By Mike Scott, Financial Times
Published: Jul 02, 2007
NONFINANCIAL RISKS
The oil and gas companies bestride the world, the biggest and most profitable companies on the planet acting as a law unto themselves as their products fuel the global economy. This is a common perception of the sector but the energy companies do not have it all their own way. In the 1960s, the oil majors had access to 85 per cent of the world’s oil reserves – now they have access to only 16 per cent as governments assert control over their national assets. The contrast between the list of the world’s biggest oil companies by revenue and by access to reserves (barrels of oil equivalent) is striking. Exxon- Mobil may be the biggest and most profitable company but it ranks only 16th in terms of reserves, well below the likes of Gazprom, Lukoil and Petrochina, according to Petrostrategies, the consultancy. “There has been a resurgence in oil nationalism, partly because of the high oil price and partly because oilproducing countries now feel more comfortable taking control of projects,” says Keith Morris, oil and gas analyst at Evolution Securities. “Ten years ago, for example, Russia was flat on its back and needed western companies – now there is plenty of money around and they are better able to cope on their own.” This has led to companies such as Shell and BP coming under pressure to sell assets in Russia to domestic companies, with Gazprom a notable beneficiary of this trend. In fact, says Elizabeth Eaton, portfolio manager, emerging markets equities at Credit Suisse, there are many opportunities in Russia and Kazakhstan, but “we believe that the best way to access this growth is by purchasing domestic companies rather than global names”. read more
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