The Petroleum Industry and the Economy.ppt

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1、The Petroleum Industry and the Economy,Some thoughts on meeting the challenges of the 21st Century Gregory McGuire,Conference on the Economy 2008,Presentation Outline,Introducing the Works of Trevor Farrell Assessing the Current Context Farrells Themes and Industry Evolution. Ideas on the Future,Far

2、rells Major Concerns,Planning Capability in the Energy Sector Engaging MNC and Technology Acquisition National Ownership Technological Capability and Industrial Policy,Some Early Conclusions of Farrell,Oil industry has failed to provide Trinidad with the development one might have expected.(1974) Fa

3、iled to play role of dynamic sector weak productive linkages with rest of the economy Venturing downstream (Plastics etc) remains a option to be explored,Some Early Conclusions of Farrell,Resource based industrialization was misleading because : Supply side approach to the definition of what is to b

4、e produced Static comparative advantage is easily lost.( 1988) Planning is a poorly developed function in the Caribbean (1980),Some Early Conclusions of Farrell,A technological capability still does not exist over a whole range of activities necessary for running the oil industry .( 1979)The country

5、 clearly had the worst of the deals in the two petroleum nationalizations of the early seventies due inpart to psychological weaknesses of negotiators and poor planning. ( 1976),Some Early Conclusions of Farrell,In the development of the JV at Point Lisas the local strategy was too narrowly focused

6、on getting the plants built rather than acquiring technological capability. ( 1986),Assessing the Context,International and Local,Current Global Trends and Issues,Developed world not driving demand growth but could drive demand destruction Reduced Transnational Company role in favor of National Oil

7、Companies Emerging supply sources give no assurance of supply stability Increasing commoditization of gas and LNG,Demand growth no longer driven by developed economies,The Power of NOCs,Source: Frank Kuijlaars- Oil & Money 2007,Supply Dynamics,Three of five largest decrease came from OPEC .Suggestin

8、g initial attempts to stabilize prices.,LNG Commoditization,Oil Prices Which way ?,Rising Oil Prices,Demand from Non OECD countries and market psychology have been the principal drivers.,Back to the Future,Oil Prices : Which Way ?,Declining Economic Growth : OECD & Non OECD New supply sources: Brazi

9、l, Heavy Oil Tech. Convulsions within OPEC Bearish market psychology Fuel Switching Peak oil theory losing steam,Declining Non -Opec Supply . New supply sources mainly in non “friendly” areas. NOC vested interest,Oil Prices : Which Way?,Some Critical EWS Real oil prices have climbed back to 1982 lev

10、els IEA, EIA and OPEC have all lowered demand forecasts for 2009 Short term supply disruptions e.g. Ike and Gustav Nigeria, Georgia have had no discernible impact on prices. China is not imported gasoline for two months; instead exported surplus stock.,Rising Gas Prices,Gas Price Forecast,This forec

11、ast was produced before the current crisis. Henry-Hub prices this morning quoted at 6.75/mmbtu lowest level in four years.,What does this mean ?,Local Industry Context,The Big Picture,Resumption of long term decline in Crude oil production Significant slowing in the rate of gas utilization and produ

12、ction Decline in both exploratory and development drilling over last two years.,The Big Picture,Refining at the cross roads. Upgrade project Costs Markets Long overdue modernization,The Big Picture,World class primary petrochemical business. World class LNG business. Limited national participation i

13、n value chain Only initial steps at downstream expansion led by local private sector.,The Big Picture,Industry growth slowed by rising capital costs, market uncertainly and tougher local terms. Stagnation at the national enterprises. Massive expansion in skill training to match requirements of the i

14、ndustry.,Long Term Production Decline,Refinery Output,Still a relatively high percentage of low value fuel oil .,Gas Consumption 1995-2006,LNG Dominates Gas Utilization,Farrells Themes,Planning and the Energy Sector,Successful Planning Farrells Six Preconditions,EffectiveOrganizational Apparatus,2.

