A followup on the Leaders Conclave that we held in New Delhi last month. We've been reaching out to both participants and invitees who could not attend. There seems to be interest in pushing forward with the discussion points that the delegates came up with. We're in the process of putting together an event for HR managers in the Indian Oil & Gas sector to action some of these ideas. Stay tuned.
In the meantime, check out the proceedings from the conclave via Slideshare.
Saturday, March 13, 2010
Thursday, February 25, 2010
The Elephant & the Dragon
Over the last decade, the oil consumption needs of India and China have increased exponentially. However demand outstrips supply in both the countries which has led to energy security emerging as a key focus area. In recent months both countries have been outbidding each other to acquire promising oil& gas reserves across borders, across continents.
China has emerged as the clear leader in this race on the strength of its vast capital reserves and availability of cutting edge oilfield services technology. Also at the macroeconomic level the Chinese government has been more aggressive in development of human potential for oil& gas sector as compared to the Indian government. So in this race for energy, how can India Inc. compete with China?
One word- talent.
India’s pool of technically proficient, English speaking engineers have been well utilized in the Business Process Outsourcing and technology offshoring industry. This very pool could be a potent weapon for Indian corporations in the oil & gas space as well. There are a couple of models for this:
• Indian IOCs (a rare bird, India based international oil companies, but I think we’ll start seeing more of these in the coming years) can use in-house talent to help drive and deliver on their international expansions. What would set them apart for other IOCs? Access to cost effective people and processes that they have perfected in their home country. Host countries and governments are looking for knowledge transfer, and this could be a vehicle for that.
• India based services companies can leverage the knowledge base and cost model to compete with other services organization, particularly in SE Asia and the Middle East. Schlumberger has already been sourcing top Indian field engineers for international deployment very effectively over the last decade
• International services companies could build centers of excellence within India. A good model to follow could be IT companies like IBM and Accenture who have built practice hubs in India to support worldwide service delivery. The growth in digitization of services to the energy industry is a trend that can lift a lot of boats in India.
Some forward leaning organizations have already started down this path. If the stars align over the next couple of years in terms of regulatory regimes, hydrocarbon prices and the broad demographic shifts in India, then India Inc. could be a force to reckon with in the global energy industry.
Wednesday, February 17, 2010
Talent landscape in India for Oil & GAs
We have been lax in updating the blog for a couple of months- apologies to our followers. The Global Energy Talent team has been hard at work in expanding the human capability model to different stakeholders- companies, students, academia, regulators. With some wins under our belt, we hope to surface more often and talk about the intersection of the energy industry and human talent.
On this note- Global Energy Talent recently ran a Leaders Conclave in New Delhi on Feb 4, in association with the Petrotech Society of India. CEOs, Directors and chairpersons of different Oil & Gas companies attended, both from India and around the world. The topic of discussion was how to leverage Indian talent for better use in O&G projects in India, as well as around the world. To help set the stage, a question was posed- can India build an O&G industry with the IT industry as a model?
A couple of interesting observations from participants:
- How can the industry better communicate the advantages of a career in O&G to college students.. its still perceived as an old line industry. Can mass media be better used? Who are the influencers that need to be convinced?
- How to best train up young professionals. How can decision making be pushed down lower into the organization so younger execs have ability to take leading decisions earlier in their working careers? What kind of knowledge management practices need to be put in place to ensure organizational knowledge gets passed on?
- What business opportunities open up in the O&G space due to the pool of technical talent in India (which is yet somewhat unpolished). Can Indian-based oil companies use this as a differentiator as they expand to outside geographies? What about remote service delivery using India as center of excellence?
It was a fascinating discussion and we'll be taking these ideas forward in several forums.. stay tuned. If you'd like to receive a precis of the event, do contact us at info@globalenergytalent.com
On this note- Global Energy Talent recently ran a Leaders Conclave in New Delhi on Feb 4, in association with the Petrotech Society of India. CEOs, Directors and chairpersons of different Oil & Gas companies attended, both from India and around the world. The topic of discussion was how to leverage Indian talent for better use in O&G projects in India, as well as around the world. To help set the stage, a question was posed- can India build an O&G industry with the IT industry as a model?
A couple of interesting observations from participants:
- How can the industry better communicate the advantages of a career in O&G to college students.. its still perceived as an old line industry. Can mass media be better used? Who are the influencers that need to be convinced?
