Monday, June 23, 2008

Oil Majors - Comparative Stats

btw, my fellow blogger Seng is absolutely correct to insists that pages 81-165 of the 2007 annual report be made fully available on the website... I think other oil companies (the listed ones in particular) does that, so I doubt there are trade secrets you cannot reveal, maybe executive compensation information may be deemed sensitive, but hey, its a brave new world Merican, so let's get it all out there ... at least make my job in defending Petronas ass easier OK!

Petronas Malaysia

ROE - 2005: 38.5%; 2006: 41.6% ; 2007: 40.9%

Net profit - 2006: RM43.1bn (US$13.26bn) ; 2007: RM46.4bn (US$14.27bn)

ROE Of Majors
(Most Recent Year)

1) Royal Dutch Shell 24.06%

2) BP Plc 26%

3) Total SA 29.5%

4) Repsol YPF 17.9%
5) Statoil 33.23%

6) Lukoil 23.23%

Net Profits Of Majors (Most Recent Year US$)

1) Royal Dutch Shell 91.8bn

2) BP Plc 75.3bn
3) Total SA 56.4bn

4) Repsol YPF 18.3bn

5) Statoil 12.3bn

6) Lukoil 20.4bn

Notes: Just for comparison sake, Statoil makes about the same amount of money as Petronas. However, Norway is the world's third largest oil exporter behind Saudi Arabia and Russia. Norway is also the world's seventh largest gas producer and the second largest supplier of natural gas to Europe. Statoil merged with Norsk Hydro and is the leading petroleum company in Norway, and also the world's largest operator of deepwater fields. To be fair, Norway has more than just one oil giant.

Asian Majors Net Profit (US$)

1) Petrochina 19.13bn

2) CPCC 7.096bn

3) CNOOC 3.96bn

Return On Equity (Most Recent Year)

1) Petrochina 24.19%

2) CPCC 19.46%

3) CNOOC 28.7%

A detail report was submitted to the Select Committee on Energy Independence & Global Warming last month. The report covers Exxon Mobil, BP, Shell, Conoco Phillips and Chevron. The 5 companies CEO's average pay was US$23m. At Exxon Mobil, the top 5 executives was paid a total of US$28m (average RM18.2m pp) in 2001 and a total of US$76m (average of RM49.4m pp) in 2007. Keep that in mind as Petronas starts to reveal executive compensation in the coming days.

photos: Rain Li Choi Wah

1 comment:

mantua said...

Dear SD

I think that you have unknowingly given Petronas more credit than it is due by comparing its apparently high ROE (41% in 2007)with industry norms of 20-30%.

You have overlooked the fact that Petronas is first & foremost a tax-collection agency. Crude oil & natural gas producers in Malaysia do not pay corporate tax but instead share profits with the govnmt (represented by Petronas)in accordance with the so-called production sharing contracts (PSC's).

The terms of these PSC's vary & are not in the public domain,to the best of my knowledge. In general, the oil companies contribute 100% of ALL capex on exploring and producing the crude oil &/or natural gas. They are then allowed to recover these expended costs from part of the revenue generated by oil/gas sales (after first paying royalties to the respective states e.g to Wang Ehsan in Trengganu).

The remaining portion of the revenue from oil/gas sales (termed "profit oil")is then split roughly 60/40 to the government & the oil company, the government's share being paid to Petronas. In addition, ownership of the oilfield & all its assets revert to Petronas at the end of the production sharing contract e.g. many of the older fields in Sarawak now belong to Petronas.

Therefore Petronas should be capable of generating billions of dollars in income with minimal capital expenditure (spent on monitoring the oil company activities & admin costs) i.e. its ROE should easily exceed 100%!! So why then is its ROE less than 100%?

The answer it that Petronas is also playing another role as a participant in oil exploration & production i.e just like Shell, Exxon and all the public listed or privately owned companies. For example Petronas has equity participation in many PSC acreages in Malaysia and is also exploring & producing oil and gas in other countries.

I expect that the ROE of Petronas' activities as an oil explorer & producer is probably very low because it is a relatively new participant in this business. So nothing to be ashamed about (at this stage) but certainly nothing to boast about either.

In conclusion, most, if not all, of the profits" made by Petronas is in fact revenue collected on behalf of the government i.e. people of Malaysia). These profits are returned to the government & consolidated with other government revenue. How this revenue is eventually spent is therefore the SOLE responsibility of the government and not Petronas.