Uchenna Izundu
International Editor
LONDON, Feb. 18 -- National oil companies are delivering higher levels of growth in market capitalization compared with international oil companies, and new models of collaboration are necessary to deliver secure and sustainable energy supplies to the global market, speakers told delegates at International Petroleum Week in London.
In 2007 NOCs held 65% of the world's reserves, offering limited equity access, according to Robin West, chairman of consultancy PFC Energy. Full IOC access to reserves was 7%. "It's their oil," West said, "and this is the new reality."
By 2030, global energy demand is expected to increase by 40% compared with 2008—driven mainly by economic growth and population increases in developing countries, according to ExxonMobil Corp. figures. The growth of the transportation sector will account for the rise over the next 2 decades, with oil remaining a crucial part of the energy mix.
Because of high oil prices, producing countries are awash with cash and are confident about developing energy projects without the assistance of IOCs. However, they are seeking technology transfers, skills training, infrastructure support, and economic development.
Tighter fiscal regimes are making it more difficult for IOCs to propose economically attractive projects. West called on IOCs to find ways to align themselves with building the gross national products of their host governments in accessing new resources. He told OGJ that BP PLC has found ways to develop the infrastructure in Azerbaijan to help grow its economy.
But many nationals from producing countries want their countries to diversify from the oil sector to drive economic growth. "BP has a commitment to use local content," said Peter Manoogian, president of BP Exploration Libya. "The petroleum industry draws on other industries to help it diversify from oil. We want to enhance the supplier side of the business to help other industries."
For Robert Olsen, chairman of ExxonMobil International Ltd., national content initiatives can happen successfully in a free market under a national business plan that creates educational and development opportunities. "There must be a commitment to contract sanctity and taking a long term strategic approach to national content."
Olsen noted that IOCs bring project capability and leading technology to implementing oil and gas projects. They need host nations to provide a stable political and economic environment to attract investment. NOCs, on the other hand, bring a unique understanding of their natural resources.
Leveraging strengths and experiences are critical, according to Khalid G. Al-Buainain, senior vice-president of refining, marketing, and international at Saudi Aramco. "The IOCs involvement will be vital in areas where you don't have skills." Aramco is eager to foster industrial clusters around the downstream elements of its petroleum chain, focusing on increasing the volume of its refined products.
Contact Uchenna Izundu at [email protected].