- How to best train up young professionals. How can decision making be pushed down lower into the organization so younger execs have ability to take leading decisions earlier in their working careers? What kind of knowledge management practices need to be put in place to ensure organizational knowledge gets passed on?
- What business opportunities open up in the O&G space due to the pool of technical talent in India (which is yet somewhat unpolished). Can Indian-based oil companies use this as a differentiator as they expand to outside geographies? What about remote service delivery using India as center of excellence?
It was a fascinating discussion and we'll be taking these ideas forward in several forums.. stay tuned. If you'd like to receive a precis of the event, do contact us at info@globalenergytalent.com
Wednesday, June 24, 2009
Chinese petroleum producers expanding inorganically
Sinopec today announced a tender offer for Addax Petroleum of Switzerland. Addax management has okayed and recommended the deal to shareholders. Addax has some valuable assets in West Africa and Iraq, both areas where GET has been extending our business, and so of particular interest to us.
Seems like the dragon's expansion is likely to continue, as predicted in a previous post by Ian Rushby. Will there be a nationalist pushback like the Rio Tinto or CNOOC- Unocal deal, or would the invisible hand of the market triumph?
Seems like the dragon's expansion is likely to continue, as predicted in a previous post by Ian Rushby. Will there be a nationalist pushback like the Rio Tinto or CNOOC- Unocal deal, or would the invisible hand of the market triumph?
Thursday, June 18, 2009
GET at Oil & Gas Asia 2009 Exhibition
I just got back from attending the 12th Asian Oil, Gas & Petrochemical Engineering Exhibition in Kuala Lumpur last week. I was present there exhibiting at a booth under the auspices of our partner Max Energy. This post outlines some of my impressions and takeaways from speaking to exhibitors and participants at the show.
- The exhibition was pretty extensive, covering 17000 square feet at the Kuala Lumpur Convention Center. Exhibitors covered two large halls that one often got lost in.
- There were almost 900 participating companies and close to 20000 visitors. It’s billed as Asia’s largest O&G show and it was indeed the case. Looking through the business cards I collected, I seem to have met with people from 17 different countries in the short space of a day and a half. Talk about a globalized industry!
- There seemed to be a much higher degree of optimism in the industry at the event. I was at the OTC show in Houston in May, where I noticed a more subdued mood. I bumped into an exhibitor who had showed at OTC as well, and in comparing notes, he mentioned how he felt that the near term business opportunities seemed more real at this show.
- The economic “green shoots” that analysts have recently been talking about seem to have already sprouted in SE Asia, at least in the O&G space. Well, we’ve also had a 20% runup in oil prices in the last month, which may have contributed to the general sense of new horizons.
- There seemed to be quite a few college students who were checking out the show. I got talking to a couple of these students, and there seemed to be a genuine sense of interest in long term careers in the O&G space.
- Finally, a word about the cuisine. I loved the noodle soups, particularly the kari mee, available at the event concession stands. Messy (still trying to get the curry stains off my favorite tie) but absolutely delish.
Thursday, April 23, 2009
Ghana: A New Growth Area for Oil & Gas
In an earlier post we’ve discussed how Africa is becoming a new frontier for oil and gas exploration for western countries as well as new emerging Asian powerhouses like China and India. We review one country – Ghana which is emerging as an oil and gas exploration hub.
Ghana was the first African nation to have gained independence from British rule. Since its independence in 1957, the country is slowly yet surely moving forward with the help of abundant natural resources especially minerals like gold, diamond, bauxite and manganese. What makes Ghana important to the oil and gas industry is the presence of light oil which was discovered recently in 2007.
As demand for energy has increased in Ghana, many projects relating to the importation of gas via pipeline from nearby Nigeria and Cote d'Ivoire have come up. Although as yet, its upstream oil industry has no crude oil production, Ghana is one of four West African countries with an oil refinery. Oil-derived products supply 70% of Ghana's commercial energy needs and the downstream sector is well structured.
Much of Ghana's emerging oil industry is underpinned by the discovery and early development successes of the “Jubilee field” located in an area straddling the West Cape Three Points and Deepwater Tano contract blocs. The development of the Jubilee field is currently in the first phase, involving the drilling of nine production wells and an additional eight support wells.
Currently, exploration and commercial activity is limited to mid cap players. Texas-based oil exploration company E&P outfit Kosmos is amongst the major players in Ghana’s oil and gas sector, although there have been some reports of Kosmos’ interest in divesting some of its stakes in the country. The other big player is UK based Tullow.
