Libya Again Tops for Explorers

U.K., Australia Also Popular

What non North American country is most favored by energy companies for new ventures?

The answer — for the third year in a row — is Libya, outranking the number two and three choices of the United Kingdom and Australia, according to the annual Robertson International New Ventures Survey for 2002.

Robertson, based in North Wales, United Kingdom, has been conducting similar surveys for about the past 15 years, based on information it receives by polling oil companies involved in E&P ventures outside North America, according to director Michael E. Scrutton.

Companies are asked to rate, in a confidential questionnaire, their level of interest in new ventures in 146 countries.

For this survey, the results of which were released earlier this year, there were about 70 responses, down from 115 about four years ago — due mainly to consolidation within the industry.

"When I looked back on the list four years ago, I saw that 37 companies listed then no longer exist," Scrutton said.

He estimates that it would take someone with a good handle on his company's activities about two concentrated hours to answer the some 20-30 pages of checklist questions, which can be answered over the Internet.

"Most companies, in determining their criteria, will consider a variety of factors — technical, economic and perhaps political," Scrutton said. "However, they use whatever criteria they want. We don't impose any."

Instead, the survey basically asks whether a company is "very interested, interested, has little interest or no interest" in any particular country. Robertson then crunches the number according to its scoring system, which results in the rankings, one down to 146.

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What non North American country is most favored by energy companies for new ventures?

The answer — for the third year in a row — is Libya, outranking the number two and three choices of the United Kingdom and Australia, according to the annual Robertson International New Ventures Survey for 2002.

Robertson, based in North Wales, United Kingdom, has been conducting similar surveys for about the past 15 years, based on information it receives by polling oil companies involved in E&P ventures outside North America, according to director Michael E. Scrutton.

Companies are asked to rate, in a confidential questionnaire, their level of interest in new ventures in 146 countries.

For this survey, the results of which were released earlier this year, there were about 70 responses, down from 115 about four years ago — due mainly to consolidation within the industry.

"When I looked back on the list four years ago, I saw that 37 companies listed then no longer exist," Scrutton said.

He estimates that it would take someone with a good handle on his company's activities about two concentrated hours to answer the some 20-30 pages of checklist questions, which can be answered over the Internet.

"Most companies, in determining their criteria, will consider a variety of factors — technical, economic and perhaps political," Scrutton said. "However, they use whatever criteria they want. We don't impose any."

Instead, the survey basically asks whether a company is "very interested, interested, has little interest or no interest" in any particular country. Robertson then crunches the number according to its scoring system, which results in the rankings, one down to 146.

The survey also asks other information about attitudes toward new ventures, which is also tabulated and analyzed.

The approximately 100-page hardbound report is sent to the participating oil companies, but is not otherwise published.

"They (oil companies) certainly don't all respond," Scrutton said, "but we feel there is a sufficient cross-section from the super companies to the small independents to provide a good overview of the industry, and therefore a valid sample of attitudes and interest."

Some companies regard the information as too sensitive and confidential to share, even though each response is kept confidential, Scrutton conceded.

He added that, although a lot of the study "is common sense and all very explicable on the basis of knowledge available in the market place, this provides a useful semi-empirical confirmation for what you decide is going on.

"It is also a useful benchmark for a company's own activity," he said. "It may have a new venture strategy that it may wish to check against what is happening in the industry generally."

For a country such as Libya, there are certainly political ramifications, Scrutton acknowledged, especially for companies in the United States, which has sanctions against Libya. But Scrutton describes the survey more as a wish list than one that necessarily will be acted on.

Still, it can have an impact. Countries that want to attract exploration are aware of the rankings, he said, and indicate that they realize that a modification of an antagonistic political stance may be a way to make them recipients of the revenues resulting from exploration and development.

Here then is a brief rundown of the top 10 (top 12, really, since there are two ties):

  1. Libya — Contract negotiations and awards are slow and Libya is under sanctions by the United States. No matter, the hydrocarbon potential appears to be so huge that Libya tops the rankings for the third year in a row.

    By contrast, Venezuela opened up in the mid-1990s and went to the top of the ranking but has steadily slipped, not only because of the deteriorating political situation, but even before because of the arrival of fiscal and legal disincentives.

  2. United Kingdom — "The UK has always had one of the best fiscal regimes in the world," Scrutton said, "but in the last few years there has been less exploration being carried out by the large oil companies, for they have perceived that the big new reserves are not there any longer."

    On the other hand, despite falling down in the ranking for three years, the UK has bounced back because the country has become attractive to smaller independents.

    (Incidentally, all votes in the survery are equal. In other words, a small independent has the same "vote" as a super multi-national.)

  3. Australia — "(It) offers a wide range of opportunity both on- and offshore," Scrutton said.

    There has been a reasonably high success rate, and the government on both the federal and state level has maintained competitive fiscal terms and a very aggressive annual program of offering new acreage.

  4. Algeria — (tie) The country "has promoted opportunities for development over the past few years that appeal to a variety of oil companies, from the very largest, for some of the projects are very big, and because the sedimentary basis is still under-explored but believed to be very good," Scrutton said.

  5. Iran — (tie) Despite sanctions and "a fiscal environment that is not one of the world's best," the government is offering participation on buy-back contracts, Scrutton said, and there are significant oil and gas fields already discovered, with huge quantities of hydrocarbons to be developed (see note this page).

  6. Egypt — It's been very successful in the last few years in attracting new investments, due to an aggressive promotional campaign by national oil company (EGPC) and the level of exploration success of gas off of the Nile Delta and oil discoveries in the Gulf of Suez and the Western Desert.

  7. Indonesia — A former number one in the ranking, the country has slipped due to social and political instability. There is still much hydrocarbon potential to be explored and exploited.

  8. Brazil — An emerging player, especially since releasing a range of opportunities for exploration in the past few years that were previously unavailable. (Rating taken prior to offering.)

  9. Mexico — A first-time listing in the Top 10, even before announcement of the proposed "Multiple Service Contract" formula by the government agency, PEMEX. Just the possibility has created a lot of excitement.

  10. Angola — (tie) Site of some spectacular deepwater discoveries that, in turn, have stimulated interest in other areas of this coastline (see page 14).

  11. Qatar — (tie) Another newcomer to the Top 10, thanks to the discovery of some huge gas reserves.

  12. Trinidad — A major oil discovery in 2001 propelled this small country into the Top 10.

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