US should lead global effort to handle growth of NOCs: study

Houston (Platts)--1Mar2007

Oil-consuming nations and the US in particular, should work harder to
promote free trade and use multinational business frameworks as they adjust to
an energy market dominated by a new breed of national oil companies in
competition with the large international majors for control of world
resources, according to a study published Thursday by Houston's Rice
University.

"The US will have to accept the existence of NOCs as a fact of life but
should encourage steps to make their activities more businesslike, transparent
and--to the extent possible--free of onerous government interference," said
the report published by the James A. Baker III Institute for Public Policy at
Rice.

In conjunction with release of the report, the institute has scheduled a
two-day conference Thursday and Friday featuring a list of speakers that
includes ConocoPhillips CEO James Mulva, Victor Zhikai Gao, general counsel
for China's CNOOC, and Bader Al-Kashti, chairman of the Kuwait Foreign
Petroleum Exploration Company.

The report includes a databank of statistics and case studies on 15
different NOCs to explain what it terms "the changing role of national oil
companies in international energy markets." And it offers suggestions for
coping in a new global market dominated by state-owned operators and
producers.

Foremost, the report urges the US to take a leadership role crafting
international agreements for more efficient development of the world's energy
resources.

"It is not all that obvious whether the US needs to care whether its oil
companies have a dominant role in exploiting the world's energy reserves,"
states the report. But it also rejects any idea that the US should create its
own national oil company as a response.

"The US government should take an increased role in promoting bilateral
and multilateral trade treaties in an effort to increase competitiveness,"
urges the report. It also suggests that the US find new ways to use foreign
aid as a supplement for US oil company investments in countries that need
social and economic development activities.

--Gary Taylor, gary_taylor@platts.com