Energy industry upheaval to benefit oil services
By Ed Crooks in London
Published: June 30 2008 03:00 | Last updated: June 30 2008 03:00
Oilfield services companies are among the biggest winners from the upheaval in the energy industry over the past decade, according to national oil executives surveyed by KPMG, the professional services company.
The executives of national oil companies, state-controlled groups such as Saudi Aramco, Gazprom and Petro-China, said service groups’ growing capabilities and international influence were changing the relationships between the leading players in the oil and gas business.
Some suggested that the international oil companies such as ExxonMobil, BP and Royal Dutch Shell would have to change their business model to become more like service companies if they were to prosper.
The rise of resource nationalism in many countries, stoked by soaring oil and gas prices, has made it more difficult for international groups to get access to oil and gas reserves which they can develop.
But service companies working as specialist contractors for national oil companies are welcome just about everywhere, and shortages of skilled staff and equipment have enabled them to push up their rates.
Milton Costa Filho of Petrobras, the Brazilian group, told KPMG: “There are very few service companies. They are in a very good position.”
Shares in Schlumberger, the world’s biggest oil services group, headquartered in Paris and Houston, have risen more than four-fold in the past four years, as have shares in Halliburton and Transocean, two leading US-based oil services groups.
That compares to a rise of 240 per cent for Exxon, the largest and one of the most successful oil groups, and just 40 per cent for BP.
Some national oil group executives suggested to KPMG that international companies should become more like service companies: providing specialist expertise and technology as required, but not taking a share of production.
Many argued that production sharing contracts allotting oil and gas output between governments and oil companies, now standard in most resource-rich countries, would fall out of use.
Oil companies favour those contracts because they allow the companies to book a share of the resources to their reported reserves.
Anthony Lobo of KPMG said investors would need to look at new ways of valuing international oil companies. The rate at which companies find new oil and gas to add to their reserves has traditionally been an important yardstick for investors, although criticism of the measure has recently led the US Securities and Exchange Commission to revise its rules for reporting reserves.
A survey from Ernst & Young, another advisory business, launched at this week’s World Petroleum Congress in Madrid, shows that while international oil companies’ shares have on average roughly doubled since 2003, national groups’ shares have risen five-fold.
Copyright The Financial Times Limited 2008