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National companies dominate world oil National government-owned companies hold the bulk of the world’s oil reserves and account for more than half of oil supplies Alan Bailey Petroleum News
For someone working in the oil fields of North America it might appear that investor-owned oil companies of various forms and sizes dominate the world oil scene.
But looks can be deceptive.
According to a briefing that the U.S. Energy Information Administration published in January, companies wholly or partly owned by national governments hold 88 percent of the world’s remaining proven oil reserves. And these companies produced more than 52 percent of the world’s oil in 2007.
EIA said that oil companies broadly fall into one of three distinct categories: companies such as ExxonMobil, Royal Dutch Shell and BP that are owned by private investors; national commercially operated companies such as the Brazilian company Petrobras; and national oil companies such as Saudi Arabia’s Saudi Aramco and Venezuela’s PDVSA that are operated as extensions of governments.
Investor-owned companies, whose primary business motivation is returns for their shareholders, only enjoyed full access rights to about 6 percent of proven reserves in 2008, EIA said. National oil companies like Petrobras seek commercial profits but are also influenced by national objectives; these companies held 10 percent of reserves. New Russian oil companies held 6 percent of reserves. The remaining reserves, amounting to a whopping 78 percent of the world total, were owned by national oil companies that are typically motivated by considerations such a government’s domestic or foreign policy objectives, EIA said.
In 2007 just 50 oil companies produced 78 percent of total world oil, with national oil companies accounting for 70 percent of the oil that those 50 companies produced, EIA said.
Oil producing countries Overlaying the influence of different types of oil companies over oil production is the regulating impact of the countries that host the oil reserves. These countries can influence world oil supplies by changing financial regulations such as tax structures, EIS said. And 12 countries have joined the Organization of Petroleum Exporting Countries, known as OPEC, a cartel that attempts to influence oil prices by setting production quotas within their borders.
OPEC countries implement production quotas by restricting the production of oil companies operating within their borders.
“OPEC countries and national oil companies already hold the majority of proven oil reserves, and the percentage of reserves they hold is increasing,” EIA said. “This concentration further establishes their future importance as major players in the world oil market and could potentially increase market tension and upward pressure on prices as world oil demand rises.”
Faced with the conundrum of ever-rising oil demand combined with ever-dwindling access to oil reserves, independent oil companies have been seeking new oil in challenging places such as the remote Arctic or from difficult resources such as oil sands.
But are there other ways of solving the reserves problem for oil majors?
According to a Reuters report, BP Chief Executive Tony Hayward said Feb. 3 that mergers between major independent oil companies in the light of low oil prices is not terribly logical at present, because that would not address the issue of access to more oil reserves. Instead, it would make more sense to “think about combining” independent oil companies, which have capabilities and technologies, with national oil companies, which have resources, he said.
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