A new study of state-owned oil companies says these so-called National Oil Companies, or NOCs, control most of the world's known energy reserves and hold the key to any increased energy production in the years ahead. The study was released in Houston, Texas at a conference held at James A Baker III Institute for Public Policy at Rice University. VOA's Greg Flakus has more in this report from Houston.
Energy experts attending the conference agreed that National Oil Companies, mostly in the developing world, will be called upon to meet the rapidly rising world demand for energy.
Conference organizer Amy Myers Jaffe says global planning must take place now. "As we look out over the next 30-year period, 90 percent of what we are going to need, the rise we are going to need in oil capacity, is going to be coming from developing countries."
Seventy-seven percent of the world's oil is now controlled by state-owned oil companies, with less than ten percent under the direct control of large international companies.
James Mulva, Chairman and CEO of ConocoPhillips represented the big oil companies at the conference comment, "Energy consumers, particularly the American public, have failed to grasp the transformation that is taking place on the international energy scene. Many consumers as well as elected officials and policy-makers cling to the misconception that future energy supply is solely in the hands of the publicly held western oil companies, the so-called 'Big Oil.' In comparison to most of the NOCs, big oil is not so big."
Mulva says he recognizes the need for private companies like his to find ways of using their investment money and advanced technology to work with state-owned entities. "National oil companies certainly have the access and ownership of the resources, they have tremendous capability and expertise. What we need to be doing as international oil companies, like ConocoPhillips, is (see) how can we collaboratively work together in a way that is different from the past."
But David Asmus, Senior Partner at Baker Botts L.L.P., an energy industry law firm, says needed investment in oil production is often diverted for other government projects. "NOCs can find that their political masters are more interested in providing jobs or pork-barrel projects or social programs than in finding oil."
While some national oil companies are competitive and technologically advanced, others remain partially or completely closed to outside investment. Mexico, for example, allows no foreign company profit-sharing contracts and many other nations place heavy taxes on the international operations in their territory.
The priority in some countries -- such as Venezuela and Iran -- is to use the oil revenues from the state-run companies to alleviate poverty. The Baker Institute report makes no judgment about this, but professor Amy Myers Jaffe says the world's future oil production will depend on how much these NOCs are willing to reinvest in production.
"Because so many of the national oil companies are spending a huge part of their revenue stream on these non-core business elements, on providing social welfare services, in the case of Venezuela even something like subsidized food, or, in the case of Iran, practically free fuel for consumers, that siphons off the kind of capital that might have been used to develop their oil sector."