Changing Market Offers Opportunities for Oil Companies

Changing Market Offers Opportunities for both Independent and National Oil Companies, Say Experts

• NOCs control 90% of world’s oil reserves and 75% production, World Energy Congress hears
• Ex-BP CEO says supermajors were slow to address rising commodity prices

World Energy Congress, Daegu, Korea, 15 October 2013: The resource ownership map has changed dramatically to the benefit of National Oil Companies (NOCs) and International Oil Companies (IOCs), speakers at the World Energy Congress said on Tuesday.

NOCs now control approximately 90% of the world’s oil reserves and 75% of production as well as many of the major infrastructure systems. In addition, an estimated 60% of the world’s undiscovered reserves lie in countries where NOCs have privileged access to reserves.

Tom Choi, natural gas market leader for Deloitte MarketPoint LLC, said a variety of factors have driven the changing market. The role of independents has increased as technology has improved and capital has become more widely available. NOCs, meanwhile, have increasingly ventured beyond their borders, acquiring assets in other countries.

Tony Hayward, the Executive Director and CEO of Genel Energy and former Group Chief Executive of BP, said four factors contributed to the success of independents in the past decade. High gas prices gave independents the momentum to attract capital, the companies had the clever technology know-how to tap into North America’s shale gas, and many had an entrepreneurial spirit, seeing a necessity in taking risks in order to survive.

Additionally, the “supermajors”, or the world’s largest oil companies, were sluggish in addressing rising commodity prices in the past decade. That gave independents the space to jump in and find solutions. Independents have also gone beyond the North American shale oil and gas boom, leading the way in East and West Africa, Brazil, and Kurdistan. “That’s an extraordinary set of successes,” he said.

The speakers also explored the role of NOCs in the global marketplace, plotting their international expansion. China stands out. The country’s state-owned enterprises (SOEs) have the political backing and drive to take risks in overseas markets.

Yet despite talk of NOCs going international, the majority linger on their home turf, restricted by the political considerations of their governments. Many NOCs have another strength: they are often repositories of unique technical expertise to work in their own regional and environmental conditions. Brazil’s Petrobras, for example, is strong in deep-water subsalt projects, Hayward concluded.

About the World Energy Council (WEC)
Founded in 1923, the World Energy Council is the only truly global and inclusive forum for thought-leadership and tangible engagement committed to our sustainable energy future. Our network of 93 national committees represents over 3,000 member organizations including governments, industry and expert institutions. Our mission is to promote the sustainable supply and use of energy for the greatest benefit of all. The World Energy Congress is the world's premier energy gathering.

Further details at www.worldenergy.org and @WECouncil

About the World Energy Congress
The World Energy Congress is the triennial flagship event of the World Energy Council. It has gained recognition since the first event in 1924 as the premier global forum for leaders and thinkers to debate solutions to energy issues. In addition to the discussions, the event provides an opportunity for executives to display their technologies and explore business opportunities. With the upcoming Congress in Daegu the event will have been held in 20 major cities around the world since its founding.

Further details at www.daegu2013.kr and @WECongress

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