In the last five years, the top five natural resource groups have lost or written off nearly $50bn on bad deals or poor project management; four of these companies' bosses have also lost their jobs. If those statistics aren't remarkable enough, it is even more surprising that these energy majors still seem able to raise money for new ventures.
In the oil business, financial discipline has generally been much tighter. Perhaps the most revealing aspect of the latest Quarterly results is that Chevron has overtaken Shell as the world's second most valuable oil company and has surpassed ExxonMobil as the business with the best return on capital employed.
The change seems to be the result of ExxonMobil’s and Shell’s exposure to gas investments in the US, where shalegas has caused a collapse in the gas price. Chevron is “more oily” than its leading rivals - its production volumes are split about 70/30 between oil and gas, while Exxon last year was 52/48 and Shell was 50/50.
While gas prices are changing the oil business and the economics of energy manufacturing, the internet is transforming all of our lives and especially the retail sector. According to Boston Consulting Group, the UK leads the world. The internet economy now represents 8.3% of GDP, with online retailing forecast to take a 23% of the sector by 2016, double the size of the second market Germany. With over 1.2bn smart devices due to be sold this year, overtaking desktop PCs, customers now expect an omni-channel experience. Lubricants marketers need to be adapting.
These significant changes, which go to the core of many organisations' business operating models, provide both threats and opportunities across all sectors including lubricants.
At OATS we, too, are siezing the opportunity for change and are re-shaping the Bulletin to fit the four main drivers that we see as being critical in defining our role in the Lubricants business: OEM Equipment, Lubricants Technical, Lubes Marketing and Internet Marketing.
From July, we will be structuring the Bulletin to focus on each of these various factors. We will, of course, continue to offer as broad a spectrum of stimulating, interesting and (sometimes) controversial industry news as possible. It will also offer even more relevance to this continually developing sector.
We hope you will find the changes positive. In the meantime, as always, we welcome your continued support and comments, which you can pass on to us by simply clicking here.
Sebastian Crawshaw
Chairman, OATS