Bloomberg News

Shell Leads Oil Companies in Non-OECD Alliances, Bernstein Says

November 03, 2010

Royal Dutch Shell Plc (RDSA) leads European oil companies in securing “strategic alliances” with state- owned producers in non-OECD nations to secure access to reserves, Sanford C. Bernstein & Co. analysts said.

Shell, Europe’s largest oil company, has about 1.1 million barrels of oil equivalent of daily production, or more than a third of its output, sourced in eight main ventures with national oil companies outside the Organization for Economic Cooperation and Development, said Oswald Clint, a Sanford analyst. BP Plc (BP/) comes next with its TNK-BP joint venture in Russia accounting for about 25 percent of the U.K. company’s fuel volumes, Clint said.

“With 93 percent of proven oil and gas reserves concentrated in non-OECD countries,” the European oil companies “face a challenge in gaining access to resources,” London- based Clint wrote in a report e-mailed today. “Exploration drilling has also been focused in non-OECD countries, with 75 percent of new wells drilled there last year.”

International oil companies have to move to new oil and gas frontiers because older fields in the North Sea and Gulf of Mexico are becoming depleted. Nations such as Saudi Arabia, Russia, Kazakhstan and Venezuela have restricted foreign access to their fields to exercise a greater control of revenue.

Shell is cooperating with OAO Gazprom, Russia’s state-owned natural gas monopoly, and PetroChina Co Ltd. (857) to develop wells in Asia. The Anglo-Dutch company is building its largest fuel production project with Qatar Petroleum, the state-run energy company, in the Middle East.

France’s Total SA (FP) has been teaming up with China National Offshore Oil Corp. to expand projects in Africa. Italy’s Eni SpA is working with Angola’s Sonangol SA and Libyan National Oil Corp. to tap fields in the continent.

U.K’s BG Group Plc (BG/) is one of a few international companies that doesn’t have “problems” finding resources, Chief Executive Officer Frank Chapman said yesterday. The company yesterday increased estimates for oil and gas resources offshore Brazil by 34 percent to 10.8 billion barrels of oil equivalent. It’s working there in partnership with state-owned Petroleo Brasileiro SA. (PETR4)

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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