Eni SpA (NYSE:E)
Perhaps the most distinguishing feature of ENI is its solid relationships with countries that are typically considered difficult to deal with. This is particularly true with regard to Africa and the Middle East. Hailing from Italy gives it a proximity benefit that others can’t compete with. However, management has gone to great lengths to ensure the company’s access to reserves in these countries. In fact, the company is one of the biggest players in Africa. It is highly unlikely that ENI will give up on the region for any reason. Moreover, with a material presence there already and a long operating history, it could be among the first in line to benefit if others pull out.
PetroChina Company Limited (NYSE:PTR)
PetroChina is certain to attempt to take advantage if other companies pull away from difficult countries or dangerous regions. This integrated oil company is effectively controlled by the Chinese government, with a major goal of securing energy resources for its fast growing home market. Although the company’s ultimate outlook depends heavily on the Chinese economy, demand for fuel in that nation seems set to continue advancing for years to come as more consumers enter the middle class. That means that PetroChina is likely to be increasingly aggressive in its efforts to gain access to oil and gas. Its efforts will be that much more productive if western firms start pulling out of risky regions.
Total S.A. (NYSE:TOT)
Total is something of a wild card. Hailing from France gives the company a very un-American feel, which residents in some nations would likely find desirable. Moreover, the company already has business relationships with countries that have suspect histories when it comes to dealing with outsiders, including Russia and countries throughout Africa and the Middle East.
However, the incident in Algeria was specifically directed at France. This could put the country on something of an emotional high alert, making business with risky countries harder to justify. Since France’s population is known for making things difficult for the government, via such things as massive protests, more such attacks have the potential to cause social discord in the country. For that reason, Total could go either way on the issue, which makes it worth watching, if not buying.
Oil isn’t Going Away
Oil and natural gas will remain important commodities for decades to come. Alternative technologies simply don’t have the financial or distribution profile to replace them. Since the easy energy has been found, someone is going to go after the hard to find oil and gas. If the list of companies willing to take the needed risks is small, then the financial benefits are likely to be amplified. As an investor, this is an issue worth keeping an eye on.
Yours,
The article Is Hard to Get Energy Worth the Risk? originally appeared on Fool.com and is written by Reuben Gregg Brewer.
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