The Big Oil’s bigger brothers

Bigger than the oil companies

A high oil price is great for oil companies, but it also attracts competitors

BUSINESS could scarcely be better for the supermajors, as the world’s biggest listed international oil companies are known. A barrel of Brent crude has changed hands for $100 or more for most of the year and cash is gushing in. On October 25th BP announced quarterly profits of $5.1 billion. Two days later Shell reported profits of $7 billion and Exxon Mobil of $10.3 billion. But the tide of the oil business is turning.

Half a century ago life was simple for the world’s oil giants. Countries with lots of oil often lacked the technology, capital and management skills to find and extract it. Western oil firms supplied all of the above, and did rather well out of it. But then OPEC was born, and petrostates started their own state-backed national oil companies to take charge of their reserves.

State-backed firms now dominate the business. Exxon may be the world’s biggest listed company by market capitalisation, but it is a tiddler beside the National Iranian Oil Company or Saudi Aramco (see chart). Measured by the reserves it controls, it is only the 11th-largest oil and gas firm in the world. Shell and BP scrape into the top 20. State-backed firms control around 80% of the world’s oil.

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