Over the centuries, historic features change gradually. Past events and developments complement and pave the way for subsequent ones, without anyone sensing that one era has ended and a new one has begun. For example, the discovery of oil and gas did not spell the end for coal. Instead, its usage and its share of the international energy market declined, in favor of other hydrocarbons. The best proof of this is the fact that coal continues to be the primary fuel used for power generation in many countries, such as India and China, and is also widely used in the United States (U.S.) As is known, there are attempts to replace coal with natural gas in power plants, and it is quite likely that the competition between these two resources will continue for decades to come. Interestingly, this competition is driven by many factors, which vary from country to country, and which include the volume of domestic production of either or both resources and their respective prices, not to mention the extent of a given country's commitment to environmental laws and participation in international efforts to reduce harmful emissions. All this leads us to the current shifts being witnessed in the global oil industry. After a whole century during which Western oil companies monopolized the global oil industry, national oil companies gradually emerged in oil-producing nations, and also in Asia and Latin America, and gained progressive experience in their pursuit to have the sufficient capability to succeed and achieve commercial independence from the governments that own them respectively. The Asian oil companies, for instance, have started to rival international companies in some of the most important oil-producing countries, such as Iraq, for example, which has allowed international companies to bid on developing its oil fields. There, we find that East Asian oil companies will hog a share of 2.7 million barrels of the Iraqi oil output by 2014, which means that these companies will be able to export directly to their home markets, without a foreign middleman, thereby reducing costs for their countries and securing direct energy supplies to them. Chinese companies, particularly CNPC, lead the Asian group thanks to their operations in the fields of Rumaila, Halfaya and al-Ahdab. The Malaysian group Petronas also plays an important role in Iraq, through its participation in the development of the Majnoon and al-Gharraf oil fields. Asian oil companies are also competing in other oil-producing markets, such as the United Arab Emirates (UAE) where first concession contracts are set to expire. As is known, these concession contracts were dominated by Western companies, which barely had any competition at the time. Indeed, the [Asian] companies were initially interested in meeting the demands of their domestic markets, and would import crude oil from Arab Gulf states such as the UAE (as was the case with Japan and China), while their international exploration operations were extremely limited. But now, the situation is very different. There is fierce competition between Western mega oil corporations and Asian companies over the upcoming development and production contracts to be awarded by the Abu Dhabi National Oil Company (ADNOC). Asian companies have also started to venture into politically risky regions, where Western companies, too, had hitherto been the only ones to bear the risks and their subsequent human and material costs. We thus now find that that the Chinese firm CNPC won the first exploration and production contract in Afghanistan. CNPC has already started production from the Amu Darya basin in northern Afghanistan, with an estimated output of 1.5 million barrels per year. While this is a small volume, it is sufficient to cover Afghanistan's domestic consumption, which means that this output will spare the country the need to import oil. At the same time, CNPC has started the construction of an oil refinery in the country. There is also the experience of oil relations between the Arab and Asian countries, which has come to light gradually in recent years. Here, we do not only mean increased crude oil imports by emerging Asian countries, which are as is known on the increase, as a result of the dramatic growth seen in the economies of East Asia, and rapid and high increase in their consumption of crude oil. These countries and other developing nations now consume nearly half of the world's crude oil output. Until a few years ago, Western industrialized countries consumed around two-thirds of the global output. Indeed, what is important in this historic shift in the global oil industry does not only lie in increased consumption in third-world countries, and the political implications for this regionally and internationally. What may be more important is the fact that Asian oil companies (e.g. from China, India, Malaysia, Korea and before them Japan of course), have started to explore for oil in producing countries, and compete with Western mega oil companies in doing so. To be sure, we can see today that these companies (e.g. CNOOC and CNPC from China and Petronas from Malaysia), not to mention the Brazilian company Petrobras and others, are engaged in exploration, development and production in all Arab producing countries, without exception. Naturally, the track record of these companies contains both hits and misses, just like other companies. Some face delays in project execution, while others lack the necessary technology to develop challenging fields – although this is a challenge faced by some Western companies as well. But at the same time, we find that some of these companies discovered some giant fields in certain Arab countries, such as the Majnoon field in south Iraq by Petrobras in the 1970s. Arab-Asian oil cooperation goes even beyond that: Several Arab national oil companies have invested in refineries and petrochemical plants in Asian countries (i.e. the promising future markets), in collaboration with international and national oil companies, to secure a foothold in those markets. * Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
