gas. An
institute of higher education, it will offer
a number of energy, petroleum engineering,
and petroleum management courses
with a strong emphasis on commercial
research. We are working as the universitys
partner, helping to design and implement
the strategic growth initiatives.
Clients have chosen to work with KPMG
firms because they have found us
to be dependable. They can rely on us
to do things not just give them paper
deliverables but work with them
to drive outcomes.
They also find that we are easy to work
with we dont sit on a pedestal; we give
them independent advice while making
sure things get done.
34
An overview of our advisory services

to the oil and gas sector
KPMG firms services
What we can do
Board assurance as
to operation of business
model and controls
Internal audit
Internal audit services to

handle significant control
and monitoring issues
Capital projects
Major projects programs
Project advisory and monitoring

services to project owners focusing
on project governance, processes,
and management outputs
Independent feedback on project
health or status
Capitalize on different
technology investments
Technology optimization
IT project portfolio optimization

Strategic assessment of major
investment areas in IT budget
Climate change
Emission reporting system
Initial impact assessment

Collecting data and reporting
Strategy development to address
climate change
Credit facilities
Debt renegotiations and

corporate financial restructuring
Assist clients in forecasting

and identifying future financing
needs and funding options
Advise clients on renegotiating
and restructuring financing lines
Economic assessment of risk
Use economic models and forecasting

to predict future elasticity of demand,
pricing, costs, return on capital, and
other critical performance indicators
Debt refinancing
Identify a range of financing options,

address the impact of alternative
funding routes
Liquidity risk assessment
Provide a first aid kit to help assess

financial soundness and benchmark
current operations against best practice
Effective board oversight
Performance measuring
board reporting
Advise on the changing corporate

governance structures
Ensuring business continuity

and the capability to recover
Business continuity
management
Assess and guide knowledge

management information
systems governance, security,
and risk management
Financial forecasting
Financial modeling
Develop financial models

and challenge existing forecasts
and associated scenarios
Improvements in
corporate governance
Corporate governance
advisory
Advise on compliance, preferred

practices, and Sarbanes-Oxley
implementation
35
KPMG firms services
Issue recognition and

strategy development
Climate change
Advise on greenhouse gas

emissions controls and
energy trading
Corporate responsibility
assurance
Advise on environmental and

stakeholder issues, including
sustainability reporting reviews, global
reporting initiative developments, and
greenhouse gas issues and audits
Decision support
Assist with end-to-end business

intelligence strategy, including
measurement definition, reporting
design, and performance management
Transaction services
Project due diligence for assessment

of new ventures, investments, and
joint venture support
Valuations
Valuations and independent reports
Project finance and debt

advisory services
Company and asset mergers,

acquisitions, and divestments
Transforming the
finance function
Advise on immediate needs, such

as meeting new IFRS accounting
standards, integrating systems,
and coping
Advisory on sharedservice centers
Assist clients with creating a sharedservice center (outsourced or internal)

and find performance improvements
by offering qualified staff, standardized
and controlled processes, and
accounting hardware and software
Management of
procurement spend
Supply chain optimization
Use KPMGs Rapid Value Procurement

to streamline the cost of procurement,
identify cost-saving opportunities,
and assist in reducing overall spend
Use Lean Six Sigma techniques
to deliver productivity improvements
Use operational modeling tools and
logistic analysis to reduce costs
Outsourcing versus
in-sourcing
Sourcing strategy
Design and implement new processes

and shared-service models
Assist with structuring the sourcing
strategy and vendor selection
Service level definition and
contract renewal support
Define monitoring controls
and processes to mitigate risks
in outsourcing relationships
Protection of intellectual property
Intellectual property advice
Advise on brand, processes,

and intellectual property rights
Reporting and communications
Performance insight
Assist clients to effectively

communicate their business
performance
Advise on rewards management,
the cost of capital, reputation, and
licenses to operate
Advise on common reporting processes
to help with automation
Risk identification
Enterprise risk management
Perform a top-down risk assessment

