The greatly changed role of the NOCs over the past 10 years was a prominent theme as speakers acknowledged that NOCs hold the majority of the world"s energy resources and are increasingly exerting control over which foreign companies help them to develop those resources and on what terms.

Olufisoye O. Delano, Managing Director of the Nigerian Petroleum Development Co. (NPDC) said NOCs are similar to other commercial companies but focus on delivering energy to their host countries and helping those countries increase economic growth. "We don"t expect international oil companies (IOCs) to do that as they have a different agenda," he said. "They will be committed to the GDPs of their own countries."

Delano said NPDC has seen different markets emerge such as the Middle East and the Far East, when 30 years ago Nigeria dealt primarily with the West. A key challenge for NOCS will be meeting domestic supply needs that will compete with exports, he said. "Customers are now driven by market issues and security of supply," Delano said.

Only 15% of delegates said IOCs will determine the future rules of doing business in energy, followed by 12% voting for those with breakthrough technologies, and 3% asserting it would be owners of assets, rigs, and large vessels.

Two main trends facing NOCs are shaping the way they do business, said Clay Sell, deputy secretary of the US Department of Energy. "Their governments see them as cash cows to gain revenues to invest in other social programs; they focus on control of the reserves and prohibit others from coming in to develop them."

For Jesús Reyes-Heroles, director eneral at Mexico"s state owned oil company Petroleos Mexicanos, the challenge facing NOCs is developing the financial resources to meet opportunities within the market. He said there is now mature and diverse discussion within Mexico"s congress about how Pemex should evolve that wasn"t possible 10 years ago. Reyes-Heroles added that the future of Pemex would become clearer in 2013 once the current administration ends its term.

Mexico"s constitution does not allow foreign ownership of its oil and gas resources. Pemex also paid high taxes equal to 60.8% of total sales to the government, which crippled its ability to invest in expanding exploration and production of its most promising—but costly to develop-structures, maintain its infrastructure, and reduce its debt (OGJ Online, June 5, 2006). The government has now adjusted the tax regime to tax profits rather than its revenue as in the past.

"We don"t anticipate in the short term to have any private E&P companies come in, but there could be interesting opportunities in the downstream in the future," Reyes-Heroles said.

Mexico is producing 2.1 million b/d of oil and expects to expand its refining capacity within the next few years. "There is very little that can be done," Reyes-Heroles said. "We import a third of our [petroleum products] and in Mexico the reduction of imports when our new refining capacity comes onstream will ease up supply elsewhere in the market."

With IOCs being increasingly pushed towards just managing reservoir risk, it is likely that they will no longer have operator roles in projects. This will be transferred instead to service companies as NOCs have access to the reserves, asserted Peter Goode, executive chairman of Aibel Group. "Service companies will continue to encroach on IOCs—they carry the burden of technical development, responsible for capital investment in equipment and operations personnel. Consolidation will accelerate within the services sector," he said.

PIN/OGJ.COM