ExxonMobil and Chevron are making significant moves in the oil industry, reshaping the market landscape and challenging traditional petrostates.
The Petrostate-Fracker Price War
A decade ago, a price war erupted between petrostates in the Persian Gulf and American frackers due to the shale revolution. While petrostates and frackers remained prominent in the new oil order, the dynamics shifted in 2023 with record shale output in the Americas.
The Great Rebalancing and Recent Megadeals
American and Canadian producers surpassed the Middle East in oil and gas production in 2023, signifying a historic shift of oil production to the western hemisphere. ExxonMobil’s $64.5bn merger with Pioneer Natural Resources and Chevron’s $60bn acquisition of Hess reflect their strategy to regain influence in the oil industry.
Shrewd Operators in the Oil Market
ExxonMobil and Chevron’s focus on cheap-to-produce oil, combined with their recent acquisitions, positions them as formidable players in the market. Their decarbonisation strategies align with their engineering expertise, while their long-term options for shale and Guyana assets provide flexibility in a changing market.
Embracing Profit-focused Strategies and Decarbonisation
The two companies prioritize profit through integrated exploration, production, refining, and distribution operations, unlike petrostates influenced by geopolitical factors. Additionally, they are investing in clean-energy technologies such as carbon capture and storage and hydrogen production.
Challenges and Prospects
While ExxonMobil and Chevron face challenges such as declining shale exposure and geopolitical risks, they demonstrate astuteness in navigating industry upheaval. Their focus on profitable growth and alignment with free-market principles positions them against traditional petrostates.