Big Oil

Chart of the major energy companies dubbed "Big Oil" sorted by 2005 revenue

Big Oil is a name used to describe the world's seven or eight largest publicly owned oil and gas companies, also known as supermajors.^[1][2][3][4] The supermajors are considered to be BP plc, Chevron Corporation, ExxonMobil Corporation, Royal Dutch Shell plc, Total SA and Eni, with ConocoPhillips Company also sometimes described as forming part of the group.^[1][2]

The term, analogous to others, such as Big Steel, that describe industries dominated by a few giant corporations, was popularized in print from the late 1960s.^[5][6] Today it is often used to refer specifically to the seven supermajors.^[7] The use of the term in the popular media often excludes the national producers and OPEC oil companies who have a much greater role in setting prices than the supermajors.^[8][9][10] Two state-owned Chinese oil companies, CNPC and Sinopec, had greater revenues in 2013 than any of the supermajors except Royal Dutch Shell.^[11]

In the maritime industry, six to seven large oil companies that decide a majority of the crude oil tanker chartering business are called "Oil Majors".^[12]

History

The history of the supermajors traces back to the "Seven Sisters", the seven oil companies which formed the "Consortium for Iran" cartel and dominated the global petroleum industry from the mid-1940s to the 1970s.^[13][14] The Seven Sisters were:

• Anglo-Persian Oil Company (now BP);
• Gulf Oil, Standard Oil of California (Socal) and Texaco (now Chevron);
• Royal Dutch Shell; and
• Standard Oil of New Jersey (Esso) and Standard Oil Company of New York (Socony) (now ExxonMobil).

Before the oil crisis of 1973 the members of the Seven Sisters controlled around 85% of the world's oil reserves. The supermajors began to emerge in the late-1990s, in response to a severe fall in oil prices. Large petroleum companies began to merge, often in an effort to improve economies of scale, hedge against oil price volatility, and reduce large cash reserves through reinvestment.^[15] The following major mergers and acquisitions of oil and gas companies took place between 1998 and 2002:

• Exxon's merger with Mobil in 1999, forming ExxonMobil;
• Total's merger with Petrofina in 1999 and with Elf Aquitaine in 2000, with the resulting company subsequently renamed Total S.A.;
• BP's acquisitions of Amoco in 1998 and of ARCO in 2000;
• Chevron's acquisition of Texaco in 2001;
• the merger of Conoco Inc. and Phillips Petroleum Company in 2002, forming ConocoPhillips.

This process of consolidation created some of the largest global corporations as defined by the Forbes Global 2000 ranking, and as of 2007 all were within the top 25. Between 2004 and 2007 the profits of the six supermajors totaled US$494.8 billion.^[16]

Composition

Trading under various names around the world, the supermajors are considered to be:^[1]

• BP plc (United Kingdom)
• Chevron Corporation (United States)
• ExxonMobil Corporation (United States)
• Royal Dutch Shell plc (Netherlands and United Kingdom)
• Total SA (France)
• Eni (Italy)

ConocoPhillips Company (United States) is also sometimes described as forming part of the group.^[3] As of 2011 ExxonMobil ranked first among the supermajors measured by market capitalization, cash flow and profits.^[17][18]

As a group, the supermajors control around 6% of global oil and gas reserves. Conversely, 88% of global oil and gas reserves are controlled by the OPEC cartel and state-owned oil companies, primarily located in the Middle East.^[19] A trend of increasing influence of the OPEC cartel, state-owned oil companies^[13][20] in emerging-market economies is shown and the Financial Times has used the label "The New Seven Sisters" to refer to a group of what it argues are the most influential national oil and gas companies based in countries outside of the OECD, namely CNPC (China), Gazprom (Russia), National Iranian Oil Company (Iran), Petrobras (Brazil), PDVSA (Venezuela), Petronas (Malaysia), Saudi Aramco (Saudi Arabia).^[21][22]