to balance the cost of compliance
with financial risk
Identify environmental and regulatory
risks across all segments of the
business and design processes
to monitor and manage change
Real-time assurance on capital

expenditure management
CapEx monitor
Monitor expenditure for capital

intensive projects
Major transaction management
Management of the
finance function
What we can do
36
An Australian perspective
A conversation with Brent Steedman, KPMG in Australia
Gas trading between Australia and Asia

is currently redefining the gas industry in
Australia. What do you see as the biggest
challenges to its success?
Asia is an increasingly larger consumer
of fossil fuels and, in particular, gas.
Big consumers, such as China, Japan
and Korea, have limited reserves and
they therefore need the input of gas,
through liquefied natural gas (LNG),
from countries with significant reserves.
Australia has significant gas reserves:
approximately 80TCF proven and
probable, and 400TCF estimated
resources. So, while this is a perfect
match, it also creates two significant
challenges for the industry.
Australia is seen as a good and

safe place to invest and so there is
fierce competition for its resources.
To be successful, the deals should
be efficiently structured and
financially robust.
Firstly, there should be effective
management of the capital spend required
to build up to 12 LNG projects in Australia,
worth in excess of AUS$120bn*. KPMG
firms have worked with many of the
companies involved on risk management,
tax and structuring, contract assurance,
systems support, and process design. We
know that mega-projects like these need
to be carefully managed and controlled
to try to ensure they are cost effective,
especially in difficult economic times
like these.
Secondly, there is significant Asian

investment in off-take agreements, gas
sale contracts in which large Asian gas and
utility companies and trading houses, such
as CNOOC, Tokyo Gas, Tokyo Electric and
Mitsubishi, are buying the gas. These deals
should be properly structured from a tax
perspective, proper due diligence needs to
be undertaken, and the financial modeling
needs to be robust.
What challenges do Asian companies
facing when investing in Australia?
One of the key challenges of gas trading,
in terms of buying assets, is the very
competitive market. Australia is seen as a
good and safe place to invest and so there
is fierce competition for its resources. To
be successful, the deals should be efficiently
structured and financially robust.
Brent Steedman
Partner
KPMG in Australia
T: + 61 8 9263 7184
E: bsteedman@ kpmg.com.au
At the APPEA 2009 conference, I was

one of three people from KPMG firms
presenting papers. Michiel Soeting,
KPMGs chair of Global Energy and
Natural Resources, was a keynote speaker
and, I am very proud to report, Kevin
Smout from the Australian firm won
the best paper in the entire conference,
an outstanding achievement.
We are also able to help APPEA and the
industry on emerging developments. We
are currently sharing information with
APPEA on carbon trading, or the carbon
pollution reduction system, as it is known
in Australia. We have close contacts
with the government and are helping
APPEA with some of the political matters
requiring consideration.
KPMG firms have been involved in

a number of these inbound investment
projects, including the first major
investment in Australia by a large utility
company out of Japan.
Why is KPMG Australias relationship
with the Australian Petroleum Production
and Exploration Association (APPEA)
important?
KPMG has a high-value and proactive
relationship with APPEA, a leading
Australian industry body. Working closely
with the association significantly helps
us develop relationships with industry
executives and, even more importantly,
helps us understand the key issues facing
oil and gas companies in Australia.
*Source: www.theaustralian.news.com.au, July 2009
37
Worldwide, KPMG firms are recognized

for our investment in our people
Here are some examples:
Americas Region
Springboard Consulting LLC
and Work Life Matters

