By Claudi Santiago
President and CEO
GE Oil & Gas

New realities

In 2008, the global population will consume 135 million barrels of oil equivalent per day, and this demand is expected to increase by approximately 2% each year. At the same time, resources currently in production are declining while emerging resources pose greater technical challenges than ever before. With very few exceptions, the easy sources of oil and gas are gone. New reserves are located in harsh environments, distant from the markets where they are required; far offshore or subsea; extremely sour or acidic; or in forms that, until very recently, were impossible to convert into marketable products. Compounding these complexities, all industries and all people around the world are facing environmental challenges unlike any in history.

New responses

In the supply chain, 80% of current expenditures are devoted to sustaining existing production, which is why the industry needs to grow. And this new version of growth is just as much about different as it is about bigger.

Over the past decade, GE’s Oil & Gas business has been reshaping itself to align with new market realities. Today, we have a broader and deeper perspective than we’ve ever had in the past or than any of our competitors do now. Our 10,500 employees support more than 800 customers in 103 countries across all segments and applications of the industry, from upstream to downstream, on land and far below the sea.

For more than 100 years we have been pushing technology boundaries to deliver leading-edge solutions no matter what the challenge. As part of GE’s global network of businesses, our access to boundary-breaking technology and talented people is virtually unmatched. But we don’t just look inward for inspiration. Many of our most significant technology and service breakthroughs are a result of visionary partnerships with our customers. In the past year we’ve introduced a new riser system for deepwater drilling – fully automated to increase personnel safety and reduce connection time. We are pioneering subsea processing and continue to lead the way in subsea wellhead systems, having just supplied 17 for greenfield developments in Norway. Our technologies enable processing of the most sour and acid gas and we have proven incredible equipment capacities for LNG applications. The list goes on.

New expectations

In this most recent decade, we have also been pushing past other traditional boundaries – moving more of our resources closer to our customers all around the world so we can improve both the quality and speed of our services. We are investing in more economies and providing more new local employment opportunities wherever we do business.

One of the most important benefits of all this activity is greater efficiency for our customers. They get a wider range of products, services and integrated solutions – all from a single source that’s practically right next door. Significant reductions in administrative, project management and installation coordination time can have our customers’ new facilities up and running faster than ever before.

Environmental responsibility continues to be a major focus, not only for us but for the entire oil and gas industry. GE’s ecomagination program is our long-term commitment to produce products and services that enable business and nature to progress and prosper side by side. I am proud to announce that yet another GE Oil & Gas product, the new Integrated Compressor Line, just received ecomagination certification.

New optimism

We only grow by helping our customers grow in the face of much rapid change and uncertainty. So, as we have been doing for more than a century, we will continue to invest significant resources researching and developing new technologies, processes and services to meet today’s new realities. We believe in the strength of emerging markets and in the strength of our people and technologies to reach new levels of productivity despite any challenge. We believe in the oil and gas industry, and we remain 100% focused on its success.

The road ahead may be very different from the one we’ve travelled so far – but we look forward to every turn and are confident that together, we will reach our destination.
Thank you for taking part in this year’s Annual Meeting. I wish you all the best in 2008.