OTC: Technology will help shape relationships with NOCs

Innovative technologies will be the key competitive advantage for service and supply companies to develop fruitful relationships with NOCs, according to speakers at the UK Trade and Investment's breakfast panel May 7 in Houston.

May 8, 2008

2 min read

Uchenna Izundu
International Editor

LONDON, May 8 -- Innovative technologies will be the key competitive advantage for service and supply companies to develop fruitful relationships with national oil companies (NOCs), according to speakers at the UK Trade and Investment's breakfast panel May 7 in Houston. The panel was part of this year's Offshore Technology Conference.

Bill Coates, president of Schlumberger North America, said the relationship between NOCs, international oil companies (IOCs), and service and supply companies have changed. NOCs are turning to service companies instead of IOCs, Coates said, to help develop their resources. Service companies are spending more on research and development than IOCs, which will help them to better play the market with NOCs. For example, Schlumberger is now seeking to improve its understanding of reservoirs and shale gas to offer better services to the operators.

"Over the past 5 years, 42 NOCs have increased their [spending] with Schlumberger by 350%. With 500 independents, revenue spend has gone up 300% and 6 IOCs have increased their [spending] with us by 200%," Coates said.

Coates warned that the oil and gas industry faces a serious threat of under-investing in developing sources of supply to meet the global demand growth projected at 50-60% by 2030.

Of the top 20 oil companies in the world, 14 of those are state-owned, demonstrating that they have moved from being caretakers of their country's assets to operating them.

More than 80% of the world's known oil and gas reserves are controlled by NOCs. But IOCs can offer NOCs great project management experience and financial capability.

"Cost effective solutions will be of importance for [NOCs]," said Chuck Hauf, president of Challenger Minerals Inc.

Neil Bruce, chief operating officer at AMEC, said service and project management companies will need to define their differentiator and help add value to NOCs' operations. Within the past 8 years, its NOC client base has grown considerably because of its project execution experience. "The frontier regions will be done in Brazil, India, Caspian, Russia, China, West Africa, and the Middle East with the NOCs primarily," he said.

Contact Uchenna Izundu at [email protected].