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GLOBAL TOP 10 ENERGY COMPANIES INDUSTRY, FINANCIAL AND SWOT ANALYSIS

Reference Code: DBEN0735 Publication Date: June 2009

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Table of Contents

TABLE OF CONTENTS
Table of Contents Executive Summary Industry analysis Industry definition Research highlights Market Value Value Market Share Share Market SegmentationProduct Product Market SegementationGeography Geography Five Forces Analysis Summary Buyer power Supplier power New entrants Substitutes Rivalry Top 10 Companies Landscape TOP 10 COMPANIES LANDSCAPE Revenue analysis Financial performance analysis Company Reports Exxon Mobil Corporation Royal Dutch Shell Plc BP Plc Chevron Corporation TOTAL S.A. 2 6 6 6 6 7 7 8 8 9 9 10 10 11 11 12 14 16 18 19 21 21 25 26 31 31 40 49 60 69

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ConocoPhillips China Petroleum & Chemical Corporation (Sinopec) Eni SpA PetroChina Company Limited OAO Gazprom Financial Analysis Exxon Mobil Corporation Royal Dutch Shell Plc BP Plc Chevron Corporation TOTAL S.A. ConocoPhillips China Petroleum & Chemical Corporation (Sinopec) Eni SpA PetroChina Company Limited OAO Gazprom APPENDIX 81 89 96 105 112 121 121 124 127 130 133 136 139 142 145 148 151

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Table of Contents

TABLE OF FIGURES
Figure 1: Global energy industry, $ billion, 200408 Figure 2: Global Energy Industry Shareby value, % share, 2008 Figure 3: Global energy industry segmentationproduct, % share, 2008 Figure 4: Global energy industry segmentationgeography, % share, 2008 Figure 5: Forces driving competition in the global energy industry Figure 6: Drivers of buyer power in the global energy industry Figure 7: Drivers of supplier power in the global energy industry Figure 8: Factors influencing the likelihood of new entrants in the global energy industry Figure 9: Factors influencing the threat of substitutes in the global energy industry Figure 10: Drivers of degree of rivalry in the global energy industry Figure 11: Turnover of global top 10 energy companies, $ million, FY2008 Figure 12: Revenue growth of global top 10 energy companies, 200608 Figure 13: Operating profit analysis, FY2008 Figure 14: Net profit analysis, FY2008 7 8 9 10 11 12 14 16 18 19 22 26 27 28

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Table of Contents

TABLES

Table 1: Global energy industry, $ billion, 200408

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Executive Summary

EXECUTIVE SUMMARY Industry analysis


The global energy industry, which consists of the oil, gas, coal and consumable fuels, and the energy equipment and services industries, has witnessed strong growth between 2004 and 2008. The industry is set to decline in 2009. However, fast recovery is predicted and the market is expected to stabilize towards 2013. The global energy industry generated total revenues of $10,273 billion in 2008, representing a compound annual growth rate (CAGR) of 25.5% for the period spanning 2004-2008. The Americas and Asia-Pacific industries reached respective values of $3,424 billion and $2,771 billion in 2008. Oil, gas, and consumable fuels sales proved the most lucrative for the global energy industry in 2008, generating total revenues of $10,021 billion, equivalent to 97.6% of the industry's overall value. In comparison, sales of energy equipment and service generated revenues of $251.6 billion in 2008, equating to 2.4% of the industry's aggregate revenues. The performance of the industry is forecast to decelerate, with an anticipated compound annual rate of change (CARC) of -0.5% for the five-year period 2008-2013, which is expected to drive the industry to a value of $10,040 billion by the end of 2013.

Industry definition
The global energy industry consists of the total revenues generated through the exploration, production, refining, marketing, storage, and transportation of oil and gas; the provision of equipment and services to the oil and gas industry; and the sale of coal for industry and power generation. For the purpose of this report, the Americas comprise Brazil, Canada, Mexico, and the US. Europe comprises Belgium, the Czech Republic, Denmark, France, Germany, Hungary, Italy, the Netherlands, Norway, Poland, Russia, Spain, Sweden, and the UK. Asia Pacific comprises Australia, China, Japan, India, Singapore, South Korea, and Taiwan. The global figure comprises the Americas, Asia Pacific, and Europe.

Research highlights
The global energy industry generated total revenues of $10,273 billion in 2008. Oil, gas, and consumable fuels sales proved the most lucrative for the global energy industry in 2008, generating total revenues of $10,021 billion. An anticipated compound annual rate of change (CARC) of -0.5% for the five-year period 2008-2013 is expected to drive the industry to a value of $10,040 billion by the end of 2013. * Currency conversions calculated using constant 2008 annual average exchange rates.

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Market Value

MARKET VALUE Value


The global energy industry grew by 39.4% in 2008 to reach a value of $10,272.8 billion. The CAGR of the industry over the period 2004-2008 was 25.5%. Table 1: Global energy industry, $ billion, 200408 Year 2004 2005 2006 2007 2008 CAGR, 200408 Source: Datamonitor $ billion 4,141.3 5,589.1 6,400.2 7,366.8 10,272.8 Growth (%)
35.0 14.5 15.1 39.4

25.5
DATAMONITOR

Figure 1: Global energy industry, $ billion, 200408

12,000

45.0 40.0

10,000 35.0 8,000 $ billion 30.0 Growth (%) 25.0 6,000 20.0 4,000 15.0 10.0 2,000 5.0 0 2004 2005 2006 Year $ billion
Source: Datamonitor

0.0 2007 2008

% Growth
DATAMONITOR

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Market Share

MARKET SHARE Share


Exxon Mobil Corporation accounts for 4.6% of the global energy industry's value. Royal Dutch Shell holds a further 4.5% of the industry's value. Table 2: Global energy industry shareby value, % share, 2008 Company Exxon Mobil Corporation Royal Dutch Shell BP Others TOTAL Source: Datamonitor Share (%)
4.60 4.50 3.60 87.30

100.00
DATAMONITOR

Figure 2: Global Energy Industry Shareby value, % share, 2008

Exxon Mobil Corporation 4.6%

Royal Dutch Shell 4.5% BP 3.6%

Others 87.3%

Source: Datamonitor

DATAMONITOR

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Market SegmentationProduct
MARKET SEGMENTATIONPRODUCT Product
Oil, gas, and consumable fuels is the largest segment of the energy industry, generating 97.6% of the industry's value. In comparison, the energy equipment and services segment accounts for the remaining 2.4% of the industry's value.

Table 3: Global energy industry segmentationproduct, % share, 2008 Category Oil, Gas, and Consumable Fuels Energy Equipment and Services TOTAL Source: Datamonitor Share (%)
97.6 2.4

100.0
DATAMONITOR

Figure 3: Global energy industry segmentationproduct, % share, 2008

Energy Equipment and Services 2.4%

Oil, Gas and Consumable Fuels 97.6%

Source: Datamonitor

DATAMONITOR

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Market SegementationGeography

MARKET SEGEMENTATIONGEOGRAPHY Geography


The Americas is the largest energy region, accounting for 33.3% of the global industry's value. Asia-Pacific accounts for a further 27% of the global industry's value. Table 4: Global energy industry segmentationgeography, % share, 2008 Category Americas Asia Pacific Europe Rest of the World TOTAL Source: Datamonitor Share (%)
33.30 27.00 24.30 15.40

100.00
DATAMONITOR

Figure 4: Global energy industry segmentationgeography, % share, 2008

Rest of the World 15.4% Americas 33.3%

Europe 24.3%

Asia Pacific 27.0%

Source: Datamonitor

DATAMONITOR

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Five Forces Analysis

FIVE FORCES ANALYSIS Summary

Figure 5: Forces driving competition in the global energy industry

Source: Datamonitor

DATAMONITOR

The global energy industry is fragmented with a substantial number of companies. The industry comprises large, diversified international companies, which appear as both buyers and players within different sectors as their operations are highly integrated. Buyer power is boosted by large size of buyers and their financial strength as well as lack of product differentiation. However, the high importance associated with the usage of oil, gas, and coal tends to weaken buyers strength. The companies could operate in one or more parts of the supply chain. The entry to the industry is limited by existence of scale economies, and significant regulatory environment. Although alternative energy sources could act as substitutes, the cost of switching towards those weakens the threat posed.

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Five Forces Analysis

Buyer power

Figure 6: Drivers of buyer power in the global energy industry

Source: Datamonitor

DATAMONITOR

Energy firms, national petroleum companies, and independent operators appear on buyers side within the global energy equipment and services industry. The buyer power is strong within the global oil and gas exploration and production sector. Amongst buyers there are individuals as well as institutional end users able to make large purchases. Commodities such as crude oil or natural gas are relatively undifferentiated products. The set price of these commodities effectively ameliorates buyer power. Buyer power with respect to the global oil and gas refining and marketing sector is moderate. The sheer number of buyers, both individual and institutional and the importance of oil and gas product to end-users weaken the buyer power within the sector. Buyers within the global oil and gas storage and transportation sector are in the majority large diversified oil and gas companies, which often incorporate gas transportation and storage activities. Such independence tends to boost buyer power. However, pipeline infrastructure is such that in certain regions, oil and gas producers have no option but to use a particular pipeline, which lowers buyer power.

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Five Forces Analysis

The power generation companies which are major buyers of coal are also large sized and have strong financial muscle. The buyers could easily switch to a different provider due to lack of product differentiation and brand loyalty. These factors tend to strengthen buyer power to some extent. However, the importance of the product offered within the market to the success of the buyers' businesses dilutes this power somewhat. Overall buyer power with respect to the global energy industry is assessed as strong.

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Five Forces Analysis

Supplier power

Figure 7: Drivers of supplier power in the global energy industry

Source: Datamonitor

DATAMONITOR

Major suppliers to the global energy industry are oil and gas equipment and services providers, landowners, as well as those who provide the raw materials used in the construction of rigs. Typically, oil and gas equipment and services providers are large, highly diversified companies and this therefore affords them greater bargaining power within the sector. Baker Hughes, for example, has a wide product portfolio catering to the worldwide oil and natural gas industry. Such suppliers are small in number, which combined with high demand from the oil and gas industry, enhances their supplier power. Amongst the suppliers within the global coal and consumable fuels market there are specialist equipment providers, human resources providers, as well as landowners or governments. Some of them may exert strong bargaining power due to their size. Some energy industry inputs (like steel) can be sourced from numerous suppliers and supplier power will therefore be proportionately weakened. However, other inputs are more specific to the industry and suppliers will have greater power in the sense that fewer companies will deal in these materials (for example, suppliers of industrial diamonds). While there are a sheer number of companies providing specialist equipment, it may be more difficult to assure adequate reserves, as coal and metal ores are nonrenewable. This means that major landowners, governments, and similar bodies can be viewed as suppliers, and these may be in a strong position. The year 2008 experienced increased demand for specialist equipment and services as commodity prices went sky high which pushed drilling companies to explore commodities deposits previously deemed too costly, boosting suppliers revenues. However, many larger oil and gas companies have backward integrated oil and gas services operations, and

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Five Forces Analysis

use third-party services companies to supplement their own activities. This, combined with the high importance of the oil and gas industry to supplier revenues, reduce the supplier power of oil equipment and services companies. Overall supplier power with respect to the global energy industry is assessed as strong.

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Five Forces Analysis

New entrants

Figure 8: Factors influencing the likelihood of new entrants in the global energy industry

Source: Datamonitor

DATAMONITOR

Analysis of the threat of new entrants into the global energy industry is complicated by the fact that it is possible for companies to operate in one or more parts of the supply chain. Within the oil, gas and consumable fuels industry, the leading players are oil companies, namely: Exxon Mobil Corporation, Royal Dutch Shell, BP, or Chevron Corporation typically large, highly vertically-integrated, multinational companies, which use the large scale of their production and distribution networks to reduce costs and enhance profitability. The energy equipment and services industry is dominated by players such as Schlumberger, Halliburton, Baker Hughes or Transocean who appear as suppliers to oil, gas, and consumable fuels industry. Such players have invested heavily in their fleets of drilling rigs, other equipment, and technology, including product innovation. The presence of such powerful incumbents acts as a significant barrier to entry and the need for substantial initial investment to set up facilities such as drilling rigs also reduces the threat of new companies establishing themselves in this sector. There is also a significant regulatory environment within the oil and gas industry, which is restrictive to the entry of players into the industry. Permission to explore new fields and extract oil and gas is generally depended on national governments, and obtaining it may be a lengthy process. There are also regulations surrounding taxation and restrictions regarding environmental impact. Good sector growth however, lures new players to enter. The 2008 experienced the biggest rally in fuel prices in eight years. The strong recovery in gas and oil prices has prompted producers to accelerate their drilling activities.

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Five Forces Analysis

The gas refining and marketing sector in many countries is unbundled, with companies typically involved either in production, supply infrastructure, or marketing. Gas production and refining is typically integrated with that of oil and therefore has equivalent barriers to entry. With respect to gas marketing, the lack of switching costs for end-users, combined with the increasing popularity of energy provider switching, increases opportunities for the entrance of new companies. Major players within the coal and consumable fuels sector are large multinational mining companies. Such companies can leverage the large economies of scale found in bulk coal production to minimize the per unit selling price for coal. Smaller companies within the market may therefore struggle to compete with them successfully, which promotes consolidation within the industry. The assets required for coal mining are also considerable including a large amount of specialized machinery, which constitutes a considerable barrier to entrance. In addition, the logistics of coal mining including the prohibitive start-up costs for a mine and the relative rarity of viable coal provide further barriers to entry. Overall the threat of new entrants is assessed as moderate within the global energy industry.

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Five Forces Analysis

Substitutes

Figure 9: Factors influencing the threat of substitutes in the global energy industry

Source: Datamonitor

DATAMONITOR

The alternative energy sources (those other than oil and gas such as nuclear, solar, coal, and wind) can be considered as substitutes in the global energy industry. Such substitutes can be seen to offer notable benefits in terms of environmental impact and sustainability. Shifting to renewable energy sources is costly and will take time, which is in short supply the world must reduce its output of carbon dioxide (CO2) by 50 to 85% by 2050. However, currently, the majority of the worlds energy production takes place with the use of non-renewable sources, primarily oil, gas, and coal, and the consequently high cost of switching weakens the threat posed by the substitutes. There are no apparent direct substitutes for oil and gas storage and transportation. However, if oil and gas resources are developed nearer to target markets, then the requirement for storage and transportation services will be reduced. There are several substitutes for coal and consumable fuels within the power generation market like nuclear fuels and other alternative energy sources. However, while power companies can alter their primary energy mix to a small extent without incurring many costs, a thoroughgoing transition to these substitutes would require investment in different generation facilities, which constitutes a very high switching cost. Overall, the threat of substitutes within the global energy industry is weak but still growing.

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Five Forces Analysis


Rivalry

Figure 10: Drivers of degree of rivalry in the global energy industry

Source: Datamonitor

DATAMONITOR

The threat of competition is strong within different sectors of the global energy industry. Major players are large vertically integrated multi-national companies such as BP, Exxon Mobil Corporation, and Royal Dutch Shell with respect to oil, gas, and consumable fuels industry; and Schlumberger, Halliburton, Baker Hughes, and Transocean with respect to energy equipment and services industry. Such companies have large scale operations, with few activities in alternative industries, high fixed costs, and high exit barriers. These combine to produce a high level of rivalry. Industry players are similar in the way that they operate and services they provide. However, some companies have specialized in particular locations: SaudiAramco, for example, has a monopoly over upstream oil development in Saudi Arabia. Players like Exxon Mobil Corporation try to diversify scope of their operations, engaging not only in exploration and production, but also refining and marketing of oil and natural gas. The company is also engaged in the production of chemicals, commodity petrochemicals, and electricity generation, and this fact tends to ease variation of operating performance within sole sector. High fixed costs and the high exit barriers created by the need to divest industry specific equipment on leaving the industry both mean that competition within this industry is substantial. Within the storage and transportation sector, however, many pipelines are effectively local-monopolies for oil and gas transportation between particular regions and therefore geographical separation of companies within the sector may lessen rivalry. The coal and consumable fuels market is fragmented with companies such as China Shenhua Energy, Xstrata, BHP Billiton, and Peabody benefiting from scale economies. The mining sector is capital intensive, which constitutes a Global Top 10 Energy Companies
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Five Forces Analysis

significant barrier to entry, and also raises exit costs. There is a tendency towards concentration, with a few multinationals dominating in several segments. Major buyers in this sector are electricity generators. These companies will be on the lookout for cheaper and more effective substitutes for coal and metals, such as oil and gas in the energy industry and players in this sector are therefore constantly contending with the threat of substitutes. Overall, the thereat of competition is strong within the global energy industry.

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Top 10 Companies Landscape

TOP 10 COMPANIES LANDSCAPE TOP 10 COMPANIES LANDSCAPE


The global energy industry is set to decline in 2009. Price increases is likely to be muted by the substantial surplus production capacity held by members of the Organization of the Petroleum Exporting Countries (OPEC), along with very high level of inventories among members of the Organization for Economic Cooperation and Development (OECD). World oil consumption is also expected to remain weak because of the global economic downturn. However, fast recovery is predicted and the market is expected to stabilize towards 2013. In 2008, Exxon Mobil Corporation was the leading player (based on revenues), followed by Royal Dutch Shell and BP.

Table 5: Turnover of global top 10 energy companies, $ million, FY2008


Ranking 1 2 3 4 5 6 7 8 9 10 Company name Exxon Mobil Corporation Royal Dutch Shell Plc BP Plc Chevron Corporation TOTAL S.A. ConocoPhillips China Petroleum & Chemical Corporation (Sinopec) Eni SpA PetroChina Company Limited OAO Gazprom Revenue ($ million) 459,579.0 458,361.0 361,143.0 264,958.0 264,805.9 240,842.0 204,739.3 China 188,107.9 154,405.7 142,130.8 Italy China Russia DATAMONITOR Country US The Netherlands UK US France US

Source: Datamonitor * Currency conversions calculated using constant 2008 annual average exchange rates.

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Top 10 Companies Landscape

Figure 11: Turnover of global top 10 energy companies, $ million, FY2008

500,000 450,000 Revenue ($ million) 400,000 350,000 300,000 250,000 200,000 150,000 100,000 Exxon Mobil Corporation Royal Dutch Shell Plc PetroChina Company Limited BP Plc Chevron Corporation ConocoPhillips China Petroleum & Chemical Corporation (Sinopec) OAO Gazprom
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Source: Datamonitor

TOTAL S.A.

Eni SpA

DATAMONITOR

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Exxon Mobil Corporation


Exxon Mobil Corporation (Exxon Mobil) is engaged in exploration and production, refining, and marketing of oil and natural gas. The company also manufactures and markets commodity petrochemicals and specialty products, and generates electricity. It operates worldwide through three segments: upstream, downstream, and chemicals.

Royal Dutch Shell Plc


Royal Dutch Shell (Shell) is a holding company which owns direct and indirect investments in a number of companies comprising the group. It engages in oil and gas exploration and production, transportation and marketing of natural gas and electricity, and marketing and shipping of oil products and chemicals. Shell has extensive operations in more than 100 countries around the world. It operates through five business segments: oil products, chemicals, gas and power, exploration and production, and oil sands.

BP Plc
BP is one of the largest vertically integrated oil and gas companies in the world, with presence in more than 100 countries across six continents. The company engages in the exploration and production of gas and crude oil, and marketing and trading of natural gas, power, and natural gas liquids. It operates through two reportable business segments: exploration and production; and refining and marketing.

Chevron Corporation
Chevron Corporation (Chevron) is engaged in every aspect of the oil and natural gas industry, including exploration and production, refining, marketing and transportation, chemicals manufacturing and sales, geothermal, mining operations, and power generation. It has operations in more than 100 countries including the US. Chevron operates through four business divisions: upstream, downstream, chemicals, and all others.

TOTAL S.A.
TOTAL is engaged in all aspects of the petroleum industry, including upstream and downstream operations. It is also involved in the chemicals, coal mining, and power generation businesses. The company has operations in more than 130 countries. TOTAL operates through three business segments: upstream, downstream, and chemicals.

ConocoPhillips
ConocoPhillips is an international, integrated energy company which owns assets and businesses in nearly 40 countries. The company is engaged in the exploration and production of petroleum, natural gas, chemicals, and polymers businesses. It operates through six segments: exploration and production (E&P), midstream, refining and marketing (R&M), LUKOIL Investment, chemicals, and emerging businesses.

