Who Really Controls the Oil... By Dr. Steve Sjuggerud
 

interesting


Earlier this year, after announcing record revenues of $25 billion for 2004, ExxonMobil became the world's largest company...

The record revenues come on the heels of a "perfect storm" in the oil markets... tight supply, high demand, fear and financial speculation have all come together to drive oil prices higher.

Wait, I've got to clarify something... Yes, Exxon had record profits and hit $400 billion in stock market value, making it larger than Microsoft, Wal-Mart, GE, or any other company in the world.

However Saudi Arabia's Aramco has over 20 times the reserves of ExxonMobil, any way you size it up. So ExxonMobil can't possibly be the world's largest company. With over 260 billion barrels in reserves in the ground, and at an oil price of $60, Aramco has over $15 trillion worth of oil in the ground today. Comparing apples to apples (oil, without natural gas factored in), ExxonMobil doesn't even have a trillion dollars worth of oil.


Who's Got the Oil?

Saudi Arabia's national oil company, Aramco (which is 100% government-owned, of course), has the world's largest pile of oil reserves, by far. But who's next? And where does the U.S. stand? What about China? And how about Canada's oil sands... where do they fit in?

I was curious. So I asked geologist and friend Matt Badiali to give me the details. Take a look:

Countries with largest oil reserves (in billions of barrels), year-end 2004:

1. Saudi Arabia 263
2. Canada* 17*
3. Iran 132
4. Iraq 115
5. Kuwait 99
6. UAE 98
7. Venezuela 77
8. Russia 72
9. Libya 39
10. Nigeria 35
11. US 29
12. China 17

Source: EIA, BP Statistical Review
*Canada's oil sands not counted in this total

The picture is fairly clear... Two-thirds of the world's oil reserves are in the Persian Gulf, where foreign firms aren't particularly welcome. Making matters worse, we've seen a rise of what's called "resource nationalism," which is choking off access to new reserves. With the exception of Canada and the potential offered by its oil sands, there's not a developed country in the Top 10.


The Biggest Oil Stocks

ExxonMobil is the world's biggest oil stock. I find it interesting that Russia's Lukoil has almost as much in reserves (specifically, MBOE, millions of barrels of oil-equivalent units) as Exxon, yet it trades at just 1/10th the value.


Below is a table of the world's largest publicly traded oil companies. I mentally separate them into developed country stocks and emerging market stocks, and then mentally give a "discount" to the emerging market stocks.

Company Reserves* Stock Market Value (in US$bn)
Exxon Mobil 21.2 377.0
BP 14.6 249.8
Total 11.1 152.6
PetroChina 11 161.8
Royal Dutch 14.4 133.5
Chevron 8.5 129.9
Lukoil 20.0 35.6

*Source: Hoovers. Reserves data in MBOE (millions of barrels of oil equivalent units, so it includes all hydrocarbon reserves)

When you think about them like this, PetroChina looks expensive, trading at the same market value-to-reserves as the developed country stocks. And Royal Dutch Shell looks like the least expensive developed-country major (where you get the most reserves per dollar invested). This is nothing scientific, of course, we're just sizing up the world.

So who controls the oil? Exxon is the giant among publicly traded oil companies. But Exxon pales in comparison to Saudi Arabia, and its state-owned oil company, Aramco.

Geologist Matt Badiali believes that oil prices won't be able to fall significantly until large investments are made in infrastructure worldwide. So the price of oil can stay high.

Exxon, BP, and Royal Dutch will of course be beneficiaries. But the biggest beneficiary will likely be Saudi Arabia.

So when someone asks, who controls the oil? The answer is no surprise... it's not Exxon... it's Saudi Arabia.

i second this statement

Great stocks: PVX and PWI

Anyone with other great oil stocks?

and who controls saudi arabia? they're just a puppet kingdom for the US

Then how come they've never worked with the US to catch the fugitives hiding there?

This is something I've never understood. If we're "in bed with them" so much then how come they've never helped us apprehend all the people that go there or reside there?

because they are an unpopular monarchy and must balance the fine line between religion (wahhabism) and being compliant with the US wishes - their agreement with the US following WW2 is we provide a cheap and steady flow of oil, and you support our undemocratic government

ever wondered why the US never mentions saudi arabia when they speak of freedom & democracy in the middle east? if saudi arabia became democratic and followed the popular policies, using oil as a weapon as they did in the mid 1970's, oil prices would instantly jump to over $100/barrel

not true, SA has significant influence on USA, but this doesnt mean anything more than it really is. Too many forces, multiple influences and interests, no country is on top of everything and everyone. The world is more complex than U"SA is the greatest power on earth" and "China will take over everything in a decade."

awsome thread dude...gotta see the macro picture :thumbsup

I would normally agree with that statement, however in the case of USA & Saudi Arabia, the relationship is somewhat transparent

You people still don't get it.....
 

