WASHINGTON, Jan. 16 (UPI) -- Once upon a time there were Seven Sisters in the oil business, and five of them were American. Only British Petroleum and Anglo-Dutch Shell broke the American dominance of Exxon and Mobil and Gulf and Chevron and Texaco, so it was still just about an Anglo-Saxon monopoly.
Not anymore. The new Seven Sisters look very different. Exxon-Mobil and Texaco-Chevron are the two Americans. The Europeans have at least three, in Shell, BP and the fast-growing French-Belgian giant TFE, Total-Fina-Elf. Then there is Saudi Aramco, a private company whose owner is the Saudi government.
That makes six. And vying for seventh place we have Italy's ENI, with China Petroleum coming up close behind. Nipping at all their heels are Spain's Repsol, Brazil's Petrobras, Japan's Nippon Mitsubishi Oil, the Indian Oil Corp. and Russia's Gazprom and Lukoil.
Keep this in perspective. All the Russian, Spanish, Brazilian, Indian and Chinese groups together barely equal BP in revenues.
But keep a close eye on the smaller Europeans, even though Italy's ENI has revenues of some $50 billion a year, just one-third of the level of Shell or BP. ENI is bidding for Enterprise Oil, which was formed from the oil interests of British Gas and is one of Britain's last independents. ENI likes the Brits, having swallowed up two other smaller British oil morsels, Lasmo and British-Borneo. Adding Enterprise's wells to its own would make ENI the third-biggest oil producer in the North Sea.
France's TFE, which only has two-thirds of BP's revenues even though it likes to call itself the world's No. 4 oil company, is backed by all the discreet muscle the French government can muster on behalf of this key strategic asset. The French are determined to join the big boys like Shell, BP and Exxon-Mobil and the strategy, according to well-informed observers, is to buy up Conoco.
But Conoco is already betrothed to Phillips Petroleum in a planned $35 billion merger. So what? Marriages have been interrupted at the altar before now, and the bride carried off.
The smart money says that the French want to make an alliance with Chevron-Texaco in order to break up the Conoco-Phillips merger, so the French can buy Conoco. And given that low oil prices have depressed share prices, the French are prepared to pay for the privilege.
The first point is that the traditional American dominance of the oil business has gone. The Europeans are at least their equal. And a lot of other contenders are muscling their way up the ranks fast.
The second point is that the oil industry has re-organized to balance, if not reverse, the historic shift of the 1970s when the major oil producing states took advantage of the OPEC price rises to seize the industry's reins from the old Seven Sisters. We now have the four super majors -- Exxon Mobil, Royal Dutch/Shell, BP and Total Fina Elf -- that together command about one-third of global product sales and one-fifth of refining capacity, known in the industry as the downstream.
They thus counterbalance the upstream controls of the four big state oil companies -- Saudi Aramco, Petroleos de Venezuela, Iran's NIOC and Mexico's Pemex -- who between them produce 25 percent of the world's oil and command almost half its reserves. The state companies dominate the upstream and the consolidation of the big private companies means they dominate the downstream.
As this consolidation goes on, the French and Italians have one big advantage. They do not face the same political constraints as their American competitors in dealing with Iran (with 10 percent of global oil reserves) and Iraq (with the second biggest reserves after Saudi Arabia). Italy's ENI and France's TFE are jointly developing Iran's Dorood field off Kharg island, and the French are also pumping oil from Iran's Sirri offshore field and cooperating with Russia's Gazprom and Malaysia's Petronas to develop Iran's massive South Parsgas field.
Along with the Russians, the French and Italians have been quietly maintaining with Iraq to ensure that they will be well-placed when the sanctions are finally lifted. The French have signed agreements to develop the Majnoon field, with an estimated 10 billion to 30 billion barrels of oil, and the Nahr Umar field. The Italians are negotiating, and it is not clear how far the talks have gone, on developing the Halfaya and Nasiriyah fields.
An American pessimist might understandably fear that the Europeans, and their Russian neighbors who are equally deeply involved in Iraq, are going to end up dominating the world oil industry, and feeding American consumers' apparently inexhaustible demand for gas-guzzling SUVs.
An American optimist, looking at the Bush administration's decision to subsidize researches into fuel cells as an alternative energy source, might wonder if the Europeans might finally come to dominate the industry just when it stops being so important. If so, then the really smart company could turn out to have been BP, repackaging itself as the "green" oil company with thoughtful investments in alternative energy sources.
