Beware the new world energy order

CALGARY – With crude oil prices strengthening and demand for oil continuing to rise, you’d expect three of the most powerful men in the global business to be thrilled with their good fortune.

Instead, Rex Tillerson, chairman and CEO of Exxon Mobil Corp., Jeroen van der Veer, chief executive of Royal Dutch Shell PLC, and Thierry Desmarest, chairman of Total S.A. — brought together likely for the first time last Friday by Alberta utility magnate Ron Southern to address his Spruce Meadows Round Table — are anxious about whether there’s even a future for their business.
As Mr. van der Veer put it: “We got very serious problems.”

Around the world, the rules of the game are changing and their business models become ineffective.

Meanwhile, the solutions are unclear.

Along with facing pressure in the developed world over climate change, from consumers outraged with high gasoline prices, from their respective governments for excessive profits, they’re watching their investments evaporate as scores of host countries rip up deals, nationalize resources and seize the power of oil to exert political influence.

“The reality of high oil and gas prices has brought more national behaviors that are not always good for industry, while what is needed is a global approach, international co-operation,” to ensure global energy security, Mr. Desmarest told the record crowd of international business leaders, including most of Canada’s energy industry chief executives.

“If the IOCs (international oil companies) don’t invest because they can’t invest, then we made the world more dependent on national oil companies that have a national agenda as well.”

In some countries, particularly in the Middle East, that are experiencing growing financial reserves because of the oil windfall, there’s even discussion about reducing production to ensure there is continued wealth for future generations, rather than boosting it to meet global oil needs, he said.

Finacial Post (Canada) Post