With operations in over 1160 locations worldwide, National Oilwell Varco (NOV -1.07%) is a leading provider of equipment and services to the oil and gas industry through its three segments; Rig Technology, Petroleum Services & Supplies, and Distribution & Transmission. CEO Merrill "Pete" Miller has held a number of senior executive positions with NOV, beginning in 1996. Miller also serves on the boards of Chesapeake Energy Corporation (CHKA.Q), Offshore Energy Center, Petroleum Equipment Suppliers Association, and Spindletop International.
In this video segment Miller describes NOV's perspective on working with national oil companies, from Argentina to China to Russia, versus major corporations, and how they meet the needs of such diverse clients. The full version of the interview can be found here.
A full transcript follows the video.
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Taylor Muckerman: Just to touch on offshore one more time, with Brazil, it's been kind of a frustrating market for the offshore community with Petrobras (PBR 1.58%) and the Brazilian government kind of holding back on some of the auctions.
They talk about the Libra Field being auctioned off, hopefully in October, and now the Brazilian government is becoming a little bit more lenient on gasoline prices within the country, and even talking about helping Petrobras fund some of their drilling initiatives down there.
What do you see, moving forward with this? Do you see it loosening up? Is it finally going to realize its true potential, do you think?
Pete Miller: I think ultimately it's going to realize the true potential, but Brazil's just a different place to work. They've had infrastructure problems ... when you take a look at it, supporting the offshore business they've got one base, and that's essentially Macaé.
Well, Macaé is high jack. If you miss your boat slot there, you're going to have big problems getting your equipment out to the rig.
I think today, though, we're starting to open up different bases around the country. I think within the next three or four years the infrastructure will catch up, and I think Brazil will become a much smoother place to do business because of that.
Muckerman: Very good to hear.
Sticking with South America a little bit, shale gas is going to probably be a huge business there, especially in Argentina. Chevron (CVX -0.29%) signing over a billion-dollar deal with YPF down there. Then you look at China, also, with huge shale reserves estimated by the EIA.
I'm just wondering how you plan on attacking these international markets that really have been untapped when you compare them to the U.S. and Canadian shale, that we've really been able to exploit.
Miller: Yeah. We're actually in great shape on being able to do that, because both countries -- Argentina that you mentioned, and China -- we've got wonderful infrastructure already in place for NOV.
But interestingly, we're actually building rigs in Fort Worth, Texas, and shipping them to China, to help exploit the Chinese shale plays. I think they know that they need help. If you look at Sinopec (SHI 1.73%), they've invested in the Eagle Ford. You look at SINOC, they've invested in the Mississippi Lime and different places like that.
That's not so much because they believe in the American market, but a lot of that's to learn. They want to get it figured out. China needs shale gas. They need it in the worst way. They've got pollution problems; a quick and easy solution for them is natural gas, and we're going to be there to help.
I believe, over the next four or five years, you're going to see international shale plays become every bit as important as the domestic shale plays, to NOV.
Muckerman: When you look at countries like China and Russia, and countries with national oil companies, what's the difference when you're trying to operate with them, versus larger integrateds like an Exxon (XOM -0.35%) or a Shell (RDS.B), for instance?
Miller: I think for the most part it's the bureaucracy. It's the quickness of decisions being made. When you're dealing with an Exxon or a Chevron, they're big companies. They're looking at things from a strictly financial basis, and they're going to make quick decisions.
I think when you're talking about national oil companies, they've got to make decisions that not only look at the financial side, but also look at the political and the social side. They want a lot more local content and different things like that, and it's a longer process.
You learn how to deal with it, but we've been overseas for so long that it's second nature to us, being able to deal with people like that, and companies.