National oil companies' response as well as the handling of current challenges will play an important role in the stability of world energy markets, said senior executives of oil companies.

A study by professional services firm KPMG on the future of oil industry in the coming five years said the changes witnessed by the industry will force big players to adjust to the changed conditions over the next 10 years.

Officials, reacting to the findings of the study, said the concept of conflict between world oil companies and national ones no longer exists today since national firms are moving outside their geographical boundaries and are privatising some of their work and assets.

The study said national oil companies have acquired huge potential, such as self-finance and modern technology, which enable them to maximise benefits from current circumstances and to seek more local and potential partners and investors.

The study said the way industry opportunities and challenges are handled by world and national oil as well as service companies will chart the progress of the industry.

The study said national oil firms such as Aramco of Saudi Arabia and Petronas of Brazil control around 75 per cent of the world oil reserves. Last year they had two-thirds of new discoveries.

It classified national companies into tigers (PetroChina, Petronas and Sonangol of Angola) and giants (Aramco, Kuwait Petroleum Corporation, National Iranian Oil Company and Gasprom of Russia). The two groups will be the big players in the future.

The study expected an end to the era of production partnership since the oil prices affected a change in terms of foreign direct investment in energy production as well as the rising competition among the tigers. Also there is the possibility of some national oil companies buying shares in global firms.