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Prince Amir Al Saud

30 Top Global Energy Gaints

30 Top Global Energy Gaints

 

In order to understand the energy vertical one must first understand the meaning of a vertical market. A vertical market is not the same as the system we might most commonly find in our daily lives, what we see day today is generally called a horizontal market where the vendor is selling to his buyers without being selective about why the buyer needs the product or whether he is deemed to be worthy enough to buy the product. On the other hand in a vertical market the vendor doesn’t just sell to his buyer without any reason, the vendor will first check exactly why the buyer is interested in his product and then decide whether he should or should not go into the process of selling to him.

For example there is a person selling travel tickets, if the ticket is domestic then the person will sell the ticket without much hesitation and barring much formality. Effectively this is a horizontal market where all are treated as equal in terms of the ability to purchase a product provided they have the funds to buy it. Where as if the ticket were to be international the ticket vendor would first check for the buyer’s documents and check whether he can legally travel to the desired destination or else he can’t be selling the ticket to that person, effectively this is a vertical market where money is not the only need to complete a purchase. A vertical market services a smaller number of recipients but each one of these recipients pays big money for a bulk buy thus making it a good source for business and becomes a really lucrative market for the horizontal market vendors to enter into. Although their products are not up to the mark for the vertical market the horizontal market vendors can afford to sell their goods at a much cheaper rate thus leaving the vertical market vendors a bit handicapped although their products are a much better fit for the customers’ high standards. This also makes the vertical market a very competitive one and one that attracts interests from investors all over the world. Value added resellers (VARs) i.e. firms that boost the value of a product by providing other services like additional hardware, installation services, consulting, troubleshooting, or other related products or services become huge players in the vertical markets. Rather than sell directly to the buyer, people who are to sell in a vertical market decide to sell to these VARs who can provide services to attract in more buyers rather than competing with them. These VARs thus monopolize the markets and take out huge chunks of profit. Rather than stay in one vertical market these value added resellers try to be “everything to everybody” in the words of Dave Sobel-CEO of Evolve Technologies. A fine example of value added resellers would be Logi analytics. (http://www.logianalytics.com). In fact any company that gets classified as a “utilities” company is essentially a VAR.

Coming to how this all connects to the oil and gas sector. The energy vertical as you might have guessed by now implies the vertical market in the energy sector. Basically the Energy is the “oxygen” of the economy and the life-blood of growth, particularly in the mass industrialization phase that emerging economic giants are facing today as their per capita GDP moves between approximately US$ 5,000 and US$ 15,000. In times of economic turbulence, the focus quite rightly falls on jobs. The energy industry is known for being highly capital intensive, but its impact on employment is often forgotten. In the United States, for example, the American Petroleum Institute estimates that the industry supports more than nine million jobs directly and indirectly, which is over 5% of the country’s total employment. In 2009 the energy industry supported a total value added to the national economy of more than US$ 1 trillion, representing 7.7% of US GDP.

Following shows the contribution of the energy sector to the GDP

As mentioned above the energy sector is a huge contributor to US and world GDP although this is decreasing slowly even so, the energy consumption is increasing. That is exactly the reason oil and gas companies occupied 7 out of 10 positions in the 2009 fortune global rankings.

An analysis of outsourcing transactions announced by oil & gas companies since the beginning of 2005 confirms high year-on-year growth of deals. Further, the oil & gas vertical is one of the very few verticals that has demonstrated consistent year-on-year growth since 2005, and has demonstrated an evolving deal signing behavior.  In the backdrop of this growth, an understanding of key outsourcing trends in the oil & gas vertical is critical for buyers and suppliers alike. This market update analyzes key trends in the outsourcing and off shoring activity of the oil & gas vertical and examines sourcing preferences across leading oil & gas majors.

Following will be an analysis of the top 30 oil and gas companies:

1. Saudi Aramco-12.5 million barrels per day

 “We are ready to commit gas for the development of a 1,000 megawatt power plant”- Saudi Aramco Chief Executive Khalid al-Falih

Saudi Aramco is by far THE biggest energy company in the world, generating more than $1 billion a day in revenues.

