Beyond the black stuff
Big Oil is being forced to rethink its future
Feb 4th 2010 | From The Economist online
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ON THE face of it the world's big and publicly quoted oil companies should be celebrating some pleasing results this week. Royal Dutch Shell unveiled its results on Thursday February 4th, reporting that it had made $9.8 billion in 2009. Two days earlier BP boasted profits of $14 billion for the same year. Yet these billions are a disappointment compared with the bonanza of previous years (Shell, for example, raked in $31.4 billion in 2008 alone) when soaring oil prices pulled profits ever higher. In the long term, however, the firms' success depends on sustaining reserves. The big western oil companies are trying to expand through acquisitions and investment, but the opportunities do so are becoming scarcer. The firms are spending where they can. Exxon Mobil, the biggest listed oil company, says that exploration and capital spending hit $27.1 billion in 2009, 4% higher than in 2008. The company expects to spend $25 billion to $30 billion annually to the same end over the next five years. BP intends to spend some $20 billion this year on investment in new projects and drilling, roughly the same level as last year.
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