Breakneck expansion across the energy business in the past decade has seriously leveled the global playing field, leaving the oil "majors" exposed to competition in areas where they once reigned supreme.

One factor behind the shift is the emergence of the plumbers as guns for hire by anyone who needs their world-beating skills. The client lists of Schlumberger Ltd, Halliburton Co and Baker Hughes Inc increasingly bulge with state-backed national oil companies (NOCs) and ambitious "independents" - as oil companies without refineries are known.

In the past, NOCs such as Brazil's Petrobras or Petronas of Malaysia may have relied more on one of the majors for their engineering expertise when developing an oil field. Now, they can go straight to a services company without having to offer equity in oil developments to outsiders.

Schlumberger, the clear global leader in services, says national oil companies and independents account for three-quarters of the industry's capital spending. Among Schlumberger's top 30 clients, the share of 2010 revenue from majors was down to about 20 percent from 33 percent in 2002, while the NOC share had doubled to 32 percent.

The reversal of fortune is clear even in deepwater drilling, or wells in 4,000 feet of water or more. A review of data on discoveries worldwide shows that, so far this year, only six of the 38 finds were made by the likes of BP, Shell or Eni, whereas majors made more than half the 26 discoveries in 2006, when deepwater drilling first took off.

The wider oil game has changed so much that even Exxon Mobil Corp is left to sign simple fee-per-barrel deals, as it did in Iraq, with no provision for payouts to rise in tandem with oil prices, according to a report on the oil business from London think-tank Chatham House.

"Companies may think such deals give them a ‘foot in the door'," the report said. "But the handle remains on the inside."

Exxon is now exiting its $50 billion Iraq project in favor of a deal in autonomous Kurdistan to the north.

Seasoned oil executives are certainly quick to caution against overstating the relative decline of traditional Big Oil.

Robert Herlin, the chief executive of Evolution Petroleum Corp who was a board member at services company Boots and Coots before it was bought by Halliburton, said services firms had to tread carefully when stepping into the shoes of the majors.

"You don't want to be competing with your customers," Herlin said, adding that keeping up with new technologies took a lot of time and capital. "The services business is a tough business, because you're always at the tail end of the cycle."

Still, the shifting balance of power is significant. Andrew Gould, who was Schlumberger's CEO for a decade before leaving this year, sees risks for Western oil majors if their drilling prowess is matched by the countries that have much of the oil.

Having crossed the services divide to be chairman of oil and gas firm BG Group Plc, Gould warns that NOCs are ambitious and quick to learn. He said some boast a technical depth on par with the majors, which could even threaten Western energy security.

"Unless we refocus, we're in danger of handing our technology lead irrevocably to the emerging petroleum nations," the UK-born executive said at the Chatham House report's launch last month. "And given our continued reliance on fossil fuels ... I'm not sure that this is very wise."

ARABIAN MIGHT

For decades, anyone with oil ambitions felt they had little choice but to court a major, going all the way back to the firm that became Chevron Corp setting up the Arabian American Oil Company: Saudi Aramco, now the world's top energy producer.

Would-be Aramcos today, or even those with less lofty goals, can buy much of the technology directly from services companies.

Alan Kleier, a Chevron executive who spent seven years in Angola, saw a dramatic change in how that country pushed for local hiring as it built up expertise, and said many of his staff gravitated to the NOC, Sonangol. But he believes majors still bring a lot to table in terms of technological expertise.

"Do I think there's a day when they do it all themselves?" he said of Sonangol. "They may work toward that, and the day may come. But they're still probably years away."

In Brazil's case, Petrobras has built up so much experience in its ranks that it is even trying to build a services industry at home. "They see the size of their reserves and say 'We have lots of time in front of us, we can do it'," Gould said.

So service firms fall over themselves to get close to NOCs. Near Aramco headquarters in Dhahran, Baker Hughes just opened a research center, while Schlumberger has been there since 2006.

Schlumberger towers over others in its geographic reach and scale. After tripling in value in the past decade, it would rank among the top 10 market-traded oil companies by value; Schlumberger's market capitalization of $90 billion puts it within range of BP and Total. By comparison, Exxon grew by 162 percent in value in that time, and Shell 59 percent. The share of the top three services companies in the S&P energy index is now a tenth, up from 8.5 percent 10 years ago.

Many national oil companies have clear advantages, not least the deep pockets of their state backers and an implicit home oilfield advantage.

In February, Petronas had Halliburton put a technical center in Kuala Lumpur focused on shale gas and oil, indicating its own ambitions in unconventional drilling. Petronas is also trying to buy Canada's Progress Energy Resources.

Eric Gordon of Brown Advisory in Baltimore, which has about one-eighth of its $29 billion in assets in energy, said all this new competition for access to oil means contracts between oil-rich countries and the majors will grow less favorable still.

"It's a concerning trend for anyone investing in the oil majors," he said, noting they already have to spend far more to get less because the "easy oil" is gone. "The capital intensity continues to rise, yet their ability to generate profitability relative to oil price movements has become less impressive."

TECHNOLOGY FOR ALL

Independents, in a further blow to big oil's dominance, have led the way into crucial new developments such as North American shale gas.

One such company is Ultra Petroleum Corp, whose CEO, Mike Watford, began his career with Shell. Watford said the rebalancing of research and development (R&D) spending over the years to the services companies had been a clear benefit for smaller players who could suddenly afford the latest technology.

"Now I've got access to it," he said at a recent conference. "The service companies want less of a premium for it."

Ranking industry R&D as a share of sales, Chatham House put service firms in the top six, then Petrobras and PetroChina, and two independents: Anadarko and Noble Energy.

The cyclical churning faced by technology innovators has been made clear for Halliburton and Baker Hughes this year. Having spent heavily to build up hydraulic fracturing capacity, a collapse in natural gas prices left the industry oversupplied.

For Schlumberger the relative impact of the gas glut was far less given its greater global reach.

The power to maintain steady prices is vital for the services companies, as Gould made clear at an industry conference in Houston back in 2009. Schlumberger's customers were grappling then with a dramatic drop in oil prices, and calling for service rate cuts to help out, to which he quipped: "When did the bill from your plumber last go down?"

(Reporting by Braden Reddall in San Francisco, Peg Mackey in London, and David Gaffen in New York; Editing by Patricia Kranz and Tim Dobbyn)

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