China Petroleum & Chemical Corporation (Sinopec)


China Petroleum & Chemical Corporation (Sinopec) is a vertically integrated energy and chemical company which operates through more than 80 subsidiaries and branches mainly located in China. It is primarily engaged in the upstream, Global Top 10 Energy Companies
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Top 10 Companies Landscape

midstream, and downstream operations. Sinopec primarily operates through five principal business segments: exploration and production, refining, marketing and distribution, chemicals, and the corporate and others segment.

Eni SpA
Eni, an integrated energy company, engages in the oil and gas exploration and production, refining and marketing, electricity generation, natural gas distribution, petrochemicals, oilfield services, and engineering industries. The company operates in about 70 countries. It generates revenues through seven segments: exploration and production, refining and marketing, gas and power, engineering and construction, petrochemicals, corporate and financial companies, and other activities.

PetroChina Company Limited


PetroChina engages in a range of activities related to petroleum and natural gas, including exploration, development, and production and sales of crude oil and natural gas; and refining, transportation, storage, and marketing of crude oil and petroleum products. The company is controlled by China National Petroleum Corporation (CNPC). It operates through five business segments: exploration and production, refining and marketing, chemicals and marketing, natural gas and pipeline, and others.

OAO Gazprom
Gazprom, a vertically integrated energy company, is one of the largest gas producing companies in the world. The companys core activities include exploration, production, transportation, processing, and marketing of natural gas, as well as refining and production of crude oil and gas condensate. The company which has strong presence in Europe operates through six business segments: production of gas, transportation of gas, distribution of gas, refining, production of crude oil and gas condensate, and other.

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Top 10 Companies Landscape

Revenue analysis

Table 6: Revenue growth of global top 10 energy companies, 200608


Revenues ($ million) Company name Exxon Mobil Corporation Royal Dutch Shell Plc BP Plc Chevron Corporation TOTAL S.A. ConocoPhillips China Petroleum & Chemical Corporation (Sinopec) Eni SpA PetroChina Company Limited OAO Gazprom Source: Datamonitor 2006 365,467.0 318,845.0 265,906.0 204,892.0 226,295.0 183,650.0 149,179.1 2007 390,328.0 355,782.0 284,365.0 214,091.0 233,578.2 187,437.0 169,213.2 2008 459,579.0 458,361.0 361,143.0 264,958.0 264,805.9 240,842.0 204,739.3 CAGR (200608) (%) 12 20 17 14 8 15 17

155,347.0 99,316.0 86,923.8

156,596.2 120,560.3 97,874.9

188,107.9 154,405.7 142,130.8

10 25 28 DATAMONITOR

* Currency conversions calculated using constant 2008 annual average exchange rates. The top 10 global energy companies have witnessed a robust revenue growth during 200608. Gazprom recorded the highest revenue growth, at a CAGR of 28%. The increase in revenues was primarily due to increase in revenues from all of its business segments. Similarly, the revenues of PetroChina increased at a CAGR of 25%. However, the revenues of TOTAL increased only at a CAGR of 8% during the same period, primarily due to decline in production of gasoline.

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Top 10 Companies Landscape

Figure 12: Revenue growth of global top 10 energy companies, 200608

30.0 25.0 CAGR % (2006-08) 20.0 15.0 10.0 5.0 0.0 Exxon Mobil Corporation Royal Dutch Shell Plc PetroChina Company Limited BP Plc Chevron Corporation ConocoPhillips China Petroleum & Chemical Corporation (Sinopec) 12 20 17 14 8 15 17 25

28

10

Source: Datamonitor

DATAMONITOR

Financial performance analysis

Table 7: Key financials of global top 10 energy companies, FY2008


Company name Exxon Mobil Corporation Royal Dutch Shell Plc BP Plc Chevron Corporation TOTAL S.A. ConocoPhillips China Petroleum & Chemical Corporation (Sinopec) Eni SpA PetroChina Company Limited OAO Gazprom Operating profit ($ million) 84,070.0 50,989.0 36,347.0 43,057.0 34,851.6 32,241.0 4,053.9 OPM (%) 18.29 11.12 10.06 16.25 13.16 13.39 1.98 Net profit ($ million) 45,220.0 26,277.0 21,157 23,931.0 15,581.5 (16,998.0) 4,291.2 NPM (%) 10.20 5.78 6.00 9.07 6.09 -7.03 1.84

27,427.2 22,963.1 50,903.8

14.58 14.87 35.81

12,984.6 16,495.2 30,006.9

7.48 11.82 21.92 DATAMONITOR

Source: Datamonitor Global Top 10 Energy Companies


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OAO Gazprom

TOTAL S.A.

Eni SpA

Top 10 Companies Landscape

* Currency conversions calculated using constant 2008 annual average exchange rates.

Operating profit analysis

Figure 13: Operating profit analysis, FY2008

90000.0 80000.0 Operating profit ($ million) 70000.0 60000.0 50000.0

40 35 30 25 20 OPM (%)

40000.0 30000.0 20000.0 10000.0 0.0 Exxon Mobil Corporation Royal Dutch Shell Plc ConocoPhillips OAO Gazprom Chevron Corporation China Petroleum & Chemical TOTAL S.A. PetroChina Company Limited BP Plc Eni SpA 15 10 5 0

Operating profit ($ million)


Source: Datamonitor

OPM (%)
DATAMONITOR

Operating margin is a measurement of what proportion of a company's revenue remains after paying for variable costs of production such as wages, raw materials, and so on. A healthy operating margin is required for a company to be able to pay for its fixed costs, such as interest on debt. Gazprom recorded the highest operating margin of 35.81% in FY2008. In contrast, China Petroleum & Chemical Corporation (Sinopec) recorded an operating margin of only 1.98% during the same period. A low operating margin indicates scope for improving cost structure.

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Top 10 Companies Landscape

Net profit analysis

Figure 14: Net profit analysis, FY2008

50000.0 40000.0 30000.0 Net profit ($ million) 20000.0

25.00

20.00

15.00

10.00 10000.0 5.00 0.0 Exxon Mobil Corporation Royal Dutch Shell Plc ConocoPhillips OAO Gazprom Chevron Corporation China Petroleum & Chemical TOTAL S.A. PetroChina Company Limited BP Plc Eni SpA -10000.0 -20000.0 -30000.0 0.00

NPM (%)

-5.00

-10.00

Net profit ($ million)


Source: Datamonitor

NPM (%)
DATAMONITOR

The net profit margin indicates how much profit a company makes for every $1 it generates in revenue. Gazprom recorded the highest net profit margin of 21.92% in FY2008. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. On the other hand, ConocoPhillips recorded a negative net margin of 7.03% during the same period. A low net profit margin suggests need for optimizing capital structure.

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Top 10 Companies Landscape

Ratio analysis
Table 8: Key industryspecific ratios
Company name Exxon Mobil Corporation Royal Dutch Shell Plc BP Plc Chevron Corporation TOTAL S.A. ConocoPhillips China Petroleum & Chemical Corporation (Sinopec) Eni SpA PetroChina Company Limited OAO Gazprom Current ratio 1.47 1.10 0.95 1.15 1.37 1.05 0.60 1.05 0.85 1.63 ROA (%) 19.24 9.52 9.11 15.44 9.14 -10.60 3.97 8.09 10.12 10.64 D/E ratio 0.08 0.18 0.36 0.10 0.49 0.50 0.50 0.46 0.16 0.29 Inventory turnover 25.41 15.51 13.66 28.37 9.47 39.03 12.24 13.20 6.52 3.52 DATAMONITOR

Source: Datamonitor

Current ratio
Current ratio indicates a company's ability to meet short-term debt obligations. If the current assets of a company are more than twice the current liabilities, then the company is generally considered to have good short-term financial strength. This implies that in the short-term, Gazprom, which recorded a current ratio of 1.63 times in FY2008, is financially much stronger when compared to the other players in the industry. PetroChina and China Petroleum & Chemical Corporation (Sinopec), meanwhile, which recorded current ratios of 0.85 and 0.60 times, respectively, may have problems meeting their short-term obligations.

Return on assets (ROA)


ROA gives an indication as to how efficient management is at using its assets to generate earnings. A higher ROA indicates the effectiveness of the company to generate profits from the assets employed. Exxon Mobil Corporation recorded the highest ROA of 19.24% in FY2008. This implies that the company is better at converting its investment into profit. In contrast, ConocoPhillips recorded the negative ROA of 10.6% in FY2008 among the top players in the industry. A weak ROA indicates the need for utilizing the assets of the company more effectively to generate income.

Debt/equity ratio (D/E ratio)


D/E ratio is a measure of a company's financial leverage. It indicates what proportion of equity and debt the company is using to finance its assets. Both Sinopec and ConocoPhillips had the highest D/E ratio of 0.5 times in FY2008. A high debt/equity ratio generally means that a company has been financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense. In comparison, Exxon Mobil Corporations D/E ratio was 0.08 times in FY2008, indicating that the company is exposing itself to a large amount of equity.

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Inventory turnover ratio


Inventory turnover ratio represents how many times a company's inventory is sold and replaced over a period. Gazprom recorded the lowest inventory turnover ratio of 3.52 times in FY2008, implying poor sales and, therefore, excess inventory. As inventories are the least liquid form of asset, a high inventory turnover ratio is generally positive. However, ConocoPhillips unusually high inventory turnover ratio compared to the industry average could mean ineffective buying. High inventory levels are unhealthy because they represent an investment with a rate of return of zero. It also opens the company up to trouble should prices begin to fall.

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COMPANY REPORTS Exxon Mobil Corporation


Company overview
Exxon Mobil Corporation (Exxon Mobil) is an integrated oil and gas company based in the US. It is engaged in exploration and production, refining, and marketing of oil and natural gas. The company is also engaged in the production of chemicals, commodity petrochemicals, and electricity generation. The company operates across the globe. It is headquartered in Irving, Texas and employs about 80,000 people. The company recorded sales and operating revenues of $459,579 million (includes sales-based taxes of $34,508 million) in the financial year ending December 2008 (FY2008), an increase of 17.7% over the financial year ending December 2007 (FY2007). The operating profit of the company was $84,070 million in the FY2008, an increase of 17% over FY2007. The net profit was $45,220 million in the FY2008, an increase of 11.4% over FY2007.

Business description
Exxon Mobil Corporation (Exxon Mobil) is engaged in exploration and production of crude oil and natural gas, manufacture of petroleum products, and transportation and sale of crude oil, natural gas, and petroleum products. The company also manufactures and markets commodity petrochemicals and specialty products. Exxon Mobil is also engaged in electric power generation. The company operates across the globe. Exxon Mobil operates through three segments: upstream, downstream, and chemicals. The upstream segment explores for and produces crude oil and natural gas. The company's upstream business has operations in 36 countries and includes five global companies. These companies are responsible for the corporation's exploration, development, production, gas and power marketing, and upstream-research activities. The company's upstream portfolio includes operations in the US, Canada, South America, Europe, the Asia-Pacific, Australia, the Middle East, Russia, the Caspian, and Africa. At the end of FY2008, the company had net reserves of 7,576 million barrels of oil and 31,402 million cubic feet of natural gas. The company had 16,558 of crude oil and 9,387 of natural gas net production wells at the end of FY2008. Exxon Mobils net exploration acreage totaled 73 million acres in 33 countries at the end of the same period. The company is also engaged in power generation. Exxon Mobil has interests in electric power generation facilities with total capacity of 16,000 megawatts (MW). The company's downstream activities include refining, supply, and fuels marketing. The company's refining and supply business focuses on providing fuel products and feedstock. Exxon Mobil manufactures clean fuels, lubes, and other highvalued products. At the end of FY2008, the company had interests in 37 refineries across 20 countries, with distillation capacity of 6.2 million barrels per day and lubricant basestock manufacturing capacity of 140 thousand barrels per day. The company has interests in 12 lubricant refineries and manufactures three brands of finished lubricants (Exxon, Mobil,

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and Esso) through interests in over 31 blending plants. In FY2008, Exxon Mobil's refinery throughput was 5.4 million barrels per day. The fuels marketing business operates throughout the world. The Exxon, Mobil, Esso, and On the Run brands serve motorists at nearly 29,000 service stations and provide over one million industrial and wholesale customers with fuel products. Fuel products and services are provided to aviation customers at more than 630 airports and to marine customers at more than 180 marine ports around the world. The company supplies lube base stocks and markets finished lubricants and specialty products. The chemicals division manufactures and sells petrochemicals. Exxon Mobil Chemical is an integrated manufacturer and global marketer of olefins, aromatics, fluids, synthetic rubber, polyethylene, polypropylene, oriented polypropylene packaging films, plasticizers, synthetic lubricant base stocks, additives for fuels and lubricants, zeolite catalysts, and other petrochemical products.

SWOT analysis Strengths


Leading market position

Exxon Mobil is the worlds largest publicly traded integrated petroleum and natural gas company with market capitalization of $337,236.8 million as on May 15, 2009. The company operates in more than 200 countries under the names Exxon Mobil, Exxon, Esso, and Mobil. The company holds exploration and production acreage in 36 countries and production operations in 24 countries around the world. In 2008, eight major upstream projects started production. The total oil and gas production available for sale averaged 3.9 million oil-equivalent barrels per day in 2008. Exxon Mobil has interests in 37 refineries located in 20 countries and markets its products through more than 29,000 retail service stations. In 2008, refinery throughput averaged 5.4 million barrels per day, and petroleum product sales were 6.8 million barrels per day. Exxon Mobil is the leading global supplier of lube basestocks and marketing finished lubricants, asphalt, and specialty products. Exxon Mobil leads the petrochemical industry with interests in 49 wholly-owned and jointventure facilities around the world. Leading market position across key product lines gives the company a competitive edge with a strong brand image. Diversified revenue stream

Exxon Mobil has wide presence across various regions. The companys revenue stream is diversified in terms of geographies. Exxon Mobil divides its geographic divisions as US and non-US. The non-US region covers the countries of Japan, Canada, the UK, Germany, Belgium, Italy, Norway, and France. In FY2008, the company generated 29.9% of the total sales and operating revenues from the US, its core market. Revenues from Canada accounted for 7.3%, revenues from Japan accounted for 6.6%, and revenues from the UK accounted for 6.5% of the total revenues. Belgium contributed 5.5% to the total revenues, Germany 4.5%, France 4%, Global Top 10 Energy Companies
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Italy 3.9%, and the revenues from Norway accounted for 2.7%. Other countries accounted for 31.3% of the remaining revenues. The companys global operations and regional brand identity gives it competitive advantage over its competitors and also indicates that the company has a wider scope in increasing its revenues by utilizing its global presence. Further, its world wide presence reduces exposure to economic conditions or political stability in any once country or region. Steady financial performance

Over the years, Exxon Mobil has delivered consistent financial results. The sales and other operating revenues of the company have increased at a CAGR of 12% during FY2004-FY2008 from $291.2 billion in FY2004 to $459.6 billion in FY2008. Further, the revenues increased at a rate of 17.7% in FY2008 over FY2007. The companys profits have followed a similar trend. The net profit of the company increased at a CAGR of 16% during FY2004-FY2008, from $25.3 billion in FY2004 to $45.2 billion in FY2008. The net profit increased by 11.4% in FY2008 over FY2007. Steady financial performance enables the company to manage its operations well and also increases the financial flexibility of the company. Strong R&D capabilities

Exxon Mobil has strong research and development (R&D) capability. The company conducts research to develop new products and improve existing products, as well as to enhance manufacturing and production methods and improve service. It spent $847 million on R&D in FY2008. R&D expenses in previous years were $814 million in FY2007, $733 million in FY2006, $712 million in FY2005, and $649 million in FY2004. Because of its strong R&D capabilities, the company, for instance, in April 2008 introduced Metallyte UBW-ES, a new OPP film for flexible packaging. This sealant technology is a breakthrough for oriented polypropylene (OPP) films as it provides excellent seal strength (1500 g/2.5cm), seal integrity, and the ability to seal through product contamination in the seal area, as compared to traditional OPP films. Further in 2008, Exxon Mobil Chemical Company introduced a new product, Enable mPE, with the potential to significantly reduce waste and energy consumption across a wide variety of film applications. Enable mPE makes packaging easier for shipping and storing bottled water, beverages, canned goods, hand soaps, detergents, health products, and beauty aids. In April 2009, ExxonMobil Chemical applied its proprietary catalyst hydrogenation technology to produce ultra-low aromatic (ULA) fluids that comply with the most stringent environmental and regulatory requirements. In the following month, ExxonMobil Chemical developed two new grades of V series co-extruded battery separator films, which enhanced safety for hybrid and electric vehicles, power tools and electronic devices including laptop computers. The company's strong R&D capabilities provide it with a competitive advantage and help it to innovate and launch new products.

Weaknesses
Legal proceedings

Exxon Mobil is involved in many legal proceedings. In October 2008, the company was fined by the European Commission along with eight other petrochemical companies for price fixing of paraffin wax. Exxon Mobil was fined E83.6 million Global Top 10 Energy Companies
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(approximately $123 million). In June 2008, Exxon Mobil was sued by the attorney of San Francisco. The company faced an allegation that it failed to clean up hazardous pollutants from a fueling depot at Fisherman's Wharf. Mobil Oil operated a fueling facility at Fisherman's Wharf between 1938 and 1992. The suit alleges that Exxon Mobil's neglect has contaminated the soil, groundwater, tidal water, and sediment of San Francisco Bay. The suit demands that Exxon clean the site and pay the damages. In another incident, a resident of Linden claimed to contract a rare form of stomach cancer as a result of conditions at the Bayway Refinery in Linden. This refinery was formerly owned by Exxon Mobil. The jury found Exxon Mobil responsible for the cancer called peritoneal mesothelioma. The company paid $7.5 million as damages. Such cases result in huge penalties and can have adverse effects on the companys profitability. Employee unrest

The workers of Mobil Producing Nigeria (MPN), an affiliate of Exxon Mobil, went on a strike in April 2008 over pay and working conditions. Exxon Mobil, the largest oil producer in Nigeria, produces about 800,000 barrels per day in a joint venture with the state. The company's equity share is around 427,000 bpd. The eight day strike by workers resulted in the stoppage of the full production of 800,000 barrels per day and forced the company to declare force majeure on its shipments. Therefore, the company could not fulfill contractual obligations to clients. The strike resulted in a decline of the Exxon Mobils oil production by more than half. Further, in May 2008, port workers of Exxon Mobil carried out a strike at the Los Angeles-area refinery in Torrance, California. Such employee actions adversely affect the operations of the company and result in decline in the productivity. Declining production in the US

The upstream division in the US has recorded a consistent decline in its production volumes. The crude oil and natural gas liquid production volumes in the region have been declining since FY2004. The net liquid production has declined at a CAGR of 10% from 557,000 barrels per day in FY2004 to 367,000 barrels per day in FY2008. The company recorded a 6.4% decline in its net liquid production in FY2008 compared with FY2007. A similar trend is noticed in the natural gas production volumes. The natural gas production has declined at a CAGR of 11% from 1,947,000 barrels per day in FY2004 to 1,246,000 barrels per day in FY2008. The company recorded a 15.1% decline in its natural gas production in FY2008 compared with FY2007. A continuation of this trend is likely to have an adverse impact on the company's revenue growth rates.

