Asia oil companies must ally 'against oil giants'

Asia oil companies must ally 'against oil giants'

SINGAPORE (Reuters): Asian states should foster energy alliances with neighbours in the wake of global industry consolidation that has created a handful of international oil giants, an ASEAN energy conference was told on Wednesday.

Solutions among Asian oil companies may not always give the best bottom line, but tangible and political benefits will be more profitable in the longer run, said Baihaki Hakim, President of Indonesia's Pertamina.

"In line with the new trend of merger and acquisitions, we (Pertamina) don't feel that it will be beneficial for us to work with the big oil corporations," Hakim told reporters on the sidelines of the 26th ASEAN Council on Petroleum (ASCOPE) in Singapore.

"They are so big and have different strategies and agendas in different markets. Realistically we see, for example, our partners as Petronas or SPC. We don't put all deals strictly on bottom line values, there are other issues to pursue."

ASCOPE comprises Indonesia, Brunei, Malaysia, Philippines, Thailand, Singapore, Vietnam and Cambodia.

Choo Chiau Beng, chairman of Singapore Petroleum Company (SPC), told delegates that mega-mergers such as BP-Amoco-Arco , Exxon-Mobil and Total-Fina-Elf had given these companies political clout in negotiations for oil and gas projects with host governments.

"We need to explore ways to ensure that we are not out-muscled by these mega players," Choo said.

SPC recently made its first foray into the upstream sector, by buying a 15 percent stake in the Kakap production sharing contract in the West Natuna Sea offshore Indonesia.

Pertamina has signed memoranda of understanding for upstream projects with Petronas and Petrovietnam.

Pertamina's Hakim said Asian oil counterparts were more committed than before to working up regional solutions upstream and downstream.

"I am inclined to see the spirit of cooperation and the momentum becoming stronger and stronger as compared with what happened in the last two decades," he said.

"Without forming and developing our competitive advantage through synergy today, it would be hard for all of us to survive in a more and more competitive environment."