Exxon Touts Record of Enhancing Value for National Oil Companies
Paul Merolli, Washington
9/5/2008
Oil Daily
This company way outperforms the other big international oils on operations.
A top Exxon Mobil executive on Thursday highlighted the importance of national oil companies (NOCs) working together with international oil companies (IOCs) and emphasized Exxon's strong track record of working with state firms to add value to massive oil and gas projects abroad.
Exxon Senior Vice President Mark Albers spoke at a Lehman Brothers energy conference about the challenges of resource nationalism and the lack of access to oil and gas reserves for IOCs in today's high-priced oil market.
"We hear a lot about the role of NOCs versus IOCs, but it's not an 'either or' question. It's both. Experience tells us that together we can generate more value than apart," Albers said.
He said that NOCs and IOCs each bring "unique perspectives" to the table that can be tapped for the common good through partnerships. Still, it is clear that NOCs hold most of the cards in the relationship since they control the vast majority of undeveloped oil and gas resources. That is particularly true of the Mideast NOCs that are also members of global producer group Opec. Meanwhile, most IOCs, including Exxon, have struggled to expand their oil and gas production in recent years as exploration opportunities have dried up.
Albers emphasized the "dozens of partnerships around the globe" that Exxon is involved in and detailed the value the supermajor brings to three specific projects in Qatar, Russia and Angola. His presentation could be mistaken for a resume pitched to NOCs seeking a "partner of choice" in a market where Exxon competes fiercely with other IOCs for access to reserves.
Exxon's main advantage in this competition is the technology it offers and its proven ability to bring projects to production on time and within budget.
Albers said the company invests about $2 million per day on in-house technology development, emphasizing the need to find new ways to exploit ultra-deep, shale and oil sands resources in a cost-efficient way.
That technological advantage has helped Exxon complete its operated projects on average within 3% of their budgeted levels between 2003 and 2007. Last year, the supermajor's projects were completed 10% under budget, an impressive feat given the run-up in industry costs for materials and equipment, as well as the shortage of labor which have beset other IOCs and led to substantial project delays.
Offshore Angola, for instance, Exxon-led projects Kizomba A and B were brought onstream within 36 months and 31 months, respectively, after first funding. The Kizomba C Mondo development began production after just 22 months. That compares to an industry average of 40 months in Angola.
"That might not sound like much. But every additional percentage of up-time can add hundreds of millions of dollars in additional revenues for host countries," Albers said.
Less than five years after discovering first oil, Exxon's Angola projects are now producing over 700,000 barrels of oil equivalent per day, helping to turn the country into one of the world's upstart producers and a member of Opec.
The story is similar in Qatar, where Exxon helped turn the tiny Mideast country into the world's largest LNG producer within a decade. Last year, it brought on the Ras Laffan II Train 5 in record time.
In Russia, Exxon has not been victimized by Moscow's oil grab like other companies such as Royal Dutch Shell and BP have. Albers noted that the Exxon-operated Sakhalin 1 project, in which it holds a 30% stake, started production ahead of schedule in October 2005. The company has contracts worth about $4 billion with Russian firms and its outlays there should ultimately generate $50 billion in revenues for the Russian government, Albers said.
By the end of this year, 70% of Exxon-operated projects in Russia should be staffed by nationals, which should also help keep authorities there happy. |