Opportunities
Increasing demand for refined products in Asia

Over the next 10 years, the company expects about 60% percent of the worlds petrochemical demand growth to occur in Asia, with more than one-third in China alone. The demand for refined petroleum products in China is expected to rise

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sharply in the coming decades. China, despite substantial additions to refining capacity over the next three decades, is expected to remain a net importer of refined products in 2030. The refining capacity in China is forecast to increase from 6.2 million barrels per day in 2006 to 14.6 million barrels per day in 2030. To capture the rising demand, the company has been making investments in Asia and the Middle East in projects in with long-term competitive advantages, including integration with other operations, advantaged feedstocks, proprietary process and product technology, and market access. Exxon Mobil is currently working on an integrated refining and petrochemical facility located in Quanzhou, Fujian Province, China. This project includes an 800,000-ton per year ethylene steam cracker and integrated polyethylene, polypropylene, and paraxylene units. The company is building a world-scale petrochemical complex at its integrated refining and chemical facility in Singapore. This project includes a one-million ton per year ethylene steam cracker; and polyethylene, polypropylene, specialty elastomer, and benzene units. The project, which is scheduled to start-up in FY2011, also covers the expansion of the existing oxo alcohol and paraxylene units. Furthermore, ExxonMobil has signed an agreement with Saudi Basic Industries Corporation (SABIC) and is conducting detailed studies at its petrochemical joint ventures in Saudi Arabia, Kemya and Yanpet, to supply synthetic rubber, thermoplastic specialty polymers, and carbon black. The company is also carrying out studies in cooperation with Qatar Petroleum for a world-scale petrochemical complex in Ras Laffan Industrial City, Qatar. The ethylene steam cracker would utilize feedstock from gas development projects in Qatars North Field. The project involves deployment of ExxonMobils proprietary steam-cracking furnace and polyethylene technologies. These investments would enable the company to export refined products or establish fresh refining capacity and take advantage of the increasing demand for refined products in Asia. Increasing demand for liquefied natural gas (LNG)

The demand for liquid fuels is expected to increase to 108 million oil-equivalent barrels per day by 2030, an increase of 30% from 2005. The company forecasts the global liquefied natural gas (LNG) demand to more than triple in volume from 2005 to 2030, driven by the demand in North America, Europe, and Asia Pacific markets. ExxonMobil is currently participating in building the Golden Pass LNG regasification terminal on the US Gulf Coast, with a planned capacity of about 2 billion cubic feet per day. The company has also applied for regulatory approval for a new LNG regasification terminal, BlueOcean Energy, 20 miles off the coast of New Jersey. In Europe, the South Hook LNG terminal in Milford Haven, Wales, and the Adriatic LNG terminal offshore Italy, both developed by ExxonMobil and its partners, would be operational in 2009. These terminals would have a combined capacity of nearly 3 billion cubic feet of gas per day. In Asia-Pacific, the companys LNG operations in Indonesia and Qatar are major exporters to Japan, South Korea, India, and Taiwan. ExxonMobil is also one of the largest suppliers of pipeline gas to markets in Australia and Malaysia, and provides pipeline gas supplies to markets in Thailand, Far East Russia, and Qatar. The company has been pursuing

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additional LNG opportunities in the Middle East, Australia, Indonesia, Russia, Papua New Guinea, and West Africa. Such investments place the company in an ideal position to exploit growing demand for LNG. Capital investments

Exxon Mobil plans to invest between $25 billion and $30 billion annually over the next five years to deliver major projects to meet growing world energy demand. The demand for global energy is expected to increase approximately 35% from 2005 to 2030. The company expects nine projects to commence production in FY2009, collectively adding 485,000 oil-equivalent barrels per day to Exxon Mobil's production. In the downstream segment, the company would invest more than $1 billion in lowersulfur diesel projects at three refineries in the US and Europe. Upon completion in FY2010, these projects would increase lower-sulfur diesel production by 140,000 barrels per day. In the chemical business, the company has scaled up construction activity on world-scale petrochemical projects in China and Singapore. In addition, it has been investing in specialty business growth, including a new plant in South Korea to manufacture lithium ion battery separator film to meet expected demand growth including batteries for hybrid and electric vehicles. These investments aim to develop new technology, bring on new upstream projects, increase the companys base refining capacity, and grow its chemical business. These investments also reinforce Exxon Mobils position as an industry leader in bringing new supplies to the market.

Threats
Economic slowdown in the US and the European Union

The company has a significant presence across the US and the European market. According to International Monetary Funds (IMF) World Economic Outlook, April 2009, the US and the European Union economies could face slowdown in 2009. The US GDP growth rate declined from 2% in 2007 to 1.1% in 2008. The country is forecasted to record a negative GDP growth rate of 2.8% in 2009. The GDP growth rate in the European Union declined from 2.7% in 2007 to 0.9% in 2008. The region is forecasted to record a negative growth rate of 4.2% in 2009. A weak economic outlook for these regions could depress industrial development and impact the demand for the companys products. Risks associated with conducting business outside the US

The company operates in more than 200 countries under the names Exxon Mobil, Exxon, Esso, and Mobil. The non-US countries accounted for more than 70% of the total revenues of the company in the FY2008. In these foreign locations, the company might experience fluctuations in exchange rates, complex regulatory requirements, and restrictions on its ability to repatriate investments and earnings from its foreign operations. The company might also face changes in the political or economic conditions in the foreign countries it operates in. Such instabilities could negatively impact the revenue growth of the company.

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Environmental regulations

Exxon Mobils businesses are subject to numerous laws and regulations relating to the protection of the environment. With rising awareness of the damage to the environment caused by industry, especially regarding global warming, regulatory standards have been continuously tightened in recent years. One of the most important developments in this area has been the introduction of the Kyoto Protocol for the reduction of greenhouse gases. The protocol calls on industrialized countries to reduce their greenhouse gas emissions level by 5.2% on an average annual basis during the 2008-12 period, compared with 1990 emissions levels. Further, in 2005, the US environmental protection agency (EPA) issued a clean air interstate rule (CAIR), to reduce the emission levels. According to the rule, the states have to reduce the allowable sulfur dioxide (SO2) emissions by 70% and reduce nitrogen oxide (NOX) emissions by 60%, by 2015 compared with the 2003 levels. The company is governed by these regulations which could impose new liabilities on the company. This could result in a material decline in Exxon Mobils profitability in the short term.

Recent developments
Exxon Mobil Chemical announced the start-up of a new $20 million compounding facility in January 2008, to supply highperformance polymers to the automotive, appliance, and specialty consumer products industries. The facility had an initial annual capacity of 40,000 tons of specialty compounded product. In March 2008, Exxon Mobil Exploration and Production Malaysia, a subsidiary of Exxon Mobil, signed a 25-year production sharing contract with the Malaysian national oil company PETRONAS for sustainable energy supplies to Malaysia. In the following month, Exxon Mobil Exploration and Production Hungary, a subsidiary of Exxon Mobil, signed an agreement with MOL Hungarian Oil and Gas for a joint exploration program in southeast Hungary. Further in April 2008, Exxon Mobil announced plans to sell Esso filling station chain in Brazil to sugar and ethanol producer Cosan. In the same month, Exxon Mobil entered into an agreement to sell Esso Espanola and Exxon Mobil Portugal Holdings to Galp Energia SGPS. In May 2008, Exxon Mobil signed an agreement with Newfield Exploration to jointly explore and develop approximately 87,000 gross acres in south Texas. Exxon Mobil announced an investment of about $100 million in offshore oil exploration in Philippines, in June 2008. In the same month, the company announced its plans to exit the retail gas business by selling 2,220 branded service stations in the US due to rising gasoline prices and intense competition. ExxonMobil Production Company awarded contracts for work in support of the first well of a multi-well drilling program at Point Thomson, in July 2008. Subsequently, Exxon Mobil announced an investment of $1.1 billion by the Gippsland Basin Joint Venture, which included its subsidiary, Esso Australia, to develop more than 270 million oil-equivalent barrels from the Turrum field in the Bass Strait, offshore southeast Australia. Further in July 2008, the companys affiliate, Mobil Producing Nigeria commenced operations of a $1.3 billion project in Nigeria to produce and sell natural gas liquids.

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In August 2008, ExxonMobil Chemical completed a major expansion to increase the halobutyl manufacturing capacity at its plant in Baytown, Texas. The Baytown plant increased its capacity to produce EXXON bromobutyl rubber (brominated butyl rubber) by 60%. Subsequently, the companys subsidiary, Esso Exploration Angola (Block 15) (Esso Angola), commenced production from the Saxi and Batuque fields, as part of the development progression of the Kizomba C project. In the same month, ExxonMobil Chemical announced the start-up of a manufacturing facility at its existing site in Pensacola, Florida. The facility provided new capacity for the production of a new tire material technology Exxcore dynamically vulcanized alloy (DVA), which improved vehicle fuel efficiency. ExxonMobil Chemical announced an agreement with Resin & Pigment Technologies (R&P), a subsidiary of EnGro Corporation, in September 2008. Under the agreement, R&P would manufacture a broad range of ExxonMobil Chemicals specialty compounds for use in automotive interior and exterior applications, appliances, and consumer products. In the same month, ExxonMobil Aviation introduced HyJet V, a fire-resistant aviation hydraulic fluid with higher stability and longer service life than type IV fluids. ExxonMobil Research and Engineering Company (EMRE) entered into an agreement with Synthesis Energy Systems (SES), in September 2008, under which SES would execute up to fifteen methanol to gasoline technology licenses in its global operations. In October 2008, ExxonMobil Chemical completed a 130,000 tons per year capacity expansion at its Exxsol hydrocarbon fluids plant in Jurong Island, Singapore, increasing capacity at this site to more than 500,000 tons per year. Subsequently, Exxon Mobil entered into an agreement with Pratt & Whitney Rocketdyne to develop next-generation technology to convert coal, coke, or biomass to synthesis gas (carbon monoxide and hydrogen). Further in October 2008, Exxon Mobil sold its terminal in South Wilmington, North Carolina to Koninklijke Vopak, the terminals operator since 1991. The films business of ExxonMobil Chemical announced Multi-Plastics and Plastics Canada as its national distributors, in November 2008, for its affiliates' oriented polypropylene (OPP) film products in the US and Canada. In the same month, ExxonMobils Vistamaxx specialty elastomers and resins products targeted at flexible and rigid food packaging applications received approval from the US Food and Drug Administration (FDA) under the food contact notification process. Subsequently, the companys affiliate, ExxonMobil Exploration and Production Turkey, signed an agreement with the Turkish national oil company, Turkiye Petrolleri Anonim Ortakligi (TPAO), to explore in two large deepwater blocks offshore Turkey. In December 2008, Exxon Mobils affiliate, ExxonMobil Exploration and Production Romania, signed an agreement with Petrom to explore deepwater portions of the Neptun Block offshore Romania. In the same month, ExxonMobil Refining and Supply announced an investment of more than $1 billion in three refineries to increase the supply of cleaner burning diesel by about six million gallons per day. The company would construct new units and modify existing facilities at its Baton Rouge in Louisiana, Baytown in Texas, and Antwerp in Belgium, refineries. Exxon Mobil, in March 2009, announced an investment between $25 billion and $30 billion annually over the next five years to meet expected long-term growth in world energy demand. In the same month, the company announced its plans

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to build a technology center in Shanghai, China to provide product applications support for its growing business in the Chinese and Asian markets. ExxonMobil inaugurated its newest cogeneration plant at its Antwerp refinery in Belgium, also in March 2009. Besides generating 125 MW, the new plant would reduce Belgium's carbon dioxide emissions by approximately 200,000 tonnes per year. In April 2009, ExxonMobil Chemical applied its proprietary catalyst hydrogenation technology to produce ultra-low aromatic (ULA) fluids that comply with existing environmental and regulatory requirements. Subsequently, Exxon Mobil announced the sale of its On the Run convenience store franchise system in the US, and 43 of its company owned and operated sites in the Phoenix, Arizona to Couche-Tard. In the following month, ExxonMobil Chemical developed two new grades of V series co-extruded battery separator films, which enhanced safety for hybrid and electric vehicles, power tools, and electronic devices including laptop computers.

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Royal Dutch Shell Plc


Company overview
Royal Dutch Shell (Shell) is engaged in oil and gas exploration and production, transportation and marketing of natural gas and electricity, and marketing and shipping of oil products and chemicals. The company also has interests in renewable sources of energy such as wind and solar and hydrogen. The company has extensive operations in more than 100 countries around the world. It is headquartered in The Hague, the Netherlands and employs about 102,000 people. The company recorded revenues of $458,361 million in the financial year ended December 2008 (FY2008), an increase of 28.8% over the financial year ended December 2007 (FY2007). The operating profit of the company was $50,989 million in the FY2008, an increase of 1.1% over FY2007. The net profit was $26,277 million in the FY2008, a decrease of 16.1% compared with FY2007.

Business description
Royal Dutch Shell (Shell) is engaged in the aspects of the oil and natural gas industry worldwide. It is a holding company which owns direct and indirect investments in a number of companies comprising the group. The company also has interests in chemicals, power generation, and renewable energy. The company has extensive operations in more than 100 countries around the world. Shell generates revenues through five business segments: oil products, chemicals, gas and power, exploration and production, and oil sands. The oil products segment conducts its operations in more than 100 countries and territories. The segment comprises the downstream businesses of manufacturing which includes refining and supply and distribution; marketing which includes retail, business to business (B2B), lubricants, and future fuels and carbon dioxide (CO2) business; Shell Trading; and Shell Global Solutions. The manufacturing portfolio of Shell's oil products segment includes interests in over 40 refineries, with a capacity of more than 4 million barrels per day. The distribution network includes more than 300 distribution facilities, 3,000 storage tanks, and 9,000 kilometers of pipeline in about 70 countries. Shell is one of the largest single branded retailers with more than 45,000 service stations spanning 90 countries. The company sells 350 million liters of fuel to approximately 10 million customers every day. Shell Lubricants sells lubricant products to customers across the transport sector in passenger cars, trucks and coaches, as well as in manufacturing, mining, power generation, and agriculture and construction industries in around 120 countries. The B2B business of Shell sells fuels and special products to a broad range of commercial client base through six separate businesses: Shell Aviation, Shell Marine Products, Shell Gas (LPG), Shell Commercial Fuels, Shell Bitumen, and Shell Sulphur Solutions. The Future Fuels and CO2 business manages the companys emerging businesses or functions to support the development of new transport fuels until the business is integrated into Shells mainstream businesses. These include gas to liquids (GTL) products, biofuels, and hydrogen. Future Fuels and CO2 is also responsible for leading energy conservation and CO2 management activities across Shell. Global Top 10 Energy Companies
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Shell Trading, engaged in trading and shipping activities, trades about 15 million barrels of crude oil equivalent per day. Shell Global Solutions provides business and operational consultancy, technical services, and research and development expertise to Shell companies and the energy and processing industries across the world. It supports the oil products, gas and power, and chemicals businesses of Shell. The chemicals segment, a part of the companys downstream business, produces and sells petrochemicals to industrial customers worldwide. These products are used in manufacturing plastics, coatings, and detergents; which in turn are used in items such as fibers and textiles, thermal and electrical insulation, medical equipment and sterile supplies, computers, paints, and biodegradable detergents. The segment produces base chemicals such as ethylene, propylene, and aromatics; and intermediates chemicals such as styrene monomer, propylene oxide, solvents, detergent alcohols, and ethylene oxide. The chemicals portfolio of the company includes several joint ventures: Infineum, Saudi Petrochemical Company (SADAF), and Shell Petrochemicals Company (CSPCL). Infineum is a 50:50 joint venture between Shell and Exxon Mobil. It formulates, manufactures, and markets high-quality additives used in fuel, lubricants, and specialty additives and components. Infineum has manufacturing centers in seven countries: the US, Mexico, Brazil, Germany, France, Italy, and Singapore. SADAF produces base and intermediate chemicals for international markets. It is a 50:50 joint venture between Shell and Saudi Basic Industries Corporation (SABIC). CSPCL is a 50:50 joint venture between Shell and CNOOC Petrochemicals Investment. The company produces a variety of petrochemicals for the Chinese market. The gas and power segment forms a part of Shell's upstream business. It works closely with the exploration and production segment. The gas and power segment liquefies and transports natural gas, develops power plants, and markets gas and electricity on a worldwide scale for consumption by industry, commerce and business establishments, and residential and government consumers. The company's gas and power business operates in 35 countries around the world. Shell develops, owns, and operates wind power projects in Europe and North America together with its joint venture participants, and has an interest in a thin-film solar pilot plant in Germany. The company also owns interests in operational gas liquefaction ventures in five countries. It is also involved GTL and coal conversion technologies. The exploration and production (E&P) segment, a part of Shell's upstream business, explores for and recovers oil and natural gas around the world. The segment's activities are spread across 37 countries, and conducted along with joint venture partners. In FY2008, the company's total hydrocarbon production (excluding production from oil sands) totaled 3,170 thousand barrels of oil equivalent (boe) per day. During FY2008, the company participated in 224 successful exploratory wells in Algeria, Australia, Brunei, Cameroon, Canada, Denmark, Egypt, Malaysia, the Netherlands, Nigeria, Oman, Russia, Kazakhstan, and the US. In FY2008, proved developed and undeveloped reserves of Shell subsidiaries totaled 7,090 million boe. The E&P segment is supported by the exploration and production research and development (R&D) directorate which is engaged in application of technology to enhance the cost-efficiency and performance of the company's exploration and production activities. The directorate has two main research and development laboratories, one in the Netherlands and another in the US. Additional technology facilities are in Oman, Qatar, Norway, Canada, France, Germany, Singapore, the UK, and India. Global Top 10 Energy Companies
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The oil sands business, which is a part of Shells downstream operations, produces synthetic crude oils for use as refinery feedstocks. The business activity of this segment constitutes two steps: the extraction of bitumen from the oil sands at the Muskeg River Mine in north-eastern Alberta; and upgrading the bitumen to synthetic crude oil at the Scotford Upgrader near Edmonton, Alberta. Shell holds 60% of interest in the existing oil sands mining interest through a joint venture with Chevron Corporation (20%) and Marathon Oil (20%). Shell also reports a non-operating segment, corporate, which represents the functional activities supporting the whole group. This segment consists of the following functional activities: holdings and treasury, headquarters and central functions, and Shell insurance operations. The corporate segment accounts for the insurance underwriting results and the functional costs that have not been allocated to the other segments. In addition, it also accounts for the interest and other income of non-operational nature, interest expense, non-trading currency exchange effects, and tax on these items.

SWOT analysis Strengths


Strong market position

Shell is one of the largest oil companies in the world. Its operations include upstream and downstream operations spanning 100 countries. The company has interests in oil production operations in 37 countries and majority interest in 40 refineries worldwide. Shell operates the world's largest single-brand retail network, with more than 45,000 service stations. The cornerstone of the company is its leadership position in various domains such as oil products, deep-water production, LNG, and polyolefin. The company has established a strong brand image operating for over 100 years worldwide. Shell is ranked second in 2009 Forbes Global 2000, up from sixth in 2008. It was ranked eight in 2007. The company is ranked third in 2008 Fortune Global 500 ranking. The company's strong market position gives it significant bargaining power in the global oil industry. Vertically integrated operations

Shells business operations are vertically integrated with presence in both upstream and downstream businesses. In upstream, the company is engaged in the exploration and production of oil and gas. In FY2008, the company's total hydrocarbon production (excluding production from oil sands) totaled 3,170 thousand barrels of oil equivalent (boe) per day. During 2008, the company participated in 224 successful exploratory wells. The company is also involved in the natural gas supply, storage, transport, distribution activities, and marketing of natural gas and electricity. The company's gas and power business operates in 35 countries around the world. In downstream, the company produces and markets refined petroleum products. Its refining and marketing division operates 40 refineries with an installed capacity of 4 million barrels per day. The company conducts its operations through an extensive distribution network comprising 9,000 miles of pipeline in about 70 countries, over 300 distribution facilities, and 3,000 storage tanks. Shell is one of the largest single branded retailers with more than 45,000 service stations spanning 90 countries. Global Top 10 Energy Companies
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The company's vertically integrated operations give it significant competitive advantage in the global market in terms of economies of scale, synergies, and cross-marketing opportunities. Steady financial performance

Over the years, Shell has delivered consistent financial results. The company had a strong asset base of $282.4 billion in FY2008, an increase of 4.8% over FY2007. The revenues of the company have increased at a CAGR of 15% during 200408, from $266.4 billion in FY2004 to $458.4 billion in FY2008. Further, the revenues increased at a rate of 28.8% in FY2008 over FY2007. The companys profits have followed a similar trend. The operating profit of the company increased at a CAGR of 12% during 200408, from $32 billion in FY2004 to $51billion in FY2008. Further, the operating profit increased at a rate of 7.1% in FY2008 over FY2007. The net profit of the company increased at a CAGR of 9% during 200408, from $18.5 billion in FY2004 to $26.3 billion in FY2008. Steady financial performance enables the company to manage its operations well and also increases the financial flexibility of the company. Strong exploration technological capability

Shell has strong exploration technological capabilities. The company has been making efforts towards enhancing its exploration technology to locate new resources of oil and gas, to meet the rising global energy demand. Shell undertakes airborne and satellite-based gathering of geophysical data and analyses it for better understanding of underground formations, which helps in the accurate exploration drilling. In FY2008, these technologies helped in Shells participation in 45 successful exploration and appraisal wells. The companys research and development (R&D) focuses on conducting research to access oil and gas in frontier locations such as ultradeep water and the Arctic; to unlock hydrocarbon resources with complex compositions, such as oil shale and very heavy oil; and to access heavy oil resources that are mined at the surface. Shell has also been working towards increasing its access to contaminated gas resources by developing and applying technologies that lower the cost of removal of contaminants such as CO2 and hydrogen sulphide. Through its Smart Fields technologies, Shell recovers resources in locations considered to be difficult or too costly to extract. For instance, the company has been recovering oil at the Champion West field in Brunei that had remained undeveloped for more than 25 years. Shell is also implementing three advanced technology applications with its partners in Oman, across a number of fields for enhanced oil recovery (EOR) to help increase oil recovery figures. In addition, the company is also pursuing the next generation of EOR applications, such as hybrid thermal technologies in Canada, where it is looking to combine steam, solvent, and heater techniques to optimize economic recovery. The companys strong exploration technological capabilities provide it with a competitive advantage by strengthening its upstream operations.

