Whilst the overall outlook for international oil company ratings remains stable, the growing longer term challenges to access and develop new reserves is likely to support greater co-operation between the international majors and some national oil companies, Moody's Investors Service says in its new Industry Outlook for the sector.
"The likely reserve base of Saudi Aramco alone far outweighs that of the five international super-majors", says Philipp Lotter, Dubai-DIFC based Senior Credit Officer at Moody's and author of the latest Industry Outlook for Integrated Oil & Gas Companies. "At the same time, some national oil companies are becoming increasingly formidable players as regards their commercial, financial and technical performance", Lotter adds.
According to Moody's, many parts of the Middle East remain heavily under-explored, providing large upside for new oil & gas discoveries.
Some country's face declining production, less as a result of lack of reserves, but more due to the growing challenges of bringing yet untapped reserves on stream. While some national oil companies, such as Qatar Petroleum (rated Aa3) have already developed long-standing partnerships with international peers, others remain more isolated. At the same time, international oil companies have seen their reserve replacement rates decline year-on-year, whilst high hydrocarbon prices have allowed them to build up considerable cash balances which are being applied to shareholders for lack of a sufficient number of large-scale projects.
"This global imbalance will lead to greater co-operation between international and national oil companies", Lotter says, and continues: "However, whilst historically the international super-majors may have had the upper hand as a result of their greater expertise, technology and financial resources, some national oil companies in the Middle East today have become equally formidable players, putting both very much on an equal playing field."
