Citi Perspectives Fall 2019

Citi Perspectives  | 25 24 | Treasury and Trade Solutions DISCOVER & FIND REPEAT DECISION SERVICE USAGE ONBOARDING Engagement Client Experience Understanding Expressed and Unexpressed Client Needs Providing Clients with Digital Solutions Powered by Data We are making it Easier for You to Do Business with Us through Digital 2-Day Onboarding Multifaceted and Responsive to Client Needs through Digital Channels Client Service Experience Transformation Digital Marketplace, Solutions and Modeling Share Price Acquisition of License/Block Seismic Exploration, Surveys & Appraisal EAs, FEED, EPCM FID Development Acquisitions Takeover/ Defense 1 2 3 8 7 6 5 4 Production Due Diligence & Prequalification Exploration Construction Development Capital Intensive Capex Funding Cash Generation √ Account Services √ Payment Services √ CitiDirect BE √ Commercial Cards √ Investment Options for Cash √ Bid Bonds √ Performance Bonds √ FX Exposure Management √ Debt Capital Markets √ Equity Capital Markets √ Export Credit Agencies √ Project Finance √ Escrow Agency Services √ Trustee & Paying Agent √ RBL √ Liquidity Management √ In House Bank √ Trade Services √ Export LCs & Bills √ Receivable Financing √ Supplier Finance √ Treasury Vision 3-5 years 4-10 years 1-7 years 10-30 years It is possible that not all the products listed in the above exhibit are available in all Latin America’s countries. Mexico Following energy reforms in 2014, Mexico’s energy play became more attractive. These reforms opened the country’s energy sector to private investments and ended a seven-decade monopoly of its state oil firm Pemex. Since then, Mexico has seen billions of dollars pour into the country in pledged investments as private companies returned to the country to take part in the expansion of Mexican oil production. Under the AMLO (Andres Manuel Lopez Obrador) administration there is a reconfiguration of how much private participation will be allowed in some segments of the energy space. As in all periods of reform, some areas might offer significant opportunities. As a result of Mexico’s past successes in attracting private capital for the retail sector, competition has increased, as well as the availability of natural gas coupled with a decrease in the price of electricity. Mexico’s energy play involves downstream, midstream and upstream exploration environments. Opportunities have been strongest in the downstream sector where over 30 private companies have settled in the past five years. On upstream and midstream, some of the largest oil and gas companies in the world participated in three successful bidding rounds that involved $9.5 billion in investment commitments. Now, these opportunities are on hold as the new administration decides how to go forward. “For the first time in decades, Mexicans can choose between different retail gasoline and diesel providers at gas stations. The market has definitely opened up for players to stimulate investment and competition.” — Ernesto Revilla The current administration has presented a strategy to strengthen Mexico`s national oil company, Pemex, through tax breaks and capital injection. It has also decided to attract private investments with service contracts, another option to invest in the energy sector. Pemex’s business plan calls for a large turnaround of the company in the following years, and even if farm-outs and joint ventures have been cancelled for the moment, there will be inherent opportunities as the outlook improves. 10 Along your journey with us: Embracing the digital transformation With a presence in 23 countries, Citi has the largest banking coverage in Latin America. Having been in several countries for over 100 years has enabled Citi to develop deep knowledge and insights to be the best for our clients by supporting them locally, regionally and globally, underpinned by a single, global technology platform. In the energy industry, Citi draws on its deep experience working with oil and gas companies and supporting them through their life cycle approach — from investment to production. 1 Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (ANP), “E&P Sector in Brazil”: http://www.anp.gov.br/images/Palestras/reunioes_ investidores_2018/PPT_ANP_Decio_Oddone_Calgary_January_2018.pdf 2 Reuters, “Latin American nations compete for capital in surge of oil auctions”: https://ca.reuters.com/article/businessNews/idCAKCN1H90UJ-OCABS 3 Reuters, https://www.reuters.com/article/us-petrobras-auction-explainer/explainer-brazils-transfer-of-rights-oil-area-whats-next-idUSKCN1RM2OK 4 Agencia EFE, “Vaca Muerta shale formation could be key to Argentina’s economic development”: https://www.efe.com/efe/english/business/vaca-muerta- shale-formation-could-be-key-to-argentina-s-economic-development/50000265-4016180 5 Oil and Gas Journal, “Capital investment continues to increase in Latin America”: https://www.ogj.com/home/article/17222790/capital-investment- continues-to-increase-in-latin-america 6 The New York Times, “The $20 Billion Question for Guyana”: https://www.nytimes.com/2018/07/20/business/energy-environment/the-20-billion-question- for-guyana.html 7 Reuters, “Seven companies bid for eleven contracts in Colombia oil auction”: https://www.reuters.com/article/us-colombia-oil-auction/seven-companies- bid-for-eleven-contracts-in-colombia-oil-auction-idUSKCN1T52J4 8 Statista, “Distribution of proved natural gas reserves worldwide from 1992 to 2018, by region”: https://www.statista.com/statistics/273584/distribution-of- natural-gas-reserves-by-region/ 9 IBRD/World Bank, 2017 (refers to 2014 figures) 10 Citi Research