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The National Oil Company Investment Challenge
The past 12 months have seen turmoil in the financial markets and volatility in the oil price. This has meant that both international oil companies and national oil companies have had to try to balance the immediate cash flow needs of their investors/ governments with the need to invest in the future development of reserves.
For this report, research and interviews were carried out with leading national oil companies (NOCs). Our key findings include:
NOCs, like international oil companies (IOCs), are actively seeking to reduce their cost base Developing and extracting new and unconventional reserves is becoming more expensive Financing new and existing projects is key in the current financial market and may provide new opportunities for international oil companies
In conclusion, our interviews and research suggest that the increased volatile oil markets could:
Affect interaction between the IOCs and NOCs — potentially generating new opportunities for IOCs, when previously they were being increasingly excluded from new reserves Provide opportunities for those NOCs with access to finance to expand their reserve base, particularly the Chinese NOCs, for whom securing supply will continue to be a key objective (for example, proposed transactions in Russia, Kazakhstan, Iraq and the Kurdistan Region of Iraq) Drive a period of cost focus throughout the industry Result in large development projects being delayed or cancelled, which may lead to reduced supply and consequently increased prices in the future.
While US$60/b is seen as the balancing point for many producers, NOCs are typically looking for a long-term price in excess of US$80/b to justify the development of new reserves
For the full report, please download the PDF version from the link below:
NOCs, like international oil companies (IOCs), are actively seeking to reduce their cost base Developing and extracting new and unconventional reserves is becoming more expensive Financing new and existing projects is key in the current financial market and may provide new opportunities for international oil companies
In conclusion, our interviews and research suggest that the increased volatile oil markets could:
Affect interaction between the IOCs and NOCs — potentially generating new opportunities for IOCs, when previously they were being increasingly excluded from new reserves Provide opportunities for those NOCs with access to finance to expand their reserve base, particularly the Chinese NOCs, for whom securing supply will continue to be a key objective (for example, proposed transactions in Russia, Kazakhstan, Iraq and the Kurdistan Region of Iraq) Drive a period of cost focus throughout the industry Result in large development projects being delayed or cancelled, which may lead to reduced supply and consequently increased prices in the future.
While US$60/b is seen as the balancing point for many producers, NOCs are typically looking for a long-term price in excess of US$80/b to justify the development of new reserves
For the full report, please download the PDF version from the link below:
national-oil-company-investment-challenge.pdf, Size: 1.2 MB© 2010 KPMG Safi Al-Mutawa & Partners, a Kuwait partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.
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