Trades,

Why can't you you buy vaseline in tbilisi, the georgians will tell you the truth.


the best example is in the Born Supremecy it explains some of it, and who's in control.

Reserves in Saudi Arabia are based on what they tell us they have. They will not allow anyone to verify their reserves.

It doesn't take much to affect the oil market. When King Faud died there was a jump in price, like there was going to be any difference in SA without him. BTW, oil just passed $64 a barrel...

Anyone catch the movie "Oil Storm" on FX a couple months ago? It was extremely fascinating. It was set after a large hurricane disrupts the gulf oil industry in Sept 2005 and the snowballing international effect. It was done as if it were a documentary with very realistic news footage.

you raised some very good points there.

When I was in college I dated a girl from Saudi Arabia. Her father was the head of Aramco.

:thumbsup Should have hung on to that one. :1orglaugh

We all have our regrets :1orglaugh

How much oil does this guy own ??

I dont trust him because if he doesn't own any oil , why or how does he know so much about who controls it..

Canada prob has the lowest population also , so canada has the second most oil and least people to use it :)

Smart wait till everyone else has used theirs up :)

CanRoy are a great way to pull some cash, but watch out for the lifespan.

On another note, I would trade them on the Toronto Exchange.

Toronto Exchange: AVN.to SPN.to

NYSE: SBR, SJT, WTU, CRT

A wildcard on the Toronto exchange: CLE.to (non oil energy resources)

interesting read here.. i totally agree with the points raised there.

Dr. Steve Sjuggerud, the author of the article, handles a large chunk of my money. He is usually spot on, and a great guy.

Google him, he caters to a different type of client.

The Rockefellers own Exxon:

http://magazine.uchicago.edu/0212/fe...efeller_01.jpg

Both Exxon and Mobil were descendants of the old John D. Rockefeller monopoly, Standard Oil. In 1911, after a United States Supreme Court ruling which upheld a federal court order to dissolve it, the Standard Oil Trust was split into 34 companies. Two of these companies were Jersey Standard, which eventually became Exxon, and Socony ("Standard Oil Company of New York"), which eventually became Mobil. 1917 painting by John Singer Sargent. ... 1911 is a common year starting on Sunday (click on link for calendar). ... The Supreme Court Building, Washington, D.C. The Supreme Court Building, Washington, D.C., (large image) The Supreme Court of the United States, located in Washington, D.C., is the highest court (see supreme court) in the United States; that is, it has ultimate judicial authority within the United States... Standard Oil was an oil refining organization founded by John D. Rockefeller (1839-1937) and partners beginning in 1863. ... Exxon Mobil Corporation or ExxonMobil (NYSE: XOM), headquartered in Irving, Texas, is an oil producer and distributor formed on November 30, 1999, by the merger of Exxon and Mobil. ... Exxon Mobil Corporation or ExxonMobil (NYSE: XOM), headquartered in Irving, Texas, is an oil producer and distributor formed on November 30, 1999, by the merger of Exxon and Mobil. ...

great business tycoons ...

welcome to GFY dude!

ouch.. i feel for you just reading that :1orglaugh

"resource nationalism,"--it's my first time to hear this term, and only here at GFY forum. ;)

This war is working out very well for the big oil companies and the consumers are getting rolled :Oh crap

anyone know what the current price of Canadian oil is ???

Russian oil about 2 weeks ago was at $45 / barrel

America isn't getting the oil and neither is Iraq. The only ones who are going to cash in are the big multinationals.

This isn't news, anyone that knows anything about oil, other than they make gas from it, knows the Saudis are Moster Whales of the industry and actually I think those #s are a little low... Some put the Saudis as high as 50% of the world's TOTAL reserves...

_booom_+

I laugh the most with those that thought getting iraqi oil under US control will lower the price of it in the states.

It was a babystep in a much larger and longer plan. Saudi Arabia is not safe from us. It may be 20 years before the truth comes out but it will soon enough. We have Iran & Syria to shake down first.

Germany is building the worlds first fusion reactor, unlimited power. The sun for one is a natural fusion reactor.

isnt that technology pretty damn far away, though?