Oil and Gas Execs Say Focus on Renewable Energy Sources Key to Addressing Declining Oil Reserves, KPMG Survey Finds But Mass Production of Renewable Fuel Not A Near-Term Possibility, Say 60

Percent

60 Percent Believe Trend of Declining Reserves is Irreversible



    HOUSTON, May 11 /PRNewswire/ -- Oil and Gas Executives say government
 involvement in supporting the development of renewable energy sources is
 necessary to alleviate the problem of declining oil reserves, according to
 the results of a survey conducted by KPMG LLP, the audit, tax and advisory
 firm.
     In the KPMG survey, which polled 553 financial executives from oil and
 gas companies in April 2007, twenty-five percent of the respondents said
 that at least 75 percent of government funding into energy should be
 directed at the renewable sources sector and a further 44 percent said that
 at least 50 percent of funding should be allocated in the same way. These
 feelings stem from the overwhelming majority, or 82 percent, citing
 declining oil reserves as a concern.
     "These executives are deeply concerned about declining oil reserves, a
 situation they see as irreversible and worsening," said Bill Kimble,
 National Line of Business Leader, Industrial Markets for KPMG LLP. "They
 see renewable energy sources as a lifeline but our survey shows that the
 execs recognize they cannot count on them as a solution in the short-term.
 Consequently, oil and gas companies are sending a clear signal to the
 government that intervention is needed."
     While oil and gas executives are keen to see renewable energy sources
 becoming a mass produced reality, 60 percent say that will not be possible
 by 2010. Of those that believe it will, 18 percent say ethanol is the most
 viable for mass production by then, 13 percent say biodiesel and only 3
 percent say cellulosic ethanol.
     Sixty percent of the executives believe that the trend of declining oil
 reserves is irreversible. And, when asked about the impact of emerging
 markets, such as China, will have on declining oil reserves, almost 70
 percent of the executives said that it would lead the situation to worsen.
     The executives also clearly see that there are steps that individuals
 can take to alleviate the issue of declining oil reserves.
     "One-third of oil and gas executives questioned said that the next time
 they are purchasing a family car they would consider one that consumes less
 gasoline, such as a hybrid," said Kimble. "They clearly see demand-side as
 part of the solution to declining oil reserves."
     When executives were asked about their upstream capital spending in the
 2006 survey, the majority indicated that investment will be a factor in
 helping them manage declining oil reserves. Sixty-nine percent said that it
 would increase by more than 10 percent, a jump of 49 percent over 2005. The
 2007 survey suggests that increases in spending are flattening, with 35
 percent saying they expect and increase of more than 10 percent, 19 percent
 saying they expect an increase of up to ten percent, and 38 percent say it
 will stay the same. Only seven percent expect to see a decrease.
     Mergers and acquisitions continue to be a trend, with 24 percent of the
 executives saying that they expect their company to be involved in one in
 the next year -- a three percent increase over last year's survey. Sixty
 eight percent of respondents expect private equity to play a larger role
 over the next year than it has in previous years.
     As financial executives, the respondents put a great deal of their
 focus on the risks facing their companies. Forty-four percent say that the
 biggest risk facing their company at this time is financial; such as
 satisfying news regulatory requirements and shareholder demands. The next
 biggest risks cited, at nine percent each, were "political unrest in
 certain countries in which your company has operations" and "insufficient
 access to drilling rigs".
     Other Findings
     Sixty-five percent of the respondents say that while they believe
 global warming is occurring, it is a natural weather cycle, and 11 percent
 say that they do not believe it is occurring. Just under a quarter believe
 CO-2- induced global warming is occurring.
     KPMG will be discussing these survey results during its Fifth Annual
 Global Energy Conference, the event for financial executives in the oil and
 gas industry on May 22nd and 23rd at the Intercontinental Hotel in Houston.
 This year's keynote speakers will be William H. Donaldson, the 27th
 Chairman of U.S. Securities and Exchange Commission and David Crane,
 President and Chief Executive Officer, NRG Energy, Inc.
     The conference will address global issues and will feature leaders in
 the industry from around the world. Topics that will be addressed include:
 Business Challenges Facing Today's Energy CEO; Alternative Energy -- The
 Real Story; and Utilizing Tax Incentives in Alternative Energy Projects.
 Please see the conference website for more information
 www.kpmgglobalenergyconference.com.
     KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com), is the
 U.S. member firm of KPMG International. KPMG International's member firms
 have 103,000 professionals, including 6,700 partners, in 144 countries.
     Contact: Sam Azzouni
              KPMG LLP
              Tel: (201) 307-8386
 
 

SOURCE KPMG LLP

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