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Weaknesses
Declining hydrocarbon production

The company has been witnessing a consistent decline in its hydrocarbon production in the recent past. The hydrocarbon production (excluding production from oil sands) totaled 3,170 thousand boe per day in FY2008. This was 2% lower than the production in FY2007 and 7% lower than in FY2006. The decline in production is attributed to field declines, divested volumes, price impacts of production-sharing contracts (PSCs), the effects of the hurricanes in the US Gulf of Mexico, and the planned maintenance turnarounds in the UK related to the shutdown of the St. Fergus gas processing facilities. The field declines affected oil production in the Australia, Brunei, Denmark, Nigeria, Norway, the UK, and the US during 2008. In addition, natural gas production was affected by declining fields in Brunei, Germany, Malaysia, the US, and the UK. Declining production would adversely affect the company's revenue growth. Administrative action

Shell faced an administrative action in 2008. Shell was fined $109,600 by Washington's Department of Labor and Industries, in June 2008. The company was fined for multiple safety violations in its Anacortes refinery. The refinery is the second largest of the four major facilities supplying gasoline and other petroleum products to the Puget Sound region. The Anacortes refinery employs 400 people and several hundred contractors. It processes 145,000 barrels of crude everyday into gasoline, aviation fuel, diesel, bunker oil and other products. The department cited 23 violations ranging from inadequately instructing operators on how to deal with emergencies to faulty inspections. The investigation by the department was conducted as part of a national inspection program following a lethal explosion at BP's Texas City plant in 2005. Further such safety violations could result in severe administrative actions affecting the companys credibility. Legal proceeding

Shell agreed to pay $120 million in June 2008, to settle a class action lawsuit led by the Pennsylvania State Employees' Retirement Board and the Public School Employees' Retirement Board. There was an allegation against Shell of overstating oil and natural gas reserves and artificially inflating stock prices over a five-year period from April 1999 to March 2004. In 2004, Shell admitted to have overstated its oil reserves by about 20% (equivalent of 3.9 billion barrels). Many of the companys executives lost their jobs, including chief financial officer Judy Boynton. In April 2007, Shell agreed to pay $352.6 million, plus administrative costs, to settle a lawsuit with investors outside the US who purchased the companys shares. Such huge penalties can have adverse effects on the companys profitability.

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Opportunities
Acquisition of Duvernay Oil Corp

Shell announced a proposal by its wholly owned subsidiary Shell Canada for the acquisition of all of the outstanding shares of Duvernay Oil Corp (Duvernay), in July 2008. The acquisition was completed in August 2008. Duvernay, based in Alberta, is engaged in the exploration and development of natural gas and crude oil in the deeper, western portion of the Western Canadian Sedimentary Basin in Alberta and Northeastern British Columbia. The company owns about 450,000 net acres in two large gas project areas, Sunset-Groundbirch in British Columbia, and the Alberta Deep Basin. Duvernay owns and controls the natural gas processing and delivery infrastructure in both the project areas. The company produces over 25,000 barrels oil equivalent per day (boe/d) predominantly in natural gas. The company plans to increase production to about 70,000 boe/d by 2012. Shell has a strong presence in North America tight gas activities. With the acquisition of Duvernay, Shell could strengthen its portfolio through enhanced technology and scale. Duvernays acreage together with Shells operating expertise and financing capabilities provide a strong platform for future growth. Joint venture in China

Shell signed a letter of intent in June 2008 with China National Petroleum Corporation (CNPC) and Qatar Petroleum International (QPI) to form a joint venture in China. This joint venture would build an oil refinery and petrochemical products manufacturing complex in China. The three companies would conduct a joint evaluation regarding the feasibility of the proposed project. The integrated refinery and petrochemical complex with state of the art production capabilities would produce refined fuels and petrochemical products. Shell would hold a 24.5% interest in the joint venture, PetroChina 51%, and QPI 24.5%. The demand for refined petroleum products in China is expected to rise sharply in the coming decades. China, despite substantial additions to refining capacity over the next three decades, is expected to remain a net importer of refined products in 2030. The refining capacity in China is forecast to increase from 6.2 million barrels per day in 2006 to 14.6 million barrels per day in 2030. Over the next 10 years, about 60% percent of the worlds petrochemical demand growth is expected to occur in Asia, with more than one-third in China alone. This project would further strengthen Shells business activities in Qatar and China. They being key markets for expansion for Shell, the company would benefit with such collaborations as they provide opportunities for growth. Increasing demand for liquefied natural gas

The demand for liquid fuels is expected to increase to 108 million oil-equivalent barrels per day by 2030, an increase of 30% from 2005. The demand for global liquefied natural gas (LNG) is expected to more than triple in volume from 2005 to 2030, driven by the demand in North America, Europe, and Asia Pacific markets.

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Currently, Shell is participating in the LNG projects in major integrated projects, Pearl GTL and Qatargas 4 LNG in Qatar. The company is also participating in LNG projects in Australia. The company's focus on LNG projects implies it is well positioned to tap opportunities in the growing market worldwide. Acquisition of Cansolv Technologies

Shell Global Solutions International acquired 100% of the shares of Cansolv Technologies (Cansolv), a provider of technologies designed to counter air pollution, in December 2008. Cansolv offers technology for the control of sulphur dioxide (SO2) and other contaminants as well as a carbon dioxide (CO2) capture process for greenhouse gas reductions. It possesses strong research and development competencies to develop new and enhance existing applications for its technologies. The CANSOLV SO2 Scrubbing System removes sulphur dioxide from combustion gases. SO2 removal helps industries such as oil refining, chemical processing, utilities, and metals to improve environmental performance and meet regulations that aim to reduce acid rain. The rising global energy demand and the declining oil and gas reserves have created the need for strong gas treating capabilities required to work on new resources such as complex contaminated gases or coal, while maintaining environmental performance. Therefore, the company plans to strengthen its capabilities to clean up contaminated gas and gases released during processing operations, focusing on the reduction of SO2 emissions. The acquisition of Cansolv would enhance Shells capabilities in CO2 capture to further explore post-combustion carbon capture technology and solutions. This in turn would help the company reduce costs, and accelerate its technology development to make carbon capture and storage commercially viable on the back of emissions trading schemes.

Threats
Economic slowdown in the US and the European Union

The company has a significant presence across the US and the European markets. In FY2008, Europe accounted for 43% of the total revenues and the US accounted for 22%. According to International Monetary Funds (IMF) World Economic Outlook, April 2009, the US and the European Union economies could face slowdown in 2009. The US GDP growth rate declined from 2% in 2007 to 1.1% in 2008. The country is forecasted to record a negative GDP growth rate of 2.8% in 2009. The GDP growth rate in the European Union declined from 2.7% in 2007 to 0.9% in 2008. The region is forecasted to record a negative growth rate of 4.2% in 2009. A weak economic outlook for these regions could depress industrial development and impact the demand for the companys products. Environmental regulations

Shells business is subject to numerous laws and regulations relating to the protection of the environment. With rising awareness of the damage to the environment caused by industry, especially regarding global warming, regulatory standards have been continuously tightened in recent years. One of the most important developments in this area has been the introduction of the Kyoto Protocol for the reduction of greenhouse gases. The protocol calls on industrialized

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countries to reduce their greenhouse gas emissions level by 5.2% on an average annual basis during the 200812 period, compared with 1990 emissions levels. The company is governed by these regulations which could impose new liabilities. This could result in a material decline in the companys profitability in the short term. Disruptions in Nigeria

Nigeria is the world's eighth-biggest oil exporter. However, the violence in the country affected the industry with the output cut by a fifth since early 2006, increasing the oil prices. Shell operates onshore and shallow water oilfields in the country through its SPDC unit, in a joint venture with Nigeria's state-run oil firm NNPC. In March 2009, an oil pipeline in Nigeria was attacked by militants, forcing Shell to halt deliveries to many customers. Approximately one quarter of Nigeria's effective pumping capacity, or around 600,000 barrels a day, was shut due to the attacks. Earlier, Shells pipelines were attacked by the residents, in July 2008. The Nembe Creek and Rumuekpe oil pipelines in Rivers state were sabotaged by the Movement for the Emancipation of the Niger Delta (MEND). Following the attack, the company declared force majeure on its Bonny Light crude oil exports for until September. However, the company has not disclosed the amount of crude oil affected. Shell being the leading oil producer in Nigeria has been affected the most among foreign oil firms by the unrest in the country. Further attacks could force the companies operating in the country to declare force majeure on more shipments. Consequently, the company could be affected with defaults in fulfilling its contractual obligations to clients. Risks associated with wide geographic presence

The company operates in more than 100 countries in different political conditions. Its wide geographic presence exposes Shell to a wide range of political developments and resulting changes to laws and regulations. The potential developments that could affect Shell include forced divestment of assets; expropriation of property; limits on production; import and export restrictions; international conflicts, including war; civil unrest and local security concerns that threaten the safe operation of company facilities; price controls, tax increases, additional windfall taxes, and other retroactive tax claims; rewriting of leases; cancellation of contract rights; and environmental regulations. The assessment of the impact of these developments on the companys operations is difficult. The sudden imposition of any of these developments could affect the employees, reputation, operational performance, and financial position of Shell.

Recent developments
In January 2008, Shell announced its decision to jointly develop the Gumusut-Kakap field, in which it held 33% interest, located in deepwater, offshore Sabah, Malaysia. Shell Qatargas, and PetroChina signed binding sales and purchase agreements for the long-term supply of LNG from Qatar to the Chinese market, in April 2008. Shell Exploration Company and Arrow Energy signed a preliminary agreement to jointly develop projects to extract cleanburning natural gas from coal deposits in Australia, China, Indonesia, Vietnam, and India, in June 2008. In the same month, Shell Hydrogen opened Californias first hydrogen refueling station in West Los Angeles.

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In July 2008, Shell announced a proposal by its wholly-owned subsidiary Shell Canada for the acquisition of all of the outstanding shares of Duvernay Oil Corp (Duvernay). In the same month, Shell and its subsidiaries announced an extended commercial alliance with Iogen Corporation to accelerate development and deployment of cellulosic ethanol. Shell Canada completed the acquisition of Duvernay, in August 2008. In the following month, Shell entered into six new biofuels research agreements as part of its program to investigate new raw materials and new biofuels production processes. Further in September 2008, Shell signed an agreement with the Ministry of Oil of the government of Iraq to establish a joint venture between the South Gas Company and Shell for the processing and marketing of all associated natural gas produced in the Governorate of Basra in southern Iraq. In October 2008, Nederlandse Aardolie Maatschappij (NAM), a joint venture between Shell, Exxon Mobil, and GDF SUEZ signed sales and purchase agreements for NAM assets situated along the Noordelijke Offshore Gas Transport (NOGAT) pipeline, covering exploration, production, and transportation of oil and gas in the Dutch section of the North Sea. Subsequently, Shell Petroleum Development Company (SPDC) as operator of the joint venture with Nigerian National Petroleum Company (55%), Shell (30%), Agip (5%), and TOTAL (10%), commissioned the first turbine of the Afam VI Power Plant, the Okoloma Gas Plant, and associated gas wells (collectively known as the Afam Gas and Power Project). Shell Global Solutions International acquired 100% of the shares of Cansolv Technologies (Cansolv), a provider of technologies designed to counter air pollution, in December 2008. Subsequently, Shell UK (a subsidiary of Shell), Esso Exploration and Production UK (a subsidiary of ExxonMobil), Mobil North Sea (another subsidiary of ExxonMobil), and Enterprise Oil UK (a subsidiary of Shell) completed the final sale and transfer of several northern North Sea assets to TAQA Bratani, a wholly-owned subsidiary of Abu Dhabi National Energy Company (TAQA). Further in December 2008, Shell Petroleum completed the sale of its 50% shareholding in Refineria Dominicana de Petroleo (REFIDOMSA), to the Government of the Dominican Republic for $110 million. Shell announced the construction of the world's largest gas to liquids (GTL) plant, Pearl GTL in Qatar, in February 2009. The plant, a joint development by Qatar Petroleum and Shell, would process about three billion barrels of oil equivalent over its lifetime from the worlds largest single non-associated gas field, the North Field, which stretched from Qatars coast out into the Persian Gulf. Subsequently, operations commenced at the Russias first liquefied natural gas (LNG) plant, a part of the Sakhalin II Project, being developed by Sakhalin Energy Investment Company (Sakhalin Energy). Sakhalin Energy was set up for implementation of the Sakhalin II Project by Gazprom (50% + 1 share), Shell (27.5% - 1 share), Mitsui & Company (12.5%), and Mitsubishi Corporation (10%). In March 2009, Shell and Codexis announced an expanded agreement to develop better enzymes that could accelerate commercialization of next generation biofuels. Shell also increased its equity stake in Codexis. Gazprom and Shell signed LNG and natural gas contracts, in April 2009. The agreements include the purchase of LNG by both Shell Eastern Trading and Gazprom Global LNG from Sakhalin Energy Investment Company. They also include a new pipeline gas agreement for the delivery of an equivalent volume of gas to Shell in Europe.

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BP Plc
Company overview
BP is one of the largest vertically integrated oil and gas companies in the world. The companys operations primarily include the exploration and production of gas and crude oil, as well as the marketing and trading of natural gas, power, and natural gas liquids. BP is headquartered in London, the UK and employs about 92,000 people. The company recorded revenues of $361,143 million during the financial year ended December 2008 (FY2008), an increase of 27% over the financial year ended December 2007 (FY2007). The operating profit of the company was $36,347 million during FY2008, an increase of 9.2% over FY2007. The net profit was $21,157 million in FY2008, an increase of 1.5% over FY2007.

Business description
BP is one of the worlds largest oil and gas companies. It has presence in more than 100 countries across six continents. The company operates through two reportable business segments: exploration and production; and refining and marketing. The company also operates through a third business segment, other businesses and corporate. The exploration and production business include oil and natural gas exploration, development and production (the upstream activities), together with related pipeline, transportation, and processing activities (midstream activities). It also includes the marketing and trading of natural gas (including liquefied natural gas or LNG), power, and natural gas liquids (NGLs). This segment includes upstream and midstream activities in 29 countries, including Angola, Azerbaijan, Canada, Egypt, Russia, Trinidad & Tobago (Trinidad), the UK, the US and locations within Asia Pacific, Latin America, North Africa, and the Middle East. The segments activities also include gas marketing and trading activities, primarily in Canada, Europe, the UK, and the US. Upstream activities involve oil and natural gas exploration and field development and production. Its exploration program is currently focused around Algeria, Angola, Azerbaijan, Canada, Egypt, the deepwater Gulf of Mexico, Libya, the North Sea, and onshore US. Major development areas include Algeria, Angola, Asia Pacific, Azerbaijan, Egypt, and the deepwater Gulf of Mexico. During FY2008, production came from 21 countries. The principal areas of production are Angola, Asia Pacific, Azerbaijan, Egypt, Latin America, the Middle East, Russia, Trinidad, the UK, and the US. The midstream operations involve the ownership and management of crude oil and natural gas pipelines, processing and export terminals, and LNG processing facilities and transportation. It also includes BPs NGL extraction businesses in the US and UK. Its most significant midstream pipeline interests are the Trans-Alaska Pipeline System in the US, the Forties Pipeline System and the Central Area Transmission System pipeline, both in the UK sector of the North Sea. The company also has a significant midstream pipeline interest in the Baku-Tbilisi-Ceyhan pipeline, running through Azerbaijan, Georgia, and Turkey. Major LNG activities are located in Trinidad, Indonesia, and Australia. BP is also investing in the LNG businesses in Angola. Additionally, BPs activities include the marketing and trading of natural gas, power, and natural gas liquids in the US, Canada, the UK, and Europe.

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BPs oil and natural gas production assets are located onshore and offshore and include wells, gathering centers, in-field flow lines, processing facilities, storage facilities, offshore platforms, export systems (transit lines), pipelines, and LNG plant facilities. Upstream operations in Argentina, Bolivia, Abu Dhabi, Kazakhstan, and TNK-BP and some of the Sakhalin operations in Russia, as well as some of BPs operations in Canada, Indonesia, and Venezuela are conducted through equityaccounted entities. The companys net proved hydrocarbon reserves, on an oil equivalent basis and excluding equity-accounted entities, comprised 12,562 million barrels of oil equivalent (mmboe) as on FY2008. Its net proved hydrocarbon reserves, on an oil equivalent basis for equity-accounted entities alone, comprised 5,585 mmboe as on FY2008. In FY2008, its total hydrocarbon production averaged 2,517 thousand barrels of oil equivalent per day (mboe/d) for subsidiaries and 1,321 mboe/d for equity-accounted entities. The total liquid production of BP as on FY2008 was 1,263 thousand barrels per day (mb/d), while liquids production on equity-accounted entities alone, was 1,138 mb/d. For the same period, the total natural gas production of BP was 7,277 million cubic feet per day (mmcf/d), while natural gas production on equity-accounted entities alone was 1,057 mmcf/d. The refining and marketing segment is responsible for the refining, manufacturing, supply and trading, marketing, and transportation of crude oil, petroleum, and petrochemicals products and related services to wholesale and retail customers. BP markets its products in more than 100 countries. It operates primarily in Europe and North America and also manufactures and markets its products across Australasia, in China and other parts of Asia, Africa, and Central and South America. The refining and marketing segment consists of two main business groups: fuels value chains (FVCs) and international businesses (IBs). In total, BP has 17 refineries worldwide, including those partially owned. These refineries had crude distillation capacities totaled to 3,769 mboe/d in FY2008, in which BP had a share of 2,678 mboe/d. The FVCs integrate the activities of refining, logistics, marketing, supply, and trading on a regional basis. The IBs include the manufacturing, supply, and marketing of lubricants, petrochemicals, liquefied petroleum gas (LPG), and aviation and marine fuels. The company has six integrated FVCs. They are organized regionally, covering the west coast and mid-west regions of the US, the Rhine region, Southern Africa, Australasia (ANZ), and Iberia. For the FY2008, BPs worldwide network consisted of some 22,600 locations branded BP, Amoco, ARCO, and Aral. BPs retail network in the US for the FY2008 comprised approximately 11,700 sites, of which approximately 9,200 were owned by jobbers (who purchase their products directly from the refining companies and either sell them to retailers or directly to the end users) and 900 operated under a franchise agreement. At the end of FY2008, BPs European retail network consisted of approximately 8,600 sites and had approximately 2,300 sites in the rest of world. . BPs IBs provide products and offers to customers in more than 100 countries worldwide, primarily in Europe, North America, and Asia. Its products include aviation and marine fuels, lubricants, LPG, and a range of petrochemicals that are sold for use in the manufacture of other products such as fabrics, fibers, and various plastics.

