LEX As business names go, Integrated Project Management sounds like an engineer’s stab at marketing. But this division of Schlumberger poses big questions for the energy industry.
IPM’s revenue – just 8 per cent of the oilfield services giant’s total – has risen 25 per cent a year since 1999. For a fee, IPM will drill wells, develop an oil field and manage production. Schlumberger claims IPM manages the same amount of output as a “moderately sized independent” exploration and production company.
Unlike E&P companies, however, IPM is not interested in owning reserves. As such, its model appeals to governments, such as Russia’s, that need outside expertise but are sensitive about foreign ownership of natural resources. Cannily, Schlumberger has opened training centres in far-flung but energy-rich provinces, such as western Siberia. Doing so earns political brownie points and access to new graduates – important in a greying industry.
IPM, along with similar businesses at Schlumberger’s peers, is far from displacing the traditional majors. The latter possess giant balance sheets – not as powerful a lure these days, but still desirable for big, risky projects – and formidable skills of their own.
Schlumberger, though, is no minnow itself – its market capitalisation of $109bn is not far behind that of ConocoPhillips. It also spends a larger proportion of revenue on research and development than traditional majors, and not much less than ExxonMobil in absolute terms, according to PFC Energy, a consultancy. And while traditional majors remain important clients, big growth opportunities lie elsewhere: national oil companies control most of the world’s proved reserves. Even if the likes of Schlumberger are not trying to compete directly with western oil companies, their services enhance the standalone capabilities of the national oil companies. In so doing, they ratchet up the pressure on majors jostling for a role in pumping tomorrow’s barrels.
