Supermajor
Encyclopedia
Supermajor is a name commonly used to describe the world's five (and sometimes six) largest publicly owned oil
and gas
companies.
ConocoPhillips Company (United States) is also sometimes described as forming part of the group.
As a group, the supermajors control about 6% of global oil and gas reserves with the largest supermajor, ExxonMobil, ranked 14th. Conversely, 88% of global oil and gas reserves are controlled by state-owned oil companies
, primarily located in the Middle East
. As of December 2006, ExxonMobil ranked first among the supermajors measured by market capitalization, cash flow, revenues and profits.
, in response to a severe deflation 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.
Exxon
and Mobil
(1999), BP and Amoco
(1998), Total and Petrofina
(1999) and subsequently Elf Aquitaine
(2000), Chevron and Texaco
(2001), and Conoco Inc.
and Phillips Petroleum Company (2002) all merged between 1998 and 2002. The result of this trend created some of the largest global corporations as defined by the Forbes Global 2000
ranking, and as of 2007 all are within the top 25. Between 2004 and 2007, the profits of the six supermajors totaled $494.8 billion.
and gas
producers, and their perceived influence on politics, particularly in the United States
. Big Oil is often associated with the Energy Lobby
.
Usually used to represent 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. The term is also utilized to discuss the consumer relationship with oil production and petroleum use, as consumers in the United States and Europe tend to respond to petroleum price spikes by purchasing vehicles with greater fuel efficiency
during these periods. Historically, consumer interest in fuel efficiency and the oil debate wanes significantly as pump prices stabilize.
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
and gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
companies.
Composition
Trading under various names around the world, the supermajors are considered to be:- BP p.l.c.BPBP p.l.c. is a global oil and gas company headquartered in London, United Kingdom. It is the third-largest energy company and fourth-largest company in the world measured by revenues and one of the six oil and gas "supermajors"...
(United Kingdom) - Chevron CorporationChevron CorporationChevron Corporation is an American multinational energy corporation headquartered in San Ramon, California, United States and active in more than 180 countries. It is engaged in every aspect of the oil, gas, and geothermal energy industries, including exploration and production; refining,...
(United States) - ExxonMobil Corporation (United States)
- Royal Dutch Shell plcRoyal Dutch ShellRoyal Dutch Shell plc , commonly known as Shell, is a global oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the fifth-largest company in the world according to a composite measure by Forbes magazine and one of the six...
(Netherlands and United Kingdom) - Total S.A.Total S.A.Total S.A. is a French multinational oil company and one of the six "Supermajor" oil companies in the world.Its businesses cover the entire oil and gas chain, from crude oil and natural gas exploration and production to power generation, transportation, refining, petroleum product marketing, and...
(France)
ConocoPhillips Company (United States) is also sometimes described as forming part of the group.
As a group, the supermajors control about 6% of global oil and gas reserves with the largest supermajor, ExxonMobil, ranked 14th. Conversely, 88% of global oil and gas reserves are controlled by state-owned oil companies
National Oil Company
A national oil company is an oil company fully or in the majority owned by a national government. According to the United States Energy Information Administration, NOCs accounted for 52% global oil production and controlled 88% of proven oil reserves in 2007.Due to their increasing dominance over...
, primarily located in the Middle East
Middle East
The Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East...
. As of December 2006, ExxonMobil ranked first among the supermajors measured by market capitalization, cash flow, revenues and profits.
History
The supermajors began to appear in the late 1990s1990s
File:1990s decade montage.png|From left, clockwise: The Hubble Space Telescope floats in space after it was taken up in 1990; American F-16s and F-15s fly over burning oil fields and the USA Lexie in Operation Desert Storm, also known as the 1991 Gulf War; The signing of the Oslo Accords on...
, in response to a severe deflation in oil prices. Large petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
companies began to merge, often in an effort to improve economies of scale
Economies of scale
Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...
, hedge against oil price volatility
Volatility (finance)
In finance, volatility is a measure for variation of price of a financial instrument over time. Historic volatility is derived from time series of past market prices...
, and reduce large cash reserves through reinvestment.
