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Big Oil, Bigger Oil

Big Oil, Bigger Oil

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Published by: tbwsm on Feb 05, 2010
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Big Oil, bigger oil

Published: February 4 2010 09:29 | Last updated: February 4 2010 09:54

“Big” and “oil” are mentioned so often in the same breath that it is easy to lose perspective. Motorists and environmentalists never tire of berating the dominant supermajors whose petrol stations and share listings make them the public face of the industry, their favourite target being America’s ExxonMobil. If market value were the sole magnet for opprobrium then Exxon’s executives could breathe a bit easier because PetroChina recently overtook it as the world’s most valuable listed energy company. But there is “Big Oil” – last year, Royal Dutch Shell earned more than $1bn a month – and then there is bigger oil. No oil major is able to affect energy prices on its own and even Exxon is far smaller than the world’s largest energy company. It is not even close. Saudi Aramco’s estimated hydrocarbon reserves of 300,000 million barrels of oil equivalent make it 15 times Exxon’s size. Exxon comes in about 17th place, with the top 10 being entirely state-owned. PFC Energy, which recently ranked the top 50 publicly listed energy companies in the world and highlighted PetroChina’s ascension, notes that their combined market value was $3,900bn at year-end. Impressive? Not really, particularly given that much of this float is not in private hands, including as it does several companies, such as Rosneft, Gazprom, Petrobras and PetroChina itself, with state shareholdings. If one took only the 10 largest, completely state-owned energy companies into account and simplistically assigned them a notional market value based on their reserves, as is done for ExxonMobil, they might be worth $34,000bn. No listed company in any industry has ever reached the $1,000bn mark. A decade ago analysts believed Microsoft or Cisco would be first, while Google was seen as having a shot a few years ago, but none got even close. On the crude measure above, though, Saudi Aramco alone would command a value of $7,000bn, 40

times Shell’s market capitalisation and double that of the entire London Stock Exchange. Big Oil indeed.

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