World's Largest State-Owned #Oil Companies

Mapped: The World's Largest State-Owned Oil Companies

By

 Marcus Lu

January 12, 2021

View the high-resolution of the infographic by clicking here.

Oil is one of the world's most important natural resources, playing a critical role in everything from transportation fuels to cosmetics.

For this reason, many governments choose to nationalize their supply of oil. This gives them a greater degree of control over their oil reserves as well as access to additional revenue streams. In practice, nationalization often involves the creation of a national oil company to oversee the country's energy operations.

What are the world's largest and most influential state-owned oil companies?

Editor's Note: This post and infographic are intended to provide a broad summary of the state-owned oil industry. Due to variations in reporting and available information, the companies named do not represent a comprehensive index.

State-Owned Oil Companies by Revenue

National oil companies are a major force in the global energy sector, controlling approximately three-quarters of the Earth's oil reserves.

As a result, many have found their place on the Fortune Global 500 list, a ranking of the world's 500 largest companies by revenue.

Country	Name	Fortune Global 500 Rank	2019 Revenues
🇨🇳 China	Sinopec Group	2	$443B
🇨🇳 China	China National Petroleum Corporation (CNPC)	4	$379B
🇸🇦 Saudi Arabia	Saudi Aramco	6	$330B
🇷🇺 Russia	Rosneft	76	$96B
🇧🇷 Brazil	Petrobras	120	$77B
🇮🇳 India	Indian Oil Corporation (IOCL)	151	$69B
🇲🇾 Malaysia	Petronas	186	$58B
🇮🇷 Iran	National Iranian Oil Company (NIOC)	Not listed	$19B*
🇻🇪 Venezuela	Petróleos de Venezuela (PDVSA)	Not listed	$23B (2018)

*Value of Iranian petroleum exports in 2019. Source: Fortune, Statista, OPEC

China is home to the two largest companies from this list, Sinopec Group and China National Petroleum Corporation (CNPC). Both are involved in upstream and downstream oil operations, where upstream refers to exploration and extraction, and downstream refers to refining and distribution.

It's worth noting that many of these companies are listed on public stock markets—Sinopec, for example, trades on exchanges located in Shanghai, Hong Kong, New York, and London. Going public can be an effective strategy for these companies as it allows them to raise capital for new projects, while also ensuring their governments maintain control. In the case of Sinopec, 68% of shares are held by the Chinese government.

Saudi Aramco was the latest national oil company to follow this strategy, putting up 1.5% of its business in a 2019 initial public offering (IPO). At roughly $8.53 per share, Aramco's IPO raised $25.6 billion, making it one of the world's largest IPOs in history.

Geopolitical Tensions

Because state-owned oil companies are directly tied to their governments, they can sometimes get caught in the crosshairs of geopolitical conflicts.

The disputed presidency of Nicolás Maduro, for example, has resulted in the U.S. imposing sanctions against Venezuela's government, central bank, and national oil company, Petróleos de Venezuela (PDVSA). The pressure of these sanctions is proving to be particularly damaging, with PDVSA's daily production in decline since 2016.

In a country for which oil comprises 95% of exports, Venezuela's economic outlook is becoming increasingly dire. The final straw was drawn in August 2020 when the country's last remaining oil rig suspended its operations.

Other national oil companies at the receiving end of American sanctions include Russia's Rosneft and Iran's National Iranian Oil Company (NIOC). Rosneft was sanctioned by the U.S. in 2020 for facilitating Venezuelan oil exports, while NIOC was targeted for providing financial support to Iran's Islamic Revolutionary Guard Corps, an entity designated as a foreign terrorist organization.

Climate Pressures

Like the rest of the fossil fuel industry, state-owned oil companies are highly exposed to the effects of climate change. This suggests that as time passes, many governments will need to find a balance between economic growth and environmental protection.

Brazil has already found itself in this dilemma as the country's president, Jair Bolsonaro, has drawn criticism for his dismissive stance on climate change. In June 2020, a group of European investment firms representing $2 trillion in assets threatened to divest from Brazil if it did not do more to protect the Amazon rainforest.

These types of ultimatums may be an effective solution for driving climate action forward. In December 2020, Brazil's national oil company, Petrobras, pledged a 25% reduction in carbon emissions by 2030. When asked about commitments further into the future, however, the company's CEO appeared to be less enthusiastic.

That's like a fad, to make promises for 2050. It's like a magical year. On this side of the Atlantic we have a different view of climate change.

— Roberto Castello Branco, CEO, Petrobras

With its 2030 pledge, Petrobras joins a growing collection of state-owned oil companies that have made public climate commitments. Another example is Malaysia's Petronas, which in November 2020, announced its intention to achieve net-zero carbon emissions by 2050. Petronas is wholly owned by the Malaysian government and is the country's only entry on the Fortune Global 500.

Challenges Lie Ahead

Between geopolitical conflicts, environmental concerns, and price fluctuations, state-owned oil companies are likely to face a much tougher environment in the decades to come.

For Petronas, achieving its 2050 climate commitments will require significant investment in cleaner forms of energy. The company has been involved in numerous solar energy projects across Asia and has stated its interests in hydrogen fuels.

