Opinion
- Editorial- Commentary
STCIC
: The
next level :
Taking energy international
The Government has signalled its intention to establish
an integrated national oil company which will
operate internationally. This announcement
was made by the Prime Minister in March 2007,
when he commented:
“We resisted it in the seventies; we resisted
it in the eighties and nineties and we saw a lot
of countries in similar situations do it. It was
done by Saudi Arabia, Kuwait, Venezuela and others.
The time has come, my dear friends, when T&T
has to consider integrating its oil industry with
the establishment of an integrated oil company
that goes international.”
The establishment of such a company and its mandate
would be one of the most significant strategic
decisions since the decision in early 1992 to venture
into liquefied natural gas (LNG). It is, therefore,
a decision that requires an analysis of the fit
between our domestic strengths and opportunities
in the regional and global energy business.
New Seven Sisters
National oil companies (NOC’s) going international
have been a major trend in the last eight years.
The February 2008 issue of the Petroleum Economist
notes that in 2000 there were only a handful of
NOC’s with operations outside their home
country.
At present, that number is around
40. In addition, of the world’s top 100
oil companies, 46 are state-owned and of these,
36 are state-controlled.
These 36 companies are responsible for 61 per cent
of the oil and gas produced by the top 100 companies.
The Financial Times has dubbed
Saudi Aramco, Russia’s
Gazprom, CNPC of China, NIOC of Iran, Venezuela’s
Pdvsa, Brazil’s Petrobras and Petronas of
Malaysia as “The New Seven Sisters.”
The “Seven Sisters” was a term originally
coined by Italy’s Enrico Mattei to describe
the Anglo-American companies that dominated the
Middle Eastern oil industry after World War II.
Collectively the “New Seven Sisters” control
almost one-third of the world’s oil and gas
production and more than one-third of its total
oil and gas reserves.
The Petronas Model
According to the World Petroleum Council Yearbook,
2007, the most successful NOCs are those which
are backed by large amounts of cash and are able
to engage in large complex projects. Such NOCs
engage in expansion outside of their borders to
secure resources for the home country (as is the
case with the Chinese NOCs) or to secure markets
for their resources.
In a world of NOCs where political
interference is a reality, Malaysia’s Petronas
(Petroliam Nasional Berhad) is held up as a model
NOC.
The Petroleum Economist (February 2008) reported
that in a recent conference on NOCs held in London,
there was consensus that Petronas was the trailblazer
for the internationalisation of NOCs. That view
was endorsed by the Financial Times.
Petronas was established in 1974
and went into natural gas exploration and development
in the
1980s. Petronas is a major global LNG player and
has interests not only in liquefaction at home
but in gas infrastructure in the UK as well as
in LNG trains in Egypt and Iran. A few months ago,
Petronas’ subsidiary, Petronas International
Corporation, acquired the UK’s largest independent
gas storage operator, Star Energy.
Petronas recently commemorated the 25th anniversary
of its first LNG shipment.
According to PFC Energy, Petronas
is the 11th largest publicly traded oil and gas
company in
the world with a market capitalisation of $US108
billion. Petronas is ranked at 121st on the Fortune
500. Its headquarters, the Petronas Towers in Kuala
Lumpur, is one of the world’s most recognisable
landmarks.
Petronas receives about 30 per cent of its corporate
revenues from abroad and operates in more than
26 countries. NOCs like Petronas have the advantage
that they can more easily woo fellow resource-rich
NOCs. The level of collaboration between NOCs has
been a feature of their expansion in recent times.
Last August, the chamber published
its opinion on the future of the T&T energy
sector. This document is available to the public
and can be
downloaded from www.stcic.org. In that document
the STCIC noted that the proposed new State company
which goes international could play a significant
role in accessing raw materials needed for our
domestic petrochemical industry in the event that
that became necessary.
We added, however, that such a company would have
to be run like a private company with no political
interference. Secondly, when considering international
competitiveness, such a company would have to take
productivity into consideration.
There are many examples of NOCs
that have been used to meet the needs of the
political directorate
in other countries. The Financial Times of March
11, 2007, went so far as to describe Mexico’s
Pemex as that country’s “Bottomless
Piggy Bank.”
While that might be an extreme case, the World
Petroleum Council Yearbook does, however, acknowledge
that NOCs have a wider mandate than international
oil companies which include fostering economic
prosperity, participating in the development of
local suppliers and implementing social programmes.
Whether or not the idea is valid requires careful
analysis of the range of potential opportunities
and consideration of the international economic
climate.
As we commemorate the 100th year
of commercial oil production, it is important
to contemplate
what is the next step for the T&T energy sector.
T&T has in that period played in the global
game but mainly as a supplier of oil, LNG, methanol
and ammonia to international markets.
The next step would be to move beyond supplying
international markets to owning a portfolio of
international energy assets which can generate
a revenue stream that can enhance our aim to achieve
sustainable development from an energy platform.
l
STCIC is South Trinidad Chamber of Industry and Commerce.
Petroleumworld not necessarily share these views.
Editor's
Note: This article was first publish in Trinidad
Guardian, Thursday 27th March, 2008 . Petroleumworld
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