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The company manufactures and market lubricants and related products and services to the automotive, industrial, marine, and energy markets across the world. It sells products directly to its customers in around 50 countries. BP markets primarily through its major brands of Castrol, BP, and the Aral brand in some specific markets. BPs marine lubricants business supplies its products to many types of vessels from deep-sea fleets to marine leisurecraft. BPs industrial lubricants business is a supplier to those sectors of the market involved in the manufacture of automobiles, trucks, machinery components, and steel. BP is also a supplier of lubricants for the offshore oil and aviation industries. BPs petrochemicals operations comprise the global aromatics and acetyls businesses (A&A) and the olefins and derivatives (O&D) businesses, predominantly in Asia. In A&A, BP manufactures and markets three main product lines: purified terephthalic acid (PTA), paraxylene (PX), and acetic acid. BP has a strong global market share in the PTA and acetic markets with a major manufacturing presence in Asia, particularly China. In O&D, BP manufactures ethylene and propylene from naphtha and also produces a number of downstream derivative products. Air BP is one of the worlds largest and best known aviation fuels suppliers, serving all the major commercial airlines as well as the general aviation and military sectors. During FY2008, BP supplied its aviation products to its customers in approximately 70 countries. BPs marine fuels business focuses on the distribution and sale of refined fuel oils to the shipping industry at locations in more than 100 ports across the world. The LPG business of BP sells bulk, bottled, automotive, and wholesale LPG products to a wide range of customers in 13 countries. LPG product sales in FY2008 were approximately 68 mb/d. Other businesses and corporate segment of the company comprises treasury (which includes interest income on the companys cash and cash equivalents) the companys aluminum asset, the alternative energy business, and shipping and corporate activities worldwide. Treasury operations of the other businesses and corporate segment of BP co-ordinates the management of the companys major financial assets and liabilities. From locations in the UK, the US, and the Asia Pacific region, it provides the link between BP and the international financial markets and makes available a range of financial services to the company, including supporting the financing of BPs projects around the world. The aluminum business is a non-integrated producer and marketer of rolled aluminum products (headquartered in Kentucky, US). The primary activity of BPs aluminum business is the supply of aluminum coil to the beverage cans business, which it manufactures primarily from recycled aluminum. Under its alternative energy business, BP is engaged in wind, solar, biofuels, and carbon capture and storage (CCS) technology businesses. The company also has developed a fifth area, gas-fired power. With respect to wind power BP has more than 500 MW (1,000 MW gross) of installed capacity. The company has wind farms in the US, the Netherlands, and in Maharashtra, India. BP Solar operates the solar energy business of BP. BP Solar operates in the entire solar value chain, from the acquisition of silicon as a raw material, the production of wafers and cells, to the creation of solar panels that are then sold and distributed as solar systems on the roofs of residential homes, large commercial buildings, and on

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vacant land. BP Solars main production facilities are located in Maryland (the US), Madrid (Spain), Xian (China), and Bangalore (India). Under its biofuels business, BP has plans to invest more than $1 billion in building its own biofuels business operations, including partnerships with other companies to develop the technologies, feedstocks, and processes required to produce advanced biofuels. These investments include a 50% stake in Tropical BioEnergia, a joint venture with Santelisa Vale and Maeda Group, to produce bioethanol from sugar cane; and a $90 million investment and strategic alliance with Verenium to accelerate the development and commercialization of biofuels produced from lignocellulosic bioethanol. BP has been working with DuPont since 2003 to explore new approaches to the development of biofuels. The first product from this collaboration will be an advanced fuel molecule called biobutanol, which has a higher energy content than ethanol. BP has partnered with ABF (British Sugar) and DuPont to construct a biofuels plant in Hull. Additionally, in FY2007, BP and Rio Tinto formed a jointly owned company, Hydrogen Energy International, to develop decarbonized energy projects around the world. The venture will initially focus on hydrogen-fuelled power generation, using fossil fuels and CCS technology to produce new large-scale supplies of clean electricity. BPs gas-fired power activities comprise modern combined cycle gas turbine plants, which emit around 50% less carbon dioxide (CO2) than a conventional coal plant of the same capacity, and several low-carbon co-generation gas power facilities. BP has stakes in eight plants worldwide. In FY2008, BP increased the total power they are capable of producing from 5 gigawatt (GW) to 6 GW and, where possible, BP has integrated plants with other BP production facilities. The Whiting Clean Energy facility, acquired in July 2008, provides a source of steam for BPs Whiting refinery and the company is adding a 250 MW steam turbine to its existing plant at its Texas City refinery. BPs combined cycle plants provide base-load demand for BPs major upstream gas production developments. Under its shipping business, BP transports its products across oceans, around coastlines, and along waterways, using a combination of BP-operated, time-chartered, and spot-chartered vessels. At the end of FY2008, BP had an international fleet of 54 vessels (37 medium-size crude and product carriers, four very large crude carriers, one North Sea shuttle tanker, eight LNG carriers, and four LPG carriers). All these ships are double-hulled. Of the eight LNG carriers, BP manages one on behalf of a joint venture in which it is a participant and operates seven LNG carriers. At the end of FY2008, BP had 115 hydrocarbon-carrying vessels above 600 deadweight tonnes on time-charter, of which 107 are double-hulled and one is double-bottomed. BP spot-charters vessels, typically for single voyages.

SWOT analysis Strengths


Dominant market position

BP has a strong market position. BP is one of the worlds leading oil companies on the basis of market capitalization and proved reserves. It is the largest producer of oil and is also the second largest producer of gas and the largest overall producer of hydrocarbons in the UK.

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BP has a strong global market share in the purified terephthalic acid (PTA) and acetic markets with a major manufacturing presence in Asia, particularly China. Moreover, Air BP is one of the worlds largest suppliers of fuels to the aviation businesses, supplying aviation fuel to the airline, military, and general aviation sectors. It supplies customers in approximately 70 countries and has annual marketing sales of more than 27 billion liters. It has relationships with many of the major commercial airlines. In addition, the company has established a robust brand image over 100 years of operation across the globe. Brands such as BP, Amoco, Aral, ARCO, and Castrol are well recognized and trusted by customers all over the world. The companys dominant market position gives it significant bargaining power in the global oil industry. Vertically integrated operations

BP has vertically integrated operations as it is involved in both upstream and midstream and downstream oil businesses. The company operates through two business segments: exploration and production; and refining and marketing. Its upstream activities involve oil and natural gas exploration and field development and production. Its midstream operations involve the ownership and management of crude oil and natural gas pipelines, processing and export terminals, and LNG processing facilities and transportation. It also includes BPs natural gas liquids (NGL) extraction businesses in the US and UK. Its most significant midstream pipeline interests are the Trans-Alaska Pipeline System in the US, and the Forties Pipeline System and the Central Area Transmission System pipeline in the UK sector of the North Sea. The company also has a significant midstream pipeline interest in the Baku-Tbilisi-Ceyhan pipeline, running through Azerbaijan, Georgia, and Turkey. BPs downstream activities include refining and marketing of oil and natural gas and related products. In total, BP has 17 refineries worldwide, including those partially owned. For the FY2008, BPs worldwide network consisted of some 22,600 locations branded BP, Amoco, ARCO, and Aral. BPs retail network in the US for the FY2008 comprised approximately 11,700 sites, of which approximately 9,200 were owned by jobbers and 900 operated under a franchise agreement. At the end of 2008, BPs European retail network consisted of approximately 8,600 sites and had approximately 2,300 sites in the rest of world. The companys vertically integrated businesses confer advantages related to operational efficiencies. Vertically integrated operations provide control over the entire value chain, which enable the company to produce products, which are used at different stages in the entire value chain. The companys vertically integrated operations give it significant competitive advantage in the global oil market. Wide geographic presence

The company has a presence in over 100 countries across all major energy markets like the US, Middle East, and China, among others. Over a period of time the company has developed diverse revenue streams and is not overly dependent on any one market. In FY2008, the US, the companys largest geographical market accounted for 34.2% of the companys revenue, while UK, rest of Europe, and rest of world accounted for 22.6%, 22.7%, and 20.5%, respectively. The company has a large consumer base and widespread source of revenues. This helps in reducing the impact of market volatility and provides economic stability. Global Top 10 Energy Companies
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Weaknesses
Decline in crude oil and natural gas production

BPs crude oil and natural gas production have declined over the years. Its net proved hydrocarbon reserves, on an oil equivalent basis and excluding equity-accounted entities, declined from 13,163 mmboe in the financial year ended December 2006 (FY2006) to 12,562 mmboe in FY2008, at a negative CAGR of 2%.Further, there has also been a significant decrease in the crude oil production from its geographic markets in the UK, rest of Europe, rest of Americas, and Asia Pacific over the years. Its crude oil production from the UK market declined from 253 mb/d in FY2006 to 173 mb/d in FY2008, at a negative CAGR of 17%. Its crude oil production from the rest of Europe declined from 61 mb/d in FY2006 to 43 mb/d in FY2008 at a negative CAGR of 16%; while for rest of Americas, the crude oil production declined from 108 mb/d in FY2006 to 75 mb/d in FY2008 at a negative CAGR of 17%. Further, the companys crude oil production from Asia Pacific declined from 44 mb/d in FY2006 to 37 mb/d in FY2008 at a negative CAGR of 8%. BPs liquid production has also declined from 1,351 mb/d in FY2006 to 1,263 mb/d in FY2008 at a negative CAGR of 3% Further, there has also been a significant decrease in the natural gas production from its geographic markets in the UK, rest of Europe, the US, and Asia Pacific over the years. Its natural gas production from the UK market declined from 936 mmcf/d in FY2006 to 759 mmcf/d in FY2008, at a negative CAGR of 10%. Its natural gas production from the rest of Europe declined from 91 mmcf/d in FY2006 to 23 mmcf/d in FY2008 a negative CAGR of 50%; while for the US, it declined from 2,376 mmcf/d in FY2006 to 2,157 mmcf/d in FY2008 at a negative CAGR of 5%. Further, the companys natural gas production from Asia Pacific declined from 727 mmcf/d in FY2006 to 699 mmcf/d in FY2008 at a negative CAGR of 2%. A declining oil and gas production can have a negative impact on BPs operating margins. Controversies and criticisms

The company has been facing several controversies and criticisms. For instance, BP operates the controversial BakuTbilisi-Ceyhan pipeline, whose development and operation has been criticized for human rights abuses and environmental and safety concerns. Critics of the pipeline have pointed out that it should be properly earthquake engineered because the pipeline travels through three active earthquake faults in Azerbaijan, four in Georgia, and seven in Turkey. The pipeline crosses the watershed of the Borjomi-Kharagauli National Park in Georgia (but not entering the park territory), an area known for its mineral water springs and natural beauty. This has long been the subject of fierce opposition by environmental activists. Going further, a $500 million grant to the University of California, Berkeley, Lawrence Berkeley National Laboratory, and the University of Illinois at Urbana-Champaign, to create an Energy Biosciences Institute, recently came under attack over concerns about the global impacts of the research and privatization of public universities. BP is also facing legal action related to its Texas City Refinery in the US. In 2005, the refinery exploded causing 15 deaths because of the mismanagement at the plant. The incident came as the culmination of a series of less serious Global Top 10 Energy Companies
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accidents at the refinery, and the engineering problems which were not addressed by the management. In February 2008, the US District Judge, Lee Rosenthal, heard arguments regarding BP's offer to plead guilty to a federal environmental crime with a $50 million fine. At the hearing, blast victims and their relatives objected to the plea, calling the proposed fine as trivial. So far, BP had said it had paid more than $1.6 billion to compensate victims. The judge gave no timetable on when she would make a final ruling. Thus, such controversies and criticisms faced by BP could tarnish its brand image and could also result in huge financial penalties for the company.

Opportunities
Increasing demand for natural gas in North America

The US Energy Department projects that the US would become more dependent on natural gas in the next two decades. Natural gas demand in North America is expected to rise from 72.6 billion cubic feet (bcf) per day in 2001 to 93.8 bcf per day in 2012. The US would account for 79% of total demand in 2012, while Canada would account for 11% and Mexico for 10%. North America will require an additional 21.2 Bcf per day of natural gas supply by 2012. In particular, natural gas will be required for incremental electric power generation in all three countries. In April 2008, BP and ConocoPhillips announced the formation of a joint venture company called Denali The Alaska Gas Pipeline. The joint venture has begun work on an Alaska gas pipeline project consisting of a gas treatment plant on Alaskas North Slope, a large-diameter pipeline that is intended to pass through Alaska into Canada, and should it be required, a large-diameter pipeline from Alberta to the Lower 48 United States. When completed, the pipeline is expected to move approximately 4 billion cubic feet of natural gas per day to markets, and would be the largest private sector construction project ever built in North America. The joint venture of BP with ConocoPhillips has hence placed the company in an ideal position to exploit growing demand for natural gas in North America. Rising demand for refined products and petrochemicals in China

The demand for refined petroleum products and petrochemicals in China is expected to rise sharply in the coming decades. China, despite substantial additions to refining capacity over the next three decades, is expected to remain a net importer of refined products in 2030. The refining capacity in China is forecast to increase from 5.8 million barrels per day in 2005 to 14.6 million barrels per day in 2030, yet China will remain a net importer of refined products in 2030. Similarly, the demand for ethylene is forecast to grow at an annual rate of over 12% between 2005 and 2010, while demand for propylene is expected to grow by 9% during the same period. The demand for polymers such as polyethylene is forecast to grow at an annual rate of 7% during 2005 and 2010. BP already has a manufacturing base in China, and is well positioned to tap into opportunities in the growing petrochemicals market. Oil and gas exploration projects

Several major oil and gas exploration projects of BP became operational in FY2008. For instance, in June 2008, first oil was achieved at the Thunder Horse field (in which BP has a 75% interest and is the operator), located in the Gulf of

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Mexico. Thunder Horse is the one of the worlds largest semi-submersible production facility and is designed to process 250 mb/d and 200 mmcf/d of natural gas. In FY2008, four wells started up with production of around 200,000 boe/d (gross) at the year-end, signaling the completion of commissioning. Production started up in the Thunder Horse North field in February 2009. In May 2008, BP Egypt, on behalf of its joint venture partners in the GUPCO, announced that oil production from the Saqqara field had started. Further, in July 2008, BP Egypt, on behalf of its joint venture partner, GUPCO, announced that gas production from the Taurt field had started. In May 2009, BP began production from the Dorado (in which it has 75% working Interest) and King South (in which it has 100% owned and is the operator) projects in the Gulf of Mexico. The company has also made several oil discoveries. For example, in October 2008, BP America announced an oil discovery at its Freedom Prospect in the deepwater Gulf of Mexico. Further, in March 2009, BP made seventeenth oil discovery in Ultra Deepwater Block 31 in Angola. Such oil and gas exploration projects coupled with oil discoveries could help BP in increasing its oil and gas production. Investments in the alternative energy business

BP is investing in its alternative energy business. In FY2008, BP invested $1.4 billion in its alternative energy business. BP further plans to invest a total of $8 billion over 10 years. To expand its alternative energy business, in July 2008, BP acquired the Whiting Clean Energy facility, a 525 MW natural-gas fired combined-cycle cogeneration power plant located in Whiting, Indiana, the US. The plant, acquired from NiSource provides steam for BP's Whiting refinery. The acquisition also offers BP the opportunity to sell lower-carbon power into the local power market. Subsequently, in April 2009, BP Wind Energy and Dominion announced full commercial operation of phase one of the Fowler Ridge Wind Farm in Benton County, Indiana. The first 400 MW of the project will generate enough carbon-free electricity to power about 120,000 homes. Of the 400 MW facility, BP and Dominion are partners on approximately 300 MW. The two companies could expand the facility to a total of 750 MW in the future. The commercial operation of the Fowler Ridge Wind Farm could help BP in increasing its role as a provider of alternative energy in the US. Going further, BP, under its biofuels business, has plans to invest more than $1 billion in building its own biofuels business operations, including partnerships with other companies to develop the technologies, feedstocks, and processes required to produce advanced biofuels. These investments include a 50% stake in Tropical BioEnergia, a joint venture with Santelisa Vale and Maeda Group, to produce bioethanol from sugarcane. It also includes a $90 million investment and strategic alliance with Verenium to accelerate the development and commercialization of biofuels produced from lignocellulosic bioethanol. BP with Verenium, in February 2009, announced the formation of a fifty-fifty joint venture to develop and commercialize cellulosic ethanol from non-food feedstocks. BP has also been working with DuPont since 2003 to explore new approaches to the development of biofuels. The first product from this collaboration will be an advanced fuel molecule called biobutanol, which has higher energy content than ethanol. BP has also partnered with ABF (British Sugar) and DuPont to construct a biofuels plant in Hull. Thus, BPs investments in its alternative energy business could help it in diversifying its product offerings, thereby increasing its revenue growth. It would also help the company in enhancing its environment-friendly image. Global Top 10 Energy Companies
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Threats
Saturation of resources in the North Sea

The company has extensive offshore exploration operations in the North Sea. Offshore exploration in the North Sea has been highly prospective in the past and intensive exploration work has been carried out in this region in the past few decades. Reserves in the region are maturing and are slowly getting saturated. There has been a succession of dry holes being drilled in the last few years. The saturation of reserves in this region is a key challenge for the company; especially as newer exploration activity in other parts of the world is far more localized and entails significantly higher investments. Instability in some oil-producing regions

BP has exploration and production interests in 29 countries. Many of these regions, including Africa, the Middle East, and South America, are prone to political instability. Though BP has been operating in these countries for a long time and understands the local environment very well, much of the geo-political risks are outside its control. Failure to anticipate some of these events or the inability to mitigate risks in these regions could seriously impair its operations and disrupt the flow of output. Environmental regulations

With the increase in global warming, environmental regulations have become more rigid in recent years. One of the most important developments in this area has been the introduction of the Kyoto Protocol for the reduction of greenhouse gases. The protocol calls on industrialized countries to reduce their greenhouse gas emissions level by 5.2% on an annual average during 2008 to 2012, as compared to the emissions level in 1990. Further, the US environmental protection agency (EPA) issued a clean air interstate rule (CAIR), according to which, states have to reduce the allowable SO2 emissions by 70% and reduce nitrogen oxides emissions by 60%, by 2015 as compared to the 2003 levels. BP already has a weak record in environmental matters and a further introduction of these stringent regulations may impose new liabilities or increase operating expenses, either of which could result in a material decline in profitability.

Recent developments
BP Egypt made a significant gas discovery at record depths in the Nile Delta, in January 2008. The Satis discovery was located in the North El Burg Offshore, Nile Delta concession, some 50 kilometers north of Damietta. The well was drilled to a Nile Delta depth of more than 6,500 meters and was the first significant high-pressure, high-temperature, offshore Oligocene discovery. In February 2008, BP and its partner, Marathon Petroleum West of Shetlands, announced a new oil discovery in Block 204/23, following drilling on the South-West Foinaven prospect, some 190 kilometers west of the Shetland Islands. In March 2008, BP and regional refiner and marketer Irving Oil entered into a memorandum of understanding to work together on the next phase of engineering, design, and feasibility for the proposed Eider Rock refinery in Saint John, New Brunswick, Canada. BP would contribute $40 million as its share of funding for this stage of the study.

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In April 2008, BP decided to take a 50% stake in Tropical BioEnergia, a joint venture established by Brazilian companies Santelisa Vale and Maeda Group. The joint venture, in which Santelisa Vale and Maeda Group would each hold 25%, also intended to progress plans to build a second ethanol refinery, investing a total of approximately $1 billion in the two refineries. Further in April 2008, BP and ConocoPhillips formed of a joint venture company called Denali The Alaska Gas Pipeline. The pipeline would move approximately four billion cubic feet of natural gas per day to markets, and will be the largest private sector construction project ever built in North America. BP along with its joint venture partners in the Gulf of Suez Petroleum Company (GUPCO) announced its plans of producing oil from the Saqqara field, in May 2008. The Saqqara field was located 12.5 kilometers offshore in the central Gulf of Suez. In the same month, BP and its co-venturers, ENI UK and Petro Summit Investment UK, announced an oil discovery in North Sea Block 16/23s, some 230 kilometers north-east of Aberdeen, to be named Kinnoull. Further in May 2008, BP Egypt, on behalf of its joint venture partners in the GUPCO, announced that oil production from the Saqqara field had started. In the following month, first oil was achieved at the Thunder Horse field (in which BP had a 75% interest and was the operator), located in the Gulf of Mexico. In July 2008, BP Alternative Energy, a subsidiary of BP, acquired the Whiting Clean Energy facility, a 525 megawatt (MW) natural-gas fired combined-cycle cogeneration power plant located in Whiting, Indiana, the US. The plant was acquired for $210 million from NiSource, a company engaged in natural gas transmission, storage, and distribution, as well as electric generation, transmission, and distribution. In the same month, BP America (a subsidiary of BP) agreed to acquire all of Chesapeake Energys (a producer of natural gas in the US) interests in approximately 90,000 net acres of leasehold and producing natural gas properties in the Arkoma Basin Woodford Shale play for $1.75 billion in cash. Further in July 2008, BP Egypt, on behalf of its joint venture partner, GUPCO, announced that gas production from the Taurt field had started. In August 2008, BP and Verenium (a company engaged in producing alternative energy fuels), created a strategic partnership to accelerate the development and commercialization of cellulosic ethanol. In the same month, Enbridge (a Canada-based company engaged in energy transportation and distribution in North America and internationally) and BP Pipelines (North America) entered into an agreement to develop a new delivery system. The delivery system would transport Canadian heavy crude oil from Flanagan, Illinois, to Houston and Texas City, Texas, using a combination of existing facilities and new pipeline construction where required. In September 2008, Chesapeake Energy and BP America announced the execution of a letter of intent for a joint venture whereby BP will acquire a 25% interest in Chesapeake Energys Fayetteville shale assets in Arkansas for $1.9 billion. In October 2008, BP America announced an oil discovery at Freedom Prospect in the deepwater Gulf of Mexico. In February 2009, BP and Verenium formed a fifty-fifty joint venture to develop and commercialize cellulosic ethanol from non-food feedstocks. In the following month, BP made its seventeenth oil discovery in Ultra Deepwater Block 31 in Angola. In April 2009, BP Wind Energy (a wholly owned subsidiary of BP) and Dominion (a producer and transporter of energy) announced full commercial operation of phase one of the Fowler Ridge Wind Farm in Benton County, Indiana. The first 400 MW of the project will generate enough carbon-free electricity to power about 120,000 homes. In the same month, BP

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Solar (a part of BP Alternative Energy) was selected to provide photovoltaic solar power systems for Wal-Mart stores in California. In May 2009, BP began production from the Dorado (in which it had 75% working Interest) and King South (in which it had 100% interest and was the operator) projects in the Gulf of Mexico. In the same month, the Egyptian Natural Gas Holding Company (EGAS) awarded BP two blocks in the 2008 international bid round on the Egyptian Offshore Nile Delta.

