This week's issue of Oil & Gas Journal includes its OGJ150/OGJ100 special report. This massive annual report is a mainstay for many industry analysts, company executives, and financial market-movers who utilize the information to determine how companies fared over the past fiscal year.
The OGJ150 ranks US-based, publicly traded oil and gas companies. In order to be included in the rankings, each company must have crude oil or natural gas reserves and production in the US.
The OGJ100 lists the world's top 100 leading producers based outside the US. This listing also provides a comparative review of both operating statistics and financial data where data are available.
This listing of both US and worldwide players has distinctly different types of companies. Though many think of major companies as the most influential, governments can play a large role in how the world oil market works, too.
The OGJ100 list demonstrates three types of companies that currently supply oil to international markets. The characteristics among them are significant because each have special operational strategies and production-related objectives.
For example, an international oil company (IOC) is exclusively investor-owned and seek shareholder value. In order to position themselves favorably in world oil markets, IOCs typically develop and produce resources that are available immediately. In the areas of the world where IOCs are active, the laws of that country apply; however, all assessments and decisions are in the end made exclusively by the company, not the government. ExxonMobil Corp., BP PLC, Royal Dutch Shell PLC are examples of IOCs.
National oil companies (NOCs), meanwhile, support their governments' agenda both financially and strategically. For example, Saudi Arabia's Saudi Aramco, Mexico's Petroleos Mexicanos (Pemex), and Venezuela's Petroleos de Venezuela SA (PDVSA) all function as extensions of their respective governments. These NOCs don't have the purpose or resources to develop their reserves as quickly as IOCs. Typically, NOCs are not necessarily market-oriented in their broad range of objectives. They are more concerned with providing low-cost energy domestically, long-term revenues, and employment to their citizens.
Another form of NOC is the third type of company, which operate independently while maintaining focus on their respective country's objectives. Brazil's Petroleo Brasileiro SA and Norway's Statoil ASA fall into this category. They often balance profit-oriented objectives with the goals of their country, while developing their corporate plan and strategy. This type of company is typically commercially driven while maintaining the goals of the country.
Government influence
While governments can influence the operations of NOCs, they can also dictate the terms of which other oil companies can function within their country. The US Energy Information Administration discusses four categories that determine the access to a country's reserve base. These are:
• Full access (15% of world reserves). All countries abide by the laws of the government but no domestic company is given preferential treatment. Examples are the US, the UK, and Canada.
• Equity access (1% of world reserves). A NOC exists, but does not get preferential treatment. Examples are Colombia, Indonesia, and Denmark.
• Limited equity access (37% of world reserves). The NOC is given first access to the reserves while outside companies may have limits on ownerships, shared production with the NOC, or other requirements. Examples include China, Angola, and Russia.
• No equity access (47% of world reserves). The NOC has sole access to the reserves with no outside foreign ownership. Outside connections are limited to operations through a domestic affiliate. Examples are Iran, Iraq, and Saudi Arabia.
Governments, by limiting outside entrance into their oil-rich countries, can greatly affect how crude oil markets are supplied. Commercially oriented companies, which are limited to those oil-rich countries, may form alliances with NOCs in order to be a major player there.