Monday, October 10, 2011

Oil Production of the Top Three IOCs

The above shows the liquids production of the three largest international oil companies (IOCs), as compiled from their annual reports.  You can see that by and large these companies are about the same size they were 15 years ago, in oil production terms (the partial exception is BP which managed to buy into a Russian oil company half way through the last decade).  The big IOCs have not been able to increase production much  in response to the high prices of the last six or seven years.

It's important to note of course that since the 1980s most oil is not produced by IOCs but rather by the various national oil companies.  Also it's worth noting that IOC revenues and profits have grown enormously over the last 15 years as oil prices have increased so much - they are basically selling roughly the same sized stream of liquids for far more money.


bmerson said...

You know, I really found that graph to be quite amazing. Those are really stunningly flat plots over that time period.

What are the possible explanations for that? 1) Peak oil plateau - within the areas available to the IOC's, the geology simply will not support higher extraction rates. 2) Over-regulation - they are not being allowed to drill in places that could support higher extraction rates. 3) Under-investment - the IOC's have failed to invest in exploration, development, extraction, and extended recovery techniques that would support higher rates. 4) Short term greed - they are more interested in profits today than in increasing extraction rates. (corollary - they don't think they can increase extraction rates so they might as well minimize costs and maximize profits).

Any or all of these seem plausible? Other reasons I missed? What do you think are the primary factors?

Michael Cain said...

Just out of curiosity, and not denying that their profits have soared, but what's happened to their costs? How much more does it cost them to produce essentially the same volume?

Fuser said...

This needs to take into account any acquisitions. Were one or more of the companies able to stay flat due to minor mergers/aquisitions?