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    Noc Reform Collins

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    tsar_philip2010
    The document discusses trends in reforming national oil companies (NOCs) globally over the past 13 years. It provides examples of projects conducted in 8 countries to restructure NOCs, introduce private sector participation, and establish effective regulatory frameworks. Reforms generally aimed to enhance NOC commercial efficiency through competition, separate regulatory and ownership roles, and attract more foreign investment through updated contractual systems.

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    Noc Reform Collins

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    tsar_philip2010
    76 views19 pages
    The document discusses trends in reforming national oil companies (NOCs) globally over the past 13 years. It provides examples of projects conducted in 8 countries to restructure NOCs, introduce private sector participation, and establish effective regulatory frameworks. Reforms generally aimed to enhance NOC commercial efficiency through competition, separate regulatory and ownership roles, and attract more foreign investment through updated contractual systems.

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    NOC Reforms

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    The document discusses trends in reforming national oil companies (NOCs) globally over the past 13 years. It provides examples of projects conducted in 8 countries to restructure NOCs, introduce private sector participation, and establish effective regulatory frameworks. Reforms generally aimed to enhance NOC commercial efficiency through competition, separate regulatory and ownership roles, and attract more foreign investment through updated contractual systems.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    76 views19 pages

    Noc Reform Collins

    Uploaded by

    tsar_philip2010
    The document discusses trends in reforming national oil companies (NOCs) globally over the past 13 years. It provides examples of projects conducted in 8 countries to restructure NOCs, introduce private sector participation, and establish effective regulatory frameworks. Reforms generally aimed to enhance NOC commercial efficiency through competition, separate regulatory and ownership roles, and attract more foreign investment through updated contractual systems.

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    of 19

    NATIONAL OIL COMPANIES Current Roles and Future Prospects

    NOC REFORM: Restructuring, Commercialization and Privatization

    Tom Collins
    May 27, 2003

    AGENDA
    2

    Challenges to NOC Reform Implementation:


    Who Are We and What Do We Do

    Where We Have Worked

    Overall Trends Identified

    Specific Country Experiences

    Some Conclusions

    SAME ROLE, DIFFERENT NAMES


    3

    In 1990 we formed a unit in Calgary, Canada, dedicated to assisting National Oil Companies or Ministries of Energy in resource developing nations:
    Coopers & Lybrand PricewaterhouseCoopers PricewaterhouseCoopers Consulting IBM Business Consulting Services

    Industry Restructuring enhancing the countrys economic engine of growth


    Policy Fiscal,

    Development Advice Economic, Legal and Regulatory Assistance Building Implementation Assistance and Efficiency Reviews Initiatives

    Capacity

    Corporate Restructuring improvement of the NOC


    Strategic Operational

    Privatization

    OVER THE LAST THIRTEEN YEARS 4

    Funding split almost equally between IFIs and the host country
    Cameroon, Congo, Equatorial Guinea, Gabon, Mozambique, Senegal, South Africa

    Abu Dhabi, Algeria, Kuwait, Qatar, Saudi Arabia, Yemen

    Bangladesh, China, Indonesia, Kazakstan, Pakistan, Papua New Guinea, Thailand, Vietnam

    Bolivia, Colombia, Costa Rica, Mexico, Trinidad, Peru

    THE IMPORTANCE OF NOCs


    5

    In 2001, the worlds oil reserves were still under the control of governments:

    IOCs 10%
    1 2 3 4 5 6 7 8 9 10 National Iranian Oil ExxonMobil Royal Dutch/Shell BP Pertamina Sonatrach Saudi Aramco Pemex ChevronTexaco Petronas Iran USA Netherlands UK Indonesia Algeria Saudi Arabia Mexico USA Malaysia

    NOCs 90%

    Ranked by 2001 Gas Production

    THE OIL AND GAS VALUE CHAIN


    6

    Previously the sole responsibility of the NOC, this is changing now:


    Optimum efficiency requires collaboration along the chain Removal of cross-subsidy distortions

    Award and/or Negotiate Mineral Rights & JVs

    Explore and Develop Reserves

    Produce Crude, Gas and NGLs

    Supply, Market and Transport

    Refine and Process Feedstock

    Market and Distribute Wholesale Products

    Sell Retail Products

    Upstream

    Midstream

    Downstream

    WORLD-WIDE TRENDS AND APPROACHES


    7

    Around the world, certain trends and approaches are apparent, as resource nations with energy monopolies transition to private sector partnerships:
    Transformation of National Oil Companies

    Instigation of Regulatory Roles and Responsibilities

    Emergence of the Natural Gas Sector

    Changing Contractual Options for Foreign Investment

    SPECIFIC COUNTRY EXPERIENCES


    8

    Eight examples: Indonesia, Cameroon, Gabon, Kuwait, Qatar, Saudi Arabia, Pakistan and Mexico

    Issues

    and challenges faced by the NOC/sector and strength of the petroleum sector players

    Structure Brief

    description of our role and reform strategies suggested/implemented

    Remedies

    Comments mainly limited to the upstream and midstream

    INDONESIA
    9

    Issues and Challenges


    Commercial efficiency, non-commercial objectives, governance, conflict of interest

