Playing by the local rules
State-owned enterprise success in Canada’s oil and gas industry
Canada’s oil and gas industry was anything but quiet in 2012. Transaction activity over the last year alone has highlighted Canada’s reputation on the world stage and the strong interest of Asian investors.
Though getting the green light to transact in Canada may seem like the biggest barrier to both state-owned enterprises (SOEs) and private investors, it’s what comes after the papers are signed that determines their success.
Whether a company is entering Canada in a complete-control capacity or pursuing non‑operating transactions or joint ventures, success in the Canadian oil and gas market takes a lot more than just regulatory compliance, safety, production, projects and profitability.
Smooth entry by SOEs into the country demands a broader approach. By developing a market-entry strategy, foreign entities can better demonstrate that their interests are aligned with the interests of the Canadian industry, the economy and society as a whole. Most important is their ability to define and communicate their wider non-monetary and monetary objectives.
Market-entry strategy framework
Six building blocks of an effective market-entry strategy
Success in Canada’s oil and gas industry relies on having a thorough knowledge and understanding of the following six factors. Adopting a strategy that considers and focuses on each of these factors is the key to making the most of opportunities.
- Canadian workforce development
- Government and IOC relationships
- Strategic business objectives
- Community and social responsibility
- Effective and transparent communication
- Canadian supplier use and development
While state-owned oil and gas companies may boast the strength of immense capital, international operations, streamlined value chains (including upstream, midstream pipelines and downstream refining), and technical capabilities (including deep water offshore, heavy oil and unconventional gas), there’s always work to be done when entering a new market to achieve success and a smooth transition. And, stepping into a sophisticated market where other global companies operate raises the performance bar, ultimately making for better business performance for the organization as a whole.
By adopting strategies, focus areas, differentiators and implementation tactics to manage these issues, SOEs can improve brand and reputation in the Canadian market, enhance opportunities for industry collaboration and better attract top talent — all key elements for setting themselves up for long-term sustained success.