Competition from state-owned oil companies for licenses and production-sharing agreements will continue to grow, according to participants in Deutsche Bank Securities' recent oil and gas conference in New York. Giants like Royal Dutch/Shell, ExxonMobil Corp. and BP Plc are like minnows in terms of reserves when compared with many national oil companies, notes Tim Lambert, head of consulting, Wood Mackenzie. "It's fairly sobering, particularly with companies like Petrobras, Statoil and Petronas moving into other areas of the world." Other overseas companies like Petronas (Malaysia) and Lukoil (Russia) now rival Amerada Hess Corp. and Conoco Inc. in acreage. While privatization has helped such firms capitalize, their public market presence generally remains limited, he says. Yet their ties more to national governments than private investors give them advantages. They can be sympathetic to domestic political and economic pressures on a host country's national oil company. They can move into politically controversial areas that produce investor protests for publicly traded companies. Their governments can supply fairly deep pockets for them to take stakes in long-term projects without having to worry so much about immediate returns. "Their only problem is they entered the international oil game fairly late and missed most of the major legacy plays," says Lambert. "This poses a significant challenge for them." Partnerships among the national oil company and non-national companies has helped Algeria, Nigeria, Iran and Venezuela add approximately 43 billion barrels of reserves in the last 10 years, says Tony Mills, who heads Wood Mackenzie's Africa practice. The four countries could increase their combined production 5.4 million barrels per day above the current level to total 13 million by 2007, he says. Conoco is not the least bit daunted, says J. Michael Stinson, the company's senior vice president for government affairs. "With 45% of the world's oil reserves located between Egypt and Iran, it's not surprising a company like ours would want to be there. Successful partners are fully aligned and pursue common goals. We believe private companies will continue to evolve overseas. But we also expect national oil companies to remain dominant in the near future."