Are Oil Companies Myopic?

In my earlier blog, I pondered if Oil Companies are myopic. I recently read an article titled Innvovation Killers by Clayton M. Christensen et al in HBR. The authors write how financial tools like NPV, DCF etc destroy the capacity to do new things.

The argument is using these traditional financial tools how confidently can we judge an innvoation that requires considerable investments. One of the arguments they make is towards the focus or emphasis on Earnings per share (EPS). They highlight that current Prinicipal - Agency relationship of companies encourage for ever increasing EPS which is nothing but myopic focus on profits at the expense of long term value creation.

This , in my belief, is what is happening with the Oil industry.

Personal Impact in Communication

As part the EMBA at ESCP Europe, I took the "Personal Impact in Communication" elective. Some of the objectives for the elective were

• Help one give strong impact to his or her communication
• Help one improve their relationships with others
• Help one deal with their emotions when they communication
• Help one deal with unexpected communication situations.

The elective or maybe I should say workshop was facilitated by Marc Geraud, a trained actor, professional coach and trainer in communication.

I learnt some intresting facts about Communication and why do we feel stressed and shaky before and during a presentation in front of an audience. It has to do with our (human) primordial behaviour or to put in simply the way we are programmed as humans.

When facing an audience we feel stressed and wanting to be some where else rather there, because our primordial reactions cause increase in adrenalin & Cortosins in our bodies. These two harmones helped our ancestors to do FIGHT back or run away (FLIGHT) from looming danger. These invaluble reflex actions that helped our acestors also kick in when we face an audience. So, the trick, I learnt, is to know about this and the fact that it is but natural. Then later to try and control or over come this.

We learnt some techniques to overcome such situations invoving breathing techniques and preparations before facing an audience.

We all work hard on the content of the presentation, but apparently this is only but a small percent of the whole presentation. More important elements are body language, the way we deliver our speech, the way we connect to the audience (or the lack of it).

I have learnt quite a bit from the workshop and hope to work on it to improve my communication skills. I would also recommed such workshops to others looking for career in leadership, having to face audiences.

Is the Oil Industry Myopic?

Now that the Oil prices are below 50USD per barrel and the uncertain future of the oil prices, most of the Oil comapnies are talking about cost cuttings in Capital expenditure as well as other areas like ICT expenditure.

I wonder if the Oil comapnies are myopic, in terms of cutting costs and stopping recuritment when ever the oil prices drop. It is a known fact that most of these Captial expenditures will in future have to be done anyway to bring new reserves online or extend the life of existing assets. Would the cost of production and marketing be more than 40 USD per barrel for many of the new developments and the modifications being carried out currently, which have been put on hold or will be soon?

If we look at what happened in the last decade when the oil price dropped to 10 USD, most of the recruitment was stopped. What did it lead to; critical shortage of experienced young engineers to replace the retiring workforce. Is this not but Myopic?

It will be intresting to see what happens with recuirtment now with know facts of skills shortage and appx 40 USD price.

Scenario NCS 2020

Scenario NCS 2020 - was the title of the talk organised by NPF (Norwegian Petroleu Society) on 25 November at the Petroleum Museum in Stavanger, Norway. The presentation was given by Jarand Rystad, Managing Partner of Rystand Energy AS.

The presentation looked at NCS in 2020 with focus on the player landscape.  What will most likely happen if current trends are to continue?  And what might alternatively happen if big changes take place?  Rystad went through three scenarios looking at how events like extreme oil prices, fiscal changes, major discoveries and technology breakthroughs might influence value creation and the player landscape. 

He started with giving an overview of the current players in the NCS. He had them into two broad groups;

1) The Incumbents: with the likes of StatoilHydro, ConocoPhillips, BP etc,

2) The Challengers: comprising of the many new players like the European Energy companies GdF, Dong, Ruhr Gas to Norwegian grown companies like Noreco, Revus to the opportunists like Aker Exploraiton etc.

Rystand dwelled on the following three scenarios:

1) Most of the Incumbent players operating with players from the Challengers like those of GdF, BG operating in the NCS

2) Some of the Incumbents leaving the NCS like Exxonmobil, BP and more of the Challengers, especially, Norwegian grown companies like Norecon becoming more active.

3) Rystad reckons if the Oil price continues its dip to the south, chances are very strong that only Incumbents like StatoilHydro will be around.

The presentation was followed by a very intresting Q&A. Questions ranging from why were the Russian & Chinese companies not included in the Challengers. Rystad politely agreed to having them and look at a possible scenario with these comapnies also operating in NCS.

One question from the audience was; whatever the scenario, a common Norwegian would expect the best returns for their national resources. A gentleman from NPF in the audience made a very good point that the Norwegian authroities are creating an environment to foster Enterprise which would lead to competition and thus lead to getting the best value.

There was a discussion on the effects of the Statoil Hydro merger. This, as is evident, is leading to more opportunities for the merged company as it becomes a bigger company and has a stronger presence globally. But the audience also reckoned that this let to a bit of unbalanced voice around the table at the licensing rounds. The strong voice of Hydro is being missed and no other Norwegain comapny has been able to step into the vaccum.

This was my first to attend these small presentation networking evenings organised by the NPF. I thoroughly enjoyed it and look forward to more of these. 

Windows Azure, Google and the Cloud

Windows has given a sneel peek into the Azure which is based on the Cloud concept. The Cloud gives us the ability to access our data from anywhere. This has been one the main arguments in favour of the Cloud. This offcourse carries the risk of having to accept the data being hosted elsewhere and not inhouse both for enterprises and as individual personal use.

If storage costs are falling rapidly and the access to broad band is increasing at a random pace, why then can not enterprises have thier own mini cloud and personal users be able to setup a server with enough storage capacity and be able to access that from anywhere?

Is this the big corporates trying to push solutions on us? What ever it is, it would be very intresting to see how this develops in the next five years to ten years.

Test Blog

This is my First Blog, well maybe not the first one. I have blogged in my Comapny's Knowledge Management Tool on some of the Conferences I attended. But this sure is my first blog on the WWW. I haven't yet thought of a theme or list of topics to Blog on. Lets see how it goes.

I have to see what it means to me, why should I use it and for what benefit/objective.

Hopefuly there are more out there like me who would like to check it out but pondering why and for what? I will sure be happy to hear from any such individuals. 

All those blogging, maybe you can give your thoughts on why you do it.

So much for now. Will check around the blogs to see what everyone is blogging on:-)