In this week's edition of Let's Talk Energy, Olga Savenkova, Head of O&G Corporate Strategy Research, and Schreiner Parker, Head of Emerging Markets and NOCs, joined Noah to examine the future of National Oil Company (NOC) strategy, partnerships and the changing global playbook. Stream the full episode now: Why the world's cheapest oil is now its riskiest investment

Noah Brenner: The traditional playbook for IOC-NOC cooperation was fairly simple — resources for capital and technology. Is that still how these partnerships work? 

Schreiner Parker: "Today, those distinctions are becoming much less clear. NOCs have become significantly more sophisticated, technically and financially. Petrobras is a great example, being one of the best deepwater explorers out there. And I think many IOCs would love to have the financial capabilities of someone like Saudi Aramco. As a result, these partnerships are becoming much more customized around specific strategic objectives that overlap both the IOCs and NOCs, rather than following a standard playbook." 

NB: How has the Hormuz crisis changed the way IOCs think about their exposure to the Middle East? 

Olga Savenkova: "No one really expected the Hormuz crisis to actually happen, it was just a too-big-to-fail kind of situation. But it did and now the window for their opportunities has narrowed down even more. Basically, the largest resource-holding countries are now at high geopolitical risk, by definition, for most of these companies. I do think that this stringent approach to portfolio quality that majors had for a few years may now need to be revised. You can't look for something that is low-cost, low-carbon, low geopolitical risk, has massive growth potential, and also doesn't have exposure to chokepoints when it comes to exports." 

NB: Does that mean IOCs are turning their backs on the Middle East? 

OS: "No one is going to argue that these are still the most cost-competitive barrels, whether it's oil or LNG. Qatar LNG is the lowest-cost LNG in the market. You still can't ignore the fact that this is the most cost-competitive resource in the market. That's the first part of the puzzle; the competitiveness of these projects will not allow companies to turn their backs on the region." 

NB: You've described the Strait of Hormuz situation as a watershed moment. What's changed? 

SP: "Iranian control of the Strait of Hormuz existed in theory only and now it exists in practice. What we understand now is that the Iranians can exert control over the strait in an asymmetrical way. It doesn't take much money or effort for them to bring shipping to a halt, but the inverse is not true. It takes a lot of money and effort to clear the strait for commerce. That asymmetric control is something I don't think was ever properly taken into account. Whatever the resolution looks like, it means Middle East NOCs have to really rethink things." 

NB: We're seeing more NOC-to-NOC partnerships. Why is this becoming more common and what's driving it? 

SP: "It's a structural change that we're seeing, the rise of NOC-to-NOC. Many of these national oil companies can now bring those capabilities themselves. That means these partnerships can be increasingly built around complementary strategic interests rather than simply filling capability gaps. The shareholders for national oil companies are quite different from those for IOCs. Governments in general have a different calculus as to what provides value, rather than an IOC that just cares about return to shareholder." 

NB: How does the oil and gas industry look in ten years from now? 

OS: "Crises are now becoming part of the normal. Maybe that's where you need to make sure that your trading and your value chain exposure becomes your second strategic objective. Instead of just being a provider of commodity, you're becoming a provider of energy security." 

Stream the full episode now: Why the world's cheapest oil is now its riskiest investment 

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House View Report 

Our House View Report examines how the Middle East crisis and prolonged disruption in the Strait of Hormuz are reshaping the global energy system. Published in direct response to the war in Iran, it is a timely assessment of an evolving crisis: what has changed, what has been stable throughout and whether the disruption will prove transformational or transitory.