The oil industry which is undoubtedly one of the most lucrative industries in the world has a very interesting pool of stakeholders. In recent times, however oil prices have faced major shifts in prices and oil production has not always equated to direct profits . In these uncertain times, it is important to pose a question: Which are the biggest stakeholders in the global oil industry?
Headquarters: Dhahran, Saudi Arabia
With the increase in its production output to 10.3 million barrels per day, Saudi Arabia has decided to defy the west and take away market share from the US shale drillers. Interestingly Saudi Aramco has earmarked a $10 billion investment in an unconventional energy development plan that includes the development of its domestic shale gas production . Saudi Aramco is not only trying to replicate the US shale success story, it has even created a well laid out strategy of hiring America’s best energy talent. Several US shale field workers who have lost their jobs are being offered employment by Aramco. So far in the oil price slump, around 75000 oil and gas jobs have been lost. Saudi Aramco is one of the few companies that are actually increasing their head count.
No other oil and gas company has invested more in newer technologies through establishing a network of global research centers (Aberdeen, Beijing, Houston, Massachusetts and others) and alliances with industries and world class universities. One of Aramco’s centers at southeast Michigan will focus on carbon capture from mobile sources.
The CEO of Saudi Aramco once stated “ We are convinced that innovation and cutting edge technology are the key strategic enablers of our current success and future competitiveness, which is why we are tripling our R&D manpower and increasing our R&D funding fivefold. Our research agenda is targeting a leadership position in about a dozen technology domains. They include multiple technologies that will help us achieve our goal of increasing our oil recovery to 70 percent and allow us to add more than a hundred billion of barrels of oil resources to our already large portfolio. In addition, we are targeting major advancements in drilling, which constitutes 60 percent of our upstream budget and is vital to realizing our significant unconventional gas potential.”
Many would consider Saudi Arabia the undisputed king of oil and gas. The desert kingdom has around 16% of the world’s proven oil reserves and is the biggest global exporter of petroleum liquid so there’s little doubt as to why its national oil company, Saudi Aramco, the biggest energy company in the world, generates over $1 billion in revenue every single day. With current recoverable crude oil assets standing at around 260 billion barrels, Aramco operates the Ghawar oil field which has production capacity of around 6 million barrels per day and is the world’s largest onshore field.
Investment In Technology
With an intention to increase its already vast oil reserves, the NOC’s research arm EXPEC ARC has undertaken a challenge to improve its oil and gas recovery techniques. Smart Water Flood is one of its homegrown recovery technologies that can improve the oil recovery rates of its reservoirs. ‘First Drilling Microchip’ is another innovation that aims to develop low- cost sensor systems for downhole drilling measurement.
Resbots are another breakthrough discovery that the company has made in the last few years. Being close to 1/1000th the size of the human hair, Resbots analyze reservoir pressure, investigate fluid and rock properties, assess the type of fluid and provide temperature measurements when injected into the reservoir. Resbots were successfully tested in 2010.
Headquarters: Texas United States
Exxon is the second largest company in the US as far as revenues go. However, its revenues have dropped by more than 7 percent from the previous year along with decreased oil production and increasing exploration expenditures. As of 2013, the company had about 71.9 million barrels of natural gas and 13.2 million barrels of liquid proved reserves. Exxon has three divisions: Upstream, Downstream and Chemical with upstream being the biggest of them all. Exxon is also the biggest refiner in the world with a refining capacity of around 5.5 million barrels per day, with Royal Dutch Shell in second place with a refining capacity of around 4.1 million barrels per day.
Being the world’s biggest refiner, Exxon has carefully hedged its risks as low oil prices would be beneficial for its refining margins. Exxon is working on a Carbon Capture Storage (CCS) technology that could play a major role in combating global greenhouse gas emissions. As per the Intergovernmental Panel on Climate Change, power plants result in around 60% of the world’s total CO2 emissions. CCS technology is leading the way in reducing these harmful emissions. The corporation has also improved its energy efficiency by around 10 % in refining and 12 % in chemical manufacturing from 2002 to 2012. These numbers are huge, considering the size and magnitude of the company’s global operations which stood at a massive 1.5 billion gigajoules in 2012 .
Headquarters: Dongcheng District Beijing China
With around half a million employees, Petrochina, the listed arm of state owned China National Petroleum Corp. (CNPC) is easily one of the biggest oil and gas companies in the world. The company operates in four segments: Exploration and Production, Refining and Chemicals, Marketing and Natural Gas and pipeline. On April 9, 2014, Petrochina surpassed Exxon Mobil as the biggest energy company by market value for the first time since 2010. Out of the total profits of the company, about 86.5 % came from the exploration and production sector while the remaining came from its natural gas and pipeline units.
In fact, the Chinese government is toying with the idea of combining the nation’s energy companies in order to compete with the likes of Exxon Mobil and Shell, revive its slowing economy and battle low oil prices. One of the options that are being considered is the merger of CNPC with its domestic arch rival Sinopec. One of the biggest reasons for this merger would be to increase efficiency by eliminating the overlapping operations of state owned oil and companies in exploration, refining and running gas pumps. If any such merger does take place, the new corporation could be twice as big as Exxon. However, some analysts are calling this as just a rumor as both Sinopec and CNPC have declined to comment on this possibility.
Few are aware that Petrochina invests around $1.75 billion in Research and Development initiatives which is the highest for any oil and gas company. Technologies at Petrochina are developed with a view to promoting green development and effective utilization of traditional fossil fuels. Petrochina has developed a set of Coal Bed Methane (CBM) exploration and development technologies that suits CBM storage and reduces seepage. This is in addition to the industrialization assessments and resource assessments of shale oil, biodiesel and gas hydrate. In 2010, the company achieved better than expected results in reduction of energy consumption and emissions through key energy saving projects and improved utilization of energy and water resources. It resulted in the saving of 1.73 million tons of coal equivalent and 28.65 million cubic meters of water .
Royal Dutch Shell
Headquarters: The Hague, Netherlands
Shell has always been one of the most respected oil companies in the world. Although the company has registered a huge drop in profit by around 40% from the previous year, it is hopeful of improving its operational performance and project delivery. In fact, on April 7, 2015, the company proposed a merger with the British gas producer BG group for $69.7 billion cash and stock. It is interesting to note here that this is the first big acquisition of the oil and gas industry this year, and will make Shell the largest producer of liquefied natural gas in the world. The merger of the two companies would produce financial benefits to the tune of around $ 2.5 billion. However, the takeover of BG group could have a direct effect on Shell’s arctic ambitions. As per the US geological survey, the Arctic is said to have close to 30% of the world’s undiscovered natural gas reserves and 13% of the world’s undiscovered oil reserves . Since Shell now has to invest around $70 billion in acquiring BG, its spending on Artic with its harsh conditions might not be an option at present. In order to promote cleaner, smarter energy, Shell is focusing on natural gas as it emits around 50% fewer emissions than coal-fired power plants. The company has also started biofuel production in Brazil in the form of ethanol from Brazilian sugarcane .