OpEd: Where were you when Gazprom dethroned ExxonMobil?
(FinancialPress) — Isn’t this a day to remember not unlike the lunar landing or the day Kennedy was shot? Well, perhaps not that significant or is it?
I’m talking about that point in time where ExxonMobil (NYSE: XOM) was dethroned. Dethroned you say? Well yes according to an article published in Oilprice.com. ExxonMobil has been a mainstay in that space.
Who you say slayed the king? Well that is Russian Gazprom (MCX: GAZP). This the state sponsored energy giant which dominates Europe and is making inroads in China.
Since the seventies (the rise of OPEC) we have seen where state owned, or controlled, entities have been muscling their way to gain a significantly larger voice in energy. They have now risen to where we have little choice, but take them into account.
Russia has nudged, shoved or pushed their way to control the European space for natural gas. Many a curse whispered in European capitals as the name Gazprom is mentioned. Natural gas is a tool used to flex muscle in Europe. This was best illustrated by the dispute between Russia and the Ukraine long before the Crimean invasion.
As the natural gas production begins to see decline (naturally) things like LNG become in focus for Europe. The first sales arrived in England this year. No one in the European market will acquiesce and LNG offers an alternative. Australia, Qatar and now the U.S.A. are alternatives to Gazprom. In several years the infrastructure will diversify the alternatives from Gazprom.
Other alternatives will immerge such as discoveries such as the developments in Israel come to mind. Gas servicing the country can see movement of excess volumes to a hungry Europe. A consortium of companies including Noble Energy (NYSE: NBL), Delek Drilling (TLV: DLEKG), Avner Oil Exploration LP, and Ratio Oil Exploration LP are developing the facilities to move gas to shore. This is a massive find in a friendlier place than Russia or the Middle East.
Renewable sources are another alternative but have proven unreliable and did see massive investment. This investment has shown signs of decline as the end result may have been disappointing.
Where does that leave this space? Well do not count ExxonMobil out of the game. They are a very well-managed company as illustrated by an article in an article written by Reuben Gregg Brewer on Sep 29, 2017. Certainly they are growing their world wide asset base whether acquiring new Permian assets or bidding for offshore Brazilian offshore rights auction. Will ExxonMobil lose sleep over waking up being Number Two. They will continue to be a force to recon with. You’re not number one by some fluke of nature and I for one am not going lose sleep over ExxonMobil surrendering the mantle to Gazprom.