Largest oil and gas companies

Country Company name Sales (US$ million) Exxon Mobil 496,255 Royal Dutch Shell 484,489 BP 386,463 Sinopec 375,214 China National Petroleum 352,338 Saudi Aramco 311,000 Chevron Corporation 245,621 Total 231,580 Phillips 66 161,212 Gazprom 157,830 Eni 153,676 Petrobras 145,915 Engie 126,076 Pemex 125,344 Valero Energy 125,095 PDVSA 124,754 Statoil 119,561 JX Holdings 119,258 Lukoil 111,433 National Iranian Oil 110,000 Petronas 97,355 Indian Oil 86,016 Repsol 81,122 PTT 79,690 Sonatrach 76,100 Reliance Industries 76,119 China National Offshore Oil 75,514 Marathon Petroleum 73,645 Pertamina 70,924 Rosneft 65,093 TNK 48,909 Idemitsu Kosan 48,828 OMV Group 47,349 Sunoco 45,765 Bharat Petroleum 44,582 Enterprise Products 44,313 GS Caltex 43,280 Suncor Energy 40,231 Hindustan Petroleum 38,885 Hess Corporation 37,871 Centrica 36,860 PKN Orlen 36,100 Ecopetrol 35,520 Hellenic Petroleum 35,495 World Fuel Services 34,623 China National Aviation Fuel 34,352 Plains All American Pipeline 34,275 Cosmo Oil 33,672 Motor Oil Hellas 31,769 Murphy Oil 31,446 Oil and Natural Gas Corporation 30,746 Tesoro 29,927 GasTerra 29,332 Gas Natural 29,305 Ultrapar 29,073 S-Oil 28,808 Showa Shell Sekiyu 28,497 Formosa Petrochemical 27,179 MOL 26,698 Korea Gas 25,721 Surgutneftegas 25,663

"Big oil"

Petroleum and gas supermajors are sometimes collectively referred to as "Big oil", a term that emphasizes their economic power and perceived influence on politics, particularly in the United States. Big oil is often associated with the fossil fuels lobby.

Usually used to refer to the industry as a whole in a pejorative or derogatory manner, "Big oil" has come to encompass the enormous impact crude oil exerts over first-world industrial society.^[23]

Maritime "Oil Majors"

In the maritime industry, a group of six companies that control the chartering of the majority of oil tankers worldwide are together referred to as "Oil Majors".^[24] These are: Royal Dutch Shell, BP, Exxon Mobil, Chevron Texaco, Total Fina Elf and Conoco Phillips.^[25][26] Charter parties such as "Shelltime 4" frequently mention the phrase "oil major".^[27]

See also

• Big media
• Big Tobacco
• Big Pharma
• Energy development
• Fossil fuel
• Military–industrial complex

