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"The private and state oil sectors should be symbiotic, but the divide between the two is actually growing. I believe that a new partnership mentality needs to be developed between these two groups to create the stable and focused environment necessary for sustained productive investment," Jafar adds.
NOCs' technical ability improves
Crescent Petroleum states that today, NOCs have become much more technically adept and cannot be described as financially weak, which makes the past forms of agreements somewhat redundant.
However, some industry analysts have moved to disagree. "The IOCs still clearly have the technical edge in the industry, especially in the Middle East where in cases where they have been absent for a long time there has been a fall in technical capabilities. Especially in places like Iran and Iraq. In Iraq it's a very long situation caused by war and sanctions etc, but the country's industry is much depleted and needs to get companies in," IHS Global Insight's senior Middle East energy analyst Samuel Ciszuk tells AMEinfo.com.
In defence of its case, Crescent Petroleum has put forward a comparison of the top seven listed private sector companies with the top seven listed NOCs. These figures show that the gap has narrowed between the two groups. The aggregate market value of the leading NOCs stands at around $750bn, which is now not too far short of the $1,000bn of the IOCs. The debt levels of the two groups both stand at around 15% of the market value, while E&P spending of the NOCs has reportedly matched that of the IOCs in 2009 and is set to surpass it in 2010, according to the firm.
Saudi Aramco and Adnoc leading way for NOCs
Ciszuk backs up this data with examples of countries where the IOCs' technical skills are being threatened by those of the NOCs. "There are exceptions and definitely in the more developed side in the GCC, you have Saudi Aramco standing out as a very capable company," Ciszuk states. "But if we should single out a country or emirate or NOC which is thinking about whether they need an IOC or not, it's probably Abu Dhabi," he adds.
Crescent Petroleum is calling on IOCs to offer the NOCs agreements based on reciprocal cooperation as equal partners. The firm states that through these types of partnerships IOC and NOCs can develop a new working model which channels the necessary capital, technology and expertise into oil and gas developments.
The firm itself recently entered into an agreement with Rosneft to cooperate on joint development opportunities in the Middle East and Africa region. "Crescent Petroleum's Strategic Cooperation Agreement with Rosneft demonstrates the way forward." says Jafar, "This partnership brings together two companies, pooling their talents rather than acting in opposition to each other."
Iraq still needs IOCs to rebuild
Despite these partnerships, there still appears to be a long way to go in places such as Iraq, where IOCs are to continually hold the upper hand while the country rebuilds itself. "I think in cases like Iraq for instance there has been a realisation that has spread throughout society, not to say there isn't a strong resource nationally," comments Ciszuk.
"When the security situation improved, there were still a lot of people believing that Iraq could, and should, with its own state industry repair and recover. But it proved impossible and 2008 and 2009 went by with minimum recovery of Iraq's potential. There are still so many easy projects that could have been done that the Iraqis have just been proved to be incapable of. It goes down more to wars and sanctions than nationalisation itself but the fact remains they haven't been able to regenerate themselves," Ciszuk concludes.
Peter Ward, Reporter
