Power continues to shift in the oil industry from major publicly listed oil firms (supermajors) to national oil companies (NOCs). More than 90% of global oil reserves are now owned by NOCs, and six of the world’s largest oil producers are NOCs. As a result, the supermajors are now more dependent on finding fresh sources of oil, which are more difficult to access. Although advances in extraction technology have helped, one estimate puts the cost of producing oil from difficult locations at a marginal cost of $100 per barrel. Also, the NOCs are relying less on supermajors for technical expertise and spending more on R&D. This year, PetroChina is expected to replace Exxon as the biggest spender on exploration and production. In addition, NOCs often have more cash to acquire new assets, and supermajors have been late to new opportunities such as shale. Some analysts estimate that oil demand is reaching a peak due to the increased efficiency of cars and the greater use of natural gas.

Source: The Economist