Smaller companies are finding it easier to explore in Ghana than in some of its neighbors in West Africa. This is due in part to advantageous terms of the contract which include factors like no front end payments such as signature or production bonuses; negotiable royalties and income tax; no limit on cost recovery, low rental payments, no restrictions on the repatriation of funds and no import duties on exploration and production equipment and materials.
With such advantages for exploration and development coupled with the quality of light crude, Ghana is poised to be one of the new growth economies in the oil sector.
Ghana was the first African nation to have gained independence from British rule. Since its independence in 1957, the country is slowly yet surely moving forward with the help of abundant natural resources especially minerals like gold, diamond, bauxite and manganese. What makes Ghana important to the oil and gas industry is the presence of light oil which was discovered recently in 2007.
As demand for energy has increased in Ghana, many projects relating to the importation of gas via pipeline from nearby Nigeria and Cote d'Ivoire have come up. Although as yet, its upstream oil industry has no crude oil production, Ghana is one of four West African countries with an oil refinery. Oil-derived products supply 70% of Ghana's commercial energy needs and the downstream sector is well structured.
Much of Ghana's emerging oil industry is underpinned by the discovery and early development successes of the “Jubilee field” located in an area straddling the West Cape Three Points and Deepwater Tano contract blocs. The development of the Jubilee field is currently in the first phase, involving the drilling of nine production wells and an additional eight support wells.
Currently, exploration and commercial activity is limited to mid cap players. Texas-based oil exploration company E&P outfit Kosmos is amongst the major players in Ghana’s oil and gas sector, although there have been some reports of Kosmos’ interest in divesting some of its stakes in the country. The other big player is UK based Tullow.
Smaller companies are finding it easier to explore in Ghana than in some of its neighbors in West Africa. This is due in part to advantageous terms of the contract which include factors like no front end payments such as signature or production bonuses; negotiable royalties and income tax; no limit on cost recovery, low rental payments, no restrictions on the repatriation of funds and no import duties on exploration and production equipment and materials.
With such advantages for exploration and development coupled with the quality of light crude, Ghana is poised to be one of the new growth economies in the oil sector.
Tuesday, February 24, 2009
Thirsty Dragon- China’s Energy Security
In little more than a decade China has changed from being a net exporter of oil into the world's second-largest importer, trailing only the United States. Despite the current economic slowdown the country’s oil demand is still forecast to grow by 2.3% this year. With some of the world’s largest and fastest growing cities and an emerging middle-class, demand is coming from both consumer and industrial sectors, including rapidly expanding automobile ownership. This growth in demand cannot be met from domestic production - currently domestic crude oil production supplies only two-thirds of the country’s needs. China’s government estimates that it will need 12 million barrels/day of crude oil by 2020 from the current demand of 7.95 mb/day (IEA).
Securing stable access to oil and gas supplies has become central to China’s economic growth which in turn underpins political stability. So China has been looking outside, in different corners of the world, to find its energy supplies. Until recently the country focused primarily on the Middle East for oil supplies. It was one of the few countries trading with the former regime in Iraq and had large production sharing contracts which were cancelled with the US and allies invasion in 2003. China has also been doing deals in Iran; earlier this year a Chinese state-owned enterprise signed a $2 billion deal to develop the Azadegan field. Nevertheless China recognizes the geopolitical issues and the significance strategically of the Middle East for both the United States and Europe so has set its sights on other areas. China has been prospecting aggressively in the Caspian region and Africa.
Although Africa holds only about 9% of the world’s total proven oil reserves compared to more than 60% in the Middle East, it may hold significant untapped resources. From 2002 to 2003, trade between China and Africa doubled to $18.5 billion; by 2007, it had reached $73 billion – including substantial crude oil imports from Sudan and other African countries. Hydrocarbon rich African countries have decade long relationships with Western oil companies. Wood Mackenzie estimates Chinese companies hold under 2 percent of Africa's known oil reserves – many of these assets were previously held, explored and relinquished by the IOCs. And much of the potential resource growth is in technically challenging deepwater blocks in Angola and Nigeria.
