Welcome once again to the PFC Energy Quarterly. This issue provides five thought pieces, capturing what many of our clients have told us are some of today's highest profile issues. In terms of common threads, I think I can best summarize by saying that the world of energy is indeed complex, and that the changes we are seeing are resulting in the rapid emergence of new players, new relationships and new realities. As always, we would most welcome feedback or comments on any of these contributions.
Lew Watts
President and CEO
PFC Energy
PFC Energy 50: Bigger and Better Than Ever
The greatest gainers in the new PFC Energy 50 were not traditional energy companies, but the traded National Oil Companies and the Alternative Energy sector. Among the companies creating the most value last year were those that enjoy both privileged access to resources and access to capital markets, such as Petrochina, Sinopec, Petrobras, CNOOC, PTT, ONGC and newly floated Ecopetrol.
Dances With Wolves
Populist leaders have often depicted International Oil Companies (IOCs) as exploitative wolves, but these days many IOCs seem to view National Oil Companies (NOCs) as all-powerful and merciless. In the years ahead, the most successful IOCs and NOCs will be those that master “Dancing With Wolves.” To succeed in this new environment, IOCs must understand the new NOC paradigm and the specific goals and needs of the different NOCs, each of which reflects its own domestic conditions.
Exuberance and Gloom: Adapting to a New LNG World
The LNG business is torn between exuberance and gloom. The exuberance comes from the belief that gas is about to become a global commodity that will be traded according to real-time supply and demand realities. The gloom reflects the realization that politics and economics are delaying gas-export projects around the world, just as more countries declare they want to use gas to boost their local economies instead of export it. The LNG mood is a mixture of exuberance about the present and gloom about the future.
OPEC States: $100 Oil Wanted by All, Needed by Some
The price OPEC needs to defend in order to assure macroeconomic stability for its member countries continues to steadily increase. Long gone are the days of price “hawks” and “doves.” Rather, all states face increasing financial burdens placed on their oil and gas sectors, to say nothing of the sharp increase in inflation hurting their non-oil sectors, which necessitates active market management in order to realize higher oil prices.
The Rise of the UAE’s State-Controlled Energy Hybrids
Companies of a new breed, whose traits place them somewhere between sovereign wealth funds and state National Oil Companies (NOCs), are becoming formidable players on the international stage. State-controlled firms have become very active in their pursuit of deals abroad, as high energy prices continue to offer attractive returns. Moreover, several international oil companies have struck strategic alliances with these state-controlled firms in the hope of leveraging their political relationships to improve their chances of closing new projects.
