International Success

A new chief executive took the helm at one of the big US independents, and announced that the future of the company lay in a business development effort to find projects in the Middle East.

Because of the sheer quantity of oil that has been found there, the Middle East has a hypnotic attraction to the oil companies and to people in the business – myself included. But doing business there is extremely difficult.

I had worked extensively for this company in the UK and elsewhere, and knew the lawyers and the new business team. So far as I knew they did not have anybody with business development experience in the Middle East.

So I rang them in Houston to offer my services and suggest that we meet up in either Houston or London. They took a day to consider, and then rang me back with a polite but firm reply. “Thanks Chris, but we don’t need you. We know what we are doing internationally. After all, we succeeded on the UKCS.”

I resisted the temptation of saying that the Middle East is a very different world from the UK. And I did not point out that their “success” in the UK came from the acquisition of a company with existing acreage.

So I watched their business development effort with interest from the sidelines. Things did not work out. After spending a reported $250 million over five years, they had not a single project in the Middle East to show for it. The Middle East business development initiative was abandoned with much less fanfare than the original announcement.

Ground-up business development is cheaper but much more difficult than buying a company or interests in existing projects. And a ground-up business development effort in the Middle East is the hardest thing of the lot.

Chris Thorpe

Chris Thorpe is a respected independent lawyer in the upstream oil and gas industry, and an established lecturer and author. Chris has a LLB in law from Magdalene College, Cambridge and trained as a barrister in London. He worked for eight years' as an in-house lawyer for BP and Marathon. Since 1991, Chris has run his own upstream legal practice, CPTL, which has acted for many upstream clients. He has extensive experience of international upstream transactions, principally in the North Sea, the FSU, Africa and the Middle East. Chris has spoken at many UK and International Conferences and Seminars, both public and in-house. His most popular current lecture is Fundamental of Upstream Petroleum Agreements, a two-day course with accompanying book.