What non-US companies are key players in the energy industry?
The most heavily advertised American energy brands are usually the first that come to mind. Among the most publicly traded oil giants are ExxonMobil, Chevron Corporation, and British Petroleum (BP). If you think these companies are among the most productive firms in the energy industry, you better think twice. According to the Forbes website, the leading crude oil producer in the energy sector is Saudi Arabia’s nationally owned Saudi Aramco (1). By producing nearly 3.8 million barrels of oil per day (bpd), Saudi Aramco holds nearly 10% of the global market share for oil (2). Why is it that a privately owned national company in Saudi Arabia dwarfs some of the most well known public companies in America? The answer is simple – Saudi Arabia has oil. The Middle East has a greater abundance of natural crude oil than anywhere in the world, especially the United States. Therefore, it is much easier for Saudi Aramco, among other Middle Eastern oil giants, to extract oil on their home ground. Multinational Corporations who are invested in foreign oil fields have to travel great distances to extract valuable oil, which inherently raises their costs of production. By producing in their own country, Saudi Aramco has the capability to focus their technological resources on the efficiency and productivity of their oil operations. According to Forbes (3), the largest oil field in the world is located in Saudi Arabia. The next highest-ranking oil fields are located in Iraq, not too far down the road in the Middle East. Companies within these borders certainly have a comparative advantage in extracting and producing oil.
Another key non-US player in the energy industry is PetroChina Company Limited, also known as CNPC. As the largest producer and distributer in the energy industry in China, CNPC could play a significant role in China’s surging economic growth (4). Energy is a key source for any growing economy. Therefore, as China’s markets expand in years to come, firms will seek gas and oil to run their operations. Unlike Saudi Aramco, CNPC in publicly traded on multiple stock exchanges, including the New York Stock Exchange and the Stock Exchange of Hong Kong (4). With the incredible potential Chinese markets have in the coming years, CNPC could possibly be the greatest investment out of all energy companies.
(1) - http://www.forbes.com/2010/07/09/worlds-biggest-oil-companies-business-energy-big-oil.html
(2) - http://www.saudiaramco.com
(3) - http://www.forbes.com/2010/01/21/biggest-oil-fields-business-energy-oil-fields.html
(4) - http://www.petrochina.com.cn/Ptr/About_PetroChina/Company_Profile/default.htm
It is very interesting to think that the major companies in the entire industry are not present in America, one of the leading consumers of oil next to China amongst others. There really is a focus on geographic location and resources in order to have a successful energy company and this limits the production and supply, not to mention the price, of the oil for the whole world. Would it be smart to invest in a company such as these that are already established and prominent in the industry? Their customers in the most powerful countries in the world must only be increasing, especially due to China's road to surpassing the United States in being the most powerful country in the world. In addition their massive population could be something to consider with investing because it seems like they will always have that strong consumer base.
ReplyDeleteThe United States has a strategic petroleum reserve (http://www.fossil.energy.gov/programs/reserves/) in Wyoming with shares in the rest of the Rocky Mountains. How do you think this affects our commerce with companies such as Saudi Aramco? My opinion is that the United States government is looking less for the commodity that oil is, and more for the political cushion in the Middle East. The SPR has a capacity of one billion barrels, which dwarfs the consumption of many countries per year. I think we are involved less for pricing reasons, and more for control politically which is why it is important to pay attention to all the players of the game such as PetroChina, like you mention.
ReplyDeleteYes. I totally agree. Actually, PetroChina is run by the Chinese government. There are no extra oil companies in China. All the oil stations on the road is owned by PetroChina.
ReplyDeleteIt would be interesting to look at how the other economic ventures in the U.S. and Middle East factor into this. For example, Dan mentioned we have a decent amount of oil, but maybe it's just more efficient for us to import it. Although prices are high, the U.S. has many other focuses absorbing our time and money. I'm relatively unfamiliar with what the Middle East has going on economically and I'm not sure how much they import, but I'm curious about that angle.....
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