KPMG in the US
magazine, Disability Matters
Award -2008
C atalyst Award in recognition
Diversity Edge magazines
of our Great Place to Build
Best Companies for Diverse
a Career strategy, 2009
Graduates, 2008
Fortune 100 Best Companies
PINK magazines list of Top
to Work For, 2007, 2008
Companies for Women
Business Civic Leadership
Profiles in Diversity Journals
Center, Corporate Citizenship
Top Ten Companies for
Award, 2008
Innovations in Diversity
Training magazines list of Top
Companies That Care Honor
125 training companies, 2008
Roll, 2006, 2007, 2008
Consulting Magazines
Hispanic Enterprise
Excellence in Diversity
Magazine 50 Best
Award, 2008
Companies, 2008
Working Mother 100 Best
Hispanic Magazines
Companies, 2007, 2008
Corporate 100 Best Places
DiversityInc Magazine Top 50
to
Work for Latinos, 2006,
Companies for Diversity,
2007, 2008
2006, 2007, 2008
Human Rights Campaigns
Computerworld 100 Best
Corporate Equality Index,
Places to Work in IT, 2008
KPMG received a perfect
BusinessWeek List of
score of 100 percent in the
Top Employers for College
Human Rights Campaigns
Graduates, 2006, 2007, 2008
Corporate Equality Index and
Diversity/Careers in
Best Places to Work Survey,
Engineering and Information
2005, 2006, 2007, 2008
Technology, Best Diversity
Strength of KPMGs
Company, 2008
Internship Program
Recognized at INROADS
Conference
Brandon Hall Gold Award
for Best eLearning Team
by Brandon Hall Research
KPMG in Bermuda
Awarded the CURE Equality
of Opportunity Initiatives
Award, 2007
KPMG in Brazil
Voc SA/ Exame, 150 Best
Companies to Work For, 2007

KPMG in Canada
Financial Post, Top 10 Best
Employers to Work For, 2009

KPMG in Chile, Colombia
and Venezuela
International Tax Reviews
Americas Tax Awards, Best

Transfer Pricing firm, 2008
38
Europe, Middle East,

and Africa Region
KPMG in Austria

HR Africa Award
Association for the
Advancement of Black
Accountants of Southern
award for the Best Place
Africa (ABASA) Award
for Internships
for having the highest
number of successful Black
candidates in the Final
KPMG in the Czech Republic
Qualifying Examination
Second place, TOP
First recipient of the
Corporate Philanthropist
governments Skills Revolution
competition, 2008
Partner Award for our Growth
Acceleration Program
Magnet Communications Ideal
KPMG in Ireland
(Commerce) Student Employer
Second, Ideal Graduate
Top 50, Best Companies
Employer in a survey
to Work For, 2008
completed by more the
First for Training and
15,000 commerce, science,
Development, Best Companies
engineering and law students
to Work For, 2008
from all 23 universities
Irish Times No.1
in South Africa
Graduate Employer, 2008
Top Company Investing
Best Workplaces
in Women
in Europe, 2008
Grad Ireland, Best Internship
and Placement Program, 2008 KPMG in the UK
Place to Perform, national
KPMG in the Netherlands

Fifth, Best Employer
KPMG in Poland
Top 25, Ideal Employer
rankings, 2008
Consultancy Firm
of the Year, 2009

Best Services Company
to Work For, 2008

Second, Best Saudi Company
to Work For, 2007
Second, Best Saudi
Company to Work For,
2008 (Mid-size companies)
Fourth, Best Saudi
Company to Work For,
2008 (All companies)
Top 20 in Saudi Fast
Growth companies
Sunday Times, Best Big
Company to Work For, 2007,

2008, 2009
Auditor of the Year by leading
UK finance directors, 2008
Euromoney Islamic Finance
Awards, Best Islamic
Assurance and Advisory
Services Provider, 2008, 2009
Asia Pacific Region

KPMG in Australia
Employer of Choice
for Women, 2007, 2008

KPMG in China
Hong Kong Council of Social
Service, Caring Company

Award, 2002, 2003, 2004,
2005, 2006, 2007, 2008
The Philanthropic Star
Company for Poverty
Alleviation for our contribution
to the New Great Wall
initiative, 2007
Junior Achievement, The
Partnership Recognition Award
for staff volunteering to teach
at migrant schools, 2007
KPMG Korea
Best Human Resources
Developer, 2007
39
Further insight
1: The National Oil Company

