Southeast Asia oil firms urged to unite to compete with giants

Southeast Asia's national oil companies should explore alliances to counter the threat from the four global giants, AFP quoted the president of Malaysia's state energy firm Petronas as saying Monday.

The biggest threat facing the world oil industry "is the domination of the super-majors," Mohamad Hassan Marican told an Asia Oil and Gas Conference.

Their low cost of Capital, access to huge untapped reserves and strong technical and development skills put them in a class of their own, he told more than 700 delegates in a speech.

Marican said the combined reserves on capacity is the equivalent of about 13 million barrels a day.

To meet this challenge, national oil companies should seek formal and informal alliances with each other and explore niche areas of the world to invest in.

"We will need to partner with the super majors as we simply do not have the capacity to compete head on with them."

It was urgent for national oil firms "to work even closer together to keep pace with the industry giants, or risk being marginalised and forced to swallow the terms others impose on us."

Marican suggested that in the next five years "and purely on a hypothetical basis," the national oil firms of Indonesia, Malaysia, Thailand and Vietnam might consolidate along with forming alliances elsewhere in the world.

Marican, who is also chief executive of Petronas, also reviewed the threat posed both by too low and too high oil prices.

He said current high prices had stalled the economic recovery in some Asian countries and suggested that 25 dollars a barrel may be the correct long-term sustainable level.

Brent North Sea reference crude for July delivery climbed to 28.70 dollars a barrel in London last Friday.

Petronas chairman Azizan Zainul Abidin told the conference the main challenge facing the industry was meeting long term demand.

The Asia-Pacific region would be the world's major energy consuming region by 2010, he said.

"Unless there is an expansion in capacity, the projected increase in demand for energy in these developing countries may result in a crunch with a serious impact on both developed and developing countries." (*)