Saudi Aramco has taken a keen interest in optimizing its processes over the last decade. To this end, it has employed about 500 engineers and scientists specializing in different aspects of the hydrocarbon industry.

There are two R&D entities in Saudi Aramco:

1) Exploration and Petroleum Engineering Center Advanced Research Center (EXPEC ARC) which is solely managed by Exploration & Producing and focuses on upstream research, and

2) The Research and Development Center (R&DC), which focuses on downstream research and includes bio-research. Leading research undertaken at these two major facilities provides Saudi Aramco with competitive technology solutions throughout the vast range of its petroleum-related activities.

 

2. Gazprom-9.7 million barrels per day

“We are ready for the winter”-Gazprom

Gazprom being one of the top fossil fuel companies as it is was “asleep” as the US shale gas boom swept their market away from them. Gazprom reacted rather late by beginning to put into action the “Power of Siberia” project that is basically a pipeline along the Russian pacific coast that should be up and functioning by the summer of 2016. This project hopes to create an easier method to move Russia’s gas reserve to their export terminal in Vladivostok. Gazprom chiefs hope that this will give them the ability to expand their market in Asia. Should this project pull through it will leave all the western oil giants biting the dust but the sheer $46bn cost of this project might be too much for gazprom to handle.

3. National Iranian Oil Co.-6.4 million barrels per day

“Our customers have been satisfied with us so far,” Mohsen Qamsari, Director for international affairs NIOC

Iran has been forced to curtail oil production due to international sanctions but remains a huge oil and gas producer. To limit its sanctions, Turkey and India have been accused of trading Iranian oil for gold. The Strait of Hormuz remains the world’s most significant choke point for oil. Iran has threatened to close the strait if attacked. This would significantly harm the world’s oil production as National Iranian Oil Co. is a very important producer of oil.

National Iranian Oil Company has signed a new term crude supply agreement with Chinese trader Unipec for 2012, ending a dispute over payment terms. The deal between NIOC and Unipec ends a dispute over payments, although it was unclear whether Unipec had accepted a reduction in the credit period to 60 days from 90.

 

4. Exxon Mobil – 5.3 million barrels per day

“We need to double the world’s nuclear energy production”-Exxon Mobil’s David Khemakhem

(Pointing to Exxon’s expansion into nuclear power)

Exxon’s $40 billion in annual profits don’t seem like a lot when you consider their $400 billion in sales .It takes giant projects to “move the needle” for the big unit. That means CEO Rex Tillerson has to keep terms with those he would rather avoid. Exxon further imposed themselves on the market when they struck a deal with Russia’s Rosneft in the summer of 2012.

This is only helped by the fact that Exxon Mobil are looking to take on the nuclear market.

 

5. PetroChina

“Forestry bio-energy, a key part of China alternative energy development strategy, will achieve a win-win for industry and ecology”-PetroChina

Standing above its compatriots CNOOC and Sinopec Petro china is the largest of china’s three state-controlled oil giants it also has the highest market cap among the publicly traded giants. Considering the enormous estimates of shale gas under Chinese soil PetroChina seems to be poised to into a neck to neck competition with gazprom for regional dominance in the oil and gas sector. Petrochina is alternatively looking for a green source of energy. Aerospace and defense giant Boeing and Chinese oil company PetroChina along with the global aviation industry and representatives of the Chinese energy sector have signed an agreement to assess the idea of establishing a sustainable aviation biofuels industry in China.

 

6. British Petroleum (BP)-4.1 million barrels per day

“The disaster in Mexico should never have happened. We are truly sorry that we did it”-BP CEO Tony Hayward

The oil spill explosion in the Gulf of Mexico left a serious dent on BP’s reputation all while damaging its funds. Three years on and BP finally seems like it is poised to regain its footing in the gulf of Mexico with its new projects going on smoothly in the hope that a repeat of the disaster in 2010 does not occur.

Bob Dudley is seeking to turn the giant formerly known as British petroleum around. Selling Assets, settling lawsuits, promising improvements. BP may not maintain its 4.1 million barrels per day for long it is in talks to sell its 50% stake in Russian venture TNK-BP, which provides a quarter of production.