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Chevron Corporation
Company overview
Chevron Corporation (Chevron) is one of the largest integrated energy companies in the world. The company is engaged in every aspect of the oil and natural gas industry, including exploration and production, refining, marketing and transportation, chemicals manufacturing and sales, geothermal, mining operations, and power generation. It has operations in more than 100 countries including the US. Chevron is headquartered in San Ramon, California and employs about 67,000 people. The company recorded total sales and other operating revenues of $264,958 million in the financial year ended December 2008 (FY2008), an increase of 23.8% over the financial year ended December 2007 (FY2007). The operating profit of the company was $43,057 million in FY2008, an increase of 32.7% over FY2007. The net profit was $23,931 million in FY2008, an increase of 28.1% over 2007.

Business description
Chevron Corporation (Chevron) engages in fully integrated petroleum operations, chemicals operations, mining operations of coal and other minerals, power generation, and energy services. The company conducts business activities in the US and approximately 100 other countries including Angola, Argentina, Australia, Azerbaijan, Bangladesh, Brazil, Cambodia, Canada, Chad, China, Colombia, Democratic Republic of the Congo, Denmark, France, India, Indonesia, Kazakhstan, Myanmar, the Netherlands, Nigeria, Norway, the Partitioned Neutral Zone between Saudi Arabia and Kuwait, the Philippines, Qatar, Republic of the Congo, Singapore, South Africa, South Korea, Thailand, Trinidad and Tobago, the UK, Venezuela, and Vietnam. Chevron operates through four business divisions: upstream, downstream, chemicals, and all others. Chevron's upstream business explores for and produces crude oil and natural gas. The companys exploration and production operations also market natural gas. Chevron's worldwide net oil-equivalent production was approximately 2.53 million barrels per day in 2008. At the end of 2008, Chevrons worldwide net proved crude oil and natural gas reserves for consolidated operations were 7.9 billion barrels of oil-equivalent and for affiliated operations were 3.3 billion barrels. Net oil-equivalent production averaged 2.53 million barrels per day, including volumes produced from oil sands in Canada. Major producing areas include Angola, Australia, Azerbaijan, Bangladesh, Denmark, Indonesia, Kazakhstan, Nigeria, the Partitioned Neutral Zone between Kuwait and Saudi Arabia, Thailand, the UK, the US, and Venezuela. Major exploration areas include western Africa, Australia, Brazil, Canada, the Gulf of Thailand, the Norwegian Barents Sea, the international waters between Trinidad and Tobago and Venezuela, the UK Atlantic Margin, and the U.S. Gulf of Mexico. Chevron's downstream operations comprise refining crude oil into finished petroleum products and marketing crude oil and the many products derived from petroleum. It also transports crude oil, natural gas, and petroleum products by pipeline, marine vessel, motor equipment, and rail car. It is a global and diverse organization with interests in 18 fuel refineries and an asphalt refinery which can process more than 2 million barrels of crude oil per day.

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In 2008, Chevron processed approximately 1.9 million barrels of crude oil per day and averaged approximately 3.4 million barrels per day of refined product sales worldwide. Downstreams most significant areas of operations are sub-Saharan Africa, Southeast Asia, South Korea, the UK, the US Gulf Coast extending into Latin America, and the US West Coast. Chevron markets petroleum products under three brands: Chevron, Texaco, and Caltex. The company also manufactures gasoline additive under the brand name Techron. The company supplies its products directly or through retailers and marketers to almost 9,700 branded motor vehicle retail outlets, concentrated in the mid-Atlantic, southern, and western states of the US. Approximately 500 of the outlets are company-owned or leased stations. Outside the US, Chevron supplies directly or through retailers and marketers to approximately 15,300 branded service stations, including affiliates. The company is also engaged in other global marketing businesses. Chevron markets aviation fuel at more than 1,000 airports. The company also markets an extensive line of lubricant and coolant products under brand names that include Havoline, Delo, Ursa, Meropa, and Taro. Chemicals operations include the manufacture and marketing of commodity petrochemicals for industrial applications, and fuel and lubricating oil additives. Chevron operates in the chemicals segment via its 50%-owned affiliate Chevron Phillips Chemical Company (CPChem) and the wholly-owned Chevron Oronite Company (Chevron Oronite). CPChem has 35 manufacturing facilities in the US, Brazil, Colombia, Singapore, China, South Korea, Saudi Arabia, Qatar, and Belgium. Chevron Oronite is a fuel and lubricating-oil additives business that owns and operates facilities in the US, France, the Netherlands, Singapore, Japan, and Brazil and has equity interests in facilities in India and Mexico. The all others segment includes Chevrons mining operations, power generation businesses, worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities, alternative fuels, and technology companies. Chevrons mining operations in the US produce and market coal and molybdenum in both the US and international markets. The companys coal mining and marketing subsidiary, Chevron Mining (CMI), owns and operates two surface coal mines, McKinley, in New Mexico, and Kemmerer, in Wyoming, and one underground coal mine, North River, in Alabama. CMI controls approximately 200 million tons of proven and probable coal reserves in the US, including reserves of environmentally desirable low-sulfur coal. Chevron's power generation business develops and operates commercial power projects. It owns 13 power assets located in the US and Asia. The company produces over 2,300 megawatts (MW) of electricity at 11 facilities it owns through joint ventures.

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SWOT Analysis Strengths


Strong market position

Chevron is one of the leading global energy companies. The company is the second-largest integrated energy company in the US and among the largest corporations in the world, based on market capitalization as of December 31, 2008. Besides the US, the company operates in 100 other countries. In 2008, Chevron was ranked third in the Fortune 500 list of top 1000 companies, up from fourth in 2007. The company's upstream and downstream activities are conducted in North America, South America, Europe, Africa, the Middle East, Central and Far East Asia, and Australia. Strong market position in a market with high barriers to entry gives it a competitive advantage. Presence across the energy value chain

Chevron operates in a wide range of businesses worldwide and commands presence across the energy value chain. The company engages in fully integrated petroleum operations, chemicals operations, mining operations of coal and other minerals, power generation, and energy services. Chevron operates across the energy value chain through its four divisions: downstream, upstream, chemicals, and others. Exploration and production (upstream) operations explore for, develop, and produce crude oil and natural gas and also market natural gas. Chevron's downstream operations undertake refining, fuels and lubricants marketing, supply and trading, and transportation activities. Refining, marketing and transportation (downstream) operations transport crude oil, natural gas and petroleum products by pipeline, marine vessel, motor equipment and rail car. Chemical operations include the manufacture and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant oil additives. Chevron also operates in other businesses which include mining operations, power generation businesses, worldwide cash management and debt financing activities, corporate administrative functions, insurance operations, real estate activities, alternative fuels, and technology companies. The company provides administrative, financial, management and technology support to the US and foreign subsidiaries engaged in energy services. Chevrons presence across the energy value chain provides the company with opportunities to optimize its business while minimizing business risks. Strong marketing operations

Chevron markets petroleum products throughout much of the world through its strong global retail network. The company markets its products under three principal brands: Chevron, Texaco, and Caltex. As of 2008, Chevron had an extensive marketing network supporting approximately 22,000 retail outlets. In the US, the company markets under the Chevron and Texaco brands. The company supplies directly through retailers and marketers almost 9,700 branded motor vehicle retail outlets, concentrated in the mid-Atlantic, southern, and western states. Approximately 500 of the outlets are companyowned or leased stations. Global Top 10 Energy Companies
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Additionally, Chevron supplies directly or through retailers and marketers to approximately 15,300 branded service stations, including affiliates outside the US. Chevron also manages other marketing businesses globally. The company markets aviation fuel at over 1,000 airports. It markets an extensive line of lubricant and coolant products under brand names that include Havoline, Delo, Ursa, Meropa, and Taro. The company's strong retail network gives widespread visibility in the market. Strong marketing operations enable Chevron to penetrate into new markets and gain a strong hold. Steady financial performance

Over the years, Chevron has delivered consistent financial results. The company had a strong asset base of $161.2 billion in FY2008, an increase of 8.3% over FY2007. The sales and the other operating revenues of the company have increased at a CAGR of 15% during 2004-2008 from $150,865 million in FY2004 to $264,958 million in FY2008. The companys profits have followed a similar trend. The operating profit of the company has increased at a CAGR of 20% during 2004-2008 from $21,042 million in FY2004 to $43,057 million in FY2008. In FY2008, the operating profit recorded an increase of 32.7% over FY2007. The net profit of the company has increased at a CAGR of 16% during 2004-2008 from $13,328 million in FY2004 to $23,931 million in FY2008. In FY2008, the net profit recorded an increase of 28.1% over 2007. Steady financial performance enables the company to manage its operations well and also increases the financial flexibility of the company.

Weaknesses
Employee unrest in Nigeria

In June 2008, workers of Chevron facilities in Nigeria went on a strike over working conditions and number of expatriate staff. Chevron, the world's eighth-biggest oil producer, produces about 350,000 barrels a day in Nigeria from around 30 fields. The company's equity share is around 129,000 barrels per day. The Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan, called on a strike over safety standards and staffing issues in Chevron facilities in the country. The workers' union had accused Chevron of employing large foreign staff and demanded the removal of Fred Nelson, the companys head in Nigeria. The five day strike, however did not affect the production at Chevron facilities. In addition, Chevron is facing stiff opposition by its workers over the sale of its 60% majority share in Chevron Oil Nigeria. The workers accuse the company management of engaging in secret talks with the new buyers to avoid paying the employees their entitlements. Such employee actions adversely affect the operations of the company and could result in supply disruptions thereby affecting the companys margins. Legal action by the Iraqi Government

The Iraqi Government has sued 70 corporations accusing them of paying kickbacks to former Iraqi leader Saddam Hussein's government under the United Nations (UN) Oil-for-Food program.

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Towards the end of June 2008, the government of Iraq sued 70 companies for $10billion through a law firm, Maney and Purrington. These companies face an allegation of defrauding the country's citizens out of food and medical provisions during Saddam Hussein's rule. The Iraq government believes these companies paid bribes to Saddam Hussein to secure business contracts under the UN Oil-for-Food program. The program was intended to allow Iraq to sell oil on the world market in exchange for food and medicine for ordinary Iraqis. Chevron is one of these companies facing legal action. GlaxoSmithKline, BNP Paribas, and Chrysler are some other large corporations facing a lawsuit. The lawsuit claims the companies had violated US racketeering laws including mail and wire fraud and money laundering. Chevron and Vitol are also accused of breaching their fiduciary duties. Such legal actions could result in huge penalties and can have adverse effects on the companys profitability. In addition, they adversely affect the credibility of the company. Declining sales of refined products

There has been a consistent decline in the sales volume of refined products. The sales of refined products by Chevron averaged 3,429,000 barrels per day (b/d) in FY2008 declining by 55,000 b/d when compared with FY2007. The company had recorded a refined products sales volume of 3,484,000 b/d in FY2007, a decline of 137,000 b/d when compared with FY2006. The down stream segment (which includes the sale of refined products) contributed 71.8% to the sales and other operating revenues (before eliminations) in FY2008. A decline in sales implies a competitive disadvantage and increase in the business risk of the company. A continuation of this trend is likely to have an adverse impact on the company's revenue growth rates.

Opportunities
Increasing demand for refined products in China

The demand for refined petroleum products in China is expected to rise sharply in the coming decades. China, despite substantial additions to refining capacity over the next three decades, is expected to remain a net importer of refined products in 2030. The refining capacity in China is forecast to increase from 6.2 million barrels per day in 2006 to 14.6 million barrels per day in 2030. Over the next 10 years, about 60% of the worlds petrochemical demand growth is expected to occur in Asia, with more than one-third in China alone. The company has exploration interests in China. In December 2007, Chevrons main Chinese subsidiary signed a 30-year production-sharing contract with China National Petroleum Corporation (CNPC) for the joint development of the Chuandongbei natural gas area in central China. Under this agreement, Chevron would assume the role of an operator and hold a 49% participating interest with CNPC will hold a 51% interest in the project. The Chuandongbei gas development area covers nearly 2,000 square kilometers in the Sichuan province. Chuandongbei, which includes the Tieshanpo, Dukouhe-Qilibei and Luojiazhai gas fields, has an estimated resource base of 5 trillion cubic feet of natural gas. Design capacity at the proposed gas plants is expected to be 740 million cubic feet of natural gas per day. Global Top 10 Energy Companies
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China has always been a key market in the companys long term growth strategy. Furthermore, Chevron plans to undertake a multiphase work program with CNPC's subsidiary PetroChina Southwest Oil and Gas Field Company to evaluate additional reserves in the contract area and commence front end engineering and design work. These investments in China would enable the company to export refined products or establish fresh refining capacity and take advantage of the increasing demand for refined products in the country. Increasing demand for liquefied natural gas (LNG)

The demand for liquid fuels is expected to increase from the 86 million oil-equivalent barrels per day, as of December 2007, to 116 million oil-equivalent barrels per day in 2030. The global liquefied natural gas (LNG) demand is forecasted to grow at more than 4% per year through 2030, driven by the demand in North America, Europe, and Asia Pacific markets. The demand for LNG would reach about 16% of the worlds gas demand by 2030. Currently, Chevron is participating in LNG projects in Angola, Mississippi, and Australia. In February 2007, the company received approval from the Federal Energy Regulatory Commission for a terminal designed to process imported liquefied natural gas (LNG) for distribution to industrial, commercial, and residential customers in Mississippi, Florida, and the Northeast. The terminal would have an initial natural gas processing capacity of 1.3 billion cubic feet per day. In Australia, a fifth LNG train, which is intended to increase export capacity by more than 4 million metric tons per year, is expected to be commissioned in late 2008. In March 2008, the company announced plans to develop a new Australian LNG project, based on its 100%-owned Wheatstone natural gas discovery. The facility to be located on the northwest coast of mainland Australia would have an initial capacity of at least one 5 million-ton-per-annum LNG production train with expansion capacity for additional production trains. In Angola, Chevron has interest in the LNG project designed with a capacity to process 1 billion cubic feet of natural gas per day and would provide a commercial option for Angolas natural gas resources. Chevron has a 36% interest in the Angola LNG affiliate. The plant is expected to start-up in 2012. Such investments place the company in an ideal position to exploit growing demand for LNG. Biofuels initiative

Chevron believes that nonfood biofuels will play an important role in diversifying the energy supply in the US. The company has been working towards developing nonfood biofuels. Chevron has separate research partnerships under way with universities, national laboratories, and technology-based companies to advance the development of nonfood biofuels. In 2007, the company entered into research alliances with Texas A&M University, with focus on the production and conversion of crops for biofuels from cellulose. Chevron also entered into a research alliance with the Colorado Center for Biorefining and Biofuel with focus on conversion technologies. The company also has research alliances with the University of California, Davis and the Georgia Institute of Technology that are focused on converting cellulosic biomass into transportation fuels. In February 2008, Chevron formed a 50-50 joint venture company with Weyerhaeuser Company. This joint venture, Catchlight Energy, would develop the next generation of renewable transportation fuels from nonfood sources. The joint venture would engage in research activities to develop technology for converting cellulose-based biomass into Global Top 10 Energy Companies
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economical, low-carbon biofuels. The two companies would contribute resources, including funding, background technology and employees, to Catchlight Energy. Catchlight's initial focus will be on developing and demonstrating novel technologies for converting cellulose and lignin from a variety of sources into biofuels. This is a significant step taken by Chevron to create a sustainable, economic, nonfood biofuels business at commercial scale. This move provides an opportunity for Chevron to realize its focus on developing and commercializing the energy resources of the future including biofuels and other renewables.

Threats
Economic slowdown in the US and the European Union

The company has a significant presence across the US and the European market. According to International Monetary Funds (IMF) World Economic Outlook, April 2009, the US and the European Union economies could face slowdown in 2009. The US GDP growth rate declined from 2% in 2007 to 1.1% in 2008. The country is forecasted to record a negative GDP growth rate of 2.8% in 2009. The GDP growth rate in the European Union declined from 2.7% in 2007 to 0.9% in 2008. The region is forecasted to record a negative growth rate of 4.2% in 2009. A weak economic outlook for these regions could depress industrial development and impact the demand for the companys products. Risks associated with conducting business outside the US

The company operates in more than 100 countries under the names Chevron, Texaco, Caltex, and Techron. International (non-US) operations accounted for 56.4% of the sales and other operating revenues (before eliminations) in the FY2008. In these foreign locations, the company might experience fluctuations in exchange rates, complex regulatory requirements, and restrictions on its ability to repatriate investments and earnings from its foreign operations. The company might also face changes in the political or economic conditions in the foreign countries it operates in. Such instabilities could negatively impact the revenue growth of the company. Environmental regulations

Chevrons businesses are subject to numerous laws and regulations relating to the protection of the environment. With rising awareness of the damage to the environment caused by industry, especially regarding global warming, regulatory standards have been continuously tightened in recent years. One of the most important developments in this area has been the introduction of the Kyoto Protocol for the reduction of greenhouse gases. The protocol calls on industrialized countries to reduce their greenhouse gas emissions level by 5.2% on an average annual basis during the 2008-2012 period, compared with 1990 emissions levels. Further, in 2005, the US environmental protection agency (EPA) issued a clean air interstate rule (CAIR), to reduce the emission levels. According to the rule, the states have to reduce the allowable sulfur dioxide (SO2) emissions by 70% and reduce Nitrous Oxide (NOX) emissions by 60% by 2015 compared with the 2003 levels. The company is governed by these regulations which could impose new liabilities. This could result in a material decline in Chevrons profitability in the short term.

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Further, in July 2008, Chevron was fined $30,000 for releasing too much air pollution in the Hatter's Pond natural gas field near Creola. The Alabama Department of Environmental Management made an allegation that three compressor units in the gas field released higher amounts of volatile organic compounds than allowed under pollution permits. The fine is the 10th largest issued by the agency in 2008. Any such incident could negatively affect the image of the company.

Recent developments
In February 2008, Chevron formed a 50-50 joint venture company with Weyerhaeuser Company to develop the next generation of renewable transportation fuels from nonfood sources. The joint venture, Catchlight Energy, would research and develop technology for converting cellulose-based biomass into economical, low-carbon biofuels. In the following month, Chevron Australia announced its plans to develop a new Australian liquefied natural gas (LNG) project with an initial capacity of at least one 5 million-ton-per-annum LNG production. In March 2008, Chevron planned to build a pre commercial plant at its refinery in Pascagoula, Missouri, to test the technical and economic viability of heavy oil upgrading technology. The Pascagoula pre-commercial plant would have a capacity of 3,500 barrels per day. Chevron Australia planned to extend the Chevron-operated Lago gas field located 80 miles (130 kilometers) offshore northwestern Australia in permit WA-16-R, in July 2008. In August 2008, Chevrons wholly owned subsidiary, Chevron Canada, and its co-venturers finalized legal agreements with the government of Newfoundland and Labrador to develop the Hebron heavy oil project offshore the east coast of Canada. In the same month, Chevron submitted an environmental permit application to the Mississippi Department of Environmental Quality for the construction of a premium base oil facility at the company's Pascagoula refinery. The facility was expected to produce approximately 25,000 barrels per day of premium base oil. In September 2008, Chevron Australia, wholly owned subsidiary of Chevron, announced the first gas output from the North West Shelf Venture's Train 5 onshore liquefied natural gas (LNG) facility at the Karratha Gas Plant in Western Australia. In the same month, Chevron extended and amended its agreement with the Kingdom of Saudi Arabia. This agreement granted Chevron the right to operate on behalf of the Saudi government for its 50% undivided interest in the petroleum resources of the onshore area of the Partitioned Neutral Zone (PNZ) between the kingdom and the state of Kuwait. Further in September 2008, Chevron Africa Holdings, a Chevron subsidiary, agreed to sell Chevron Nigeria Holdings to Corlay Global, a Panamanian Company owned by an African-based consortium composed of MRS Holdings and Petroci Holdings. In the same month, Chevron Africa Holdings sold its affiliates in Benin, Cameroon, Republic of Congo, Cote d'Ivoire, and Togo to Corlay Global. Chevron started crude oil production from its Blind Faith Field in the deepwater Gulf of Mexico, in November 2008. In the same month, Chevrons wholly owned subsidiary, Chevron Pacific Indonesia, started producing crude oil from the North Duri Field Area 12 in Indonesia, where Chevron produced nearly half the nation's crude oil. Subsequently, Chevron Africa Holdings agreed to sell 100% of its shareholdings in Chevron Kenya and Chevron Uganda to Total Outre Mer.

