Decline of the Western Oil Majors
Source: Gerson Lehrman Group (7/19/10)
"Western oil majors at competitive disadvantage in emerging markets."
Maintaining growth is challenging for major oil companies based in the EU and U.S. because the domestic European and North American markets are mature. In some cases, such as the ban on offshore drilling in the U.S., exploring new opportunities is even restricted. Conversely, Chinese, Indian and other Asian oil companies are less sensitive to politics or to the environment, which enables them to dominate emerging markets. Because of the competitive disadvantage in emerging markets, the long-term outlook for the Western oil majors is uncertain.
The Chinese government has taken an economic interest in Sudan, despite the Darfur conflict. Sudan is currently producing 400,000 barrels of oil per day (bopd) and has the potential to produce over a million bopd. But, the Western oil majors are not able to compete in this emerging market because of political pressure from the EU and the U.S. governments.
In Brazil, China and India, government regulations control the expanding oil products markets. Even though they are slowly evolving toward market-based pricing, Western oil companies cannot compete profitably in these markets because of the government subsidies and the price controls.