Why the world's cheapest oil is now its riskiest investment

**Let's Talk Energy — Episode 42** Why the world's cheapest oil is now its riskiest investment, with Olga Savenkova and Schreiner Parker Wednesday, 17 June 2026 SPEAKERS **NB** Noah Brenner — Host, Let's Talk Energy **OS** Olga Savenkova — Head of O&G Corporate Strategy Research, Rystad Energy **SP** Schreiner Parker — Head of Emerging Markets and NOCs, Rystad Energy [00:00] NB This is Let's Talk Energy, your go-to podcast for smart energy insights. I'm Noah Brenner. Oil and gas is an intensely competitive business, but when it comes to actually pulling barrels out of the ground, it looks more like a team sport as companies partner with others to gain access to new resources, spread risks, and add specialised expertise. For years, there was a pretty standard playbook for how different types of companies — big Western super majors, giant national oil companies, and everyone in between — would think about who they would partner with, where they would do it, and why. NB Now that playbook is changing, driven by trends as diverse as rising geopolitical competition, more resilient oil and gas demand, increasing capabilities among NOCs, and demands from public investors that public companies turn a tidy profit even in tough times. So how are the needs and abilities of national oil companies and Western players changing as they evolve? Is the war in the Middle East shifting the calculus of the region's NOCs when it comes to bringing in outside investors, or its attractiveness in the eyes of international players? And finally, what does this mean for how companies think about pairing up to secure not just the reserves they need, but the ability to produce them? NB To help us understand how current events and industry trends are reshaping the oil and gas industry's matchmaking game, we're joined from Oslo by Olga Savenkova, head of Rystad Energy's Corporate Strategy Solution. Olga, welcome back. OS Pleasure to be here. NB And from near Houston, we're joined by Schreiner Parker, Rystad Energy's head of emerging markets and NOCs. Schreiner, it's great to have you with us. SP Thanks so much for the opportunity. Looking forward to this conversation. NB Well, let's talk energy. Before we dive in, I want to quickly define the types of companies we're talking about here, because they have pretty different goals and need different things to achieve them. Olga, I want to start with you. We have international oil companies, or IOCs — largely Western. They include US companies like ExxonMobil and Chevron, European firms like Shell, BP, TotalEnergies, ENI. What is it that they need? What are their goals and how are they looking at partnerships to meet them? OS The first thing I would like to emphasise is that the priorities for these companies have been changing over time, over energy cycles, over the maturity of the industry. If I focus on the last cycle — the last three to five years — the core priority for them eventually became profitability and delivering shareholder returns, while also taking into consideration safety, HSE, and the environmental impact of their operations. While doing this, the focus is on optimising for profits and how they can be best in class on metrics like total shareholder return. NB And Schreiner, I want to come to you now. We have resource-rich national oil companies — NOCs. Many, but not all of these are in the Middle East — so this is a Saudi Aramco, Abu Dhabi National Oil Company or ADNOC, QatarEnergy. But it could include others — Kazakhstan's KazMunayGas, Nigeria's Nigerian National Petroleum Company, Argentina's YPF. How are these companies thinking about what they need to deliver for their shareholders, their stakeholders, and what might they be looking for in terms of partnership? SP Their shareholders are a different group and a much more complex group than maybe an IOC's. Historically, these resource-rich NOCs were primarily focused on monetising the resource within their borders and generating revenue for the state. There are examples, like Pemex, that was completely funding the state for many, many years. For the most part, that's still their core mission, but the mandate has expanded considerably. [04:00] SP Today, many of these resource-rich NOCs are balancing four key objectives simultaneously: maximising resource value, supporting national economic development, maintaining energy security, and increasing their influence in global energy markets. The leading NOCs today increasingly look less like a traditional state-owned company and more like a globally integrated energy enterprise with broad strategic ambitions. NB What do the changes you just pointed out mean for what these companies are looking for in partnerships? They have resources which are in high demand, but they also have needs. How is that shifting landscape reflected in how they're partnering with other companies, particularly the IOCs? SP The answer today is very different than what it was 20 years ago. Many of the resource-rich NOCs no longer need outside capital in the same way that they once did. Instead they're really looking for technology, market access, commercial relationships, and risk sharing on complex projects — particularly in areas where