By Sheila McNulty in Houston
Published: November 12 2007 02:00 | Last updated: November 12 2007 02:00
The Big Five international oil companies have cut exploration spending in real terms between 1998 and 2006, failing to respond to the incentive of high prices.
ExxonMobil, BP, Chevron, Royal Dutch Shell and ConocoPhillips used 56 per cent of their increased operating cash flow on share buybacks and dividends instead of exploration, according to a study released today by the James A. Baker III Institute for Public Policy.
While this kept investors at bay, it did not address questions about the groups’ ability to replace reserves.
“The oil majors are not replacing reserves and, therefore, are seemingly slowly liquidating their long-term asset base,” said Amy Myers Jaffe, co-author of the report. “They may see a declining rate of production over time.”
John Felmy, chief economist at the American Petroleum Institute, the US industry’s main trade association, defended share buybacks, saying that shareholders expected strong returns on investment and that the oil industry had undertaken share buybacks at a rate less than half that of other industrial groups in the S&P 500.
The Big Five have, in recent years, turned over much of the research and development of the business to service companies. Now, the Baker report reveals, the exploration side has been picked up by second tier US oil companies. “They are relinquishing their position in the market,” said Ms Jaffe.
The five apparently last year recognised that the window was closing and increased exploration spending by 50 per cent over 2005. By contrast, the next 20 largest publicly traded US oil companies, including Devon Energy and Anadarko Petroleum, have been increasing exploration spending since 1998, so their spending levels are now equal to those of the Big Five.
“This would indicate that these 20 next largest privately traded US companies will control an increasing portion of non-Opec oil production in the coming years,” Ms Jaffe said.
Robin West, chairman of PFC Energy, a consultancy, said that the Big Five were under pressure, because of their size, to generate projects of enormous scale and high returns, and frequently captured large projects through production deals with governments rather than exploration.
To compensate, the groups are branching out. Shell will spend more in capital investments this year than any other energy company, investing between $22bn and $23bn (€16bn, £11.5bn) to develop an energy portfolio including second-generation biofuels, wind energy and unconventional fuels.
Copyright The Financial Times Limited 2007
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Royal Dutch Shell conspired directly with Hitler, financed the Nazi Party, was anti-Semitic and sold out its own Dutch Jewish employees to the Nazis. Shell had a close relationship with the Nazis during and after the reign of Sir Henri Deterding, an ardent Nazi, and the founder and decades long leader of the Royal Dutch Shell Group. His burial ceremony, which had all the trappings of a state funeral, was held at his private estate in Mecklenburg, Germany. The spectacle (photographs below) included a funeral procession led by a horse drawn funeral hearse with senior Nazis officials and senior Royal Dutch Shell directors in attendance, Nazi salutes at the graveside, swastika banners on display and wreaths and personal tributes from Adolf Hitler and Reichsmarschall, Hermann Goring. Deterding was an honored associate and supporter of Hitler and a personal friend of Goring.
Deterding was the guest of Hitler during a four day summit meeting at Berchtesgaden. Sir Henri and Hitler both had ambitions on Russian oil fields. Only an honored personal guest would be rewarded with a private four day meeting at Hitler’s mountain top retreat.
IN JULY 2007, MR BILL CAMPBELL (ABOVE, A RETIRED GROUP AUDITOR OF SHELL INTERNATIONAL SENT AN EMAIL TO EVERY UK MP AND MEMBER OF THE HOUSE OF LORDS: 
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