National oil companies Who are they and where are they going?

Valerie Marcel Principal Researcher (energy) JETRO 7 April 2006 Outline z NOCs today z How are they different from IOCs z Oil Titans: the five major Middle East NOCs

z Corporate culture and identity

z Strategic ambitions

2 NOCs are the true Super Majors Substantial low-cost reserves

Saudi Aramco NIOC z NOCs hold the keys to growth Iraqi NOC PDVSA z Control nearly 3/4 KPC of global oil ExxonMobil reserves . . . RD/Shell Oil (bn bbl) Qatar z . . . and more Condensate (bn bbl) TotalFinaElf than 60 per cent Gas (bn boe) of global gas Abu Dhabi NOC reserves Sonatrach SpA PEMEX BP

0 50 100 150 200 250 300

3 Source: IHS (Petroconsultant) Internationalising NOCs

4 Oil Titans: National Oil Companies in the Middle East

z Lack of available data led to interview based research z Cases: Kuwait Petroleum Corporation - KPC National Iranian Oil Company -NIOC Abu Dhabi - ADNOC Sonatrach … and their Ministries of Petroleum And regional banks z Also interviews and discussions within Statoil, , , PDVSA, Total, BP, ChevronTexaco, ExxonMobil.

5 Key questions

Process of maturation. Some 30 years after nationalization, NOCs are at a crossroads.

Who are the NOCs? How do they relate to their governments? What do they want? Capacity increases - International – Integrated - Gas exporters? Can they achieve their strategic goals? Where are they heading?

6 Examples of changing NOC missions

Petronas Petrobras Saudi Aramco Sonatrach National Commercial mission mission KPC Adnoc

PDVSA

7 NOCs in the 21st Century

z A balancing act between public service, profitability and (for OPEC) international market obligations

Aramco View Public Service ‘Golden Quadrant’

Public Profitability International Service Markets

Source – Aramco presentation Chatham House Nov 2004 Profit 8 Different NOCs

Mineral Exclusive Saudi Aramco/oil, NIOC, Pemex Rights Shared with ’s NOC, Sonatrach, NNPC, Sonangol, IOCs PDVSA, ADNOC, Petronas Ownership 100% State Saudi Aramco, Pemex, NIOC, KPC, Sonatrach, Petronas, Socar, PDVSA, KMG in Kazakhstan, ONGC in India, in Colombia Part Private Petrobras, Statoil, Gazprom, Gazprom, Petrochina, Geography Domestic ADNOC, NIOC

Domestic & Petrobras, Statoil, Sonatrach, KPC, Petronas, International Petrochina, ONGC

9 Strategic ambitions z All Middle East countries want spare capacity z Preoccupied with timing of investments z Preoccupied with the long-term management of reservoirs z Gas: Sonatrach and NIOC want to be gas hubs z Integration is an important part of their strategy z Internationalization is the next frontier

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