IOCs still maintain an expertise and a certain type of advantage. So increasingly they're seeking partners that can help advance those strategic priorities rather than just simply finance a project. NB Finally, we have resource-seeking NOCs — national oil companies whose countries may have quite a bit of oil and gas but don't necessarily have enough to meet their domestic demand. These could be NOCs in parts of Asia, say Indonesia's Pertamina or Thailand's PTT — major producers but still needing resources for their country. As well as Colombia's Ecopetrol. What are their goals? How are they looking at partnerships? SP These types of NOCs, their priorities tend to revolve much more around energy security and, to a certain extent, learnings that can then be brought back to the home country. First of all, they're trying to secure reliable supplies of oil and gas for their home markets while also generating commercial returns. This means they're often looking for access to reserves abroad, long-term supply arrangements, and partnerships that can help diversify their sources of energy. For many of these companies, the question isn't simply what's the most profitable investment — it's also how the investment improves national energy security. SP Ecopetrol's most profitable asset today is in the Permian Basin, and I think there is a learning component incorporated in Ecopetrol's step out into the unconventional space there — how much knowledge can Ecopetrol gain about unconventional extraction that can then be brought back to Colombia, which has a large unconventional potential. So it's really about ensuring energy security while generating commercial returns, but also exposing yourself to learnings that can be brought back to the home country and may change the domestic supply scenario. OS The interesting statistics that we observed while exploring the partnerships of majors and NOCs is that the portfolios they have together — combined projects — actually have the best cost structure and best breakeven prices. When you look at the major's portfolio, split their projects with NOCs into breakeven price brackets, and then do the same without NOCs, you see that the share of lower-cost barrels in the portfolio with NOCs is by far larger than without NOCs. [08:00] OS That's a great example of how they bring together two very important pieces of the puzzle. NOCs bring resources that are typically easier to extract, abundant, and large in scale. Then majors bring competency, technology, international experience, and supply chain exposure. And when you combine these two things together, you really get best-in-class resources developed. NB Companies partnering are going to be more effective than companies going it alone. There's a new playbook for how these companies are coming together. Can you give me some examples of where this new playbook is coming into effect? Schreiner, maybe let's start with you. SP The traditional playbook of IOC-to-NOC cooperation was fairly simple: resource owners provided access to reserves and international oil companies brought capital and technology. But 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 deep water explorers out there. And I think many IOCs would love to have the financial capabilities of someone like Saudi Aramco. But while NOCs have become more sophisticated, IOCs have become more selective and disciplined in where they're deploying capital. As a result, these partnerships are becoming much more customised around specific strategic objectives that overlap both the IOCs and NOCs, rather than following a standard playbook. OS It's a very well-said kind of shift in how they view the partnership agenda in general. Both have more specific requirements of what they are seeking rather than something as simple as capital and resources as it used to be. Now the quality of resources matters, the scale matters, geopolitical stability matters — it's become an increasingly complex equation, especially for IOCs. They really put brackets on what 'good' looks like for them, because they started by looking at cost and growth, but then we had climate and decarbonisation coming along, and then geopolitics, and now geopolitics 2.0. [12:00] OS This brings a bigger challenge because this is a region that everyone knew was risky, but no one really expected the Hormuz crisis to actually happen — it was just a too-big-to-fail kind of situation. But it did happen. 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. The question is, are they willing to take this risk? Is it going to be a different structure of partnership? How are they going to negotiate the next projects? All these things build up into an increasingly complex equation in terms of how they can work together. OS 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 really deliver on all of these things together. 