Moisés Naím / World Energy & Oil

Who had the largest impact on the energy sector in 2012? A scientist or a politician? Iran’s mullahs or the CEOs of major oil companies? The energy industry is so diverse and complex that it is impossible to trace its fast changes to the actions of specific individuals.

No one is that powerful. Nonetheless, here below I name nine individuals who made a big difference last year. It is, of course, a highly personal and arbitrary list. My goal was to pick individuals whose actions vividly illustrate the important trends – good and bad – that are reshaping the industry.

George Mitchell
The Texan engineer who pioneered the techniques that made possible the boom in shale gas production. Three decades ago, Mitchell developed the techniques that – among other consequences – will make the United States the world’s top natural gas producer by 2015. According to the International Energy Agency, the country could even become a net exporter of energy by 2020. The shale gas revolution is not limited to the U.S. Major shale gas deposits have also been found in Mexico, Canada and Argentina. The U.S. boom has inspired a widespread search for shale gas in Europe and China. The plummeting prices of gas are having immense consequences for other energy prices and are altering investment patterns and the pace and direction of the development of other sources of energy.

Wang Yilin
Chairman of the China National Offshore Oil Company, CNOOC.
Geologist Wang epitomizes the increasingly important role that Chinese companies are playing in oil, gas and energy in general. While the power structure of China’s energy sector is complex and not easy to ascertain objectively, there is no doubt that Wang Yilin, the chairman of China National Offshore Oil Company, plays an important role. When he was CNPC’s Deputy General Manager, Wang championed China’s participation as investor and technical partner in the giant Iranian Pars gas field. Now he is Chairman of CNOOC, the company in charge of upstream activities abroad and – based on assets – the world’s 13th largest oil company. Many informed observers also credit him as being one of the main architects of China’s geostrategic approach to its energy policy. In December 2012 CNOOC made the largest acquisition ever undertaken by a Chinese energy company abroad, a $15 billion takeover of Canadian energy company Nexen.

Essentially, thanks to this policy of “going abroad,” during the last ten years China has acquired – through a multiplicity of joint ventures and acquisitions – offshore reserves of “equity oil” that allow the country to meet a third of its total oil consumption. Only two decades ago, Chinese oil companies were not part of the global picture. Today they are one of its defining elements – and Wang Yilin has been a major protagonist of this development.

Leon Panetta and Hans-Josef Fell
The U.S. Secretary of Defense and a member of the Green Party in the German Parliament.
These two individuals symbolize initiatives promoting the large-scale adoption of renewable energy practices. As U.S. Secretary of Defense Panetta has continued and expanded the Pentagon’s efforts to become greener, while Fell is the main force behind the legislation that is rapidly expanding Germany’s dependence on renewable sources of energy. In April 2012 the Department of Defense announced plans to install three gigawatts (GWs) of renewable energy capacity at Army, Navy, and Air Force installations by 2025 (one gigawatt being enough to supply electricity to about 800,000 homes, equivalent to the capacity of the Three Mile Island nuclear reactor in Pennsylvania).

This announcement was another example of the substantial commitment of the U.S. Department of Defense, a massive consumer of energy in all its forms, to becoming more reliant on renewable energy. In his January 2012 State of the Union address, President Obama announced that by 2020 the U.S. Navy would have one gigawatt of renewable energy in each of its installations.

The U.S. military is also planning to set up 160,000 solar energy systems in 33 U.S. states. While green energy is being actively promoted in the U.S., it has become a true revolution in Germany, largely due to the 2000 adoption of the Renewable Energy Act, the initiative of Green Party member Hans-Josef Fell. The act established strong financial incentives for investors in renewable energy. Today solar and wind power have shown exponential growth. Electricity generation from wind power has increased by 25 percent of total output while carbon emissions are down to one-fourth of 1990 levels. The German government is initiating a $270 billion program to install wind farms which will cover an area six times the size of New York City.

