Oil majors see production levels decline in Q2

YADULLAH HUSSAIN | AUGUST 2011 | SOURCE: Financial Post

Oil majors saw their profits rise in the second quarter, but, worryingly, output fell during the period.

“The prospects are more worrying for the European majors, since nearly all of them… reported year on year output declines, often in double digits,” said the UK-based Central For Global Energy Studies in a note.

Oil majors see production levels decline in Q2

BP saw its production decline 11% during the second quarter, partly due to reduced activity in the Gulf of Mexico after an explosion on the oil rig that spilled 205 million gallons of oil into the Gulf of Mexico.

Royal Dutch Shell and Chevron also reported 2% decline each in their energy outputs. However, ExxonMobil, the largest publicly-listed energy company in the world, saw a 10% increase in output.

The lacklustre performance is a result of Big Oil’s declining control of easily accessible petroleum reserves, says CGES. “According to estimates, in 1973 independent oil firms controlled 75% of the world’s reserves as opposed to a mere 10% today. This, we believe, is forcing the oil majors to turn to natural gas, unconventional shale gas and oil.”

While their output may have fallen, oil majors continued to rake in significant profits on the back of high oil prices. Shell posted a whopping second quarter profit of 77% during the second quarter, Chevron 43% and Exxon Mobil 41%, as Brent crude prices flirted with three-dollar figures and the West Texas Intermediate also hovered around the late $80-90 per barrel.

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