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. Probably the one region that everyone talks about that is still in this realm is the Atlantic margin. And that's where Petrobras is becoming an increasingly interesting partner to work with for the IOCs. NB Where are IOCs looking? Where are there opportunities in terms of both geographies and types of deals? OS Let's look at the opportunities outside of the Middle East. The Atlantic margin is something that everyone talks about. There are several areas that provide opportunities for growth — whether it's Guyana, Brazil, or West Africa. They have different types of growth: some are more frontier exploration like the Orange Basin, some have more mature opportunities like Brazil, some have flex exploration opportunities like Angola. There's a variety of options that can be a good fit for IOCs, and the attractiveness is enhanced by the fact that you're not as exposed to the major chokepoints when it comes to exports. [16:00] OS The second is North America and North American gas — probably a hot topic right now. This is probably the sector that is benefiting from the crisis more than others, because feedstock gas for LNG is becoming something that needs to be developed at a rapid pace as companies look to diversify their LNG imports. The last thing I would mention is East Mediterranean — gas opportunities there. And perhaps if we think about Asia, there is Indonesia with potential growth in the gas part of their business. NB Schreiner, you've highlighted the potential for greater NOC-to-NOC partnerships — this was not part of the traditional playbook. Can you talk about how this is different and why these are more likely to go ahead? SP I think that's where international oil companies are also looking. Many of the geographies that Olga just mentioned outside of the United States are areas where NOCs have a heavy established presence — Brazil, Indonesia, Angola. So the idea of NOC-to-NOC partnerships is something that we are beginning to see a lot more of. XRG, for example, which is the international arm of ADNOC, partnering with YPF and ENI on gas evacuation from the Vaca Muerta through FLNG. You've seen other examples of the Middle Eastern Qataris going abroad again — QatarEnergy is more on the LNG side of things. SP I think it's a structural change that we're seeing — the rise of NOC-to-NOC. Historically, many of the NOCs depended heavily on international oil companies for the financing, the technology, the project execution. But today, many of these national oil companies can bring those capabilities themselves. So that means these partnerships can be increasingly built around complementary strategic interests rather than simply filling capability gaps. And going back to what I said at the beginning — the shareholders for national oil companies are quite different than they are 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. SP Prior to the situation in the Middle East with the Strait of Hormuz, a good example of the growing relationships between NOCs existed between Middle Eastern NOCs and Asian NOCs. For Gulf producers, these partnerships could help secure long-term demand. And for Asian NOCs, they could provide access to resource and strengthen energy security. These interests align naturally and create these opportunities. The calculus over the last six months has changed. I think you're going to see NOCs that are resource-seeking — or that were traditionally resource holders but because of this situation have become more interested in international opportunities — mirroring IOCs in terms of their geographical interests. And they may be able to use a different mechanism to gain entry into these geographies through an NOC-to-NOC partnership, if those partnerships advance the more strategic goals of each country. And those goals may or may not be 100% related to the hydrocarbons business. It's an evolving scene. It's one that we've not seen a lot of historical precedent, but I think it's one that we will see a lot more of in the future. [20:00] NB Are these types of NOC-to-NOC agreements more difficult because of geopolitical considerations, or are they easier if the two governments have a strategic partnership at the governmental level, even if the economics of certain projects aren't as attractive? SP I think the geopolitical cloth can cut both ways. Strong government-to-government relationships can sometimes accelerate projects that might otherwise struggle to clear commercial hurdles. But at the same time, growing geopolitical competition can complicate those partnerships when countries are viewed as aligning with one block or another. So increasingly, the strategic consideration has become just as important as the economics. SP There are different types of government structures that you deal with in a NOC-to-NOC relationship. Middle East NOCs often deal with governments that have long-term continuity — monarchies that are multi-year and multi-generational — versus South American NOCs, which have very dramatic and sometimes contradictory oscillations in energy policy depending on election results. The way in which NOCs working with other NOCs from different parts of the world manage those long-term and short-term oscillations will be very important, and I think it will play out on a case-by-case basis. NB We've been talking around the Middle East conflict quite a bit — so let's tackle it head on. This is a region home to the highest concentration of low-cost, low-carbon oil and gas in the world, and countries here have traditionally driven a pretty hard bargain to get access to those resources. Olga, how are IOCs thinking about their exposure to