References

1. "Oil majors' output growth hinges on strategy shift". Reuters. 1 August 2008. Retrieved 28 April 2011.
2. "Shell will invest despite decline in earnings". The New York Times. 2 February 2006. Retrieved 28 April 2011.
3. "ConocoPhillips: The Making Of An Oil Major". Business Week. 12 December 2005. Retrieved 2016-04-01.
4. Nafta - Volume 56 - Page 447 2005 "Tom Nicholls, editor, Petroleum Economist, writes WHOEVER coined the term supermajor should have kept some superlatives in reserve. Oil companies may rank as some of the biggest private-sector corporations, but when it comes to oil ..."
5. Corporate Packaging Management C. Wayne Barlow - 1969 "Even with the price ceilings, gas cost more than it had, prompting consumers to charge that “Big Oil,” and not the Arabs, had used the crisis to squeeze profits from oppressed consumers. Some thought that the oil companies got rich from the ..."
6. Defending the National Interest: Raw Materials Investments and ... - Page 330 Stephen D. Krasner - 1978 "Kennedy's Treasury Secretary, Douglas Dillon, was a director of Chase Manhattan Bank and thus tied to the Rockefellers and big oil. Nixon's campaigns were partly financed by oil money, and his Secretary of the Interior, Walter Hickel, was an ...
7. Encyclopedia of Business in Today's World: A - C - Volume 1 - Page 174 Charles Wankel - 2009 The older term Big Oil, used in reference to the cooperative behavior and lobbying of oil companies, is often used now to refer specifically to the supermajors. Each supermajor has revenues in the hundreds of billions of dollars, benefiting from ...
8. Green Energy: An A-to-Z Guide - Page 331 Dustin Mulvaney - 2011 "the oil majors have the power to manipulate oil prices, profiteering at the expense of consumers in North America and Europe. Although the term Big Oil is used in the media, it is not used to describe the Oil Producing and Exporting Countries'
9. Crude Reality: Petroleum in World History Brian C. Black - 2012 "Therefore, Big Oil included large-scale corporate infrastructure that spanned the globe without ever releasing the basic elements that titillated the public: fortune, danger, and bust. Today, the term Big Oil most likely evokes a negative visceral ..."
10. Role of National Oil Companies in the International Oil Market Robert Pirog - 2011 "In the United States, the term “big oil companies” is likely to be taken to mean the major private international oil companies, largely based in Europe or America. However, while some of those companies are indeed among the largest in the ..."
11. "Global 500 2014". Fortune. Retrieved 20 November 2014.
12. "TEN wins long-term suezmax charter with an oil major". Lloyds List. 1 December 2015. Retrieved 6 December 2015.
13. The new Seven Sisters: oil and gas giants dwarf western rivals, by Carola Hoyos, Financial Times. 11 March 2007
14. "Business: The Seven Sisters Still Rule". Time. 11 September 1978. Retrieved 24 October 2010.
15. "Slick Deal?". NewsHour with Jim Lehrer. 1998-12-01. Retrieved 2007-08-20.
16. Global 500, Fortune website, accessed Aug. 2008.
17. Forbes Global 2000 – 2011 list
18. FT list of top Publicly Traded companies
19. Energy Information Administration (2009). "Who are the major players supplying the world oil market?".
20. "Shaky industry that runs the world". The Times (South Africa). 24 January 2010. Retrieved 26 October 2010.
21. "New and Old Leaders in the Upstream Oil Industry". ypenergy.org. Retrieved 20 Jan 2012.
22. "FT – New and Old Leaders in the Upstream Oil Industry" (PDF). FT. Retrieved 20 Jan 2012.
23. Inside the Big Oil Game at Time
24. "Meaning of an ‘Oil major’ and ‘Recognised Oil Majors’". www.lawandsea.net. Law and the sea. Retrieved 6 December 2015.
25. "Dolphin Tanker Srl v Westport Petroleum Inc (The Savina Caylyn) [2010] EWHC 2617 (Comm)". http://www.lawandsea.net. Law and sea. Retrieved 6 December 2015. External link in |website= (help)
26. Helman, Christopher (19 March 2015). "The World's Biggest Oil And Gas Companies - 2015". Forbes. Retrieved 6 December 2015.
27. McInnes, David. "Legal aspects of oil major approvals in oil tanker charter parties". www.lmaa.london. Ince & Co. Retrieved 6 December 2015.

Further reading

• Black, Brian C. Crude Reality: Petroleum in World History. New York: Rowman & Littlefield, 2012. ISBN 0742556549
• Blair, John Malcolm (1976). The Control of Oil. Pantheon Books. ISBN 0-394-49470-9.
• Painter, David S. (1986). Oil and the American Century: The Political Economy of US Foreign Oil Policy, 1941–1954. Baltimore, MD: Johns Hopkins University Press. ISBN 978-0-801-82693-1.
• Yergin, Daniel (1993). The Prize: The Epic Quest for Oil, Money & Power. New York, NY: Free Press. ISBN 0-671-79932-0.

External links

• "Crude Awakening", NOW, week of 16 June 2006.
• "Big Oil's bigtime looting", editorial from the Boston Globe, 2 September 2005.
• "Big Oil bears brunt over gas prices", Reuters, 23 October 2005.
• "In heated hearings, oil bosses defend big profits", Associated Press (via CNN), 9 November 2005.
• List of World's Largest Oil and Gas Companies Ranked by Reserves
• Who are the major players supplying the world oil market?