The CEOs of BP, Exxon, and Total, and the heads of four Middle Eastern state oil companies met yesterday in Abu Dhabi to discuss changes in how they do business.
The meeting, attended by the heads of Aramco, Kuwait Petroleum, UAE’s Adnoc, and Qatar Petroleum, took place behind closed doors, but the topic of conversation must have had a lot to do with the changes that state oil companies in the world’s biggest oil producing region have undergone.
According to the moderator of the meeting, IHS Markit vice chairman Daniel Yergin, the parties have realized that they now operate in a much different market environment than, say, 10 years ago, which means changes are in order as to how the supermajors and state oil companies do business together.
Traditionally, as The National notes, the relationships between international oil giants and national oil companies have not been the smoothest. The latter have, over the last decade, transformed into much more professional entities, apparently prompting a reconsideration of what the supermajors have seen as traditional.
However, both the national oil companies of the Middle East and the international majors have been hit hard by the oil price slump, and now both groups need each other’s help to weather the effects of the crisis. Related: The Toilet Paper Crisis: Angola’s Oil Firm Can’t Supply The Basics
According to Yergin, supermajors and national oil companies discussed the formers’ need for long-term investments and the latter’s need for new job creation to stimulate the local economies. No details were given about whether they agreed on specific moves, but a revisiting of their usual contracts would likely lead to changes, which are supposed to be mutually beneficial.
National oil companies have taken the upper hand in terms of value and performance over international majors, thanks to government financial support and favorable tax regimes in many cases. Supermajors, on the other hand, are growing increasingly aware of the new market realities. Last week, they even pledged a fund of $1 billion to help tackle climate change. Although the amount is tiny compared to government pledges, it does signal a change in these companies’ perspective.
By Irina Slav for Oilprice.com
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