Energy producers in driving seat at Rome talks

interactive investor: Energy producers in driving seat at Rome talks

Sun 20 Apr, 2008 10:59

By Alex Lawler and Peg Mackey

ROME (Reuters) – Consumer countries and international oil firms keen to gain greater access to the world’s energy resources are likely to walk away empty-handed from talks with producer nations in Rome.

Record high oil, which struck $117 a barrel on Friday, has helped to drive up the profits of oil majors, but it has also increased the spending power of national oil companies and made them ever more reluctant to grant access to their resources.

“The relative positions of international energy companies and national energy companies are changing — and not in our favour,” Paolo Scaroni, chief executive of Italian oil and gas company Eni said in a speech at the opening of the International Energy Forum (IEF).

OPEC member Venezuela, under President Hugo Chavez, has spearheaded a global trend towards resource-holders seeking to maximise their returns from their energy wealth.

International firms have found themselves faced with tougher terms and shut out of the best energy territory.

During the 1970s, the international oil companies controlled nearly three-quarters of global oil reserves and 80 percent of production, Scaroni said.

Now, they control 6 percent of oil and 20 percent of gas reserves, and 24 percent of oil and 35 percent of gas production, he said. National oil companies hold the rest.

There is little sign the trend will reverse.

MUTUAL NEED

But national oil companies still have some need for cooperation with foreign investors as international and national firms alike battle with cost overruns, staff shortages and the difficult of extracting oil and gas from more complex fields.

Producers are also keeping a nervous eye on the impact of high oil prices on demand and the development of alternative energy, such as biofuels.

“We need reciprocity — we (consumers) should demonstrate that we can manage demand in the years to come … their companies should demonstrate investments sufficient to meet this demand,” Pierluigi Bersani, industry minister in Italy’s outgoing government, told reporters.

“We need to talk to each other more. We are equally responsible for humanity.”

Shokri Ghanem, head of Libya’s National Oil Corporation, said consumer countries and international oil companies had to accept the world was changing.

“When the prices went down in 1990s, we accepted to give them a higher share … Now they have to accept a lower share, because they have a windfall profits,” he said.

But Libya remains relatively open as it seeks to develop reserves that were hobbled by years of international sanctions.

“We are opening our doors to different countries, to work in our country. it is in our advantage to have oil companies working there,” Ghanem said.

IEF meetings, which have taken place every two years since the forum was set up in response to the 1990-91 Gulf war when oil spiked briefly to $40 a barrel, have a reputation for being no more than talking shops.

But although they have largely failed to come up with broad, concrete steps, they can produce a rash of smaller deals.

Qatar Petroleum International and Eni signed an agreement on oil and gas cooperation on Sunday, although Iran, which has been in protracted negotiations with Royal Dutch Shell and Total over its South Pars field said it did not expect to sign any deals during the talks from Sunday to Tuesday.

Mexico, which is among the countries represented at the IEF, is considering an oil reform law that could offer foreign investors better terms, as it seeks to tap deep-water reserves.

(additional reporting by Simon Webb, Peg Mackey and Alex Lawler)

http://www.iii.co.uk/news/?type=reutersnews&articleid=L204348&feed=Bus&action=article

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