Øyvind Hansen, Mickey (Bar) OtterleiBØK320 Markedsføring, Høst 2013, Høgskolen i Molde

PetroleumFrom A Marketing Perspective

Petroleum Industry PortfolioWe don’t need marketing really; you will buy our products anyway

▪ No need to prove our products ▪ No need to lure you into buying ▪ It is a supplier’s market

▪ You all need petroleum for transportation, medicine, agriculture, plastic products, and this is just to start with

▪ You are in our pockets

Do You Have A Driving License?

It means that it will run out one day, as all natural resources when being over exploited

Fossils are pressed between crusted hot layers

for millions of years

Refined natural gas, gasoline, naphtha, kerosene, fuel, lubricating oils,

paraffin wax, & asphalt

So What Is Petroleum?

Thick, flammable,

yellow to black colored mixture

of gaseous, liquid and solid

hydrocarbons

BUT The first oil company was established in 1858;

Seneca Oil Company started drilling in Titusville Pennsylvania,And oil companies started popping out everywhere.

Egyptians mummification

BabyloniansBuilding Material

ChineseHeating

How Long Have We Used It?

When Did Oil Become Essential?

A World Of Petroleum Seekers

The countries who are not in the game, wish they wereThose who are, have a lot of power over the rest

http://labs.wnstnsmth.net/worldoil/

RUSSIA

Gazprom:• 9,7 mil. barrels a day• Owned by the Russian

government

Rosneft:• 2,6 mil. barrels a day• Owned by the Russian

government

Lukoil• Private ownership• 2,2 mil. barrels a day

USASAUDI ARABIA

• Biggest oil company in the world

• 12,5 mil. barrels a day

• Owned by the state of Saudi Arabia

But there are many more...

The Petroleum Giants

ExxonMobil• Largest publicly traded

oil company in the world

• 5,3 mil. Barrels a day

Chevron• 3,5 mil. barrels a day• Internationally

involved in exploration

The World Leaders12.5

9.7

6.4

5.3

4.44.13.93.6

3.5

3.2

2.9

2.7

2.62.6

2.62.3

2.32.2

2.22.1 2 1.9 1.61.4

Saudi Aramco Gazprom National Iranian Oil Company ExxonMobil PetroChina BP Royal Dutch Shell

Pemex Chevron Kuwait Petroleum Corp. Abu Dhabi National Oil Co. Sontrach Total Petrobras

Rosneft Iraqi Oil Ministry Qatar Petroleum Lukoil ENI Statoil ConocoPhillips

PDV Sinopec Nigerian National Petroleum

ROSNEFT

ARAMCO

GAZPROM

ExxonMobilCHEVRON

LUKOIL

We Control 44% Of The World’s OilSaudi

Aramco16%

Gazprom12%

Exxon-Mobil

7%

Chevron4%

Rosneft3%Lukoil

3%Statoil

3%

The rest of the world

53%

The other 18 biggest companies, and the small players we do not hear so much about

How Do We Play The Game?• We create joint ventures

We all have businesses with the others

• We outsource our marketingWe have companies that do the marketing for us

• By gathering informationWe must be updated all the time about what is going on with the other players in the market

• By thinking of our PR nonstopWe must take the green parties off our backs

Petroleum Supply ChainExploration

Production

Crude Pipelines

Shipping

Storage Terminals

Product Pipelines Trading

Industrial Markets

Commercial Markets

Distributionretailers

Market/Product Grid

Same Product

Same Market

New Product

Same Market

New Product

New Market

Same Product

New Market

A new product is spread at almost all the markets

simultaneously, which means no competitive advantage to no one

through here..

Saudi Aramco Joint Ventures2002 • 50% shares in Motiva (belongs to chevron),

making Saudi Aramco a Co-Owner with Shell

2004 • 10% shares in Showa Shell Sekiyu K.K., a Royal Dutch/Shell refining & marketing arm in Japan.

2005 • Developing an integrated refining & petrochemical complex with Sumitomo Chemical Co. (Japan)

2007• Agreements with ExxonMobil, Sinopec Corp &

the Fujian Provincial Government of China to form 2 joint ventures: • Fujian Refining and Petrochemical Co. Ltd. (FRPC) • Sinopec SenMei (Fujian) Petroleum Co. Ltd. (SSPC),

a marketing venture.