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In February 2009, Chevron discovered a new deepwater oil discovery at the Buckskin prospect located in the deepwater US Gulf of Mexico. In the following month, two of Chevrons subsidiaries completed the sale and transfer of their fuels marketing business in Brazil to a subsidiary of Ultrapar Participacoes (Ultrapar). In March 2009, Chevron Africa Holdings completed the sale of Chevron Nigeria Holdings to Corlay Global. Chevron Africa Holdings completed the sale of 100% of its shareholding in Chevron Uganda to Total Uganda, in April 2009. Chevron started crude oil production from its Tahiti Field, the deepest producing field in the Gulf of Mexico, in May 2009. In the same month, the company discovered an offshore discovery within the Moho-Bilondo license in the Republic of Congo.

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TOTAL S.A.
Company overview
TOTAL is one of the leading integrated oil and gas companies in the world. The company is engaged in all aspects of the petroleum industry, including upstream and downstream operations. TOTAL is also active in the chemicals, coal mining, and power generation businesses. The company has operations in more than 130 countries. TOTAL is headquartered in Courbevoie, France and employs about 97,000 people. The company recorded revenues of E179,976 million (approximately $264,805.9 million) during the financial year ended December 2008 (FY2008), an increase of 13.4% over the financial year ended December 2007 (FY2007). The operating profit of the company was E23,687 million (approximately $34,851.6 million) during FY2008, a decrease of 6.4% compared with FY2007. The net profit was E10,590 million (approximately $15,581.5 million) in FY2008, a decrease of 19.7% compared with FY2007.

Business description
TOTAL is engaged in the exploration and production of oil and gas, as well as transportation, refining, petroleum product marketing, and international crude oil and product trading. The company operates in more than 130 countries. TOTAL operates through three business segments: upstream, downstream, and chemicals. The upstream segment includes the company's exploration, development, and production activities, as well as its gas and power operations. TOTAL has exploration and production activities in over 40 countries and produces oil or gas in 30 countries. TOTALs gas and power division conducts activities downstream from production related to natural gas, liquefied natural gas (LNG), and liquefied petroleum gas (LPG), as well as power generation and trading, and other activities. The companys consolidated exploration and production subsidiaries development expenditures amounted to E7 billion (approximately $10.3 billion) in FY2008. The investments were made primarily in Angola, Nigeria, Norway, Kazakhstan, Indonesia, the Republic of Congo, the UK, Gabon, Canada, the US, and Qatar. In FY2008, TOTALs combined proved reserves of crude oil and natural gas was 10,458 million barrels of oil equivalent (Mboe), 50% of which were proved developed reserves. Liquids represented approximately 54% of these reserves and natural gas the remaining 46%. These reserves were located for the most part in Europe (Norway, the UK, the Netherlands, Italy, and France), and Africa (Nigeria, Angola, the Republic of Congo, Gabon, Libya, Algeria, and Cameroon). The reserves were also located in Asia/Far East (Indonesia, Myanmar, Thailand, and Brunei), North America (Canada and the US), and the Middle East (Qatar, United Arab Emirates, Yemen, Oman, Iran, and Syria). These reserves were also located in South America (Venezuela, Argentina, Bolivia, Trinidad & Tobago, and Colombia) and the Commonwealth of Independent States or CIS (Kazakhstan, Azerbaijan, and Russia). The upstream business segment also includes the gas and power division which encompasses the marketing, trading, and transport of natural gas and liquefied natural gas (LNG), LNG re-gasification and natural gas storage, and LPG shipping and trading. It also includes power generation from gas-fired combined-cycle plants and renewable energies; the trading

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and marketing of electricity; and the production, marketing, and trading of coal and solar power systems (through its subsidiaries Tenesol and Photovoltech). In FY2008, TOTAL traded and sold 5.2 million metric ton (Mt) of LPG (butane and propane) worldwide. As a refiner and petrochemicals producer, TOTAL has interests in several cogeneration facilities. TOTAL also participates in another type of cogeneration, which combines power generation with water desalination and gas-fired electricity generation. One such example is the Taweelah A1 cogeneration plant in Abu Dhabi, in which TOTAL has a 20% interest. TOTAL has also entered into a partnership agreement in FY2008 with GDF Suez and Areva to propose the development of a nuclear power plant project, based on third generation EPR technology, to the local authorities in Abu Dhabi at the appropriate time. In Thailand, TOTAL owns 28% of Eastern Power and Electric Company (EPEC), which operates the combined cycle gas power plant of Bang Bo, with a capacity of 350 megawatt (MW). In Nigeria, TOTAL and its partner, the state-owned Nigerian National Petroleum Corporation, are participating in two projects to construct gas-fired power generation units. TOTAL is also engaged in renewable energies, with a particular focus on solar-photovoltaic power. In solar-photovoltaic power (silicon-crystal technology), TOTAL is involved in upstream activities, with the manufacturing of photovoltaic cells, and, in downstream activities, with the marketing of solar panels. In partnership with GDF Suez and IMEC (Interuniversity MicroElectronics Centre), TOTAL owns 47.8% of Photovoltech, a company specializing in manufacturing photovoltaic cells. In addition, TOTAL holds a 50% interest in Tenesol, in partnership with Electricite de France (EDF). Tenesol designs, manufactures, markets and operates solar-photovoltaic power systems. TOTAL also operates a wind farm in Mardyck (near its Flanders refinery, located in Dunkirk, France). Mardyck has a capacity of 12 MW and produced approximately 29.5 gigawatt-hours (GWh) of electricity in FY2008. TOTAL has decided to dispose of certain of its wind farm projects. In marine energy, TOTAL acquired a 10% interest in a pilot project located offshore Santona, on the northern coast of Spain, in 2005. The construction of a first buoy, with a capacity of 40 kilowatt (kW), was completed and the buoy was put into the water in September 2008. TOTAL also exports steam coal from its mines located in South Africa, primarily to Europe and Asia. TOTAL owns and operates three mines. A fourth mine is under construction and several mining development projects are being reviewed. TOTAL also trades and markets steam coal through its subsidiaries Total Gas & Power, Total Energy Resources (Pacific Basin), and CDF Energie (France). TOTAL sold approximately 8.4 Mt of coal worldwide in FY2008, of which 4.0 Mt was South African steam coal. Approximately 50% of TOTALs South African coal production was sold to European utility companies and approximately 40% was sold in Asia. The downstream segment is engaged in refining, marketing, trading, and shipping activities. TOTAL is the largest refiner/marketer in Western Europe, and the largest marketer in Africa, with a market share of 11%. TOTALs refining business has interests in 25 refineries and it directly operates 12 of these refineries. These refineries are located in Europe, the US, the French West Indies, Africa, and China. The companys refineries produce a broad range of specialty products, such as lubricants, LPG, jet fuel, special fluids, bitumen, and petrochemical feedstock. As of December

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31, 2008, TOTALs worldwide refining capacity was 2,604 thousand barrels per day (kb/d) and its refined products sales worldwide stood at 3,658,kb/d (including trading activities). The company markets a wide range of specialty products, produced from refined oil at its refineries and other facilities. TOTAL is among the leading companies in the specialty products market, in particular for the bitumen, jet fuel, LPG, and lubricants markets. Through its specialty products, TOTAL is present in approximately 150 countries. As of December 31, 2008, TOTALs worldwide marketing network comprised 16,425 retail stations, with more than 50% owned by the company. TOTAL is also active in the biodiesel and biogasoline biofuel sectors. In 2008, TOTAL consolidated its position as a leading oil and gas company in the European biofuels market by producing and incorporating 790 kilotonnes (kt) of ethyltertio-buthyl-ether (ETBE) at ten refineries and incorporating 1,470 kt of VOME (vegetable-oil-methyl-ester) at fourteen European refineries and several storage sites. TOTAL, in partnership with the companies in this area, is developing second generation biofuels derived from biomass. The company is also participating in French, European, and international bioenergy development programs. The trading and shipping activities of the downstream segment of TOTAL sell and market the companys crude oil production; and provides a supply of crude oil for the companys refineries. It also imports and exports the appropriate petroleum products for TOTAL, charters appropriate ships for these activities, and undertakes trading on various derivatives markets. In FY2008, the shipping division of the company chartered 3,182 voyages to transport approximately 128 million metric ton (Mt) of oil. As of December 31, 2008, TOTAL employed a fleet of 62 vessels chartered under long-term or medium-term agreements (including six LPG carriers). The fleet, consisting entirely of double-hulled vessels, has an average age of approximately five years. The chemicals segment is organized into the base chemicals (petrochemicals and fertilizers) and the specialties chemicals (including rubber processing, resins, adhesives, and electroplating activities). TOTAL is one of the worlds largest integrated chemical producers. TOTAL's petrochemicals activities include base petrochemicals (olefins and aromatics) and their derivatives (polyethylene, polypropylene, and styrenics). TOTAL's main petrochemicals sites are located in Belgium, France, the US, Singapore, and China. TOTAL holds a 50% interest in an integrated petrochemicals site located in Daesan, South Korea in partnership with Samsung. The company also holds a 20% interest in a site with a steam cracker and two polyethylene units in Mesaieed, Qatar. Through its subsidiary GPN, TOTAL manufactures and markets nitrogen fertilizers made from natural gas. TOTALs specialties chemicals division includes its business in rubber processing, resins, adhesives, and electroplating. Hutchinson manufactures and markets products derived from rubber processing for the automotive, aerospace, and defense industries and consumer markets. TOTAL produces and markets resins for adhesives, inks, paints, coatings and structural materials through three subsidiaries: Cray Valley, Sartomer, and Cook Composites & Polymers. TOTAL, through its subsidiary Bostik, is engaged in manufacturing adhesives for the industrial, hygiene, construction, and consumer and

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professional distribution markets. Atotech, which encompasses TOTALs electroplating activities, is the second largest company in this sector, based on worldwide sales. It is engaged in both the electronics and general metal finishing markets.

SWOT analysis Strengths


Strong market position

The company has a strong market position. TOTAL is the fifth largest publicly-traded integrated international oil and gas company in the world. The company operates in over 130 countries. TOTAL has exploration and production activities in over 40 countries and produces oil or gas in 30 countries. Its reserves are located for the most part in Europe, Africa, Asia/Far East, North America, and South America. Its reserves are also located in the Middle East and the CIS. TOTAL is one of the leading marketers in Western European markets, which includes countries such as France, Spain, Benelux, the UK, Germany, and Italy. TOTAL is one of the worlds largest integrated chemical producers. The company is also the largest marketer in Africa, with a market share of 11%. The company was ranked 15 in Forbes 2008 Global 2000, up from 19 in 2007. A strong market position provides it with a significant bargaining power in the global oil and gas industry. Diversified geographical presence

TOTAL has wide presence across various regions. The company has operations in more than 130 countries. The company divides its geographic division as France, rest of Europe, North America, Africa, and Asia-Pacific and rest of the world. France, TOTALs largest geographical market, accounted for 24.2% of the total revenues in the FY2008. For the same period, rest of Europe accounted for 46% of the total revenues; North America accounted for 7.8%; and Africa accounted 6.9% of the total revenues. Asia-Pacific and rest of the world accounted for the remaining 15.1% of the total revenues in FY2008. The companys diversified geographical presence and regional brand identity gives it competitive advantage over its competitors and also indicates that the company has a wider scope in increasing its revenues by utilizing its global presence. Further, its world wide presence reduces exposure to economic conditions or political stability in any once country or region. Strong research and development (R&D) capabilities

TOTAL has strong research and development (R&D) capabilities. The company conducts research to develop new products and improve existing products, as well as to enhance manufacturing and production methods and improve Global Top 10 Energy Companies
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service. TOTAL focuses its research and development activities on the areas of exploration and production technology, refining technology, and chemical processes. It spent E612 million (approximately $900.5 million) on R&D in FY2008. R&D expenses in previous years were E594 million (approximately $874 million) in FY2007; and E569 million (approximately $837.2 million) in the financial year ended December 2006 (FY2006). The number of employees dedicated to research and development activities in FY2008 were 4,285, compared with 4,216 in FY2007 and 4,091 in FY2006. TOTAL has established a R&D department within its gas and power division (which operates under the upstream business segment) to support the industrial and commercial activities of the division. It also focuses on contributing to the divisions and the companys growth by anticipating technological and market trends and developing technical solutions. The new R&D department would focus on natural gas, chemical conversion of coal to liquids, carbon dioxide capture, biomass, solar energy, and energy storage. TOTAL uses its strong R&D capabilities in research projects, as well as research and testing programs. For instance, in October 2008, TOTAL inaugurated a pilot methanol to olefins (MTO) plant at its Feluy site in Belgium. This research project, one of TOTALs most important research projects, is intended to assess, on a semi-industrial scale, the technical and economical feasibility of producing olefins from methanol derived from natural gas, as well as from coal and biomass. It would also consider new methods to produce polyolefins. Further, in FY2008, TOTAL continued its research and testing programs for fuel cell and hydrogen fuels technologies. The company's strong R&D capabilities provide it with a competitive advantage and help it to improve the efficiency of its products and processes. Presence across the energy value chain

TOTAL operates in a wide range of businesses worldwide and commands presence across the energy value chain. The company engages in fully integrated petroleum operations, chemicals operations, mining operations of coal, power generation, and energy services. TOTAL operates across the energy value chain through its three business segments: upstream, downstream, and chemicals. The companys upstream operations comprise exploration, development, and production activities, as well as its gas and power operations. The gas and power division encompasses the marketing, trading, and transport of natural gas and liquefied natural gas (LNG), LNG re-gasification and natural gas storage, and LPG shipping and trading. The downstream segment is engaged in refining, marketing, trading, and shipping activities. Trading activities of the segment include selling the company's crude oil production, and providing a supply of crude oil for the companys refineries. TOTAL's petrochemicals activities include base petrochemicals (olefins and aromatics) as well as their derivatives (polyethylene, polypropylene, and styrenics). The company also has interests in the coal mining, cogeneration, and electricity sectors. TOTALs presence across the energy value chain provides the company with opportunities to optimize its business while minimizing business risks.

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Weaknesses
Legal proceedings

TOTAL is involved in a number of legal proceedings. In January 2008, the Paris Criminal Court imposed a fine on TOTAL in relation to the sinking of the tanker Erika in 1999. The tanker, carrying fuel oil owned by a TOTAL division, split in two and sank in rough seas in December 1999, spewing nearly 20,000 metric tons of oil into the Atlantic. TOTAL was found guilty of recklessness in its vessel inspection and vetting procedure. TOTAL was ordered to compensate the victims of pollution from the Erika. The compensation totaled E192 million (approximately $282.5 million). TOTAL had already spent E200 million (approximately $294.3 million) after the sinking to help clean up the coastline, pump out the heavy fuel oil remaining in the wreck, and treat the waste collected along the coast. In June 2008, TOTALs Elf Aquitaine and unit Arkema France was fined by the European Commission for fixing prices of a chemical used to make paper. Elf Aquitaine merged with TOTAL and spun off Arkema France. Elf Aquitaine and unit Arkema France were fined a total E59 million (approximately $86.8 million) and two other groups E10 million (approximately $14.7 million) each. Such penalties could have adverse effects on the companys profitability. Employee unrest

TOTAL has been facing employee unrest over the last two years. For instance, in FY2007, workers of TOTAL went on a strike at five of the company's refineries over pay issues. The five refineries affected were Gonfreville, La Mede, Donges, Grandpuits, and the Feyzin refinery. As a result of the strike the supply of fuel from the five refineries was blocked or reduced. The employee unrest continued even in FY2008. In December 2008, the company's employees at domestic refineries as well as at some lubricant plants and air-refueling operations went on a strike over a wage dispute. Such employee actions adversely affect the operations of the company and could result in decline in the productivity. Declining production of gasoline

TOTALs gasoline production from its refineries has been declining for the past few years. The companys gasoline production has declined from 532 kb/d in FY2006 to 443 kb/d in FY2008, at a negative CAGR of 9%. Further decline in the gasoline production could have a negative impact on the revenues of the company.

Opportunities
Establishment of Jubail Refining and Petrochemical Company

TOTAL signed agreements with The Saudi Arabian Oil Company (Saudi Aramco) for the establishment of a joint venture in June 2008. The joint venture, Jubail Refining and Petrochemical Company, is expected to begin operations in 2013. Saudi Aramco would initially own 62.5% of the company and TOTAL would own the remaining 37.5%. The joint venture is to construct a full-conversion refinery with a capacity of 400,000 barrel per day in Jubail, Saudi Arabia. The refinery would process Arabian heavy crude to high-quality refined products. This full-conversion refinery would Global Top 10 Energy Companies
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maximize the production of diesel and jet fuels. In addition, the project will produce 700,000 tons per year (t/y) of paraxylene, 140,000 t/y of benzene, and 200,000 t/y of polymer-grade propylene. Saudi Aramco and TOTAL would share the marketing of the refinerys products. This refinery is strategically located to benefit from its proximity to the Arabian heavy crude supply system. This refinery reflects the companys commitment to increase its capacity to meet the growing demand for refined products across markets. TOTAL, together with Saudi Aramco, could supply transportation fuels and petrochemicals in Asia, Middle-East, and European markets where the demand for diesel and jet fuels continues to increase. Increasing demand for refined products in China

Over the next 10 years, it is expected that about 60% of the worlds petrochemical demand growth to occur in Asia, with more than one-third in China alone. The demand for refined petroleum products in China is expected to rise sharply in the coming decades. China, despite substantial additions to refining capacity over the next three decades, is expected to remain a net importer of refined products in 2030. The refining capacity in China is forecast to increase from 6.2 million barrels per day in 2006 to 14.6 million barrels per day in 2030. TOTAL was the first international oil and gas company to undertake offshore exploration and to produce offshore oil in China in the 1980s. TOTAL has been operating in the country for about 30 years through its activities of exploration and production, gas, refining and marketing, and chemicals. Further, in 2006, TOTAL and China National and Petroleum Corporation (CNPC) entered into a production-sharing contract for the evaluation, development, and production of natural gas in Sulige South. TOTAL has also been a partner for over 10 years (22.4% stake) with Sinochem and PetroChina in WEPEC, the first sino-foreign oil refining joint-venture in China. In June 2008, TOTAL signed a MOU with China National Offshore Oil Corporation (CNOOC) for cooperation in the areas of upstream, downstream, and in the field of new energies. These investments in China would enable the company to export refined products or establish fresh refining capacity and take advantage of the increasing demand for refined products in the country. Increasing demand for liquefied natural gas (LNG)

The demand for liquid fuels is expected to increase from the 86 million oil-equivalent barrels per day, as of December 2007, to 116 million oil-equivalent barrels per day in 2030. The demand for liquefied natural gas (LNG) is expected increase in North America, Europe, and the Asia Pacific. It is forecasted that the global LNG demand would grow at more than 4% per year through 2030, driven by the demand in North America, Europe, and Asia Pacific markets. The demand for LNG would reach about 16% of the worlds gas demand by 2030. TOTAL has entered into agreements to obtain long-term access to LNG regasification capacity in North America (the US and Mexico), Europe (France and the UK), and Asia (India), and is studying a plan for a terminal in Croatia. This access to diversified markets allows TOTAL to develop new liquefaction projects, in particular in the Middle East and Africa, while strengthening its own LNG supply portfolio. In the recent past, TOTAL acquired stakes in the Brass LNG project in Nigeria,

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in the Ichthys LNG project in Australia, and in the Qatargas 2 project in Qatar and signed a cooperation agreement with Gazprom to study the development of the first phase of the Shtokman field. Such investments place the company in an ideal position to exploit growing demand for LNG. Oil and gas exploration projects

TOTAL has entered into several agreements for oil and gas exploration projects. For instance, in September 2008, TOTAL signed three oil and gas agreements in Syria. The first agreement provides for a 10-year extension of the Deir Ez Zor permit, until 2021. The second sets forth the principles to be incorporated into a final agreement concerning the increase in production on the Tabiyeh gas and condensates field. TOTAL also signed a framework agreement related to the development of oil projects in partnership with the state-owned companies, Syrian Petroleum Company and Syrian Gas Company. Further, in October 2008, TOTAL signed an agreement with KNOC to farm into onshore exploration Block 70 (Attaq Area, Shabwa Governorate) in Yemen with an interest of 30.875%. This agreement had been approved by the Yemeni Ministry of Oil and Minerals. In April 2009, TOTALs subsidiary, TOTAL E&P USA, entered into several agreements with Cobalt International Energy to jointly explore the deepwater Gulf of Mexico. The company has also made several oil and gas discoveries. For instance, in August 2008, TOTAL announced a gas discovery from the Mimia-1 exploration well on the WA-344P permit (in which TOTAL has 40% interest), in the Browse Basin in Australia. In December 2008, TOTALs Nigerian subsidiary, TOTAL E&P Nigeria (TEPNG), encountered hydrocarbons in the area within the south-eastern corner of Oil Mining License (OML) 102, offshore south-eastern Nigeria, about 15 km from the Ofon Field, in a water depth of seventy meters. Such oil and gas exploration projects coupled with oil discoveries could help TOTAL in increasing its oil and gas production. Strategic initiatives in the area of biofuels and photovoltaic solar power systems

TOTAL has taken several strategic initiatives in the area of biofuels and photovoltaic solar power systems. In FY2008, TOTAL consolidated its position as a leading oil and gas company in the European biofuels market by producing and incorporating 790 kt of ethyl-tertio-buthyl-ether (ETBE) at ten refineries and incorporating 1,470 kt of VOME (vegetable-oilmethyl-ester) at fourteen European refineries and several storage sites. TOTAL, in partnership with the companies in this area, is developing second generation biofuels derived from biomass. For instance, in September 2008, TOTAL announced that it would be participating in Futurol, a second-generation bioethanol research and development project. Further, in April 2009, TOTAL acquired an interest in Gevo, a company engaged in developing biofuels. TOTAL is also increasing its footprint in the solar power systems. In December 2008, TOTAL acquired, as a core industrial shareholder, an interest in the share capital of the US start-up Konarka, a company specializing in the development of third generation organic solar technologies. With a significant interest of slightly below 20%, TOTAL is Konarkas principal shareholder. Further, in March 2009, TOTAL and GDF Suez announced that they were considering together locating a

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silicium wafers fabrication plant intended for the photovoltaic industry on the De Vernejoul industrial site in the Moselle region in France. The initial investment is estimated at approximately E70 million (approximately $103 million). The company is also planning to make a foray into the nuclear energy production sector. In Abu Dhabi, TOTAL entered into a partnership agreement in early 2008 with GDF Suez and Areva to propose the development of a nuclear power plant project, based on third generation EPR technology. This project would provide TOTAL with an opportunity to enter the nuclear energy production sector. Such strategic initiatives could help TOTAL in diversifying its product offerings, thereby increasing its revenues.

