'Big oil' getting smaller as production keeps falling
February 14, 2014 - Richard Swann in London
* Top seven western majors all seeing liquids output fall
* Supermajors' share of global market dropping every year
* BP reports fastest decline of 30% from 2009-13
* Production becoming more evenly split between oil and gas
The biggest western oil companies are continuing to see their oil output decline, despite record investment in recent years spurred by sustained crude prices in excess of $100/barrel, according to data released by the companies.
Furthermore, with total world oil output continuing to rise every year, the western majors are seeing their share of the global market fall even faster, with new volumes coming largely from their rivals in places like Russia and a host of smaller companies at the heart of the shale oil boom in the US.
Analysis continues below...
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Combined output of crude and other liquids by the seven biggest western majors -- ExxonMobil, Shell, BP, Chevron, Total, ConocoPhillips and Eni -- amounted to 9.517 million b/d last year, down 2.2% from 2012 and marking the fourth consecutive year of decline.
Liquids output from the same group has been falling every year of late, having been as high as 10.865 million b/d in 2009.
As a group, the seven have seen their combined liquids output fall by 1.348 million b/d, or 12.4% over the period from 2009 to 2013.
The most notable contribution to the overall decline comes from BP, whose production of oil and other liquids has fallen by more than 30% from 1.695 million b/d in 2009 to 1.176 million b/d in 2013.
These figures do not include production associated with BP's current 19.75% stake in Russia's Rosneft or its previous 50% stake in Russian oil producer TNK-BP.
This is a much sharper fall than other majors have experienced, and is evidence of the scale of the asset divestment program the company has been going through to cover its actual and potential liabilities in the wake of the disastrous Gulf of Mexico oil spill in 2010.
While its peers have not seen production fall by the same degree, they have nonetheless all experienced declining oil production since 2009.
Even ExxonMobil, the biggest of the group in terms of production and profitability, saw its oil output fall by 4.5% in 2011 and 5.5% in 2012, the two years with the highest average international oil prices of all time.
In 2013 ExxonMobil's oil output rose by 0.8% to 2.202 million b/d, but it still remained more than 200,000 b/d below where it was in 2010.
Shell, Chevron, Total, ConocoPhillips and Eni also all saw their liquids production fall in 2013.
Total's output declined by 15.5% between 2009-13, Eni's by 17.3% and ConocoPhillips' by 12.4%. Shell has seen the smallest fall of 2.5% over thesame period.
Dwindling share of global output
According to the International Energy Agency, total world oil supply has risen in recent years from 85.66 million b/d in 2009 to an average of 91.53 million b/d in 2013.
As a result, the seven leading western majors have seen their share of this total supply fall from 12.7% to 10.4% over the same period.
While this group is seeing its production fall, others have clearly been heading in the opposite direction.
The most obvious is Russia's Rosneft, which has grown at breakneck pace in recent years on the back of a debt-funded acquisition spree, including the purchase of former rival TNK-BP.
Rosneft is now the world's biggest publicly listed oil producer with total crude and liquids output of close to 4.2 million b/d.
In other words, Rosneft alone now produces almost as much oil as ExxonMobil, BP and ConocoPhillips combined.
The western majors are not short of either the expertise to produce more oil or the money to fund developments after 2013 marked the third consecutive year of Dated Brent prices above $108/barrel.
The recurring challenge for the western companies in recent years has been to find attractive investment opportunities, with several of the world's leading oil reserves holders offering limited, or even no access to international operators.
"It's an access question," said an official from one of the western majors, who asked not be identified. "Who will let us in? They'll only let us into the difficult bits like the deepwater projects, or tight gas, that kind of thing," he said.
With their liquids output falling, the so-called "oil majors" are gradually becoming less oily and more reliant on gas production.
Oil accounted for more than 60% of ExxonMobil's total hydrocarbons output in 2009, but by last year this figure had fallen to less than 53%.
It is a similar story for Total, where oil's share of total production has fallen from 60.5% in 2009 to 50.8% in 2013.
Shell produced more gas than liquids last year, the third time in the last four years this has happened, and BP is not far away from a 50:50 split.
Of the seven majors who embody the image of "Big Oil" the only one bucking the trend towards greater gas exposure is Chevron, where oil continues to account for two thirds of all production -- a full 10 percentage points more than any of the rest of the peer group.
Production of oil and other liquids by leading western companies