07 June 2009
The global financial crisis and the resulting difficulty in raising finances may force national oil companies to become more transparent in their operations.
Analysts at the World national oil companies congress' said oil firms, particularly those of consumer countries and emerging oil producers such as Petrobras of Brazil, raise finances through new business partnerships and issue of bonds.
Gulf majors such as Saudi Aramco, Adnoc and Kuwait National Petroleum Company (KNPC) will, however, remain immune to these changes, considering the low costs involved in extracting crude and strong financial positions. However, even they will be forced to diversify their sources of funding during the prevailing turbulent times, an analyst said.
"National oil companies may be forced to disclose their accounts especially if they are looking forward to raising finances from banks and financial institutions," said Valerie Marcel, an associate fellow at Chatham House, a London-based non-profit analysis and research institution.
"We may however not see similar changes among the Middle East producers. It is yet to be seen whether correct production levels will be disclosed here," said Darren Davis, Managing Director, Head of Resources and energy wing of HSBC.
The views came in tandem with those officials from national oil companies of Venezuela and Sudan who said they are looking to attract foreign majors on their soil. Cash-starved Venezuela wants to have 70 per cent of its project financed by foreign majors. "We have prominent oil fields in Carabobo that we intend to exploit in co-ordination with foreign majors. We want foreign majors to finance 70 per cent of the project they take up," said Eulogio Del Pino, Head (E&P) of Venezuelan national oil company PDVSA.
Salah Wabhi, President and CEO of Sudan's Sudapet, said his company remains open to any foreign major wanting to extract oil in Sudan. The company plans a prominent downstream investment this year - it is to double the production capacity of Sudan-based Darfur refinery from 100,000 to 200,000 barrels by December.
World's largest national oil companies and international oil companies are planning on delivering in excess of $375 billion (Dh1.37 trillion) of ambitious investments through the economic downturn, despite ongoing concerns around oil demand, consultant Ernst & Young (E&Y) said recently.
However, the investment will be lower than what could have been the case had the crisis not struck. International Energy Agency (IEA), the consumer world's energy watchdog, recently said upstream oil investments will decline more than 21 per cent this year (globally) due to projections of low demand.
That would be a reduction of almost $100bn, the IEA said. While Opec has forecasted a year-on-year decline of 1.6 million barrels per day in 2009, IEA has said oil demand will decline by 3.5 percent this year.
National oil companies alone are on course to invest more than $275bn (a major pie of the $ 375bn investment) in the development of their businesses at home and abroad in 2009, E&Y said.
Almost 70 per cent of total investment will come from national oil firms in Asia and South America, the consultant said.
The view over a long period of time, which includes the period when the global economy would have supposedly recovered is particularly strong. "Based on current estimates by 2015 the largest national oil companies will have invested around $600bn in their hydrocarbon sectors," E&Y said.
The global financial crisis and the resulting difficulty in raising finances may force national oil companies to become more transparent in their operations.
Analysts at the World national oil companies congress' said oil firms, particularly those of consumer countries and emerging oil producers such as Petrobras of Brazil, raise finances through new business partnerships and issue of bonds.
Gulf majors such as Saudi Aramco, Adnoc and Kuwait National Petroleum Company (KNPC) will, however, remain immune to these changes, considering the low costs involved in extracting crude and strong financial positions. However, even they will be forced to diversify their sources of funding during the prevailing turbulent times, an analyst said.
"National oil companies may be forced to disclose their accounts especially if they are looking forward to raising finances from banks and financial institutions," said Valerie Marcel, an associate fellow at Chatham House, a London-based non-profit analysis and research institution.
"We may however not see similar changes among the Middle East producers. It is yet to be seen whether correct production levels will be disclosed here," said Darren Davis, Managing Director, Head of Resources and energy wing of HSBC.
The views came in tandem with those officials from national oil companies of Venezuela and Sudan who said they are looking to attract foreign majors on their soil. Cash-starved Venezuela wants to have 70 per cent of its project financed by foreign majors. "We have prominent oil fields in Carabobo that we intend to exploit in co-ordination with foreign majors. We want foreign majors to finance 70 per cent of the project they take up," said Eulogio Del Pino, Head (E&P) of Venezuelan national oil company PDVSA.
Salah Wabhi, President and CEO of Sudan's Sudapet, said his company remains open to any foreign major wanting to extract oil in Sudan. The company plans a prominent downstream investment this year - it is to double the production capacity of Sudan-based Darfur refinery from 100,000 to 200,000 barrels by December.
World's largest national oil companies and international oil companies are planning on delivering in excess of $375 billion (Dh1.37 trillion) of ambitious investments through the economic downturn, despite ongoing concerns around oil demand, consultant Ernst & Young (E&Y) said recently.
However, the investment will be lower than what could have been the case had the crisis not struck. International Energy Agency (IEA), the consumer world's energy watchdog, recently said upstream oil investments will decline more than 21 per cent this year (globally) due to projections of low demand.
That would be a reduction of almost $100bn, the IEA said. While Opec has forecasted a year-on-year decline of 1.6 million barrels per day in 2009, IEA has said oil demand will decline by 3.5 percent this year.
National oil companies alone are on course to invest more than $275bn (a major pie of the $ 375bn investment) in the development of their businesses at home and abroad in 2009, E&Y said.
Almost 70 per cent of total investment will come from national oil firms in Asia and South America, the consultant said.
The view over a long period of time, which includes the period when the global economy would have supposedly recovered is particularly strong. "Based on current estimates by 2015 the largest national oil companies will have invested around $600bn in their hydrocarbon sectors," E&Y said.
By Shashank Shekhar
© Emirates Business 24/7 2009
