CERAWeek: Schlumberger's Gould, Pemex's Heroles and CNPC's Zhou

Andrew Gould, Chairman and Chief Executive Officer of oil field services giant Schlumberger said this downturn isn’t like the one in the mid-1980s.
“There is no 12 million barrel per day of over production,” he said. When the economy returns, so too will demand.
The big challenge for companies like Schlumberger now, said Gould, is how to maintain a service industry that will support industry when demand returns but keep shareholders happy in the meantime through lower costs.
“No one dispute the age of easy oil is gone,” Gould said, so the industry must rely on technology , and research and development to drive down costs.
Schlumberger traditionally doesn’t cut R&D during downturns and won’t this time. Gould expects more mergers in the services industry, particularly with financing hard to come by.
New exploration must continue is the industry expects to meet production goals for the next decade, Gould said.
Jesus Reyes Heroles, Director General of Petroleos Mexicanos (Pemex) gives a rapid-fire update and overview on the company.
Mexico’s main oil field, Cantarell,” is declining at an expected but fast rate,” Heroles said, therefore it is urgent to increase the rate of investment. Mexico also needs to build new refineries. Pemex is planning to produce 2.9 million barrels per day this year, Heroles said. The company is continuing to focus on the longer term and won’t have a stop-and-go approach to investments.
Jiping Zhou, Vice President of China National Petroleum Corporation
The year 2008 is an unforgettable year for China, Zhou said, referring to the massive earthquake that struck central China and the Beijing Olympics. It’s also the 30th anniversary of the beginning of the country’s economic reform and opening to the rest of the world.
Zhou pointed out many superlatives about the Chinese oil industry, with an emphasis on how CNPC is using enhanced oil recovery techniques to improve output from mature fields.
“So far mankind has been unable to find a reasonable substitute for oil” from a financial perspective, Zhou said. So once the world economy recovers it will be a return of the major supply issues that were familiar last year.