East-West Ties: Next Steps for National Oil Companies?

Abstract

The same cliff edge threatens all national oil companies (NOCs) in the Middle East, Asia and beyond: ensuring energy security amid tighter budgets, green targets, growing populations, and rising energy demand. In the Middle East alone, BP Outlook expects energy consumption to rise by 54% by 2040. Success will be hard-won, especially in a world of US 60/bl oil. As guardians of their economies, NOCs must reach out for strategic helping hands to stay on their toes.   Price volatility is a key pressure point, from which no NOC is immune. Such volatility has seen oil prices reach US 86/bl in early October from US$67/bl at the beginning of this year, then slide again recently by 30$57/bl. But there is a silver lining to this lingering cloud of guesswork. Dated Brent averaged US$72/bl as of the 7 December this year, versus an average of US$ 54/bl in 2017 – a 33% annual increase. Of course, there could be more twists and turns ahead, such as the US' renewed sanctions on Iran. This alone could remove between 1 million barrels a day (b/d) to 1.5m b/d of oil from the market. As more ‘what ifs' dominate NOCs' boardroom conversations, partnerships are pivotal to staying afloat in the sea of ambiguity.&nbsp