Uchenna Izundu
International Editor
HOUSTON, May 7 -- Business with national oil companies (NOCs) is certain to grow over the next 5 years according to 64% of attendees at the Offshore Technology Conference's Energy Roundtable May 7 in Houston, voting that they believed this would happen.
But a lack of trust between international oil companies (IOCs) and NOCs could threaten this new dynamic, hindering oil and gas investment, agreed the same number of attendees at the roundtable.
Global energy demand is expected to rise by 1.2%/year until 2030 with NOCs and IOCs committed to meeting those needs: hydrocarbons will have an important role in doing so.
Oil executives on the panel agreed that there was a new energy equation encompassing constrained supplies, steep growth in the world's energy demand, geopolitical tensions, and new challenging energy resources such as oil sands.
Lack of trust
Patrick Poyanne, senior vice-president of strategy, business development, and research and development at Total SA, said IOCs and NOCs should cooperate because IOCs have operational excellence and offer a diversified experience in handling large and complex developments. However, Poyanne also acknowledged that IOCs need to address the socioeconomic needs of producing countries and boost the intellectual capacity of its people.
"There is a lack of trust now between NOCs and IOCs. NOCs feel that IOCs benefit from excessive profits. We accept that contracts can be revised in today's market, but it needs to be on a win-win basis," he said.
Increased competition between NOCs, IOCs, and independent exploration and production companies for acreage necessitates a focused and disciplined strategy, said Jean Claude Gandur, president and chief executive of Addax Petroleum. "Resource pressures include personnel, service providers, and capital."
But tensions are developing in some producing nations where its citizens are demanding an improved standard of living and economic growth rather than their governments focusing on export markets.
Emmanuel Egbogah, special advisor to Nigeria's president on petroleum affairs, said that security of demand and supply are complementary, and it was necessary to strike the right balance between local demand and high values in the export markets. Nigeria is changing its stance by aggressively monetizing its gas resources under its Gas Master Plan for the domestic market.
"The domestic market's demand is expected to be at 10-11 bcfd by 2010, but supply will be at 4 bcfd and export demand at 25 bcfd. This unprecedented growth is due to the power and LNG export capacity," he said.
Robert Ryan, vice-president of global upstream exploration at Chevron Corp., was optimistic that oil companies can meet growing global demand provided it can find new ways to enhance recovery from mature fields, deliver technological breakthroughs in the deep water and ultradeep water, and turn to unconventional resources.
"We have always had limited access, remote locations, technological challenges, and escalating costs," he said. "These are all relative because one of these factors has always been a problem at some point, but we have found ways to overcome them."
Personnel shortage
Meanwhile, Thierry Pilenko, chairman and chief executive of Technip SA, warned that megaprojects will take longer to implement because of a shortage of experienced management. There were 190 major projects worldwide in 2008 that have an average size of 1.6 billion boe and require investments of $8.7 billion, according to a report by Goldman Sachs. Most of the reserves will come from deep and ultradeep water, which poses significant technological challenges.
"As the complexity of project rises, soft skills and attitudes will make the difference as well as the finance and technical skills," he said.
Greater societal and governmental pressure on oil companies to reduce emissions and stem climate change means that they must become more transparent in their practices, predicted Mark Lee, chief executive of industry think tank SustainAbility. Oil and gas prices are likely to be volatile, with export quotas and resource nationalism all having an impact on energy supplies.
"Leadership from the industry needs to become more sophisticated," Lee said, "and I think there will be a massive technological acceleration until 2050, particularly in alternative energy."
Contact Uchenna Izundu at [email protected].