 

 

7. Royal Dutch Shell – 3.9 million barrels per day “That was a big disappointment to me personally”-ex-Shell CEO Peter Voser said regarding shells massive bet on the US shale oil boom.

Shell were let down by the promises that were given by the US Shale gas boom. This unconventional resource didn’t turn out as then CEO of shell Peter Voser expected it to thus Dragging shell down on their $24bn investment. Shell was hoping soon enough to start drilling for oil in Alaska’s Chuckchi Sea. But this expansion has been curtailed. The prospect of this massive project that was to be undertaken by Shell is now looking incredibly dire. Shell however still remains to be one of the largest oil companies around and will find another way to expand their market and keep their reputation as a big shot in the oil industry.

8. Pemex – 3.6 million barrels per day

"We will carry out development of the Los Ramones project to meet the supply needs of the country," -Pemex Pemex’s most ambitious project Los Ramones is switching into Phase 2 as Pemex voided a $2bn tender, their largest ever tender. The project that is often termed as ‘backbone’ of Mexico’s natural gas transportation system is now pemex’s crown jewel and should facilitate Mexico’s gas transportation efficiently for years to come

Production from Mexico’s biggest field, Cantarell has plunged from 2 million barrels per day to a comparatively measly 0.6 million barrels per day now. State-owned pemex is working to replace that shortfall with other fields. Mexico’s incoming president Enrique Pena Nieto has said reforming Pemex to allow foreign investment will be his signature issue.

9. Chevron-3.5 million barrels per day

"Well control operations have been successful and that any fluid flow from the well appears to have ceased," –Chevron

That should come as a relief considering that this case was really damaging chevron’s other expeditions. American based Chevron has turned up as one of the frontrunners in the shale gas boom and has continued its search for the unconventional fuel in Romania and Ecuador.

Chevron bought atlas petroleum in 2010 for $4.3billion to gain acreage in Marcellus and Utica shales. With gas prices low some expect a bigger deal to come. Chevron are one company that cannot stay out of controversy but yet they are one of America’s biggest oil and gas companies.

10. Kuwait Petroleum Corp.-3.2 million barrels per day

“We are a strong player in Europe and our commitment will continue to strengthen that presence” Hussein Ismail, KPC

Kuwait’s oil company was originally formed in 1934 by what are now Chevron and BP. In 1975 the company was nationalized. Kuwait’s fields have been harmed greatly by the fury of Saddam Hussein’s forces in 1990. Kuwait’s biggest field, Burgan, continues to be operated by chevron.

11. Abu Dhabi National Oil Co.-2.9 million barrels per day

“OMV and Adnoc will conduct a state of the art exploration programme consisting of 2D and 3D seismic acquisition and the drilling of exploration wells.”-Abu Dhabi National oil co.

Abu Dhabi is the seat of power in the United Arab Emirates. It is currently taking advantage of its strategic position adjacent to the Strait of Hormuz to build a pipeline to Fujairah, alleviating any chance of its crude exports being bottlenecked by an Iranian blockade

12. Sonatrach-2.7 million barrels per day

“Sonatrach to up stake in Algerian license”-Petroceltic

Most of the output from Algeria’s national energy company is in the form of natural gas, much of which Algeria exports to Europe. Their In Salah gas project strips out carbon dioxide from the gas stream and re-injects it back down into the gas reservoirs.

13. Total-2.7 million barrels per day

“We like to be a long-term partner and we have long-term vision when we are doing long-term deals.”- Christophe de Margerie

After French President Francois Hollande imposed new taxes on oil inventories in July, Total CEO Christophe de Margerie said the move would cost total nearly $200 million in 2012 and hurt France’s already ailing refining sector.

14. Petrobras-2.6 million barrels per day

 "The current debt profile is well distributed and balanced in relation to future cash flow."-Petrobras

Former CEO Sergio Gabrielli passes the baton to new Petrobras boss Maria das Gracas Silva Foster last February. The company is striving to develop one of their kind massive ultra deep oil fields offshore.

