AS FOR whether or not NOCs need IOCs when main contractors are perceived as possessing so much of the capability needed, Peter Robertson is very clear – NOCs need IOCs for a whole bunch of reasons.
“My reply is, ‘Why don’t they?’. Why did the Chinese government come to Chevron to do the sour gas in Szechuan. It’s because there are only a few companies in this world that can deal with $5-10-15-20billion projects and make them work, bringing in all the technologies that are required, and all the project management and the money and the partnerships.
“But it’s not just because of our size, though we have the balance sheet that can stand it as well.
“Look, we’re the leader of Angola LNG. In order to get that to work, in Angola … Angola LNG collects gas from the various partnerships; this gas is associated with oil production. We have to get all these guys lined up to agree to invest in an LNG plant with the government of Angola, all with their different perspective and production forecasts, and get them to agree to build this plant.
“Then we have to build the plant; then we have to find a market for the gas with a bunch of different partners, including the government of Angola … in the US or Europe perhaps and maybe build a regasification plant there; then we have to build ships to move this gas; and we have to do this over a long period of time. It took 10 years just to get the contract signed. Then we spend five years building the thing and then there’s a 40-year operating life.
“None of these companies that you name (main contractors) could even contemplate taking the risk or mounting the balance sheet, or mounting the wherewithal, getting all these characters together, working with them for long enough, doing the marketing, doing the production, bringing in the technologies, getting systems built in Korea, the US Gulf Coast, Europe or wherever, making it all arrive in one place at the right time and to do that through successive governments and all kinds of regimes and $150 oil and $30 oil and ….
“Last year, everyone had money … boatloads of it. But all of a sudden they can’t. But Chevron has to bring money and Exxon has to bring money through thick and thin, and we have the capability to do that … project management, culture, ability to handle multiple governments on these things.
“The thing that distinguishes this business from almost every other is absolute scale. I keep saying if, when you filled your car, you had to go to Waitrose and buy petrol in half-gallon containers like you do milk, and buy 40 of these every time you needed to fill your car, and wheel it out and pour it in your car, you’d know you’d bought something.
“And if you had to do that twice a week, you start to realise the scale of this … the physical scale of this industry is huge. We’ve spent $100billion a year for 100 years building this machine that we have and it can’t be replicated very quickly. It just can’t.”
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