September 4, 2007
IOCs in search of a role
At Offshore Europe in Aberdeen, the biggest oil and gas trade show outside the US, the dominent theme has been the struggle for international oil companies to find a role for themselves in a world where governments and national oil companies control the resources, and services companies very often control the skills and the technology.
Malcolm Brinded, Royal Dutch Shell’s executive director of exploration and production, and Robert Olsen, chairman of ExxonMobil International, came up with very similar answers: the IOCs need to offer the most advanced technology and the most sophisticatred skills, especially in project management, or they are dispensible. As Mr Brinded put it, the oil majors are not needed by resource-rich countries any more, so they have to make themselves wanted.
The most interesting take, though, came from Xavier Preel of Total, who talked about his company’s vision of "a new relationship with governments and national oil companies" based on "mutual understanding and respect". He made it very clear that that as far as Total was concerned, there was no argument over who had the upper hand in that relationship.
It is all a long way from John D Rockefeller. Still, in the case of the recent Shtokman deal with Gazprom, for example, it appears to work. (FT stories require subscription.)
If anyone needed a reminder of the way things are going, Algeria helpfully gave Repsol a slap in the face on Monday. And in remarks the FT reported back in June, its government has made very clear the way it believes the industry is going.
However, one of the crucial issues in Algeria’s decision on the Repsol gas project seems to have been the cost overruns and delays that have hit it. An IOC might have the silkiest diplomatic skills in the world, but if it cannot deliver projects on time and on budget and delivering the returns that its partner expected, it will be in trouble.
