IN THE NEWS / Petro-Canada Reports That Oil Multinationals Agree Bigger May Not Be Better
The Financial Post
Rather than paving the way for marriages, world oil industry leaders who attended an exclusive weekend meeting ended up agreeing bigger may not necessarily be better, Petro-Canada president and chief executive Jim Stanford said yesterday.
"The general consensus of this group [was that] other things were much more important than size," said Stanford, the only Canadian oil industry leader invited to the gathering in Venice to discuss oil's declining fortunes.
Strict cost control is another.
"I came away ... much more aware of just how critical low cost is at being successful," he said. It's clear to me we can't plan our strategy around today's costs because they will be too high next year."
PetroCan was one of 15 world energy companies at the summit organized by Washington-based Petroleum Finance Co.
Many observers expected the meeting to plant the seeds for new mergers after the US$59-billion union this summer of British Petroleum Co. and Amoco Corp.
European antitrust regulators even demanded assurances the summit wouldn't involve anti-competitive activities such as price fixing.
"It really was an opportunity to ... expand the window on how what we all see that is unfolding, and what the implications on the industry might be, then we all took away our own thoughts on what the implications might be for ourselves," Stanford said. No quick fixes emerged from the gathering.
Stanford said he came away encouraged about his firm's long-standing plans to expand internationally.
However, other participants were concerned the BP-Amoco merger would make it much more expensive to take part in international deals.
In fact, new opportunities are emerging with oil producing countries that traditionally managed their energy resources through state oil companies and that are now looking for outside participation, he said.
While the notion bigger may not necessarily be better might be heresy in this age of megamergers, Stanford said big for big's sake just compounds problems unless it leads to obvious efficiencies and cost advantages.
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