Both IOCs and NOCs say they want to work together in developing oil and gas in the Middle East. NOCs may need investment capital, management practices or technology, while IOCs need access to reserves and are looking for their next investment frontier. In private, however, both groups detail the difficulties in finding common ground. IOC frustration with previous joint exercises and NOC increased confidence in their own capacity had led many on both sides to privately question the terms of engagement.
For instance, as they stand, these terms do not give IOCs adequate incentives to develop resources for the long-term benefit of the country. And conversely, they do not sufficiently include the NOCs in the management of the resources. Present investment models do not allow both parties to align their interests. This paper will examine some new means of NOCs and IOCs working together for their mutual benefit and issues related to these options. It will examine options ranging from the IOCs as integrated service providers to international strategic alliances throughout the supply chain.