China’s share of Africa’s oil is however growing. Two factors have been driving this. Firstly China’s foreign policy of non-interference in the domestic affairs of its trading partners. Sudan’s government resisted international pressure over its actions in Darfur. How significant was the combination of China’s veto in the UN Security Council and the export of 60% of Sudan’s oil production to China? China also uses aid to provide leverage, supplying easy credit and development knowhow in places as diverse as Gabon and Congo. The Council on Foreign Relations put out a very thoughtful paper last year detailing the growth of Sino-African relations. Oil is the common denominator and China is expected increasingly to use a combination of aid, trade and knowledge transfer to expand its influence in the region and increase its imports. Will the new Obama administration’s clearly stated preferences for reducing its oil import dependency and diversifying to alternative sources of energy give China an opening to construct more deals and expand its presence in Africa in the coming years?
We’ve also recently seen China adopt a model of more direct ownership, fully or partly, of foreign companies. The US congress shot down CNOOC’s attempt to buy into Unocal during the last phase of industry consolidation - but that was in a very different world and has not stopped China’s NOCs from evaluating other options. Will the announcement earlier this month of Chinalco’s proposed massive investment in Rio Tinto be a precursor of similar deals in the oil & gas industry ?
About the author:
Ian Rushby had a 30-year career in BP plc where he held various business leadership, commercial, planning and control positions in BP’s Head Office and Exploration, Finance, Coal and Gas divisions, working in London, the Netherlands, Indonesia, USA and Russia. His most recent assignment was Group General Auditor of BP plc, reporting to the Group Chief Executive, the Board Audit Committee and the Ethics and Environment Assurance Committee. He is also a non-executive Director, Ministry of Defence, UK and Chairman of the Defence Audit Committee.
Securing stable access to oil and gas supplies has become central to China’s economic growth which in turn underpins political stability. So China has been looking outside, in different corners of the world, to find its energy supplies. Until recently the country focused primarily on the Middle East for oil supplies. It was one of the few countries trading with the former regime in Iraq and had large production sharing contracts which were cancelled with the US and allies invasion in 2003. China has also been doing deals in Iran; earlier this year a Chinese state-owned enterprise signed a $2 billion deal to develop the Azadegan field. Nevertheless China recognizes the geopolitical issues and the significance strategically of the Middle East for both the United States and Europe so has set its sights on other areas. China has been prospecting aggressively in the Caspian region and Africa.
Although Africa holds only about 9% of the world’s total proven oil reserves compared to more than 60% in the Middle East, it may hold significant untapped resources. From 2002 to 2003, trade between China and Africa doubled to $18.5 billion; by 2007, it had reached $73 billion – including substantial crude oil imports from Sudan and other African countries. Hydrocarbon rich African countries have decade long relationships with Western oil companies. Wood Mackenzie estimates Chinese companies hold under 2 percent of Africa's known oil reserves – many of these assets were previously held, explored and relinquished by the IOCs. And much of the potential resource growth is in technically challenging deepwater blocks in Angola and Nigeria.
China’s share of Africa’s oil is however growing. Two factors have been driving this. Firstly China’s foreign policy of non-interference in the domestic affairs of its trading partners. Sudan’s government resisted international pressure over its actions in Darfur. How significant was the combination of China’s veto in the UN Security Council and the export of 60% of Sudan’s oil production to China? China also uses aid to provide leverage, supplying easy credit and development knowhow in places as diverse as Gabon and Congo. The Council on Foreign Relations put out a very thoughtful paper last year detailing the growth of Sino-African relations. Oil is the common denominator and China is expected increasingly to use a combination of aid, trade and knowledge transfer to expand its influence in the region and increase its imports. Will the new Obama administration’s clearly stated preferences for reducing its oil import dependency and diversifying to alternative sources of energy give China an opening to construct more deals and expand its presence in Africa in the coming years?
We’ve also recently seen China adopt a model of more direct ownership, fully or partly, of foreign companies. The US congress shot down CNOOC’s attempt to buy into Unocal during the last phase of industry consolidation - but that was in a very different world and has not stopped China’s NOCs from evaluating other options. Will the announcement earlier this month of Chinalco’s proposed massive investment in Rio Tinto be a precursor of similar deals in the oil & gas industry ?
About the author:
Ian Rushby had a 30-year career in BP plc where he held various business leadership, commercial, planning and control positions in BP’s Head Office and Exploration, Finance, Coal and Gas divisions, working in London, the Netherlands, Indonesia, USA and Russia. His most recent assignment was Group General Auditor of BP plc, reporting to the Group Chief Executive, the Board Audit Committee and the Ethics and Environment Assurance Committee. He is also a non-executive Director, Ministry of Defence, UK and Chairman of the Defence Audit Committee.
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