In praise of perpetuity
by Alexandre Lavelle
National oil companies manifesto

Perpetuity is every national oil company’s mission. Their articles of incorporation proclaim that they must toil for future generations. While international operators can wander from one country to the next according to the circumstances and various regulatory frameworks of producing countries, national oil companies cannot be so versatile. Neither can they pick and choose geologies; they remain attached to the hydrocarbon heritage exploited on behalf of their people. This praise of perpetuity is a tribute from ARTHUR D. LITTLE (ADL) to national oil companies, which strive to forge a path in a blurry world towards their historical destiny.

Gaze at the beige shades of dunes peppered by countless wells from your airplane window as you land at Hassi Messaoud airport in Algeria. Make out the drilling barges sprinkled across flooded forests as you fly over West Siberia in a relief helicopter. Follow pipelines and manifolds around the street corners of Kuwait’s residential neighborhoods. You will comprehend the petroleum industry’s promethean work of transformation, shaping on its way to its processing facilities, the land and maritime vistas of our humanity, as we enter a new Anthropocene.

States, multinational corporations and non-governmental organizations aggregate in financial, logistical and information networks that send men to extract hydrocarbons in the Arctic, the Gulf and the Appalachians. In this game of wars and alliances that blends politicians and industrialists, national oil companies stand out. They carry out, as either operators or regulators, the production of domestic hydrocarbons on behalf of their nations and for the sake of future generations. Many arose out of nationalization movements prior to the first oil shock of 1973. Today, they represent 75 percent of global production, and they control about 90 percent of global reserves. They sustain national industrial agendas and maintain, thanks to the diversity of their activities, the largest employment areas in their economies.

Heroic figures of the oil & gas industry


After independence, national oil companies were the petroleum industry’s heroic figures. Back then, several industry leaders, some of which still guide their companies today, were young engineers put in charge of production assets overnight – assets that were, until that point, operated by foreign companies. Nationalization, a political decision which was, at times, sudden and without negotiation, made these technicians the men accountable for ensuring the prosperity of their countries. Today, portraits of them in hieratic poses adorn the boardrooms of Sonatrach, Pemex, KOC and ONGC. Their mission was colossal: increasing production levels, executing governmental instructions, recruiting and molding a new generation of technicians, paving roads, and erecting hospitals and airports. The intrusion of politics in the early days of national oil companies’ operations galvanized their leaders, but also exposed them to often-contradictory directions from governmental authorities. They faced an evolving equation of reconciling operating conditions with political instructions. Once nationalization movements were complete, the mandate of every national oil company’s CEO became –and remains today – to untie this double bind.

The celebrations of the 24th of February 1971 at Sonatrach, or the multiplication of shrines such as Burgan’s dream tree for KOC, constitute institutional monuments to the epic of national oil companies. Also enduring, in the interstices of their collective memory, is the experience of those teams who, moved by
a nationalistic fervor, organized themselves to seize the oil business from the English, French and Americans. Service companies assisted with managing operations and facilitating the transfer of the knowledge necessary for sustaining production.

Nevertheless, national oil companies also had to turn to management consulting firms – which were emerging during the same period, but under different circumstances – in order to restructure their organizations, which they had inherited from foreign operators, and to take hold of their installations. The expansion of management consulting firms and the creation of national oil companies coincided, without there having necessarily been a correlation. Until the 2000s, ADL'S posters explaining the hydrocarbon industrial chain of Algeria had been hanging in the hallways of Sonatrach’s old headquarters. At KPC, black-and-white pictures of ARTHUR D. LITTLE consultants side by side with Kuwaiti engineers can be found, capturing the drawing of plans (in India ink, much before PowerPoint!) for a future holding federating the totality of the oil & gas sector in Kuwait. It was a time when consultants, wearing wide-collar shirts without ties and hanging cigarettes on their lips, helped Angola create Sonangol out of nationalized assets from Texaco, Fina, Shell and Mobil.

 

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