15. Rosneft-2.6 million barrels per day

The second Russian company in this list is Rosneft, sibling to Gazprom it is another one of Russia’s state controlled oil companies.

(Results as published by Forbes.)

The oil and gas companies are :

1. EXELON

A Vermont Law School researcher says four nuclear power stations in Illinois are at risk of shutting down early because of their age, operating costs, and low electricity prices. But, Exelon Nuclear says their Illinois nuclear power plants aren't going anywhere any time soon. Communications Manager Megan Borchers says it's true the company scrapped capacity upgrades at both LaSalle reactors, but that doesn't mean the company wants to shut them down. Borchers says the only Exelon Nuclear plant being closed is in New Jersey and that'll be in 2019.

“Our assets are some of the lowest-cost, most-dispatchable baseload assets and don't have any plans at this point of early shutdown on them,"- Exelon Corp. Chief Executive Christopher Crane

Revenue: $23.5 billion Profits: $1.16 billion

2. DUKE ENERGY

Duke Energyhas completed its $32 billion merger with Progress Energy; a few hours after South Carolina gave final approval. The move creates the largest electric utility in the United States, with 7.1 million customers in six states in the Southeast and Midwest.

This move makes the new merger one of the biggest utility companies in the world.

"It became clear that Progress viewed this as a takeover of Duke,"-Duke CEO Jim Rogers on the Merger with Progress. Revenue: $19.6 billion Profits: $1.77 billion

3. AES

Emerging market growth and value investors can amp up their portfolio with The AES Corporation, a utility company that owns electrical distribution and generation businesses in 27 countries over five continents.

“We are concentrating our growth efforts in a few key markets, including the U.S. utility sector, where we see opportunities to leverage our global platform of 40,500 megawatts and 11.5 million utility customers,” Paul Hanrahan, chief executive of AES Revenue: $18.2 billion Profits: -$912 million

4. SOUTHERN COMPANY

The incentive to reduce IT energy use is strong. It's particularly strong for utility companies since their IT departments use large amounts of the very power that the companies themselves produce, primarily by burning coal. Fortunately, some utility companies have found that reducing their IT infrastructures' energy needs also improves their carbon footprints in effect, making them greener.

"We started going green before most people were even talking about it," Becky Blalock, IT Department, Southern Co. Revenue: $16.5 billion Profits: $2.35 billion

5. FIRSTENERGY

More than 50 West Virginia and Pennsylvania property owners are suing FirstEnergy Corp. over groundwater pollution, soggy yards and foundation damage they blame on a leaking coal ash impoundment and the 7-mile waste pipeline that feeds it. Revenue: $15.3 billion Profits: $770 million

6. PG&E CORP.

PG&E said it welcomes the opportunity to continue its work with the California Public Utilities Commission (CPUC) and San Mateo County communities to validate that the company has completed, as represented, safety-related work on transmission Line 147.

“I want all customers to know that this pipeline has been demonstrated to be safe” Revenue: $15 billion Profits: $816 million

7. AMERICAN ELECTRIC POWER

In 1906, electric power in America was a revolutionary technology. The company that would become American Electric Power was incorporated that year; a century on, AEP’s president and CEO Nick Akins is leading the company through a new revolution.

“The AEP name’s been built over 106 years, and certainly this company will be around for a lot longer. And for the next hundred years, I’ve got to start it off right,” –AEP CEO Nick Akins. Revenue: $14.9 billion Profits: $1.26 billion

8. NEXTERA ENERGY

Florida Power & Light and its sister company NextEra Energy Resources will cut 1,000 jobs from their current total of 15,000 positions over the next two years. The cuts are mostly due to more efficient technology.

