Global Oil & Gas Industry Entering Phase of Darwinian Competition

Share Article

Panel members at The Oil Council’s May 12 press briefing in London cite securing resources, technological evolution and risk management as key factors changing the current oil and gas landscape.

News Image

Past News Releases

RSS

The Oil Council, the world’s leading network for business development within the global oil and gas industry, today announced the findings from it’s May 12 press briefing held in London, UK. According to participants of the briefing organized by The Oil Council and Willis Global Energy, the oil and gas industry is in a period of Darwinian competition where survival will be determined by those most able to adapt to the rapidly changing landscape.

Speaking at the briefing were Dougie Youngson, Director, Oil & Gas, Arbuthnot Securities; Gavin Graham, Executive Vice President, Petrofac Energy Developments; Laurie McFadden, Partner and Co-Head, International Energy and Natural Resources, Freshfields; Mike Karaiskos, Director, Energy and Resources, Deloitte; and Tim Chapman, Managing Director and Head, International Energy, RBC Capital Markets.

The mission to secure oil resources, driven chiefly by Asian NOCs who are long on dollars and short on reserves, was cited as the dominant feature of the current oil and gas climate. Mike Karaiskos said that KNOC’s hostile takeover of Dana Petroleum last year, though unprecedented, was just the beginning of the shopping list. “We see them at every auction, they are backed by deep pools of capital, and they are able to pay prices no one else can pay” said Laurie McFadden, “the question is, how will IOCs react?”

Dougie Youngson said IOCs must adopt an ‘if you can’t beat them, join them’ attitude, anticipating many more JVs between IOCs and NOCs as the latter seek to gain access to new technologies and expertise, especially regarding shale gas and deepwater exploration. Tim Chapman agreed, saying that oil companies are now using NASA-like technology in unconventional plays, citing innovation and technology advancements as key components to new industry growth.

Alongside this technology evolution, IOC business models are similarly developing as they are forced to adapt their strategies in light of fiercer competition. “IOCs have to figure out what’s in their black box that will reward shareholders,” said Chapman. That black box isn’t just technology, but also proven management, skilled workforces, and operational expertise that NOCs are keen to secure through partnerships.

The panel also highlighted the increasing influence of risk management in the decision making processes of O&G boardrooms with increased industry regulation post-Macondo, heightened environmental concerns surrounding shale gas and oil sands extraction, resource nationalization and fiscal regime volatility, which is happening all over the world, not just in the North Sea. Whereas companies used to just ask ‘how do we do this transaction?’ increasingly they want to know ‘how do we manage this risk?’ said McFadden.

Despite this, and with the volatility of oil prices and the uncertain outlook for global growth, there was a buoyant mood amongst the panel about the way new frontiers and new technologies are furthering industry growth and creating large commercial opportunities. “A company like EnCore Oil shows us that a small, AIM-listed company can take on the big boys and win,” said Youngson. Furthermore, there existed a broad and well-capitalized investor base and supportive debt market that was ready to fund the right IPOs or M&A deals, it might not be the glory days of 2007, but confidence is certainly alive and strong in the sector.

As concluded by Gavin Graham in this Darwinian world it isn’t survival of the strongest but the survival of the most adaptable that will matter.

About the Oil Council
The Oil Council is the single most important network for business development within the global oil and gas industry. Its 365 days a year platform promotes knowledge and thought leadership, acting as a conduit between the international energy, finance and investment communities. The Council’s world-class network of senior executives gather regularly across the globe to examine the business dynamics of oil and gas. Through e-media, customized business development programs, annual Assemblies and networking functions The Oil Council tackles key business challenges, champions best practice, develops strategic affiliations and showcases new investment opportunities.

###

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Jay Morakis
JMR Worldwide (for the Oil Council)
212-786-6037
Email >
Visit website