ConocoPhillips Chief Executive Officer James J. Mulva said energy independence is a popular topic in the US, but believes that energy interdependence among worldwide energy companies is a more realistic goal.
“We believe it is unrealistic to believe the US can become energy independent,” Mulva said Mar. 1 in a speech at Rice University’s Baker Institute in Houston. His speech was part of a 2-day conference on national oil companies (NOCs).
Bader al-Khashti, chairman and managing director of Kuwait Foreign Petroleum Exploration Co. (Kufpec), and Victor Zhikai Gao, senior vice-president and general counsel-company secretary of CNOOC Ltd., also spoke at the conference.
In separate speeches, al-Khashti and Zhikai Gao each talked of corporate growth plans and the need for cooperation with international oil companies (IOCs).
Mulva said cooperation and collaboration between NOCs and publicly held IOCs is vital. He advocated a supportive government attitude on the part of both producing and consuming nations in order to encourage the massive investments by energy companies that will be needed to fulfill anticipated world oil and gas demand.
US policy
“The US must start sending clear signals to partners around the world that their contribution to energy is vital now and for years to come,” Mulva said, adding that any efforts against allowing foreign investment in the US upstream or downstream sectors “is out of touch with the real world.”
A new model is evolving for NOC-IOC partnerships, Mulva said. Components of a successful partnership include sharing costs and risk, complementary business and technical skills, good relationships, and a commitment to uphold contracts.
“Partnerships must take into account the big picture,” and partners must seek to help each other meet goals, Mulva said. “We believe there are a multitude of ways NOCs and IOCs can work together” in both upstream and downstream projects.
Mulva said NOCs are “in a stronger position to bankroll big projects on their own as well as make acquisitions.” Western “Big Oil” companies no longer necessarily have a lock on technology. “In comparison to NOCs today, Big Oil is not so big.”
CNOOC’s Zhikai Gao said his company’s mission is to become “more and more international” going forward. He expressed disappointment about CNOOC’s failed attempt to buy Unocal Corp.
CNOOC bid $18.5 billion for the US independent, but eventually withdrew its bid in the face of opposition from some US congressional members about a Chinese company buying a US oil company. Chevron Corp. bought Unocal for $18 billion.
“I really do believe CNOOC’s offer was a better deal,” Zhikai Gao said. “It did not go the way we wished, not for commercial reasons, but for other reasons.”
CNOOC believes “greater openness and greater cooperation between one country and another is in the fundamental interests of all the countries, all the consumers,” he said.
Kufpec
Kufpec expects to meet its previously announced goal to produce 100,000 boe/d by 2010. It produced more than 65,000 boe/d at yearend 2005, al-Khashti said. The company has operations in 15 countries including Australia, Egypt, Indonesia, and Pakistan.
“Our presence helps bring economic prosperity,” al-Khashti said. “We are here not only to make oil and gas. We are here to make a profit.”
The company’s strategy calls for continued growth by expanding existing partnerships and also through the creation of new partnerships, he said. Kufpec is considering many possibilities, including Commonwealth of Independent States countries, he said.
“NOCs represent their nations as official and unofficial ambassadors in energy,” al-Khashti said. “Kufpec has successfully carried the Kuwaiti flag into many host governments.”