Igor Sechin
Russia’s oil czar and head of Rosneft.
As head of Rosneft, Igor Sechin has been the main actor in the two most important events in the Russian oil industry during 2012. The first was the $56 billion stock and cash deal through which British Petroleum acquired 20 percent of Rosneft while Rosneft acquired the Russian AAR consortium that owned 50 percent of TNK-BP. The new entity will produce four million barrels of oil a day, nearly half of Russia’s oil production. The deal gives the government an even larger weight in the oil industry, while BP now has the largest stake owned by any foreign company in a Russian state enterprise. First Deputy Prime Minister Igor Shuvalov has announced the government’s intention to privatize Rosneft sometime in the next two years, “depending on market conditions.” The second event presided over by Sechin in 2012 was the joint exploration in the Artic Sea by Rosneft and foreign oil companies. Three agreements have already been signed by Rosneft: with ExxonMobil, with ENI and with Statoil. The agreement with ExxonMobil, in particular, calls for an initial investment of $3.2 billion to explore in the Kara Sea, with the potential of increasing the investment significantly in the future, and the participation of Rosneft in some of ExxonMobil’s global properties. ENI has acquired a 33 percent stake in the development of two blocks in the Barents Sea and the Val Shatsky field in the Black Sea, while Statoil has obtained exploration licenses in the Barents Sea and in the Sea of Okhotsk. These events reaffirm Sechin’s status as Russia’s oil czar while clearly illustrating the kind of trends that have come to define a nation that is one of the world’s top energy suppliers.

Dilma Rousseff, Cristina Fernandez and Hugo Chavez
The Presidents of Brazil, Argentina and Venezuela.
These three leaders preside over countries with policies that hurt their oil and gas sectors. The nature and extent of these self-inflicted wounds varies among the three, with Venezuela being the most extreme example. But in all three nations a change of polices could yield immense benefits.

In Argentina, President Fernandez took over the shares in YPF, that country’s largest oil company, that were owned by Spain’s Repsol. Other polices of her government, and an unsustainable macroeconomic environment, also discourage or delay the initiatives that Argentina needs to achieve its significant energy potential.

In Brazil, President Rousseff has been imposing rules that force Petrobras to buy as much as 70 percent of its oil and gas equipment in the domestic market. Such rules not only fuel protectionism but may even contribute to delaying the development of Brazil’s massive offshore, pre-salt oil resources. Moreover, no oil auctions for onshore new acreage in Brazil took place in 2012. Auctions for offshore, pre-salt areas will probably have to wait even longer, as the country remains undecided about the legal and taxation treatment it should give to oil reserves found in the pre-salt.

In Venezuela, the explosion of the Amuay refinery – one of the world’s largest – dramatically called attention to that country’s dwindling capacity to manage what used to be one of the most respected oil companies – PDVSA – and adequately exploit the huge hydrocarbon reserves the country has.

The problems that these three countries will be facing in their oil and gas sectors in coming years will be largely if not completely self-inflicted – a trend that is not restricted to South America.

Enrique Peña Nieto
Mexico’s new president.
A few days after his inauguration, the new president announced a pact among the main political parties to support an ambitious reform program that, if implemented, can substantially change Mexico in general and its energy sector in particular.

Since Lazaro Cardenas nationalized this industry, total state control of oil has been a Mexican dogma. The cost has been increasingly high, as Mexican oil production has dropped from about 3.5 million barrels a day in 2004 to some 2.5 million barrels in 2012. Exports to the United States in 2012 are only two thirds of what they were some six years ago. At this rate, Mexico will become a net oil importer by 2020. President Peña Nieto has vowed to introduce changes in Mexican legislation that would allow private companies to enter Mexico’s upstream oil activities.

He will face significant political opposition, including from within his own party, and from the labor unions that have long held a tight grip on Pemex. It is too soon to predict the outcome of his efforts, but it is clear that an opening of the Mexican oil industry to private, international participation could produce a major shift in the western-hemisphere energy equation and bring Mexico back to the international energy arena.

During 2012, two definite global trends seem to have emerged in the energy sector. One is the increasing importance given to the development of renewable sources of energy, a trend that appears to be irreversible. The other is the relative weakening of resource nationalism. With the exception of Iran and Venezuela, most important oil-producing countries exhibit an increasingly pragmatic attitude towards peaceful co-existence and cooperation with international oil companies.