“We have a culture of continuous improvement. With all the dynamic changes in the marketplace and investments in technology, we felt it was time to look at everything and see what we can do better.”-Eric Silagy, FPL (sister company of NetEra Energy.) Revenue: $14.3 billion Profits: $1.91 billion

9. DOMINION RESOURCES

“The project moves us closer to the job creation that its development is expected to bring to Calvert county and to Maryland”-Dominion Resources

Dominion, which about a decade ago purchased a terminal at Cove Point in Calvert County to import natural gas, hopes to spend as much as $3.8 billion to build new facilities for exports, and it has signed ­20-year contracts to ship natural gas to customers in Japan and India. Because neither country has a free-trade agreement with the United States, Dominion needed approval from the Energy Department for the exports, which the department conditionally granted. Revenue: $13.2 billion Profits: $302 million

10. EDISON INTERNATIONAL

California-based Edison International has acquired solar developer SoCore Energy in a move that will expand the utility company's ability to install and operate rooftop solar installations for commercial and industry customers.

"SoCore has an impressive client base and pipeline of solar projects with large retailers and other businesses."-Bert Valdman, Senior VP of strategic planning, Edison International Revenue: $13.1 billion Profits: -$183 million

11. PPL

PPL Corp.'s Kentucky utilities hope to build a natural gas-fired power plant and a solar facility to meet electricity demand after the retirement of coal plants.

Federal environmental regulations are forcing Louisville Gas and Electric and Kentucky Utilities to shut down 800 megawatts of older coal-fired generation, according to the utilities, which are owned by Allentown-based PPL.

The utilities arrived at their plan for new cleaner power plants through a public bidding process. LG&E and KU Chief Operating Officer Paul W. Thompson described that process in a news release last week as "lengthy and complicated … considering ever-increasing federal environmental regulations."

"We're pleased that the outcome creates economic development in western Kentucky and provides LG&E and KU customers with reliable, low-cost energy that will meet the latest set of federal [Environmental Protection Agency] regulations," he said. Revenue: $12.3 billion Profits: $1.53 billion

12. CONSOLIDATED EDISON

Consolidated Edison Inc. (ED) said it will take two to three weeks to repair a failed power line that snarled the train commutes between Connecticut and New York and forced Amtrak to halt some Acela Express service. Con Edison, which serves the New York City area, is working with Metro-North to try to establish “alternative power sources” to serve the New Haven Line, which runs between Grand Central and New Haven, Connecticut, the New York-based company said in a statement. The electric utility said the repair estimate was for its own equipment and referred questions about transportation service to the train operator.  Revenue: $12.2 billion Profits: $1.14 billion

13. ENTERGY

Entergy Corp. says it will decommission Vermont Yankee Nuclear Power Station by end of 2014.

Apparently the decision was driven by sustained low power prices, high cost structure and wholesale electricity market design flaws for Vermont Yankee plant

 

"This was an agonizing decision and an extremely tough call for us," said Leo Denault, Entergy's chairman Revenue: $10.3 billion Profits: $847 million

14. XCEL ENERGY

Xcel Energy reports 4,600 customers are without natural gas service and 517 are without electricity in the communities that the company serves within the flood area.

"We will make temporary repairs, in some cases, to restore service to customers and return later to make permanent repairs," Xcel

(Reports as of September 2013) Revenue: $10.1 billion Profits: $905 million

15. PUBLIC SERVICE ENTERPRISE GROUP

PSE&G currently serves nearly three quarters of New Jersey's population in a service area consisting of a 2,600-square-mile diagonal corridor across the state from Bergen to Gloucester Counties. PSE&G is the largest provider of gas and electric service, servicing 1.8 million gas customers and 2.2 million electric customers in more than 300 urban, suburban and rural communities, including New Jersey’s six largest cities. Revenue: $9.8 billion Profits: $1.28 billion

From the above displayed data it is clear that these vertical market players and their horizontal market counterparts have enormous investments in the energy sector and have sufficient enough options to fall back on to cover for the worlds energy needs for long years to come and that the vertical market is a place where businesses can thrive under the right leadership and management thus amassing a substantial fortune. These companies are the backbone of the Energy market that is what makes them so lucrative and successful. The energy vertical is as important to the everyday consumer as is the horizontal market because should even one of these utility companies pull out of the vertical market it would lead to a apparent shortage for individual consumers sending the prices of the fuels rocketing.

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