The Web of Partnerships between BP, Chevron, Eni, ExxonMobil, Shell, and Total

By Martin Mogstad

How a thick web of joint ventures elevates the need for oil and gas supermajors to manage broader company relationships

NOT SINCE THE interlocking corporate directorates of post-war Japan has there been such a concentration of intermingled corporate relationships as found today among oil and gas industry supermajors. When we plot producing assets by operatorship and non-operatorship, we see a pattern of extraordinary — albeit intriguingly lumpy — interconnections between the six supermajors (Exhibit 1).

Exhibit 1: Interlocking Partners

For instance, BP is the operator in 14 joint ventures where Eni is a non-operating partner, while Eni operates 10 joint ventures in which BP is a non-operator. This supermajor-to-supermajor relationship represents 5–6% of the companies’ production volumes.

Meanwhile, French supermajor Total operates 30 joint ventures in which BP is a non-operating partner — although Total is the non-operating partner in just three BP-operated assets. Indeed, when we look at the ratio of operated-to-non-operated assets, we see that BP is much more likely to be a non-operator when in a production-phase joint venture with other supermajors. This may be driven by the peculiarities of individual asset opportunities and the global shape of the BP portfolio — or it might reflect a post-Macondo effect where BP has higher operating costs relative to peers due to an understandably heavy emphasis on HSE.

The highest concentration of friendship is clearly between ExxonMobil and Royal Dutch Shell — the oil and gas industry’s equivalent of the “special relationship” forged between the U.S. and Britain, first described in 1946 by Winston Churchill. Today, Shell operates 170 production-phase joint ventures in which ExxonMobil is a non-operating partner, including many in the North Sea, while ExxonMobil operates 77 such joint ventures in which Shell is a non-operator. (One wonders whether the CEOs of Shell and ExxonMobil, Ben van Beurden and Rex Tillerson respectively, appreciate that Shell is 2.5-times as likely to operate an asset when their companies are co-venturers, or believe that this is the right balance given their strategies, skills, and risk appetite.) In addition to these 247 overlapping producing assets in which Shell or ExxonMobil is the operator, the companies are also co-venturers in numerous independently-operated or operating companies, such as Aera Energy (an additional 11 assets), and project-phase joint ventures, including those like Gorgon in Australia, in which ExxonMobil and Shell are both non-operators.

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