It is known that low oil prices times are usually favorable to innovation and technical progress. It is new that their conjunction with harsher financial criteria may lead to a lot of changes, reorganizations, merges in the move of a revolution.

A first move is of gaining time, which is easy by delaying the production of some fields, namely those who be close to the limit with present prices. Says Dominique Deschamps, a manager of the Girassol project : " delays used to be critical, now costs are the real point ".

This is now insufficient : costs are to be reduced to meet the return criteria demanded by the investment funds. But soon each new point gained is harder and harder. The internal growth reaches its limit.

Going further demands larger views, with scale economies and more efficiency. This is time to look for partnership, beginning regionally and downstream.

The trend upstream is to investment reduction, although this may be harmful at term. Interesting and new grow rare and expensive, as most prospect do not meet the new return criteria. Appreciation of future return is however delicate, as in most cases huge discoveries come from risky projects, while less risk is often linked to low size.

Buying oil fields may be tempted, while they are cheap. Such solutions were popular in 1997, sales reached about 38 billions US$. This is still possible, but shortage is in sight. Another way is by buying directly companies who own the fields. Hunting is active. Says EPMag on January " Time is now to merge or buy ". But the hunter may turn to prey.

Hence the defense must be ready. The rule is now to turn and concentrate on traditional know-how. This may lead to multiplying the risks, while just a few years ago, the thumb rule was of diversification. The secondary branch are cut in fear a hacker would do it. Such cuts usually go with a capital reduction by buying and destroying shares. A justification is to be found, usually the lack of serious projects. Anyway, the goal of a better return is met. As shown recently (see Avascope, 23, February 1998), this is a real cultural change. To an industrial mind is substituted a business mind.

Then the inner logic of the system goes by itself : the company objective concentrates on patrimonial issues, and all peripheral activities, seen as cheap and found on the market have to go. A growing part of the technical activities are delegated, at first in France, then on the US market. This is not any longer simple services. Partnership develops, alliances are made with companies themselves in concentration, horizontally and/or vertically, so that complete services are now available.

Interpretations issued by these contractors are sometimes incomplete, for they may not have at hand the full set of geological or patrimonial data. Research may turn void because of the lack of coherent application cases. In some opportunities, contractors with many customers may turn to industrial spying. Competitors happen to benefit of leaks on some of the contracted studies.

The proper logic of a purely financial system may hence drive to giving up the role of an industrial operator to become a minor partner, with less needs and more flexibility (no comment about the foolish outsourcing). The climate is at merge, sell and buy between major. But we do know that bigger may not always be better.

In such a gear, we foresee what the writer of " World deepwater " (BIP, March, 1^st) calls " the concept of VIRTUAL OIL COMPANIES with only financial engineers and geoscientists " ;

The industry then turned to a financial holding. Where are now the salaries-shareholders ? Is happiness always built on other’s sadness ?