Investment Challenge
discusses the relationship that
national oil companies (NOCs)
have with fluctuating oil prices;
for example, to what extent is
their future planning affected,
and what is the ideal cost
per barrel for NOCs to maintain
operating efficiencies?
2: Demand for energy is
expected to grow by more
than 50 percent by 2030.
How national oil companies,
that control 72 percent of the
worlds oil reserves, respond
to this challenge will have
a significant impact on the
stability of oil and gas markets
in the future. Key Issues for
Rising National Oil Companies
discusses and debates the state
of the oil industry, and the role
that national oil companies
may have in shaping its future.
01 02
03 04
05 06
07
3: IFRS in the Oil and Gas

industry analyzes the accounting
policies and disclosures of
33 oil and gas companies
from 14 countries that applied
International Financial Reporting
Standards or IFRS equivalents
in their 2007/2008 annual
reports. The survey highlights
not only areas in which IFRS
has been applied with reasonable
consistency by the industry;
but also areas in which nuances
of a companys previous GAAP
has been carried through to its
IFRS accounting policies and
disclosures.
4: SEC Modernizes Oil and Gas

Reporting: The US Securities
and Exchange Commission
(SEC) adopted a final rule
on December, 2008, to revise
oil and natural gas reserves
reporting requirements. This
publication discusses the SECs
final rule and provides in-depth
discussion on several important
issues and key concepts.
5: Canada will move from
GAAP to adopt IFRS for public
companies by 2011 to enable
Canadian companies expanded
access to international financial
markets. However, the oil and
gas industry in Canada may
encounter complex IFRS
accounting issues. Illustrative
Financial Statements Canadian
Full Cost Oil and Gas Industry
demonstrates one possible
format for IFRS financial
statements for a fictitious junior
to medium-sized upstream oil
and gas company in Canada that
previously applied the full-cost
approach under Canadian GAAP.
6: Procurement in Oil & Gas,
published by KPMGs Global
Energy Institute, focuses on
procurement in the oil and gas
industry and highlights trends
and tools as well as issues and
challenges in both up-stream
and down-stream sectors of
the industry.
7: The Real Oil Crisis discusses
the era of expensive oil, the
uncertainties that are shaping
government policy, and how
businesses should evaluate their
supply chain and energy portfolio.
40
8: Fighting Fraud discusses the

impact the economic downturn
is having on companies.
Regulators are on high alert
and are increasing their levels
of scrutiny and inquiry. The
propensity for commercial loss
and damage to a companys
reputation has increased
significantly as businesses
have become more complex
and global while operating
in an increasingly regulated
environment.
9: Accounting for Carbon
discusses the impact of carbon
trading on financial statements.
It provides providing insights and
strategies to help organizations
understand and manage the
business implications of
climate change.
08 09 10
11 12 13
14 15
For a copy of any of KPMGs publications, visit

www.kpmgglobalenergyinstitute.com
10: A global boom is

encompassing infrastructure,
energy and natural resources,
and private building programs.
At the same time, there is
a severe shortage of talent,
limited contractor capacity, and
rapidly rising material and labor
costs. This has helped to shift
a far greater share of contracting
risk to project owners.
KPMG published Adapting
to Complexity: Global Major
Project Owners Survey 2008
to find out how contractors
that are commissioning
large projects are coping
in this environment.
11: KPMG surveyed leading