15、Cadre of Skilled people,3. Effective Control Over Energy Sector,4. Sophisticated Understandingof planning,5. Willingness Of Policy Makers to plan,6. QualityInformation,Approach: AFROSIBER,Nine Point Planning Methodology Assess Context Forecasting Resource evaluation Objectives Strategies and Implica

16、tions Balances Execution Review,Assessment,Planners were mainly project managers concerned with getting the physical plant off the ground. A handful of people were entrusted with the responsibility for projects were not enough to do the kind of planning required. Planners did not have the level of i

17、nformation required and relied on the information provided by technology supplier.,Recent Approaches,Vision 2020 Energy met criteria of skilled cadre, and information requirements . Widening Gap between plan and what is being implemented.Organizational Apparatus remains basically the same as 30 yrs

18、ago, with the same personalities.,Farrells Themes,Engaging MNCs and Technology Acquisition,Philosophy,Major concern ; the level of benefits the country receives from MNCs in the form of Technology Acquisition and Value Added. TNCs dont willingly transfer technology . Host Governments need to develop

19、 the national capacity to acquire required technology.,Assessment,It is clear that the areas where the country has developed a capability have been only those areas which the companies needed to develop locally st to carry out their activities. Technological capability still does not exist over the

20、whole range of activities necessary for running the industry .,Current State,The relationships with ANLG suggest that technology acquisition is still not a specific item on the agenda and that weaknesses in dealings with the Multinational persist. PMs cry for a better deal from ANLG,Farrells Themes,

21、National Ownership,Philosophy,We cannot plan for what you could not control. Multinationals run the business in their own interest This is so even when they are engaged in a JV arrangement The primary aim of Nationalization is to create a national vehicle to build national technological capability i

22、n the sector.,History and Performance,Nationalization and national ownership in sector since 1969. Features: Rescue Nationalization Cosmetic Nationalization Direct Investments Process reversed during the 1990s with privatization of bulk of direct investment assets,Assessment,An effective and meaning

23、ful genuine nationalization would possess the following features: Effective local control of the nationalized properties The actual exercise of such control for the furtherance of development goals The targeting of areas of real economic significance,Assessment,Farrell study highlighted breath weakn

24、esses: Major projects and construction Research and development Economics and Planning Transportation International marketing,Assessment,Farrell study highlighted Depth weaknesses: Exploration and Marine production Petrochemicals Genaeral administration Purchasing Information and Data Processing,Ass

25、essment,in a 1979 study of industry Farrell concluded : Nationalization is unlikely to work even in the short run unless ways are found for tackling the basic skills deficits in the are of the critical functions,State of the National Enterprise,Fully Owned,Petrotrin National Gas Company National Ene

26、rgy Corporation Equity Tringen PPGPL ANLG Train 1 and 4,State of the National Enterprise,THE CASE OF PETROTRIN,The Refiners Economic challenge,Refinery location issues Raw materials, markets, utilities, labour supply Capital investment Fixed and working capital Refining costs Project and payout time

27、 Economics of impurities,The Developing Country Problem,Access to low cost secure crude supply Lack of capital for investment Diseconomies of scale and small refineriesMarket demand and refinery output imbalance Lack of design and construction capability Lack of managerial, commercial and technical

28、expertise,Main Products,LPG Aviation Gasolene Motor gasolene Kerosene/Avjet Gas Oil/ No. 2 Fuel Oil Fuel Oil Bitumen Sulphur,Refinery Throughput 1994-2008 August Ytd,Refining & Marketing Performance Indicators,INCOME STATEMENT - R&M (TT$MM),Refining at the crossroads,Refinery Sustainability Specific

29、ations Petrocaribe & Caricom Gas & LNG Oil Prices,Cost Challenges to the refining Industry,Petronas : A benchmark National Enterprise:,Founded in 1974 Total Assets ( 2004) US$ 53 billion compared to NGC/Petrotrin $3 billion. Business : Fully integrated oil and gas , gas processing, liquefaction, LNG

30、 shipping regas, shipping property investments. Petronas Group: 94 wholly owned subsidiaries, 55 associated companies 14 countries.,Technological Capability and Industrial Policy,Philosophy,At the heart of our ability to win the game with the TNCs is the technological capability That is ; the abilit

31、y to find ones problems and needs and find ways to meet and solve them.,Local Content in Energy,Local content policy formulated Permanent local content committee appointed Need to build on achievements Labidco etc Need to provide resources,Enterprise development,Local enterprise development vital fo

32、r the continued meaningful growth o f the industry. CL Financial is an outstanding example of what is possible by a local enterprise Policy makers should learn lessons of that experience in order to inform the way forward.,Thoughts on Moving Forward,Place technology acquisition and technological capability back on the agenda. Develop that Cadre of skills personnel involved in the planning and Management of the Sector. Make strategic use of state equity participation to expand downstream and down the value chain.,