the region? Will it continue to be a pivotal part of their portfolios? And what does that say for overall geopolitical risk appetite among these companies? OS There is a conventional way of thinking about this — the risk that happened is going to create a risk premium for these projects going forward. Therefore, attractiveness for IOCs will be reduced and costs will increase, because all of the contracts supporting these projects will have this risk premium baked in, as every supply chain player will account for what happened. [24:00] OS At the same time, 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. OS I think the big impact on future development in the region will be the strategy of recovery from the conflict. So many people talk about the cost of recovery and infrastructure. But I think what is even more important is to think about how future developments will happen — how much revenue loss companies will experience because Qatar LNG's next trains are not going forward on schedule. This moving to the right in terms of project development timelines can be a bigger challenge for companies to overcome when they think about their future development in the region. They want to secure their growth and they want to know that they can do it with defined timelines. There's probably going to be some muted interest when it comes to new projects, because the first priority is to bring back what is already there and try to get timelines back towards what was originally planned. OS Then the second part is the regions where they can substitute for these reduced volumes and projects that are not going ahead according to plan. This will require them to look outside of the Middle East and seek opportunities that can fill the gap in their portfolio. [28:00] NB Schreiner, how might the large NOCs in the region think about partnerships in light of the war? They're in a pretty historic situation — they've got to rebuild facilities and think about bypassing the Strait of Hormuz with new pipelines and facilities. Does that open up possibilities for outside investors? SP I think it's important to emphasise what a watershed moment we're really living through, because as Olga alluded to, 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 taken into account. SP I think we're in a watershed moment where there is a before and an after. Whatever the resolution looks like, what was in theory possible is now in practice possible. And that means Middle East NOCs have to really rethink things. What these recent events have done is reinforced something that was already understood in a latent sense — that production capacity alone isn't sufficient. You need resilient export routes and supply chains. As a result, we're likely to see increased attention being put on storage, logistics infrastructure, export diversification, and redundancy throughout the value chain. That doesn't necessarily mean these countries suddenly need outside capital — most of the major resource holders remain extremely competitive destinations for investment. But what may change is that investors are placing a greater premium on stability, export flexibility, and contractual certainty than they did before. SP What about other NOCs looking at the Middle East from different geographies? The Middle East still remains absolutely critical for resource-lacking NOCs. The lesson is not to avoid the region — the lesson is to diversify risk around it. That could mean combining Middle Eastern investments with opportunities in Latin America, Africa, and Southeast Asia, while maintaining those long-term relationships with Gulf suppliers. At the end of the day, the world's lowest-cost resources are still in the Middle East, and that reality has not changed. So maybe more caution going forward, maybe more understanding that this region is not as it was previously. But it's still a region of great importance and one that will be fundamental and key for energy security going forward. [32:00] NB How are we seeing these companies balance those types of decisions? There's maybe one element we haven't talked about with NOCs — developing new types of resource within their own borders. Shale development, for example. How replicable is the US model — or even Argentina's Vaca Muerta — in different geographies? Throughout my travels in Pakistan, Algeria, and many other places, national oil companies are already asking those questions. China is another great example of a country that would love to develop more shale resource and become less dependent on gas imports. SP Argentina is a great example of Atlantic margin that has frontier basin potential in Argentina Norte and Malvinas. There is a question about how much new resource can be developed within these borders that national oil companies can be pushing or helping to bring to fruition. In almost all of those cases, it's going to be with an IOC partner that has had experience doing this elsewhere. So I think it reinforces this idea of the IOC-to-NOC partnership. NB Are those types of opportunities interesting for IOCs whose investors are saying they want to make sure you're profitable? Is a shale opportunity in Pakistan or Algeria — does it make the cut? OS In this day and age, nothing is off the table, to be honest. They