Three years ago, the top six names on the PFC Energy 50 ranking of the world's largest oil & gas industry companies were ExxonMobil, BP, Royal Dutch Shell, Total, Chevron and Eni. This year's top six include Petrochina, Gazprom, Sinopec and Petrobras, National Oil Companies (NOCs), whose shares are traded on public markets, but which are majority-owned by the governments of China, Russia and Brazil. The preeminent positions of these NOCs on the PFC Energy 50 list reflect a profound change in the global energy industry. With some 65% of oil and gas reserves off-limits to International Oil Companies (IOCs), the majors are finding it increasingly difficult to deliver growth in reserves and production, while the NOCs offer more convincing growth prospects.
"The financial sector recognizes that NOCs have superior access to resources and booming domestic markets," said J. Robinson West, Chairman of PFC Energy. "Despite their enormous earnings, IOCs must communicate a new vision for growth."
During 2007, Petrochina edged ExxonMobil out of the first place position it has occupied on every previous PFC Energy 50 list, while Sinopec rose from twelfth to fifth position and Brazilian NOC Petrobras climbed from eleventh to sixth.
While Chinese companies, swept up by a combination of a booming domestic stock market and a strong energy sector, enjoyed a banner year, the Russian companies that have been top performers in recent years posted more disappointing results. State-owned companies Gazprom (stock up 13%) and Rosneft (+5%) posted gains, while Lukoil (-1%) and Surgutneftegaz (-19%) declined.
The PFC Energy 50 includes a display of top performers in each segment based on 2007 share price increases in companies' domestic markets and currencies. Traded NOCs posted an average 73% share price increase, compared with 20% for IOCs and 42% for E&P companies. The top two performers among the IOCs, Hess and BG, both benefited from association with the year's most exciting exploration news -- the offshore Brazil pre-salt play. Chinese and Indian companies, buoyed by both surging domestic stock markets and energy sector strength, posted impressive gains. As a sector, Alternative Energy delivered stellar share price performance, including the highest overall stock price gain among PFC Energy 15 companies, First Solar's 795% gain.
Technology will be a crucial factor in differentiating oil and gas companies in the future and this year's PFC Energy includes the first ever ranking of the industry's Top R&D spenders. In the lead are Royal Dutch Shell with the highest absolute R&D spending (over $1 billion) and service company Baker Hughes, which spends the largest percentage of revenues (3.6%). Despite these substantial figures, the oil and gas industry's R&D expenditures are dwarfed by those of other industries.