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2
Nov

4- The complicated future of Oil Majors: first and foremost a management problem?

In its Sunday 4th / Monday 5th August 2013 edition, Le Monde exploration published an article entitled “The complicated future of Oil Super-Majors”.

This article looks at the problem of the decline in production of these Majors, who are having more and more difficulty in finding and producing as much petrol and gas as they would like; the reason given is the fact that the oil deposits that are easy and inexpensive to mine are controlled by State Companies of the oil-producing countries and that, as a consequence of this, the Majors have to turn to projects which are technically much harder and complicated to implement.

This phenomenon does indeed exist but is it the only explanation of the difficulty the Majors are having in renewing their reserves?

Over the last 5 or 6 years a series of major discoveries has been made in hydrocarbons in general and gas in particular: shale gas in the USA, gas reserves in the Eastern Mediterranean region and Israel in particular, considerable reserves in Mozambique and to a lesser extent in Tanzania and Uganda, and vast pre-salt deposits in Brazil. All these discoveries have at least two new common characteristics: the first one is that these considerable reserves have been discovered in completely new hydrocarbon trends, and the second is that none of the Oil Majors were involved in these discoveries.
The American shale gas was initially implemented by small companies such as Chesapeake; the Israeli deposits were discovered by Noble, the Mozambique ones by Anadarko, Uganda’s by Tullow and the Brazilian pre-salt deposits by Petrobras. No Majors,  although Petrobras is not a small company.

Exploration does of course involve luck, but the fact that none of the Oil Majors were present initially in these discoveries, which were over varied and wide geographic zones and over several years, leads us to ask  whether this could be a strong tendency rather than just a question of luck. Are the Majors still capable of the creativity and audacity that allowed the Independents (and Petrobras) to make these recent discoveries?
The Majors have proved, these last few years, their know-how and competence for pulling off production mega-projects for which the unit of account is in billions of dollars or even tens of billions of dollars. The implementation of such projects requires extremely strict organization and continuous control involving complicated decision making processes based on significant comitology. One possible theory is that this work method, which is essential for big production projects but very complicated, has affected the Exploration activities by excessively blocking the necessary risk taking in this area.
In other words, by becoming Production champions, the Majors may have lost their Explorer souls.

In this hypothesis, the smaller companies don’t have the same problem as they haven’t implemented any mega-projects and their decision making protocols are much shorter and based on the trust they have in their teams rather than the processes.

If this is the case, the question that an Exploration / Production Major should be asking itself is whether it should adapt its setup to remedy its lack of success in Exploration or, on the contrary, if it should adapt its business model by leaving Exploration to smaller companies that it could take over post discovery (or that it could finance as independent companies), while bringing its expertise in the development of major Production projects that the smaller companies do not have. This solution has been retained by the Majors for many of the projects above, but probably by opportunism rather than deliberate and assumed strategy.

In conclusion, the key to further development of the Majors may lie in adapting their own internal organization as much as in resolving technical, political and financial problems that they’ve always been able to resolve successfully previously.

D.Venet
Gleamergy
dominique.venet@gleamergy.com

12
Oct

3- Ecological comparison Seoul – Paris

I recently spent a week in Seoul.

I was surprised by two things: the excellent quality of the air and the low noise levels, compared to the pollution and noise to be found in Parisian streets.

This was not my first wholesale nfl jerseys time in Seoul and I did not notice this Russia, difference during my previous visits in the 90’s, 00’s or 10’s.

There are two possible explanations for this difference: the situation in Seoul has gotten a lot better or that of Paris has gotten much worse; in fact, pilotprosjekt it is both:

A “green” policy has been in place in Seoul for several years:

  • All wholesale nfl jerseys buses run on natural gas (NGV: Natural Gas Vehicles).
  • Cars are either hybrid or petrol run; there are no diesel cars.

The result is moderate pollution and a reasonable noise level even on very busy avenues. The Sox, NOx and particles wholesale jerseys pollution and the noise levels from gas and petrol run motors are indeed a lot less than that of the diesel motors that we favor in France.

You could argue that a “green” policy has also been in implemented in Paris:

  • A tax incentive system for diesel motors wholesale nfl jerseys on the grounds that they produce less CO2 than petrol ones: thanks to this grand initiative the majority Tienda of French cheap nba jerseys cars these days have diesel motors.
  • A traffic control policy designed to deter motorists, which results in permanent traffic ban jams, during which the slowed down diesel motors generate noise and atmospheric pollution.

Seoul has shown that a very large modern city (20 million people) can limit its pollution and noise levels; Paris has proved, once again[1], that ecological pretexts can result in accomplishing the exact opposite of what they originally set out to do…

 

[1] please X250 see the other article on this site: ”The ban on exploration of shale gas: a breach of the precautionary principle?

 

D.Venet
Gleamergy
dominique.venet@gleamergy.com

11
Jul

2- Russia, China and the Northern Route

The recent signature by Mr Poutine of a document agreeing to provide gas to China can be related to another, less Кухня mediatized, event which happened towards the end of 2013, the first journey of a Gazprom-chartered cheap jerseys LNG carrier from Northern Europe to Asia via Watches the “Northern Route” (i.e. the direct maritime route between Europe and Asia via the north of Russia).

In both cases Russia demonstrated its intention to no longer rely solely on Europe as it’s near exclusive client of natural gas exports, and to develop sales in Asia. Russian sales to Asia began with Sakhaline’s LNG but these were moderate and from the gas fields which wouldn’t have been able to supply Europe.

Both of these examples lead ban us to reflect on the notion of Europe / Asia arbitration by Russia, a fundamentally new Trucks situation.

In the case of the Northern Route, it is what we could call “direct” arbitrage: Yamal LNG methane carriers could either go west wholesale MLB jerseys towards Europe or East towards Asia; for the first time a Russian gas field is open to arbitrage.

In the case of the Chinese contract, the arbitrage would be “indirect”: this project will require considerable investments, in which the Russians will understandably want to keep a majority hold; leaving possibly a shortage of capital to maintain and repair existing West Russian facilities which supply Europe.

In conclusion, Russia is preparing to reduce its dependence on Europe, its historical exclusive client, in the medium term (and it is in this direction that the dependence existed and not the other way round), and to put itself in wholesale NBA jerseys a position to arbitrage between Asia and Europe, as is already the very profitable case for Qatar.

Indeed, one of the reasons that European prices have been 30 to 50% cheaper than Asian prices is the supply from Russian pipelines in particular. Asian arbitrage by Russia could decrease this difference to the detriment of Europe.

The USA is not concerned by this, protected by its shale gas; but this subject is taboo in France, so let’s not talk about it …[1]

 

[1] please see the other article wholesale NBA jerseys on this site: ”The ban on exploration of shale gas: a breach of the precautionary principle?

 

D.Venet
Gleamergy
dominique.venet@gleamergy.com