are looking very broadly right now, and the Hormuz crisis has made them much more tolerant towards some risks that were not acceptable in the past. The longevity question has already become the main priority. Since the uncertainty around the Middle East drives their thinking about how to mitigate this risk and think about portfolio longevity in scenarios where supply is going to be delayed, I do think this opens up some opportunities that just a few months ago were not an option. OS That's where we start seeing activation of non-US shale opportunities. I don't think it's impossible to see some of the IOCs coming back to geographies that they decided to exit because of climate and emissions considerations. I wouldn't be surprised if we see majors coming back to the Canadian oil sands and maybe coming back to some shale plays as well. Most of the players are quite cautious about making these big moves and big announcements — I'm actually really happy about it, because in all of the previous crises they were making U-turns in strategy in the middle of things. [36:00] OS What's the future going to look like for them? You do want to ensure that your growth is there, even though some of the growth opportunities that were very attractive are now under a high geopolitical risk mark. That's where diversification is back — not just from a geography point of view, but from a chokepoint exposure point of view. For example, in some geographies you can invest into storage and have a little more flexibility and maximise your trading muscle. I think doors are opening in some areas where previously they were not willing to invest. It's quite exciting to watch, because majors do have this unique skill to make things work sometimes when other players don't know how to. NB What does this all mean in terms of how the oil and gas industry looks in five or ten years? Olga, maybe you can address this from an IOC standpoint and then we'll come to you, Schreiner, for an NOC perspective. OS The silver lining for IOCs since the last cycle is that they do need to focus on their core and make their core as strong as possible — ensuring a clear path forward that provides the growth underpinning their profitability. With this mindset and objective, they actually have more opportunities to venture into other businesses. The prerequisite is to make the core strong though. Even though we see capital going back to strengthen the upstream, I do think vertical integration capability is still going to be the differentiating factor, and they are going to make it only stronger with time. At moments of market volatility, the trading companies with a developed trading arm perform better than others. OS The reality is that 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. [40:00] SP A lot of what Olga said is applicable to the NOCs and particularly the larger NOCs. I'm a big fan of — if you want to understand the future, you need to understand the past. Ten years ago, the industry with regards to NOCs was largely organised around a distinction between resource owners and resource developers. But having said that you need to understand the past to understand the future, I also want to say that when we're thinking about NOCs, you might have to throw that out the window. Because in ten years from now, that distinction will be much less clear. SP From a meta perspective, we're much more likely to see NOCs operating internationally, more NOC-to-NOC partnerships, and more selective participation by IOCs focused on areas where they retain a genuine competitive advantage. The industry as a whole will become more multipolar with a broader range of players competing for capital, technology, and market access. Those partnerships may become more complex, but they'll also become more important. And I think that's really where we're heading as an industry. NB It's a great place to wrap it up. Thank you so much for joining us. OS Thank you. It was a really interesting conversation. SP Always appreciate the opportunity. NB Let's recap. The oil and gas industry's partnership playbook is shifting, but the value of them remains clear — as data shows that projects held in partnership between IOCs and NOCs consistently have some of the most attractive economics. The war between the US and Iran has laid bare the geopolitical risks of operating in the Middle East. But it does not change the fact that IOCs and resource-short NOCs need the region's barrels in their portfolios. And as we look ahead, we will continue to see partnership strategies evolve as countries place greater emphasis on energy security and companies — whether national champions or super majors — strive to deliver it. NB Thanks for listening to Let's Talk Energy. This podcast is a Rystad Energy production, produced by Elliot Busby and Bade Og. Check out the show notes for further analysis on the topics we've discussed in the episode and find us on social media — we're at Rystad Energy on all major platforms. While you're there, leave us a review, a like, and hit that subscribe button. You can also keep up to date on our website. If you'd like to send us questions or reflect on today's episode, email us directly at podcast@rystadenergy.com. 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