Russia’s Gazprom tumbles in global energy rankings
Battered by a plunging rouble and a poor long-term credit outlook, Russian state-owned gas giant Gazprom has plunged from fourth to 43rd on the annual ranking of publicly traded energy companies compiled by commodities information provider Platts.
Gazprom, which has 17 per cent of the world’s gas reserves and accounts for 12 per cent of world gas production, saw its output and export revenues decline sharply in 2014-15 as domestic demand slowed and the Ukraine crisis brought shipments there to a halt. In April this year, Gazprom reported its 2014 profit dropped more than 80 per cent to just under $US3 billion, on revenue of $US102 billion.
As a consequence, Gazprom’s market capitalisation today is about $US50 billion, a far cry from its high of $360 billion in 2008.
With Russian President Vladimir Putin pushing Gazprom to make expensive geopolitical commitments such as the Power of Siberia trunk pipeline that will increase gas capacity to China, the company’s outlook is for further financial pain before the gain from its new China and North Asia trade kicks in.
Still, Gazprom CEO Alexey Miller is relentlessly upbeat, telling a gas conference in St. Petersburg last month that the Russian gas industry “has been and will remain the driving force of our economy.” He said gas sales to Germany were running at record levels in the second half of 2015 and it was clear European customers would need more gas in the near future. Sales to Ukraine resumed last month.
Russia’s top oil producer, state-owned Rosneft, fared better than Gazprom in 2014, reporting a $US6 billion profit on revenue of $US100 billion, despite what it said were challenging economic conditions and the impact of US and European sanctions against Russia over Ukraine. Like Gazprom’s Miller, Rosneft CEO Igor Sechin is regarded as being close to Putin.
Rosneft is the only Russian energy company in the top 10 on the 250 Global Energy list released by Platts last week, down from sixth last year to 10th spot.
In contrast, three state-backed Chinese energy companies have made the top 10: oil and gas explorer-producer CNOOC in fourth spot behind global oil majors Exxon, Chevron and Shell; PetroChina — the listed arm of China National Petroleum Corp (CNPC) — at No. 5 and coal miner China Shenhua Energy at No. 9. But a Chinese top-10 entrant last year, China Petroleum and Chemical Corp, slipped from ninth to 11th.
For US-based Exxon, it is the 11th straight year it has been rated the world’s top listed energy company, based on a combination of revenue, profit, asset worth and return on invested capital in the 2014 financial year. Likewise, Chevron and Shell usually rank in the top three or four names.
Among global majors, UK-based BP, which ranked second last year, dropped to 29th spot on weaker profits and low return on invested capital. French company Total, which lost charismatic CEO Christophe de Margerie in a Moscow plane accident in October last year, dropped to 26th from eighth spot in 2014. Two new names in the top 10 this year are U.S. refining companies Phillips 66 at No. 6 and Valero Energy at No. 8. ConocoPhillips moved up from 10th in 2014 to seventh this year.
According to Platts data, the top 10 listed companies between them had total revenue in 2014 of $US1.87 trillion and combined income of $US120 billion.
The highest-ranking Indian company is the MukishAmbani-controlled Reliance Industries at No. 14, followed by state-owned Oil & Natural Gas Corp (ONGC) at No. 17. Coal India, known as the world’s largest pure coal miner, rose from 47th spot a year ago to 38th in 2015, after impressive output gains.
The highest-ranking Australian energy company this year is Woodside Petroleum at No. 50, followed by AGL Energy at 130 and Oil Search at 232.
In Latin America, Brazilian oil and gas giant Petrobras plunged from 27th last year to 161 in 2015, on the back of a massive $US17 billion writedown linked to a long-running corruption scandal. Like Gazprom, Petrobras was valued by the market at more than $US300 billion in 2008, but today its market capitalisation is just $US30 billion.
While the annual Platts Top 250 ranking is a valuable guide to the performance of listed companies, by definition it must omit some of the largest players in the global energy scene. These include the single biggest oil producer, Saudi Aramco, which is the national oil company of Saudi Arabia. According to data published by the Organisation of Petroleum Exporting Countries (OPEC) in June this year, Saudi Arabia’s petroleum exports in 2014 were valued at $US285 billion. Another $US347 billion in exports came from four other national oil companies in the Middle East: those of the UAE ($US108 billion), Kuwait ($US98 billion), Iraq ($US84 billion) and Qatar ($US57 billion).
The Platts list skips the major diversified resources companies with extensive energy interests, such as BHP Billiton, Rio Tinto and Glencore. It also omits the big unlisted energy trading companies such as Vitol, Trafigura, Gunvor, Mercuria and AOG — all of which turn over many billions of dollars annually in energy sales — and the Japanese trading houses Mitsubishi, ITOCHU, Mitsui, Marubeni, Sumitomo, Sojitz and Toyota Tsusho.
Similarly, in the US, Koch Industries, the private company run by brothers Charles and David Koch, counts a substantial slice of energy business in its $US115 billion-plus annual turnover.
According to Platts, the North American shale revolution remains at the centre of energy developments, helping to bring 89 US and 14 Canadian companies into the Top 250 this year, up from 103 companies in 2014.
“Despite being in its fifth year and in a much lower price environment, the shale oil revolution in some places of the US has barely begun,” it said. It pointed to basins such as the Permian in West Texas and Mexico becoming more productive, and to continuing falls in the cost of production.
