The day of the huge integrated international oil company is drawing to a close?

This 'The Economist' article is quite interesting....given current realities in the Oil & Gas industry? How many claims are still valid and which provide some food for thought?

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ON THE surface, things look pretty good for the big, listed oil companies. The world wants more of what they produce than ever before. The price it sells for is high and the profits are rolling in. Exxon Mobil, with a market capitalisation of $417 billion, vies with Apple as the world’s most valuable listed company. Royal Dutch Shell is the most valuable firm on the London Stock Exchange. Chevron employs 62,000 people; Total operates in more than 130 countries. In BP’s case the big numbers are more calamitous—it may end up paying out $90 billion in fines and compensation stemming from the Deepwater Horizon disaster. But its ability to do so and stay standing is a perverse sign of the company’s underlying strength.

In the 1990s, when the oil price dipped, a round of mergers turned the “seven sisters” of the 1950s—BP, Esso, Gulf Oil, Mobil, Royal Dutch Shell, SoCal and Texaco—their descendants and some smaller fry into this new set of “supermajors”. Soon afterwards global economic expansion further increased the demand for oil that had grown for a century, and set its price soaring (see chart 1). Things looked good for the new giants. But the rapid growth of emerging markets also exacerbated a half-century-long trend for power over that oil to shift to the countries where it is found.


In the 1950s the seven sisters controlled some 85% of global reserves. Today

over 90% of reserves are under the control of national oil companies (NOCs) which are owned, at least in part, by the governments sitting on the oil in question. In the past the NOCs relied on the technological expertise, project-management skills and global reach of the big international oil companies to produce, refine and sell their oil. These days more and more NOCs are able to do without the supermajors’ help.


Twinned peak
This means the supermajors are increasingly reliant on oil which is hard to get at: either because of geology (oil buried deep underwater and far from any shore); or because of chemistry (oil mixed up in tar sands and the like); or because of politics (oil in countries politically difficult to deal with). Their size, know-how and experience serves the companies well in such plays. But they are spending more and more money to produce less and less of global oil output. That is fine as long as the world goes on wanting more and more oil. But what if it doesn’t?

Read full article: http://www.economist.com/news/briefing/21582522-day-huge-integrated-international-oil-company-drawing