Trend: Big Western oil companies have been locked out of the most promising areas in the world for oil exploration.
Jim Jubak at MSN Money describes the future of oil production. He likes national oil companies with the world-class technology to exploit the next generation of difficult geologies. Excerpts below.
It's not just that big Western oil companies control only 13% of today's oil production -- down from 50% or more in the 1970s -- but that they have so little access to the most promising areas for future production.
National oil companies in countries such as Russia, Iran, Saudi Arabia and Venezuela control access to roughly 80% of the world's existing and probable oil reserves. And that percentage is rising as more countries move to take back or reduce exploration and production agreements signed with the international oil majors.
This isn't good news for the Western oil majors. It means they've been pushed into exploring for oil deep offshore or to mine oil from difficult-to-refine deposits of oil sands. The volumes of new oil produced from sources like these haven't been enough to offset production declines from older fields, and the high cost of developing oil from these sources has gobbled up even increased exploration budgets.
The majors face a worst-case future of higher costs and falling production. Their best case is quite possibly higher costs and stable production.