Power shifts in global oil business
When an angry Enrico Mattei coined the phrase the "Seven Sisters" to describe the Anglo-Saxon companies that controlled the Middle East's oil after World War II, the founder of Italy's modern energy industry could not have imagined the profound shift in power that would occur barely half a century later.
As oil prices tripled over the last four years, a new group of oil and gas companies rose to prominence. They have consolidated their power as resource holders and pushed the world's biggest publicly traded energy companies, which emerged out of the original Seven Sisters -- ExxonMobil Corp. and Chevron Corp. of the U.S. and Europe's BP and Royal Dutch Shell -- onto the sidelines and into an existential crisis.
The "new seven sisters," or the most influential energy companies from countries outside the Organization for Economic Cooperation and Development, have been identified by the Financial Times in consultation with numerous industry executives. They are Saudi Aramco, Russia's Gazprom, CNPC of China, NIOC of Iran, Venezuela's PDVSA, Brazil's Petrobras and Petronas of Malaysia.
Overwhelmingly state-owned, they control almost one-third of the world's oil and gas production and more than one-third of its oil and gas reserves. In contrast, the old Seven Sisters -- which shrank to four in the consolidation of the 1990s -- produce about 10% of the world's oil and gas and hold just 3% of reserves. Even so, their integrated status -- which means they sell not only oil and gas but gasoline, diesel and petrochemicals -- pushes their revenue notably higher than that of the newcomers.
Robin West, chairman of PFC Energy, an industry consulting firm, says: "The reason the original Seven Sisters were so important was that they were the rule makers. They controlled the industry and the markets. Now, these new Seven Sisters are the rule makers and the international oil companies are the rule takers."
The International Energy Agency calculates that 90% of new supplies will come from developing countries in the next 40 years. That marks a big shift from the last 30 years, when 40% of new production came from industrialized nations, most of it controlled by publicly traded Western energy groups, said a report published this month by Rice University's James A. Baker III Institute of Public Policy.
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