2011 • Formed the Sadara company with Dow Chemical Company (USA).

2012 • The Japanese-Saudi Yanbu Aramco sinopec refining company was founded.

SaudiAramco CSR Activities“We at Saudi Aramco are constantly seeking to enhance our positive impacts on the Kingdom’s economy, its communities and young people, and its natural environment.While supplying energy to the world is our core purpose, our sense of civic duty and mission extend far beyond running a successful business.”

Ras TanuraCommunity Project

Responsible Competitiveness

Encouraging new businesses to be

friendly to society, efficient and to deal fair

trading

”we remain committed to reducing the impact we have on the environment”

IT Schools, Awards,

Stipends, Free

Education

Gazprom Joint Ventures2001

• Gazprom, Rosshelf and Rosneft signed an Agreement on joint development of the Prirazlomnoye oil field located on the Pechora Sea shelf.

2002 • Gazprom, Royal Dutch Shell and ExxonMobil signed in Beijing a Framework Agreement with the Chinese gas company PetroChina

2003 • Gazprom, Rosneft and Surgutneftegaz signed the Agreement of cooperation to set up a consortium

2008 • Shareholders Agreement among Gazprom, Total and StatoilHydro on establishing the special purpose company Shtokman Development AG

2009 • Implementation Agreement setting the terms for Gazprom to acquire a 51 per cent stake in SeverEnergia among Gazprom, Eni and Enel;

2011 • Agreement on Gas Supply between Gazprom and LUKOIL;

2012• Agreements with Japanese Far East Gas,

PertroVietnam, Novatek, South Stream Slovenia and Rosneft

Gazprom Growth Strategies

Existing products, new markets

Rosneft Joint Ventures

2006• An agreement with CNPC for a joint venture in

Russia, with BP for a development of the Sakhalin shelf, strategic partnership with Gazprom

2008 • Commercial oil production begins in east Siberia, with TNK-BP

2010 • Acquisition of 50% shares on Ruhr Oel GambH was reached with National Oil Company Of Venezuela

2012• Agreement with BP regarding 5,66% Rosneft

shares• Strategic cooperation with ExxonMobil and

Gazprom for west Siberia joint venture• Agreement on ExxonMobil participation in

Arctic research with Gazprom• Joint venture with PDVSA (Venezuela) for

production of crude oil• 25 years contract was signed with INTER RAO

ES

Rosneft SWOT Analysis

Strength• Financial

Performance• Assets Portfolio

Weakness• Refineries Old & Not

Efficient• Restricted

Autonomy• Strong Domestic

Rivals• Under OPEC

Governing

Opportunities• Upgrading

Refineries• Strategic

Ventures with ExxonMobil

Threats• Joint Ventures in

Venezuela Under Governmental Threat

• Intense Competition Both Domestic & Internationaly

Lukoil Joint Ventures

2011• Acquisition of 11% shares in ERG, making

Lukoil owner of 60% shares in the ERG joint venture.

• Agreement with the Romanian national Agency Of Mineral Resources to research the Black Sea for 80% of the shares.

• Long termed partnership agreement signed with Rosneft for development, research and exploration of Rosneft sites on the Russian Shelf.

2012• Strategic partnership with Rosatom• Aquisition of 46 stations in Holland and 13 in

Belgia• Production in Venezuela as part of the

national Petroleum consortium

2013• Aquiring 18,75% shares in Iraq production,

from Statoil• Aquiring 100% SAMARA-NAFTA• Joint venture with the french SNF-SAS• Aquisition of 65% shares of production and

development project in Guinea, from a private Nigerian company

Lukoil Marketing Structure

ExxonMobil Joint Ventures

1999 • Exxon and Mobil joined to create the ExxonMobil cooperative

2005 • Expanding development in north offshore field in Qatar, as part of joint venture with Qatar Petroleum

2010• Finalizing agreement with XTO Energy Inc. for

development and production of unconventional resources.

• Leading a build and deployment response system to discover and capture contained oil in the gulf of Mexico as part of a joint venture with Chevron, ConocoPhillips and Shell

2011• Joint venture with Rosneft for exploration of

the Russian shelf and Siberia• Cooperation agreement with Rosneft, covering

31 million acres in the Kara Sea. Exxon Neftegas LTD, cooperation between ExxonMobil, Rosneft, Japanese company Sakhalin Oil, RN-Astra and Sakhalinmorneftegas-Shelf; & the Indian state-owned oil company ONGC Videsh Ltd.