    Structure and Strength


    Powerful NOC, weak Ministry, no Regulator, many IOCs working under PSCs

    Project
    Comprehensive operational and commercial audit of Pertamina for Ministry of Finance,

    followed by implementation planning for the restructuring of the company Remedies and Reform Strategies
    Take Regulation away from Pertamina, restructure and make it compete commercially with

    IOCs, update contractual arrangements with IOCs, strengthen the Ministry

    CAMEROON
    10

    Issues and Challenges


    Commercial efficiency, 20 year history of declining production, conflict of interest

    Structure and Strength


    Weak NOC non-operator, weak Ministry, few IOCs working in country

    Project
    Two diagnostics of the petroleum sector and two operational and financial performance

    assessments of SNH, in preparation for restructuring Remedies and Reform Strategies


    Nothing changed in 10 years, not so attractive as other areas, overhaul fiscal system to attract

    private sector participation, strengthen SNH, but do not let it operate. Separate ownership and from regulation

    GABON
    11

    Issues and Challenges


    Lack of exploration success, recent declining production, governance of sector

    Structure and Strength


    No NOC, no Regulator, weak Petroleum Ministry, Treasury runs State interests with few IOCs

    Project
    Comprehensive diagnostic of the petroleum sector, implementation of new petroleum

    legislation, followed by many years conducting audits as stand in for the Regulator Remedies and Reform Strategies
    Overhaul program of bidding rounds, strengthen the petroleum Department of the Ministry

    KUWAIT
    12

    Issues and Challenges


    The Constitution, cash requirements, technology shortfall, non-commercial objectives

    Structure and Strength


    Strong NOC, strong Minister/weak Ministry, no Regulator, no IOCs, new National Assembly

    Project
    Introduction of foreign investment, design and development of new style of contractual

    arrangements for private sector participation. Models of how to turn KOC into a profit center Remedies and Reform Strategies
    Introduction of Service Contracts, update Petroleum Laws and Regulations

    QATAR
    13

    Issues and Challenges


    Change from oil to gas-based revenues, commercial efficiency, governance, conflict of interest

    Structure and Strength


    Competent NOC, strong Minister/weak Ministry, no Regulator, several IOCs participate

    Project
    Restructuring of NOC and re-introduction of private sector participation, particularly in LNG

    Remedies and Reform Strategies


    Commercialization of NOC, JVs in LNG, TSCs in NOC, PSCs for offshore oil

    SAUDI ARABIA
    14

    Issues and Challenges


    Rapid expansion of gas sector, cash requirements, differences between two Ministries

    Structure and Strength


    Strong SPC, strong Foreign Affairs Minister, strong NOC, strong Petroleum Minister/weak

    Ministry, no Regulator, no IOCs Project


    Project and process management of the Saudi Natural Gas Initiative. Provision of advice to the

    electricity and desalination sectors Remedies and Reform Strategies


    Private sector participation in very large, integrated upstream, midstream and downstream

    projects

    PAKISTAN
    15

    Issues and Challenges


    Commercial efficiency, non-commercial objectives, governance, five different governments

    Structure and Strength


    Strong Ministry, weak NOC, new Regulator, several IOCs participating in PSCs

    Project
    Eight year program to strengthen the sector to produce self sufficiency

    Remedies and Reform Strategies


    Sale of NOC assets, privatization of gas utility sector, introduction of Regulator, improvement

    of PSC terms, strengthening of the Ministry

    MEXICO
    16

    Issues and Challenges


    The Constitution, cash requirements, commercial efficiency, non-commercial objectives

    Structure and Strength


    Powerful NOC, weak Ministry, average regulator, no IOCs

    Project
    Opening of natural gas sector to foreign investment

    Remedies and Reform Strategies


    Introduction of Multiple Service Contracts, commercialization of Pemex, update of Petroleum

    Regulations

    AN IDEAL FRAMEWORK
    17

    As transitions occur in any given country, including the introduction of foreign investment, the ideal roles of the various players should be:
    The Ministry of Petroleum/Energy

    Overall Hydrocarbon Policy Development Setting Legal/Policy Framework for Foreign Investment High Level Definition of Investment Projects International Promotion
    The Ministry of Finance

    Collection of Royalties, Payments and Taxes


    The National Oil Company

    Disconnection from Government budget Forced into Efficiencies by Competition from Foreign Operators
    The Regulator

    Independent Role in Economic/Infrastructure Regulation

    CONCLUSIONS FROM THE TRENCHES


    18

    Depending on the country context:


    Isolate the National Oil Company, keep it in state hands, but improve it by

    some divestiture or asset sale


    Instigate better governance and internal management controls Make it compete for acreage Separate ownership, operation and regulation

    Strengthen the Ministries of Energy/Petroleum Improve independent regulation Update the contractual systems to attract more foreign investments

    THANK YOU
    19

    Tom Collins Independent Consultant Calgary, Canada


    [email protected]

    403 509 7359

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