Elsewhere, China's national oil companies are dealing with a more near-term threat. In compliance with an executive order issued by the Trump Administration in November 2020, the New York Stock Exchange (NYSE) announced it would delist three of China's state-run telecom companies. Analysts believe oil companies such as Sinopec could be delisted next, due to their ties with the Chinese military.

See the post on Visual Capitalist here: https://www.visualcapitalist.com/mapped-the-worlds-largest-state-owned-oil-companies/

When the Time Comes, #Venezuela’s Vast, Yet “Dirty”, #Oil Reserves May Not Be Able to Provide the Cash Needed to Restart its Economy

"Oil will not save us this time around..."

"If you have the slightest concern about the future of oil demand, you wouldn't touch [Venezuela] with a barge pole"

Venezuelan oil could become world's biggest stranded asset, say experts

Climate change poses mortal threat to shattered country's only economic lifeline

Financial Times 

November 18, 2020 

Once a wealthy oil exporter, Venezuela's hopes of reviving its shattered economy are pinned on huge investment in extracting one of the world's most carbon-heavy blends of crude.

But concerns about climate change are upending energy markets worldwide, and some experts believe much of the country's most valuable asset will remain stranded in the ground.

"Oil will not save us this time around," said Pedro Burelli, a former board member of Venezuela's state-owned oil company PDVSA who now runs a consultancy in the US. "We have to reinvent ourselves as a country and as an economy."

…

Chronic mismanagement of the national oil industry and draconian US sanctions on exports have slashed Venezuela's crude production to 359,000 barrels per day in the third quarter of this year, just over a tenth of the level achieved in the early 2000s.

But Venezuela has the world's biggest proven oil reserves, according to Opec data. One of the very few things Mr Maduro and the country's US- and EU-backed opposition leader Juan Guaidó agree on is that the road to recovery lies in huge investment to revive the industry.

The "Plan País" blueprint drawn up by Mr Guaidó's team is unequivocal: "Oil and gas are the fundamental resources which the nation has to begin its reconstruction."

Elías Matta, president of the energy commission of the Guaidó-dominated Venezuelan National Assembly, said that to rebuild the once widely admired PDVSA "will take eight to 10 years and cost $180bn to $200bn to produce 2m barrels per day more".

…

Yet, even if Mr Maduro and his inner circle could somehow be induced to depart, much of the country's oil wealth may end up worthless because of the dramatic shifts in the global energy industry.

"Plan País says 'Let's go back to the oil era again'. It's the wrong premise. We are now at the end of the oil era," Mr Burelli said in a talk to the British-Venezuelan Society, pointing out that Venezuela's oil infrastructure has been effectively destroyed and PDVSA is in ruins.

Video: How Venezuela's oil industry collapsed

…

With every year that passes, investor pressure on oil companies to become carbon-neutral increases and Venezuela's chances of reviving its once-mighty oil industry diminish. Its abundant Orinoco Belt crude, while relatively cheap to extract, is among the world's most carbon-intensive.

"More and more companies are turning away from the dirty barrels and Venezuelan crude is among the dirtiest," said Valérie Marcel, an energy expert at Chatham House in London. "There are still some players out there that might invest but they are becoming fewer and fewer."

BP and Shell declined to comment. However, oil executives have said they are increasingly factoring in the carbon intensity of investments into future decision-making. Venezuela's oil is likely to be less attractive in such scenarios, though it may still have some offshore gas potential. 

…

"If you have the slightest concern about the future of oil demand, you wouldn't touch [Venezuela] with a barge pole," said Andrew Grant, who leads energy research at Carbon Tracker, an independent climate change think-tank.

Some insist that Venezuela's oil has not yet lost its allure. Ricardo Hausmann, a former Venezuelan planning minister in the 1990s now at Harvard University's Centre for International Development, said "there are fairly few places in the world where there are proven reserves with zero geological risk and fairly low costs of production".

See the whole story on the FT here: https://www.ft.com/content/cafbd3c7-2434-4f23-8da8-1f7052efdc8e?desktop=true&segmentId=7c8f09b9-9b61-4fbb-9430-9208a9e233c8#myft:notification:daily-email:content

bit.ly/MasterEnergyBlog

DEEP DIVE in US #Shale- plenty of inventory below $40/bbl- best names are $PXD/$OXY/$CXO/$EOG/$MTDR/$MRO #OOTT

Phil Jungwirth at BMO is out with a Deep Dive on the US shale plays. The conclusions are: 

1-      There is plenty of inventory even below $40/bl mainly located in the Permian

2-      In fact there is enough inventory to hold US production flat below $40 for 10 years

3-      The Delaware is the most Capital efficient play ( see chart below). XEC/DVN/EOG/MTDR/OXY best exposed there

4-      Interestingly the top tier of Bakken ranks higher than the Delaware. MRO is most exposed.

5-      Tier 1 and 2 inventory: PXD, OXY, CVX, XOM, HES, COP, and CXO have the deepest inventory. MTDR, WPX, and XEC screen best among SMIDs

bit.ly/MasterEnergyBlog