With oil resources depleting all around the world, nations may suffer from sudden economic upheaval. This will lead to the discovery of alternate sources of energy such as natural gas. It has been maintained that the oil industry will face difficulty in meeting the large scale worldwide demand of oil in the future. It will be a challenging task to produce more than 95-100 million barrels per day. However, when the oil output stops to grow beyond a level, oil prices will skyrocket. This is going to bring significant increase in the demand for oil. There will be massive recession, leading to plans of discovering alternative fuels.
International oil companies, IOCs are going to face some tough challenges when competing with national oil companies, NOCs. IOCs are fully exchange traded where as NOCs are the ones that are largely state controlled. However, IOCs have become some of the largest and the most profitable companies in the market. Never the less, the international markets are unsure about their future. This can be ascertained by the fact that there has been a low price earnings ratio for integrated oil and gas companies. In fact, it has been second lowest in the basic materials sector. Similar trends have been noticed in the booming minerals business. The price earning ratio, in this business has been half the average level, for integrated oil and gas companies. However, even after making enormous profits, the IOCS are having difficulties in keeping up with their own progress. Recent figures, suggest that in previous years the super-majors have substituted their oil produce with new reserves. This has only been possible with the help of important acquisitions and natural gas resources. Sometimes, even these elements were missing from the scene.
Just to give you an insight on what’s happening in the world oil market, here are some facts about the world’s leading oil companies. Most of them are unable to find substitutes for their depleting oil resources. Along these lines, Shell has been unable to find replacements every year, since 2001. Also, BP and Chevron are lagging behind, when it comes to finding suitable replacements ever since 2003. ExxonMobil and Total are two other companies facing similar problems since 2004. However, ExxonMobil has replaced almost all of their reserves in 2007. Also, Total had carried out seventy eight percent replacements for the year 2007. BP and Shell are lagging in replacing their reserves.
Most of the biggest IOCs are striving to uphold certain oil production levels. However, there has been a decline in Shell’s output, in the previous five years. Once IOCs controlled most of the world’s major oil reserves but they have limited access to oil now. These days, NOCs are emerging in bigger oil markets. The five largest oil companies are controlled by the state. They include companies like PetroChina, Gazprom and Sinopec. However, it doesn’t matter who is winning or loosing, at the end of the day it’s all about the availability of oil. We are leading into a situation, in which our oil reserves are gradually diminishing, therefore most of the major oil companies need to act fast. They have to deal with the repercussions of depleting oil and some how find out ways to fill this gap with substitute resources. If not then we should expect further escalation of oil prices.