mining and upstream oil and gas
organizations for their views on
the latest trends, priorities, and
challenges for finance, including
their response to the current
economic turbulence. The
ENR Finance Function Survey
Insights from Leading Finance
Functions found that the current
economic turmoil exposed
shortcomings in areas typically
seen as Finance strengths (cash
flow management, balance
sheet insight, budgeting,
and forecasting). In addition, a
non-standardized approach to
the Finance organization design
at the asset level has added
complexity and cost in a sector
already inherently complex.
12: Chinas Energy Sector:
A Clearer View provides
an overview of each energy
sector including both upstream
and downstream oil and gas,
and oil and gas infrastructure
in the country.
13: The Oil and Gas Sector
Overview in India 2009
provides a comprehensive
summary of the industry,
including discussions on
upstream, transportation
and distribution, retailing,
and LNG.
14: Central and Eastern Europe
has a distinct geography that
makes it crucial for gas transit
into Europe. This and other issues
relating to natural gas in the
region are discussed inKPMGs
Central and Eastern European
Natural Gas Outlook 2008.
15: Todays refining industry
is operating in a unique
environment. Challenges
and Opportunities for Todays
Refining Industry discusses
how crucial it is to understand
current business issues in
order to plan for the future.
kpmg.com
Michiel Soeting
Global Chair Energy
& Natural Resources
KPMG in the UK
T: +44 20 7 311 1000
E: michiel.soeting @kpmg.co.uk
Jimmy Daboo
Global Head of Audit
for Energy & Natural Resources
KPMG in the UK
T: +44 20 7 311 1000
E: jimmy.daboo @kpmg.co.uk
Pamela OLeary
Global Executive Energy
& Natural Resources
KPMG in the UK
T: +44 20 7 311 1000
E: [email protected]
Cathy Lewis
Global Head of Tax for
Energy & Natural Resources
KPMG in the US
T: +1 816 556 1580
E: calewis @kpmg.com
Wayne Chodzicki
Global Head of Oil & Gas
KPMG in Canada
T: +1 403 691 8004
Hilda Mulock Houwer

Global Head of Advisory for
Energy & Natural Resources
T: +27 11 647 7028
The information contained herein is of a general nature and is not intended to address the circumstances of any particular
individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such
information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act
on such information without appropriate professional advice after a thorough examination of the particular situation.
2009 KPMG International. KPMG International is a

Swiss cooperative. Member firms of the KPMG network
of independent firms are affiliated with KPMG International.
KPMG International provides no client services. No member
firm has any authority to obligate or bind KPMG International
or any other member firm vis--vis third parties, nor does
KPMG International have any such authority to obligate or
bind any member firm. All rights reserved. Printed in the UK.
KPMG and the KPMG logo are registered trademarks
of KPMG International, a Swiss cooperative.
Designed by Roundel
Publication name: KPMGs Global Oil and Gas Profile
Publication number: RDL -1955
Publication date: August 2009
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KPMG global energy institute

Global Oil and Gas Profile

This is a time of extraordinary global economic

The following document aims to capture who we

Vision, reputation, and commitment

a leader in the field

KPMGs Oil & Gas practice has one clear vision:

Investing in the sector

KPMG member firms invest

The KPMG Global Energy

Conference: The annual

Shell Oil Company in the US

In addition to giving our

For more information, please visit

Fred Fowler, Group

Executive and President

Chief Executive Officer, NRG

Vision, reputation, and commitment

A conversation with Anthony Lobo, KPMG in the UK

What are the major challenges currently

One of the areas where KPMG firms

KPMG firms are helping our clients

The protectionism of reserves

Whereas the majors previously had the

Developing industry best practice

A conversation with Hilda Mulock Houwer, KPMG in South Africa

How do KPMG firms stay at the

transaction services, business effectiveness,

Hilda Mulock Houwer

These plans have been successfully

Another example is a South African project

being looked after. We looked at it from

Vision, reputation, and commitment

Investing in the sector (continued)

Informing our firms clients

Vision, reputation, and commitment

KPMG member firms oil and gas clients operate

KPMG member firms provide

percent of top 50 oil and gas

percent of oil and gas companies

percent of the largest refining

Abu Dhabi National Oil Company BP (UK)

*Source: KPMG Analysis, July 2009

KPMGs Centers of Excellence

What inspired you to develop KPMGs

In emerging oil and gas countries, the

How were the Centers selected?

offered by the Institute, inviting them

Vision, reputation, and commitment

Oil & Gas Centers of Excellence

KPMG member firms offer

Our Centers of Excellence enable

We have 11 dedicated Oil & Gas Centers of Excellence in key locations

KPMG member firms operate in

Middle East and

The Offshore Group

Vision, reputation, and commitment

A North American perspective

What do you see as the key challenges facing

managing cash flow, and ensuring they

The KPMG Global Energy

In addition to giving our

Fred Fowler, Group

K PMGs Oil & Gas Country