Baker Hughes 2013 Annual Report Download - page 64

2013 Annual Report 34
Activity and Spending Outlook Outside North America - International activity is driven primarily by the oil
and gas price environment, which currently provides attractive economic returns in almost every geographic region
and is strong enough to support major natural gas export projects. Customers are expected to increase spending to
develop new resources and offset declines from existing producing fields, relying on advanced drilling techniques to
support exploration and production activities in deepwater, heavy or viscous oils and tight reservoirs. For 2014, we
anticipate a 10% increase in international rig activity relative to 2013, with improvements anticipated in all
international regions. Areas that are expected to see the largest increases include the Middle East, in particular
Saudi Arabia, Iraq, and the Gulf States; and Asia Pacific, with the largest growth expected in Australia.
Around the world, the drivers of oil and gas commercialization have changed. Within Southeast Asia, there is
an increased focus on exploration and development of oil and natural gas resources to meet high local demand
growth rather than the historic focus on exports. In Africa, traditional growth areas such as Angola and Nigeria are
being augmented by new producers such as Ghana, Uganda, Mozambique and Tanzania. Russia is striving to
maintain 10 million barrels of oil production per day through 2020 by investing in Eastern Siberia and eventually in
technically challenging offshore Arctic deposits. Efforts in Russia at developing tight oil using vertical drilling are
already underway, and the government provided support for pilot projects in 2013 featuring more complex horizontal
drilling and completions. In natural gas, Australia is leading the expansion of LNG export projects, using offshore
gas drilling in the northwest shelf as well as onshore coal-bed methane operations. Large-scale gas pipeline
exports from the Caspian region to China and Europe are expected to grow significantly in the next five years,
spurring drilling for deeper targets, both onshore and offshore, and increased natural gas process plant capacity for
sour gas.
While the development of unconventional oil and natural gas deposits is still in its infancy outside North
America, there is a general consensus that unconventional resources will play a growing role in the future of global
energy supply. Countries taking active steps to develop their unconventional reserves base include Australia,
China, Saudi Arabia and Argentina. However, there is demonstrated interest at ministry and national oil company
levels in defining unconventional resource potential in almost all countries with active hydrocarbon industries.
COMPLIANCE
We do business in more than 80 countries, including approximately 19 of the 40 countries having the lowest
scores in the Transparency International’s Corruption Perception Index survey for 2013, which indicates high levels
of corruption. We devote significant resources to the development, maintenance, communication and enforcement
of our Business Code of Conduct, our anti-bribery compliance policies, our internal control processes and
procedures and other compliance related policies. Notwithstanding the devotion of such resources, and in part as a
consequence thereof, from time to time we discover or receive information alleging potential violations of laws and
regulations, including the FCPA and our policies, processes and procedures. We conduct timely internal
investigations of these potential violations and take appropriate action depending upon the outcome of the
investigation.
We anticipate that the devotion of significant resources to compliance-related issues, including the necessity for
investigations, will continue to be an aspect of doing business in a number of the countries in which oil and natural
gas exploration, development and production take place and in which we conduct operations. Compliance-related
issues have limited our ability to do business or have raised the cost of operating in these countries. In order to
provide products and services in some of these countries, we may in the future utilize ventures with third parties,
sell products to distributors or otherwise modify our business approach in order to improve our ability to conduct our
business in accordance with applicable laws and regulations and our Business Code of Conduct.
Our Best-in-Class Global Ethics and Compliance Program (“Compliance Program”) is based on (i) our Core
Values of Integrity, Performance, Teamwork, Learning and Courage; (ii) the standards contained in our Business
Code of Conduct; and (iii) the laws of the countries where we operate. Our Compliance Program is referenced
within the Company as “C2” or “Completely Compliant.” The Completely Compliant theme is intended to establish
the proper Tone-at-the-Top throughout the Company. Employees are consistently reminded that they play a crucial
role in ensuring that the Company always conducts its business ethically, legally and safely.