Page 10: of Offshore Engineer Magazine (Dec/Jan 2013)

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Opinion

ThoughtStream

Marcus Richards

Shifting dynamics: Industrializing economies are moving markets he shift in oil demand from industri- become the default way of seeking new

T alized to emerging economies is one opportunities in oil and gas.

Our industry is that we at Dana Petroleum know only too IOCs, a growing variety of indepen- well. dents, of different size and focus, service fundamentally changing

An impressive North Sea success story companies and NOCs themselves, will be with modest but ambitious beginnings in increasingly competing to build partner- shape, a structural shift

Aberdeen in the mid-1990s, Dana grew ships with governments and with each fast, becoming an emerging international other to explore new opportunities. that is altering the oil and gas company with a footprint in Secondly, in an increasingly com- balance of power amongst the UK, Norway, the Netherlands, Egypt plex energy market, complementarity and North and West Africa. and common ground will be crucial. industry players.

In 2010, as Dana was pondering ave- Competition will give way to comple- nues for future growth, it was acquired mentarity as IOCs, NOCs and service by the Korea National Oil Corporation companies become ruthlessly clear about (KNOC). KNOC was on the lookout for of world’s largest importer of crude oil, their strengths, their weaknesses and exploration and production targets that surpassing the US for the frst time. how they can work together.

would help meet South Korea’s energy At a time of declining or stagnant Finally, I think the current trend also security needs and support the develop- demand from developed economies, it is means that we are likely to see more ment of its emerging oil and gas sector. becoming increasingly clear that virtu- consolidation within the industry, as

For that, it needed two things: reserves ally all the net growth in global energy independents join forces and NOCs and expertise. consumption will, in the next few years, continue to acquire independents to

As a high-income developed country come from emerging economies. build their position and capability in key with almost non-existent native reserves, Our industry is fundamentally chang- markets.

South Korea is one of the world’s top ing shape, a structural shift that is energy importers. altering the balance of power amongst This is a version of Mr. Richards’ talk

Dana Petroleum was acquired by industry players. at Chatham House’s The Changing

KNOC in 2010, as part of an ambitious I believe that one of the key changes, Dynamics of Global Energy Markets plan to reach 1.2MM bbl production by and one that is in part a consequence Conference in November, in London. 2030. of the shift in demand to the emerging

Looking back, we can say that South economies, is the increasing prominence Marcus Richards is group chief execu-

Korea was at the forefront of a trend that of national oil companies, or NOCs. tive of Dana Petroleum. Until mid-2009, saw successive historical producers in NOCs now control around 90% of the he held the role of senior vice president the UK North Sea change hands to serve world’s remaining oil and gas reserves. in BP corporate headquarters covering the growing appetite of emerging econo- As NOCs continue to expand beyond upstream E&P and downstream refning mies for resources, technology, skills and their home markets, they will naturally businesses. During his 27 year career expertise. compete head on with international oil to date, he has held a number of busi-

This trend will undoubtedly be here to companies (IOCs) and independents to ness leadership, functional and techni- stay. Oil demand in the developing world access new reserves. But in doing so, cal roles, with a signifcant proportion is projected to overtake that in industrial- they are changing the dynamics and rules of his career spent outside the UK and ized countries for the frst time this year. of the business. Europe, including assignments in the US,

This is a tipping point in the geography I think that this has a series of conse- Australia, China and Indonesia. He holds of oil demand and will no doubt have quences for the structure of world energy a BSc (Hons) and PhD, and is an alum- profound implications for the dynamics markets and the new patterns of invest- nus of Harvard University. He is also a and structure of world energy markets. ment in them. visiting professor at Aberdeen’s Robert

In October, China reached the position Firstly, resource diplomacy will Gordon University.

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