The second-quarter results of the oil supermajors make for dismal reading. BP's profit was down 25 per cent, Chevron's 26, ExxonMobil's 57, and Shell's 60 per cent on the same period last year. Lower oil prices did not help, but these figures show that the supermajor model is struggling - with no convincing alternative on the horizon.
The supermajors were created in the time of low oil prices in the late 1990s and early 2000s, with the mergers of Exxon and Mobil, BP with Amoco and Arco, Chevron with Texaco and so on. The premise was that they would cut costs, grow production quickly, take on larger projects and deal more effectively with political risk.
But the supermajor oil companies are struggling to grow. Shell was the latest to abandon giving an explicit target for oil and gas production - already such a misleading aim as to be useless, even dangerous. Its production was down 1 per cent on last year. ExxonMobil produces barely more than it did in 2003, despite buying the American shale producer XTO for US$41 billion in 2010, and planning to invest a further $41bn this year. Total's output grew this quarter, but for the first time in three years.
When they are growing it is in gas, rather than oil. More oil-focused Chevron is the rare exception. Gas reserves are more accessible than oil, but gas prices in the United States are low, and a global glut looms towards the end of this decade. Meanwhile, refining is burdened by overcapacity and drags down earnings - the smallest supermajor, ConocoPhillips, spun off its refining arm entirely last year.
It is fashionable to blame lack of growth on the supermajors' sheer size. But their technical and financial bulk should enable them to compete where others cannot. After all, they still dominate international investment in the Middle East and former Soviet Union.
The failure to grow is instead rooted in the early 2000s. Mass lay-offs then, and a failure to invest in people since, has meant the entire industry is chronically short of skilled staff, leading to rising salaries and poorer project delivery.
Slow moving and locked in the expectation of low oil prices, the supermajors missed the US shale boom and had to buy back in expensively - and into poorer assets, if Shell's writedowns are a guide. Outside the deep-water Gulf of Mexico, their exploration performance has been poor - they are largely absent from giant new finds in east and west Africa, east Mediterranean and the Kurdish region of Iraq.
And the giant oil companies have largely conceded new technology development to the service companies such as Schlumberger. It's still to be seen whether Shell's bold bets on gas-to-liquids, floating LNG and the Arctic will pay off.
The industry has had to realise the limits of its ability to manage political risk. Shell has suffered especially from sabotage in Nigeria; ENI from protests in Libya; BP from its enforced exit from its flagship Russian investment, TNK-BP. It has dawned on both BP and Shell that the US is not immune to political risk - BP complaining over an escalating compensation bill for the 2010 Macondo disaster, Shell being frustrated in plans to drill off Alaska.
The supermajors have not developed a convincing way of managing mature assets. They have neither the attention to detail, nor the low cost-base, for squeezing out the last drops - again, Chevron in California is the exception. This leads to a steady stream of divestments, providing cash at the cost of liquidating the company.
The oil giants need to rediscover their traditional virtues of cost control, project delivery, technological excellence, valuing their people and informed risk-taking. If they cannot, pressure will swell for a more radical reincarnation for the next decade - as gas majors, sleeker and smaller companies, or something entirely new.
Robin Mills is the head of consulting at Manaar Energy, and author of The Myth of the Oil Crisis and Capturing Carbon
THE SIXTH SENSE
Starring: Bruce Willis, Toni Collette, Hayley Joel Osment
Director: M. Night Shyamalan
Rating: 5/5
Indian origin executives leading top technology firms
Sundar Pichai
Chief executive, Google and Alphabet
Satya Nadella
Chief executive, Microsoft
Ajaypal Singh Banga
President and chief executive, Mastercard
Shantanu Narayen
Chief executive, chairman, and president, Adobe
Indra Nooyi
Board of directors, Amazon and former chief executive, PepsiCo
The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
Fuel consumption: 11.2L/100km
On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
Company profile
Date started: 2015
Founder: John Tsioris and Ioanna Angelidaki
Based: Dubai
Sector: Online grocery delivery
Staff: 200
Funding: Undisclosed, but investors include the Jabbar Internet Group and Venture Friends
UAE currency: the story behind the money in your pockets
Mohammed bin Zayed Majlis
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
UAE currency: the story behind the money in your pockets
What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
Report to local authorities
Warn others to prevent further harm
Courtesy: Crystal Intelligence
Company profile
Name: Dukkantek
Started: January 2021
Founders: Sanad Yaghi, Ali Al Sayegh and Shadi Joulani
Based: UAE
Number of employees: 140
Sector: B2B Vertical SaaS(software as a service)
Investment: $5.2 million
Funding stage: Seed round
Investors: Global Founders Capital, Colle Capital Partners, Wamda Capital, Plug and Play, Comma Capital, Nowais Capital, Annex Investments and AMK Investment Office
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
Business Insights
- As per the document, there are six filing options, including choosing to report on a realisation basis and transitional rules for pre-tax period gains or losses.
- SMEs with revenue below Dh3 million per annum can opt for transitional relief until 2026, treating them as having no taxable income.
- Larger entities have specific provisions for asset and liability movements, business restructuring, and handling foreign permanent establishments.
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
Secret Pigeon Service: Operation Colomba, Resistance and the Struggle to Liberate Europe
Gordon Corera, Harper Collins