Exxon
Exxon
Exxon is a chain of gas stations as well as a brand of motor fuel and related products by ExxonMobil. From 1972 to 1999, Exxon was the corporate name of the company previously known as Standard Oil Company of New Jersey or Jersey Standard....
and Mobil
Mobil
Mobil, previously known as the Socony-Vacuum Oil Company, was a major American oil company which merged with Exxon in 1999 to form ExxonMobil. Today Mobil continues as a major brand name within the combined company, as well as still being a gas station sometimes paired with their own store or On...
(1999), BP and Amoco
Amoco
Amoco Corporation, originally Standard Oil Company , was a global chemical and oil company, founded in 1889 around a refinery located in Whiting, Indiana, United States....
(1998), Total and Petrofina
Petrofina
Petrofina was a Belgian oil company which merged with Total in 1999 to form TotalFina, but the name has now been changed back to Total after another merger...
(1999) and subsequently Elf Aquitaine
Elf Aquitaine
Elf Aquitaine was a French oil company which merged with TotalFina to form TotalFinaElf. The new company changed its name to Total in 2003...
(2000), Chevron and Texaco
Texaco
Texaco is the name of an American oil retail brand. Its flagship product is its fuel "Texaco with Techron". It also owns the Havoline motor oil brand....
(2001), and Conoco Inc.
Conoco Inc.
Conoco Inc. was an American oil company founded in 1875 as the Continental Oil and Transportation Company. It is now a brand of gasoline and service station in the United States which belongs to the ConocoPhillips Company...
and Phillips Petroleum Company (2002) all merged between 1998 and 2002. The result of this trend created some of the largest global corporations as defined by the Forbes Global 2000
Forbes Global 2000
The Forbes Global 2000 is an annual ranking of the top 2000 public companies in the world by Forbes magazine. The ranking is based on a mix of four metrics: sales, profit, assets and market value...
ranking, and as of 2007 all are within the top 25. Between 2004 and 2007, the profits of the six supermajors totaled $494.8 billion.
"Big Oil"
Petroleum supermajors are sometimes collectively referred to as "Big Oil", a term used to describe the individual and collective economic power of the largest oilPetroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
and gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
producers, and their perceived influence on politics, particularly in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. Big Oil is often associated with the Energy Lobby
Energy Lobby
"Energy lobby" is the umbrella term used to name the paid representatives of large fossil fuel and electric utilities corporations who attempt to influence governmental policy...
.
Usually used to represent 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. The term is also utilized to discuss the consumer relationship with oil production and petroleum use, as consumers in the United States and Europe tend to respond to petroleum price spikes by purchasing vehicles with greater fuel efficiency
Fuel efficiency
Fuel efficiency is a form of thermal efficiency, meaning the efficiency of a process that converts chemical potential energy contained in a carrier fuel into kinetic energy or work. Overall fuel efficiency may vary per device, which in turn may vary per application, and this spectrum of variance is...
during these periods. Historically, consumer interest in fuel efficiency and the oil debate wanes significantly as pump prices stabilize.
Further reading
- Yergin, Daniel. The Prize: The Epic Quest for Oil, Money & Power. New York: Free Press, 1993. ISBN 0671799320.
- Blair, John Malcolm The Control of Oil (Hardcover). Publisher: Pantheon Books; 1st edition (January 1, 1976) ISBN 0394494709
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", ReutersReutersReuters is a news agency headquartered in New York City. Until 2008 the Reuters news agency formed part of a British independent company, Reuters Group plc, which was also a provider of financial market data...
, 23 October 2005. - "In heated hearings, oil bosses defend big profits", Associated PressAssociated PressThe Associated Press is an American news agency. The AP is a cooperative owned by its contributing newspapers, radio and television stations in the United States, which both contribute stories to the AP and use material written by its staff journalists...
(via CNNCNNCable News Network is a U.S. cable news channel founded in 1980 by Ted Turner. Upon its launch, CNN was the first channel to provide 24-hour television news coverage, and the first all-news television channel in the United States...
), November 9, 2005. - List of World's Largest Oil and Gas Companies Ranked by Reserves
- Who are the major players supplying the world oil market?