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November 7, 2007

PetroChina's Eclipse of Exxon Should Draw Respect, Not Skepticism

The Financial Times compares PetroChina and Exxon, and concludes that the former's eclipse of the present day descendant of John D. Rockefeller's Standard Oil Company is not totally preposterous:

. . . A comparison of their recent records, compiled by PFC Energy, a consultancy, does Exxon few favours. While over the past five years the US giant has added 6 per cent to its oil and gas reserves, for example, ­PetroChina has added 19 per cent.

PetroChina’s reserves are already on a par with Exxon’s, and are set to grow further.

A recent report by Wood Mackenzie, another consultancy, noted that the large Chinese oil companies, including PetroChina, were investing more in exploration and development than many western companies, and said: “Higher domestic spending is starting to provide some payoffs.”

PetroChina’s Nanpu discovery is thought to hold up to 11bn barrels of oil which would make it the biggest oil find in China for decades. . . .

. . . it is getting harder for Exxon, like all the big oil companies, to get access to resources.

PetroChina, with the full backing of the Chinese state behind it, is able to do business in countries such as Venezuela where Exxon cannot or will not go.

It will be many years before PetroChina can match Exxon’s technology and skills, if it ever does, and that will continue to give the American company an edge.

But sceptics would do well to remember that there was a time when people laughed at the idea that Toyota would topple General Motors from its world number-one slot.

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