Emerging Markets Focus
Do NOC Leaders have the skills to deliver their National Mission? Written by Johan Nell and Colin Sloman, Accenture
The growing ambition of National Oil Companies (NOCs) has transformed the energy landscape in recent years. But as NOCs increasingly expand beyond their domestic markets, it is now time to ask whether they themselves are ready for further transformation of their business. NOCs are expected to continue delivering on their „national mission‟, and as they expand abroad, and must compete with International Oil Companies (IOCs) where the battle for reserves, equipment and talent is intense. But another challenge is emerging.
NOCs are now being asked to operate their business on a different scale which involves delivering large and complex projects (both at home and abroad) operating in new markets, working with multiple partners and ensuring operational excellence. This new way of operating means the spotlight is now being turned on the leadership qualities of NOCs as they face these new challenges.
Over the next decade, OPEC will have an opportunity to reassert its dominance as its members‟ share of global production rises from 40% to as much as 46% by 2030i. International expansion is already a feature for many NOCs. Asian players in particular are very active in acquiring assets abroad.
For example, the Chinese National Petroleum Company (CNPC) now operates 81 oil and gas projects in 29 countries, up from 58 projects in 22 countries at the end of 2005ii. It recently stated that its average annual growth rate of overseas crude oil production reached 15.6% during the past five yearsiii.
NOCs are also working together, forming consortia to bid on new projects together as they move into new markets. Saudi Aramco, for example, has become a major supplier to Asia and an important contributor to Asian economies through investment in refining and petrochemical sector activities. In China alone, it currently employs around 8,000 peopleiv.
The Importance of Leadership
These trends will require very different skills and experience to those required of NOCs before. In a recent survey of NOC executives conducted by Accenture,* most respondents cited leadership skills and quality talent as essential to deliver their strategies, but acknowledged that these were also often the attributes they particularly lack.
NOCs recognise the need to introduce leadership development programmes but these programmes often do not go far enough to drive wholesale business transformation. As they expand their horizons, a greater focus on leadership skills is needed.
(*in 2010 Accenture undertook a study of NOC executive to understand what leadership capabilities would be required for NOC success in the energy industry. The study composed of surveys, workshops and interviews with NOC senior level executives, and a workshop with over 40 students (the majority are current employees of NOCs) completing Oil and Gas MBAs in Aberdeen, UK)
There are many different types of NOCs, all with different strategies and ambitions; as a result they will all need a slightly different focus to delivery their particular leadership development agenda. In addition, NOC leadership skills face unique challenges with which IOCs do not have to contend. In place of the Western ideology of “maximising shareholder returns”, NOCs work to a more holistic concept of “value creation” along both commercial and social lines, which also requires an ability to manage their key stakeholder, the government.
Expectations of “value creation” for many NOCs are codified in their „national mission‟ that means that NOC leaders are continuously balancing the priorities of the commercial business with that of the wider economy, against a backdrop of a constantly changing political situation.
What Leadership Capabilities do NOCs need?
As NOCs embark on changing their business models (which often involves internationalization) they need to achieve a cultural fit with their new businesses and communicate well with governments in the host nation. Overlooked skills such as languages are fundamental, as are abilities to execute increasingly risky and complex projects on time and to budget.
Over the past two decades, the gap in commercial and technical excellence has narrowed considerably between NOCs and international oil companies (IOCs) However over the past few years, IOCs have been forced to raise their levels of efficiency as they work on projects which have increased in size, complexity, and risk. Many NOCs are now seeing a similar challenge and need to also build on their business execution skills to be able to deliver projects, on time and on budget. Complex project management skills will be critical to long term success for NOCs.
Underpinning the leadership attributes of vision, relationship and execution is a requirement of all leaders to have strong “soft” skills. Such skills include commercial acumen, communication skills and international experience which are all needed to scale companies at a global level. Such skills often come with experience rather than training and are thus, harder to develop.
Visioning skills will also be important for NOC who will are required to maintain a focus on the „national mission‟ as well as inspire and engage staff throughout the significant transformation ahead. In the Accenture survey, NOCs identified that the ability of their executives to set a vision, see opportunities and inspire their workforce as fundamental to achieving their future objectives, but is often lacking as a core leadership attribute.
Drillers and Dealers
Drillers and Dealers :::
::: February 2011 Edition
February 2011 Edition
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36