Role seen for integrateds as national oil firms grow more dominant

National oil companies will become increasingly dominant, but will need to work with investor-owned integrated firms, panelists said during the US Energy Information Administration's 2009 annual conference on Apr. 7.

April 10, 2009

2 min read

"Even though national oil companies' resource bases continue to grow, they have different priorities. We don't expect integrated oil companies to go away, but we do see them supplying the talent necessary to produce from increasingly difficult formations," said David Knapp, senior editor of global oil markets at the Energy Intelligence Group.

Growth of national oil companies will make it harder to predict supply trends because of their different priorities, observed Eduardo Gonzalez-Pier, executive advisor to the director general of Petroleos Mexicanos (Pemex), Mexico's national oil company.

"As fields grow mature and become more difficult to produce, national oil companies will have to work more closely with service companies and integrated oil companies. That poses a particular challenge in Mexico because of its view of oil as a national resource," he said.

While national oil companies unsuccessfully tried to work with service companies before returning to integrated oil companies as partners, integrateds also are finding that strong national oil companies are their most effective partners, according to Fareed Mohamedi, a partner at PFC Energy.

He predicted that the Organization of Petroleum Exporting Countries may struggle to keep up with world demand. "For us, demand destruction has shifted the day of reckoning by about two years," he said.

Panelists agreed that national oil companies which have adopted more straight-forward business models are doing better than those which have had to follow political agendas. They said that Brazil is doing better than Venezuela and Bolivia, and that Malaysia's Petronas has successfully adopted an industrial approach which is helping it prosper while meeting national goals.

Contact Nick Snow at [email protected]