As the oil runs out, the fight is on to find more of the black stuff.
The problem for the international oil majors, such as BP and Shell, is that most of the remaining oil is controlled by national oil companies such as Saudi Aramco. That is why countries such as Iraq are so important to them.
If you cannot get your hands on Iraqi oil, then BP and Shell are either being forced into exploiting heavy oil like tar sands or looking for the last remaining fields of conventional oil: these are in every deeper water and places like the Arctic or the Amazon.
There are still major fields to be found in deep water – which is becoming the latest battleground between state oil companies such as the national Brazilian company Petrobras and the international oil companies such as BP.
The NYT reports today how the Brazilian government has now announced that it wants Petrobras to control all future development of the deep-sea fields discovered off Brazil in 2007, which could hold billions of barrels of recoverable oil.
The change would be yet another example of the growing power of national oil companies and diminishing power of the oil majors such as BP and Shell. Petrobras would become the operator for over 60 percent of the new area, consigning foreign companies to the role of financial investors.
José Sergio Gabrielli, the president of Petrobras has tried to argue that the latest moves are not “nationalism against foreigners” but most industry observers will claim it looks like it is and argue the move could back-fire as it will delay Brazil’s ability to develop the field.
BP is also going deep, although maybe not in Brazil. The company has just announced that it intends to drill even deeper than before, especially in the Gulf of Mexico, where it is planning on testing new technology.
Neil Shaw, BP’s team leader in the Gulf region, said: “We think it holds really great potential but it’s going to be very difficult.” “A lot of companies will not be successful,” he said.
“It’ll be interesting over the next couple of years who stays with it and who basically makes a choice of, ‘Too difficult,'” he said.
But if it is too difficult for some oil majors – where else will they go?
Oil on the moon, anyone?