ExxonMobil Growth Analysis

Conventional Oil/Natural Gas Exploration &

Production

Gas Exploration & Production,

Unconventional E&P

Chemicals

Refinery & Manufacturing Power & Coal

Transportation

Our leading business segment

and money maker: We spend

a fortune over this

The chemicals give us high

profitability while the investment is

comparatively low

Eventually we do have hopes for this section, because we expect it to become profitable in a few decades

We really don’t like getting our hands dirty, so.. Why transport oil or refine it when there are others that can do it for us?

ExxonMobil Market OfferingSegmentation,

Targeting & Positioning

• Power generation (40% expected growth rate)• Countries that cuts back nuclear power

(Germany & Japan)• Industrial customers

Customer Value

• The products are commodities, hard to differentiate

• Value is added by bonus products and supplementary products

Marketing Mix:

• Product - As many marketing networks as possible, retailers (19000 stations)

• Price - price premium for specialty chemical products• Promotion - a shift to cleaner energy is expected• Place - Increasingly look for opportunities in the emerging

economies of Asia and Africa

Chevron Joint Ventures2001

• Merged with Texaco to create ChevronTexaco Corporation

• Joint venture with Phillips66 “The chevron Corp. & Phillips Petroleum company”

2005 • Changed name to Chevron Corporation, acquired Unocal Corp. (Union Oil Company Of California)

2006 • Joint venture with Los Alamos National Laboratory

2013• Interest in the joint-venture of Angola LNG,

along with Sonangol with a 22.8% interest and subsidiaries of Total, BP and ENI, each with a 13.6% interest.

• Joint-venture arrangement with the Nigerian National Petroleum Corporation (NNPC).

• Chevron’s China subsidiary has entered into production sharing contracts (PSC) with China National Offshore Oil Corporation (CNOOC)

2011 • Acquiring Atlas energy for 3,2 billion dollars

Chevron Market Offering

The South African Customer Value

The New Zealand Customer Value

Same Products, different continents

What About Norway?• Statoil has operations in 34 countries, and 23000 employees

• Production of 2,1 million barrels per day, operating 7 pipelines

• The 3rd biggest sales company of crude oil in the world

• 500 retail stations in Norway, with a market share of 34%

• Joint agreement with NAF, which gives 500000 members discounts on fuel

• Statoil are marketing 2 gasoline types and 1 type of diesel

• They market bioethanol E85 as well, which consists of 85% ethanol and 15% gasoline

• All the Statoil’s have added up to 5% biofuel to the regular gasoline and 7% to diesel

How Much Of It Do We Have

Why Is CSR So Important?In 1989, the Exxon Valdez spilled 750000 barrels into the ocean, because of an unprofessional crew and insufficient equipment and safety regulations.

20 years after

The Worse Oil Spills In History1

1991 - Gulf War – Kuwait, 10,3 mil. barrels burned by the Iraqis

2

1980 - Ixtoc I Oil Well (owned by PEMEX) – Gulf of Mexico, 3,3 mil. pressure imbalance

3

1979 - Atlantic Empress/Aegean Captain, 2,2 mil. After collision between the 2 ships next to Tobago.

4

1992 - Fergana Valley, Usbekistan, 2,1 mil.

5

1991 Liberia’s tanker ABT Summer, next to Angola, 1,92 mil., an explosion

6

1983 – Norwuz oil field, 1,9 mil. colission with a supertanker.

7

1983 - Castillo de Bellver, Spanish tanker caught fire, 1,8 mil.

8

1978 – Amoco Kadiz, 1,6 mil. Crew lost control of the ship

While Oil Giants Use CSR:Go Green

Monitor Petroleum Companies

Use Green Technologies

Create Safety Regulations

Recycle

Our ConclusionsThe petroleum industry is using one of earth’s resources and is a risk to our future

Petroleum is needed in many other industries and we cannot simply stop using it

It is the mean for motoric activities in so many areas, that we must conclude:

We have no choice but to buy it

It is and will be a vendor’s market

CSR, Market Offerings, PR, and any other mean of being «nice» to us does not matter and is not really needed – they got us in their pockets. The real game is

among themselves, and this is the only thing that matter to them

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