12/22/09 - oil

In today's excerpt - in the late 1990s even as the major U.S. oil companies merged their influence waned in the face of foreign national oil companies. Of the world's twenty largest oil companies fifteen are state-owned:

"[The need for significantly larger investments in oil exploration and development] created the imperative for what became known as restructuring. The majors combined to become supermajors. BP merged with Amoco to become BPAmoco and then merged with ARCO and emerged as a much bigger BP. Exxon and Mobil—once Standard Oil of New Jersey and Standard Oil of New York—became ExxonMobil. Chevron and Texaco came together as Chevron. Conoco combined with Phillips to be ConocoPhillips. In Europe what had once been the two separate French national champions Total and Elf Aquitaine plus the Belgian company Petrofina combined to emerge as Total. Only Royal Dutch Shell already of supermajor status on its own remained as it was. ... With all these mergers the landscape of the international oil industry changed. ...

"It turned out that the restructuring of the world oil industry that had started with the emergence of the supermajors at the end of the 1990s was only the beginning. One more merger—of Norway's Statoil and Norsk Hydro—created Statoilhydro a new supermajor although partly state-owned. But the balance between companies and governments has shifted dramatically. Altogether all the oil that the supermajors produce for their own account is less than 15 percent of total world supplies. Over 80 percent of world reserves are controlled by governments and their national oil companies. Of the world's twenty largest oil companies fifteen are state-owned. Thus much of what happens to oil is the result of decisions of one kind or another made by governments. And overall the government-owned national oil companies have assumed a preeminent role in the world oil industry. ...

"Saudi Aramco—the successor to Aramco now state-owned—remains by far the largest upstream oil company in the world single-handedly producing about 10 percent or more of the world's entire oil with a massive deployment of technology and coordination. The major Persian Gulf producers control for the most part their production as do the traditional state companies in Venezuela, Mexico, Algeria, and many other countries. The Chinese companies—partly state-owned, partly owned by shareholders around the world—continue to produce the majority of oil in China, but have also become increasingly active and visible in the international arena. So have Indian companies. The Russian industry is led by state-controlled giants Gazprom and Rosneft, and by privately held companies such as Lukoil and TNK-BP that are majors in their own right.

"Petrobras, the Brazilian national oil company, is 68 percent owned by investors, and 32 percent by the Brazilian government, though the government retains the majority of the voting shares. Petrobras had already established itself at the forefront in terms of capabilities in exploring for and developing oil in the challenging deep waters offshore. Beginning with the Tupi find in 2006 potentially very large discoveries are being made in what had heretofore been inaccessible resources in Brazil's deep waters below salt deposits. These discoveries could make Petrobras—and Brazil—into a new powerhouse of world oil. Malaysia's Petronas had turned itself into a significant international company operating in 32 countries outside Malaysia. State companies in other countries in the former Soviet Union—KazMunayGas in Kazakhstan and SOCAR in Azerbaijan—have also emerged as important players. While Qatar is an oil exporter its massive natural gas reserves put it at the forefront of the liquefied natural gas industry (LNG) and along with Algeria's Sonatrach and other exporters at the center of growing global trade in natural gas."


Daniel Yergin


The Prize: The Epic Quest for Oil, Money & Power


Free Press a division of Simon & Schuster, Inc.


Copyright 1991, 1992, 2008 by Daniel Yergin


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