Environmental Engineering Reference
In-Depth Information
and inefficiency of some NOCs and the political interference in their
operations. But they know that the NOCs are the big holders of remain-
ing resources. The question is more whether the NOCs will allow col-
laboration. NOCs or their governments may well harbour some residual
suspicion of the IOCs for always wanting to claim ownership of reserves
wherever possible (so that they, the IOCs, can “book” the reserves onto
their balance sheets in order to reassure investors that they have a future).
Moreover, NOCs tend to take a more cautious approach to depletion
(the rate at which oil or gas is extracted), whereas IOCs almost always
want to pump oil or gas as fast as possible without damaging the oil or
gas reservoirs in order to get the payback on their investment. But in fact,
the desire of NOCs and their governments to work with the IOCs goes up
and down with the oil price. When the oil price is low, and cash is short,
oil-producing governments are often happy to have the IOCs investing in
their fields. But they have much less need of help from IOCs when the oil
price is high and the living is good.
The industry workhorses
Unlike the integrated oil majors whose filling stations make them house-
hold names, oil services companies have no public image. Yet they do
much of the work - providing seismic services to help the oil companies
decide where to drill, doing the drilling, and then maintaining and repair-
ing oil wells. Their role has increased in recent years. The international oil
companies (IOCs) have tended to hand over to service companies more
of the middle stages of the oil cycle between exploration and refining and
marketing. This has enabled the IOCs to limit the number of full-time
employees they have, and put more of the burden of adjusting to oil indus-
try booms and busts on to the service companies.
So oil services tend to be the most up-and-down part of a cyclical
industry. They tend to be the first to feel the booms and busts. Many
people in the sector, and the rigs they use, are paid and hired on a day
rate, and can be laid off at very short notice. For instance, although it
still has 77,000 employees of 140 nationalities working in 80 countries,
Schlumberger laid off 12,000 employees between autumn 2008, as the oil
price plummeted, and summer 2009, as the oil price recovered.
Meanwhile the service companies are not only important, but also
attractive, to the national oil companies (NOCs). In contrast to the IOCs,
they don't try to book oil field reserves as their own, or to try to get the
