U.S. Ranks Lower for O&G Investment


"Competitive playing field in international O&G sector has become more crowded,"

Non-U.S.-based companies have fared better in acquiring oil and gas concessions than U.S.-based counterparts in the face of competition from national oil companies (NOCs) that have emerged as international players, according to a recent report by IHS Cambridge CERA and Deloitte.

In the analysis, the share of global activity by investor-owned companies (IOCs) measured by oil production, acreage owned and number of wells operated by international oil companies in the U.S. or elsewhere has declined in relative terms over the past 40 years as NOCs have taken control of their home territories and begun investing in overseas oil and gas ventures.

While a number of factors contribute to the difference in performance between U.S.-based and non-U.S.-based companies, one factor that has not received the attention it deserves is the complex interactions between the host country fiscal regime and that of the home country. Other factors include policy objectives of the home country, access to capital, and the ability to mobilize collateral investments in the host country, such as ports, railways and power generation.

IHS and Deloitte concluded that the costs of repatriating profits from international operations back to the U.S. is higher than many of its chief competitors and places a value hurdle in the path of U.S.-based oil and gas companies that is higher than that of companies based in other countries. Securing new concessions requires them to overcome this hurdle.

The competitive playing field in the international oil and gas sector has become more crowded with new entrants and the growth of existing players. Over the past 20 years, the number of companies with production of over 1M BOE/d has doubled from eight to 16. This number does not include NOCs that do not operate outside their home territories.

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