The former boss of oil and gas explorer Dana Petroleum last night urged UK policy makers to take heed of major shifts on the global energy landscape to ensure the North Sea remained competitive.
Marcus Richards, in his first public speaking engagement since he left his role as chief executive of the Korean-owned firm, said the oil and gas industry was witnessing a “structural shift” in the balance of power among industry players, host governments and national oil companies.
In a speech delivered to members of the Scottish Council for Development and Industry (SCDI) at its annual lecture at the Marcliffe Hotel, Mr Richards said his own experience of running a North Sea company owned by national oil company Korea National Oil Corporation (KNOC) reflected “the changes going on in the industry and in the world in general”.
He said: “My transition from a Western oil major to an Asian national oil company is but an illustration of the shape of things to come.”
He said national oil companies, such as China’s CNOOC and Sinopec as well as Abu Dhabi National Energy Company, now controlled around 90% of the world’s remaining oil and gas reserves.
Backing Sir Ian Wood’s proposals for closer working relationships in the North Sea, he urged industry and government to “work together based on mutual advantage” and heed the lessons of the national oil companies.
“The motivation of these state companies is not earnings per share or total shareholder return but building capability and energy security.
“As a result, their business models of capability, funding and competitive advantage are very different. They bring a whole new dimension to the oil and gas sector.”
He called for a “new generation of visionary leaders” to reforge the way the industry worked together.
He said North Sea firms should introduce ways in which firms could share inventory costs by introducing “integrated supply chain management” to the sector.
“I believe this would be a visionary path to follow,” he said.
Mr Richards noted that when he moved to Aberdeen to work with BP in 1983, the average oil price was $36 a barrel and the North Sea was producing in excess of 2.5million barrels of oil per day.
This compared with oil prices over the last five years which stayed in the range of $90-$110 per barrel.
He added: “Aberdeen is no longer just the centre of the oil and gas sector for the North Sea.
“It is home to a vibrant sector that supports enterprise beyond the city boundaries and the international oil and gas sector.”