Eni CEO sees tougher time for international oil firms

ROME (Reuters) - International oil companies, squeezed by governments seeking a greater share of income and resources, are losing out in the race with national oil firms, Eni's chief executive said on Sunday.

"The relative positions of international energy companies and national energy companies are changing -- and not in our favor," Paolo Scaroni said in a speech at the opening of the International Energy Forum.

International oil companies (IOCs) are finding access to large sources of energy reserves more difficult and are developing more complex projects, which increases the risk of cost overruns and delays.

During the 1970s, IOCs controlled nearly three-quarters of global oil reserves and 80 percent of production, Scaroni said.

Now, they control only 6 percent of oil and 20 percent of gas reserves, and 24 percent of oil and 35 percent of gas production, he said. National oil companies (NOCs) hold the rest.

Oil companies, while raking in cash from record-high oil prices, are also up against countries from Venezuela to Russia seeking a greater share of income from projects.

"The average government take is now moving to overcome the critical barrier of 90 percent, which means that oil companies' profitability is decreasing -- in many cases, below their cost of capital," he said.

"This doesn't mean international oil companies have completely lost their role and are set to disappear."

"But it does mean that they need to profoundly rethink their business model in order to survive and prosper in the new oil and gas landscape."

IOCs should focus on targeting the maximum level of technological expertise, he said.

Also, they should make a cultural shift that includes taking a more integrated approach to projects and balancing the short-term demands of financial markets with the long-term nature of energy projects.

"Give too much importance to short-term requirements and you risk sentencing your company to death," he said. "That's why a long-term vision is necessary, but it must be effectively 'sold' to the financial community."

Cutting-edge technology from IOCs is in demand, for example, when it comes to extracting reserves in deep waters and to carrying out challenging liquefied natural gas projects.

"In this context, technology -- together with the availability of skilled people -- will be the lifeblood of the IOCs' future," he said.

"And hiring and retaining skilled people is a challenge we should not underestimate."