Government-run oil companies in resource-rich countries are increasingly matching the traditional major players in talent and ability, but they still need expertise from oil services firms, the president of Schlumberger's North American division said Wednesday.
Bill Coates added that his industry need not worry about national oil companies adopting their expertise and similarly casting them aside, as long as Schlumberger, Halliburton and others stay ahead on the technology front.
"I think it's incumbent on us to stay one step ahead of it," Coates told a gathering of executives at the Offshore Technology Conference, which winds down today. "The risk of us being pinched out of the market is relatively small."
Once sleeping giants
In the past, national oil companies often were sleeping giants that relied on the Exxon Mobils, Shells and Texacos of the world to develop their resources. But increasingly, government-owned firms are working on the same level as the majors, using their wealth to invest in attractive oil and gas plays beyond their borders, such as the Gulf of Mexico.
But oil field services — from drilling to technical support to providing tools for exploration — remain something both private-sector and national oil companies seek.
Four decades ago, services companies were small and typically niche-oriented, and the big oil companies often performed their duties in-house until they began outsourcing work. That created a bigger oil field services industry with huge, consolidated players who support exploration, production and refining.
In-house improvement
Coates acknowledged that major oil companies may beef up their own oil field services divisions to differentiate themselves as they jockey for access to fields dominated by national oil companies, which now control the vast majority of worldwide reserves.
Neil Bruce, chief operating officer for engineering and project management consulting company AMEC, noted that 14 of the world's top 20 oil companies are government-run. They include PETROBRAS, China National Petroleum Corp. (CNPC), SaudiAramco and StatoilHydro.
"In a lot of cases, they're looking to us to provide — if you look back 30 years — what international oil companies would have provided," Bruce said.
Bruce said AMEC focuses on engineering, project execution, modernization and decommissioning old facilities. Growth areas where national oil companies are seeking help to run more complex projects include the Middle East, India, China, Brazil and the Caspian Sea.
"The opportunities are huge," he said.
Gazprom No. 1
Hesketh Streeter, an analyst with consultancy Wood MacKenzie, said national oil companies' hold on global reserves offers oil field services firms a wealth of opportunity. And in terms of sheer size, he said, Russia's government-run natural gas behemoth, Gazprom, is the world's biggest company in the industry, followed by China National Petroleum Corp with ExxonMobil coming in third. ExxonMobil is the world's largest in terms of revenue, though.
National oil companies will expand their in-house services, but that shouldn't necessarily threaten the industry. Successful oil field services companies "have to think like oil companies," with long-term plans for growth.
A frequent question
So might national oil companies try to buy major players in the services industry? Schlumberger's Coates said he wasn't concerned about it but added that "every other week" he talks to a new Schlumberger hire who asks him whether the company could be acquired.
"They usually work for us an hour before they ask," he quipped.
However, he said technology-oriented oil field services companies like Schlumberger are "asset poor," in that they focus more on people than equipment.
"Anyone who acquires a services company takes an enormous risk because the assets are people and people can leave," he said. "It would be an unusual risk to spend so much money on an asset that is portable." Bruce added that a national oil company would be more likely to make such an acquisition "to accelerate the investment they've got."
Bill Coates added that his industry need not worry about national oil companies adopting their expertise and similarly casting them aside, as long as Schlumberger, Halliburton and others stay ahead on the technology front.
"I think it's incumbent on us to stay one step ahead of it," Coates told a gathering of executives at the Offshore Technology Conference, which winds down today. "The risk of us being pinched out of the market is relatively small."
Once sleeping giants
In the past, national oil companies often were sleeping giants that relied on the Exxon Mobils, Shells and Texacos of the world to develop their resources. But increasingly, government-owned firms are working on the same level as the majors, using their wealth to invest in attractive oil and gas plays beyond their borders, such as the Gulf of Mexico.
But oil field services — from drilling to technical support to providing tools for exploration — remain something both private-sector and national oil companies seek.
Four decades ago, services companies were small and typically niche-oriented, and the big oil companies often performed their duties in-house until they began outsourcing work. That created a bigger oil field services industry with huge, consolidated players who support exploration, production and refining.
In-house improvement
Coates acknowledged that major oil companies may beef up their own oil field services divisions to differentiate themselves as they jockey for access to fields dominated by national oil companies, which now control the vast majority of worldwide reserves.
Neil Bruce, chief operating officer for engineering and project management consulting company AMEC, noted that 14 of the world's top 20 oil companies are government-run. They include PETROBRAS, China National Petroleum Corp. (CNPC), SaudiAramco and StatoilHydro.
"In a lot of cases, they're looking to us to provide — if you look back 30 years — what international oil companies would have provided," Bruce said.
Bruce said AMEC focuses on engineering, project execution, modernization and decommissioning old facilities. Growth areas where national oil companies are seeking help to run more complex projects include the Middle East, India, China, Brazil and the Caspian Sea.
"The opportunities are huge," he said.
Gazprom No. 1
Hesketh Streeter, an analyst with consultancy Wood MacKenzie, said national oil companies' hold on global reserves offers oil field services firms a wealth of opportunity. And in terms of sheer size, he said, Russia's government-run natural gas behemoth, Gazprom, is the world's biggest company in the industry, followed by China National Petroleum Corp with ExxonMobil coming in third. ExxonMobil is the world's largest in terms of revenue, though.
National oil companies will expand their in-house services, but that shouldn't necessarily threaten the industry. Successful oil field services companies "have to think like oil companies," with long-term plans for growth.
A frequent question
So might national oil companies try to buy major players in the services industry? Schlumberger's Coates said he wasn't concerned about it but added that "every other week" he talks to a new Schlumberger hire who asks him whether the company could be acquired.
"They usually work for us an hour before they ask," he quipped.
However, he said technology-oriented oil field services companies like Schlumberger are "asset poor," in that they focus more on people than equipment.
"Anyone who acquires a services company takes an enormous risk because the assets are people and people can leave," he said. "It would be an unusual risk to spend so much money on an asset that is portable." Bruce added that a national oil company would be more likely to make such an acquisition "to accelerate the investment they've got."
Source: Houston Chronicle| by KRISTEN HAYS
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