Threats
Economic slowdown in France and the European Union

The company is based in France and has a significant presence across the European market. In the FY2008, Europe accounted for 70.2% of the total revenues of the company. Of these, France alone accounted for 24.2%. According to International Monetary Funds (IMF) World Economic Outlook, April 2009, the French and the European Union economies could face slowdown in 2009. The GDP growth in the European Union market is forecasted to decline from 1.1% in 2008 to a negative growth rate of -3.9% in 2009. The GDP growth rate of France is likely to decline from 0.7% in 2008 to a negative rate of 2.9% in 2009. A weak economic outlook for these regions could depress industrial development and impact the demand for the companys products. Environmental regulations

TOTALs businesses are subject to numerous laws and regulations relating to the protection of the environment. With rising awareness of the damage to the environment caused by industry, especially regarding global warming, regulatory standards have been continuously tightened in recent years. One of the most important developments in this area has been the introduction of the Kyoto Protocol for the reduction of greenhouse gases. The protocol calls on industrialized countries to reduce their greenhouse gas emissions level by 5.2% on an average annual basis during the 2008-2012 period, compared with 1990 emissions levels. Further, in 2005, the US environmental protection agency (EPA) issued a clean air interstate rule (CAIR), to reduce the emission levels. According to the rule, the states have to reduce the allowable sulfur dioxide (SO2) emissions by 70% and reduce Nitrous Oxide (NOX) emissions by 60%, by 2015 compared with the 2003 levels. The company is governed by these regulations which could impose new liabilities on the company. This could result in a material decline in TOTALs profitability in the short term. Regulations concerning Iran

In 2006, Iran and Libya Sanction Act (ILSA), the US legislation implementing sanctions against Iran and Libya was amended and extended until December 2011. As per this amendment, the President of the US is authorized to initiate an investigation into the possible imposition of sanctions against persons to have knowingly made investments of $20 million or more in any 12-month period in the petroleum sector in Iran. Global Top 10 Energy Companies
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The US government waived the application of sanctions for TOTALs investment in the South Pars gas field in Iran in 1998. In each of the years since the passage of ILSA, TOTAL has made investments in Iran (excluding South Pars) in excess of $20 million. TOTAL may invest amounts significantly in excess of $20 million per year in the country. In July 2008, TOTAL postponed plans to invest in a project linked to Iran's South Pars gas field in the midst of mounting tensions over its nuclear ambitions. The US has intensified its push for tougher sanctions on Iran over the country's nuclear program. Therefore, an immediate investment in Iran amid the mounting tensions over Irans nuclear program could increase political risks for TOTAL.

Recent developments
In January 2008, TOTAL announced the commercial start-up of a large scale liquefied petroleum gas (LPG) import and underground storage terminal located in Visakhapatnam, in the south eastern Indian state of Andhra Pradesh. This facility was owned and operated by South Asia LPG (SALPG), a company equally-owned by TOTAL and HPCL. In the following month, Elf Petroleum Nigeria (EPNL), a wholly-owned subsidiary of TOTAL, obtained approvals from the Nigerian government and co-venturers for developing the offshore Usan field. Co-venturers in the Usan development included Elf Petroleum Nigeria (20%, operator), Chevron Petroleum Nigeria (30%), Esso Exploration and Production Nigeria (Offshore East) (30%), and Nexen Petroleum Nigeria (20%). In March 2008, TOTAL signed an agreement to acquire ExxonMobils marketing assets in Puerto Rico, Jamaica, and the US Virgin Islands. In April 2008, TOTAL sold a 20% stake in the Taoudenni Ta7 and Ta8 permits in Mauritania to Qatar Petroleum International. In the same month, TOTAL entered into an agreement to acquire Synenco Energy. In May 2008, TOTAL E&P Malaysia, a wholly-owned subsidiary of TOTAL, signed a production sharing contract with national oil company Petronas. In June 2008, TOTAL signed a Memorandum of Understanding (MOU) with China National Offshore Oil Corporation (CNOOC) to enhance wide-ranging cooperation in the areas of upstream, downstream, and in the field of new energies. Further in June 2008, TOTAL signed agreements with The Saudi Arabian Oil Company (Saudi Aramco) for the establishment of a joint venture, the Jubail Refining and Petrochemical Company. In August 2008, TOTAL announced a gas discovery from the Mimia-1 exploration well on the WA-344P permit (in which TOTAL had 40% interest), in the Browse Basin in Australia. In September 2008, TOTAL entered into an agreement with Talisman Energy (an independent oil and gas exploration and production company) to purchase the shares of its Dutch subsidiary, Goal Petroleum (Netherlands), for $480 million (excluding working capital). In the same month, TOTAL signed three oil and gas agreements in Syria. Further in September 2008, TOTAL announced the production of first gas from the K5F field, part of its gas development project in the K5a block of the Dutch Continental Shelf. It was located approximately 115 km northwest of Den Helder on the Dutch Coast. In the same month, the company decided to participate in Futurol, a second-generation bioethanol research and development project.

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Subsequently in September 2008, TOTAL, Gazprom (a company engaged in oil production and refining activities), and Yacimentos Petroliferos Fiscales Bolivianos (YPFB, a state-owned petrol company of Bolivia) signed a cooperation agreement to explore the Azero block in Bolivia within the framework of a joint venture company in which TOTAL and Gazprom would own equal stakes. In October 2008, TOTAL signed an agreement with Korea National Oil Corporation (KNOC, a national oil and gas company of South Korea) to farm into onshore exploration Block 70 (Attaq Area, Shabwa Governorate) in Yemen with an interest of 30.875%. This agreement was approved by the Yemeni Ministry of Oil and Minerals. Further in October 2008, TOTAL inaugurated a pilot methanol to olefins (MTO) plant at its Feluy site in Belgium. This research project was intended to assess, on a semi-industrial scale, the technical and economical feasibility of producing olefins from methanol derived from natural gas, as well as from coal and biomass. The project would also consider new methods to produce polyolefins. In November 2008, TOTAL announced a significant gas and condensate discovery in Block B offshore Brunei, in a water depth of 62 meters, around 50 km from the coast. TOTAL operated the block with a 37.5% interest in association with Shell Deepwater Borneo (35%) and local partners (27.5%). Further in November 2008, TOTAL announced that three successful exploration wells had been drilled in Thailand and that a new phase of development of the Bongkot North Field had been launched. In December 2008, TOTAL was awarded three exploration licenses in the 25th oil and gas licensing round of the UKs Department of Energy and Climate Change. In the same month, TOTALs Nigerian subsidiary, Total E&P Nigeria (TEPNG), discovered hydrocarbon reserves in the area within the south-eastern corner of Oil Mining License (OML) 102, offshore south-eastern Nigeria, about 15 km from the Ofon Field, in a water depth of 70 meters. Further in December 2008, TOTAL acquired, as a core industrial shareholder, an interest in the share capital of the US start-up Konarka, a company specializing in the development of third generation organic solar technologies. With a significant interest of slightly below 20%, TOTAL was Konarkas principal shareholder. In January 2009, TOTAL agreed to acquire a 50% stake in IDT Corporations (IDT) subsidiary, American Shale Oil (AMSO). In February 2009, TOTAL signed a memorandum of understanding (MOU) with Libyas National Oil Corporation (NOC) converting the existing petroleum contracts covering the blocks C17 and C137, operated by its subsidiary Mabruk Oil Operations, to exploration and production sharing agreement (EPSA) IV format. The blocks were located in the onshore Sirte Basin and the offshore Sabratha Basin, respectively, around 100 km from the Libyan coast. Further in February 2009, TOTAL signed an agreement with Azerbaijans state-owned oil and gas producer, SOCAR. The exploration, development, and production sharing agreement (EDPSA) covered a license on the Absheron offshore block. This block was located in the Caspian Sea, 100 km from Baku, in a water depth of around 500 meters.

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In March 2009, TOTAL and GDF Suez announced that they were considering together locating a silicium wafers fabrication plant intended for the photovoltaic industry on the De Vernejoul industrial site in the Moselle region in France. The initial investment was estimated at approximately E70 million (approximately $103 million). Further in March 2009, TOTAL announced its plans to invest more than E1 billion (approximately $1.5 billion) in France in refining, petrochemicals, and solar energy. In the same month, TOTALs affiliate, TOTAL Exploration and Production Vietnam, signed a production sharing contract with Vietnam Oil and Gas Group (PetroVietnam) for the exploration blocks DBSCL-02 and DBSCL-03. The blocks, which were located in the Mekong Delta area onshore, would be operated by TOTAL with a 75% interest, while PetroVietnam Exploration Production (PVEP) would hold the remaining 25% interest. In April 2009, TOTAL signed agreements for a 20-year extension of its 15% participation in Abu Dhabi Gas Industries (Gasco), alongside the Abu Dhabi National Oil Company (Adnoc, 68%), Shell (15%) and Partex (2%). In the same month, TOTAL E&P Canada (TOTAL Canada), a wholly-owned subsidiary of TOTAL, sold a 10% interest in the Northern Lights Partnership (NLP) to SinoCanada Petroleum Corporation, a subsidiary of China Petroleum & Chemical Corporation (Sinopec). Subsequently in April 2009, TOTAL announced the inauguration of Qatargas 2, a LNG venture, composed of two trains of 7.8 million tons per year (Mt/y) each and for which TOTAL held a 16.7% interest in the second train, alongside the stateowned company Qatar Petroleum (65%) and ExxonMobil (18.3%). Further in April 2009, TOTALs subsidiary, TOTAL E&P USA, entered into several agreements with Cobalt International Energy (an oil and gas exploration and development company) to jointly explore the deepwater Gulf of Mexico. In the same month, TOTAL acquired an interest in Gevo, a company engaged in developing biofuels. In May 2009, TOTAL announced that the Tahiti field located in the Gulf of Mexico had started production. This deepwater field, in which Total owned a 17% interest along with StatoilHydro, was operated by Chevron Corporation. Further In May 2009, TOTAL announced that, within the framework of the Egyptian Natural Gas Holding Company (EGAS) 2008 international bid round organized by the Egyptian authorities, it had been awarded a 90% participation in and the operatorship of Block 4 (East El Burullus Offshore) in conjunction with partner ENEL (10%).

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ConocoPhillips
Company overview
ConocoPhillips is the third-largest integrated energy company in the US and the second-largest refiner in the country. The company is engaged in the exploration and production of petroleum, natural gas, chemicals, and polymers businesses. It has operations in over 40 countries. ConocoPhillips is headquartered in Houston, Texas and employs about 33,800 people. The company recorded revenues of $240,842 million during the financial year ended December 2008 (FY2008), an increase of 28.5% over the financial year ended December 2007 (FY2007). The operating profit of the company was $32,241 million during FY2008, an increase of 9.5% over FY2007. The net loss was $16,998 million in FY2008, compared with net profit of $11,891 million in FY2007.

Business description
ConocoPhillips is an international, integrated energy company. It operates worldwide with assets and businesses in nearly 40 countries. It operates through six segments: exploration and production (E&P), midstream, refining and marketing (R&M), LUKOIL Investment, chemicals, and emerging businesses. The E&P segment primarily explores for, produces, transports, and markets crude oil, natural gas, and natural gas liquids on a worldwide basis. It also mines deposits of oil sands in Canada to extract bitumen and upgrade it into synthetic crude oil. Operations to liquefy natural gas and transport the resulting liquefied natural gas (LNG) are also included in the E&P segment. Proved reserves for ConocoPhillips at year end 2008 were 8.08 billion barrels of oil equivalent (BOE). The company conducts its E&P operations in the US, Norway, the UK, Canada, Nigeria, Ecuador, offshore Timor-Leste in the Timor Sea, Australia, China, Indonesia, Algeria, Libya, Vietnam, and Russia. In FY2008, E&Ps worldwide production, including its share of equity affiliates production excluding LUKOIL, averaged about 1.76 million barrels-of-oil-equivalent (BOE) per day. Production from its international E&P operations averaged 0.99 million BOE per day; and its Canadian syncrude mining operations had net production of 22,000 barrels per day in 2008. The company conducts its midstream business through its 50% equity investment in DCP Midstream, a joint venture with Spectra Energy (a North American natural gas infrastructure company). The midstream business purchases raw natural gas from producers and gathers natural gas through extensive pipeline gathering systems. The gathered natural gas is then processed to extract natural gas liquids. The remaining residue gas is marketed to electrical utilities, industrial users, and gas marketing companies. Most of the natural gas liquids are fractionated and separated into individual components like ethane, butane, and propane, and marketed as chemical feedstock, fuel, or blendstock. The total natural gas liquids extracted in 2008, including its share of DCP Midstream, was 188,000 barrels per day in 2008. As on December 31, 2008, DCP Midstream owned or operated 53 natural gas liquids extraction plants, 10 natural gas liquids fractionation plants, and its gathering and transmission systems included approximately 60,000 miles of pipeline. In 2008, its raw natural gas throughput averaged 6.2 billion cubic feet per day, and natural gas liquids extraction averaged Global Top 10 Energy Companies
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360,000 barrels per day. DCP midstreams assets are primarily located in the following producing regions of the US: Rocky Mountains, Midcontinent, Permian, East Texas/North Louisiana, South Texas, Central Texas, and Gulf Coast. Outside of DCP midstream, the companys US natural gas liquids business included, as of year-end 2008, a 25,000 barrel per day capacity natural gas liquids fractionation plant in Gallup, New Mexico. It also included a 22.5% equity interest in Gulf Coast Fractionators, which owns a natural gas liquids fractionation plant in Mont Belvieu, Texas (with ConocoPhillips net share of capacity at 25,000 barrels per day). It further included a 40% interest in a fractionation plant in Conway, Kansas (with ConocoPhillips net share of capacity at 42,000 barrels per day); and a 12.5% equity interest in a fractionation plant in Mont Belvieu, Texas (with ConocoPhillips net share of capacity at 26,000 barrels per day). ConocoPhillips also owns a 39% equity interest in Phoenix Park Gas Processors (Phoenix Park), a joint venture principally with the National Gas Company of Trinidad and Tobago. Phoenix Park processes natural gas in Trinidad and markets natural gas liquids in the Caribbean, Central America, and the US Gulf Coast. Its facilities include a 1.35 billion cubic feet per day gas processing plant and a 70,000 barrel per day natural gas liquids fractionator. A third gas processing train is currently under construction. When complete in 2009, it will bring Phoenix Parks total processing capacity to 2 billion cubic feet per day. ConocoPhillips share of natural gas liquids extracted averaged 8,000 barrels per day and its share of fractionated liquids averaged 14,000 barrels per day in 2008. The R&M segment purchases, refines, markets, and transports crude oil and petroleum products, primarily in the US, Europe, and Asia. As on December 31, 2008, R&M owned or had an interest in 12 operating refineries in the US, and marketed gasoline, diesel, and aviation fuel through approximately 8,340 outlets in 49 states of the US. It markets its products under the brand names of Phillips 66 and Conoco, and 76 other brands. At December 31, 2008, R&M owned or had an interest in five refineries outside the US. Three refineries are located in the UK, Ireland, and Malaysia, while two refineries are located in Germany. For the same period, R&M had marketing operations in five European countries. The company uses the JET brand name to market retail and wholesale products in Austria, Germany, and the UK. In addition, a joint venture in which ConocoPhillips has equity interest, markets products in Switzerland under the Coop brand name. The company also markets aviation fuels, liquid petroleum gases, heating oils, transportation fuels, and marine bunkers to commercial customers and into the bulk or spot market in these countries and Ireland. As of December 31, 2008, R&M had approximately 1,260 marketing outlets in its European operations, of which approximately 860 were company-owned and 400 were dealer-owned. Through its joint venture operations in Switzerland, the company also has interests in 200 additional sites. The LUKOIL Investment segment consists of ConocoPhillips equity investment in the ordinary shares of LUKOIL, an international, integrated oil and gas company headquartered in Russia. As on December 31, 2008, ConocoPhillips ownership interest in LUKOIL was 20% based on authorized and issued shares, and 20.06% based on estimated shares outstanding. The chemical segment consists of ConocoPhillips 50% equity investment in Chevron Phillips Chemical Company (CPChem), a joint venture with Chevron Corporation. CPChems business is structured around two primary operating segments: olefins and polyolefins; and specialties, aromatics, and styrenics. Global Top 10 Energy Companies
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The olefins and polyolefins segment produces and markets ethylene, propylene, and other olefin products, which are primarily consumed within CPChem for the production of polyethylene, normal alpha olefins, polypropylene, and polyethylene pipe. The specialties, aromatics, and styrenics segment manufactures and markets aromatic products, such as benzene, styrene, paraxylene, and cyclohexane. The segment also manufactures and markets polystyrene, as well as styrene-butadiene copolymers; a variety of specialty chemical products, including organosulfur chemicals, solvents, catalysts, drilling chemicals, mining chemicals, and high-performance engineering plastics and compounds. The emerging businesses segment represents ConocoPhillips investment in new technologies or businesses outside its normal scope of operations. Activities within this segment are currently focused on power generation and innovation of new technologies, such as those related to conventional and non-conventional hydrocarbon recovery (including heavy oil), refining, alternative energy, biofuels, and the environment.

SWOT analysis Strengths


Strong market position

The company has a strong market position. It ranks sixth amongst the non-government-controlled companies in terms of worldwide proved reserves. In the US, it is the third largest integrated energy company. The DCP Midstream, in which the company has a 50% equity investment and which conducts its midstream business, is also a large producer of natural gas liquids in the US. Further, based on the statistics published in the December 22, 2008 issue of the Oil & Gas Journal, the companys R&M segment had the second-largest US refining capacity of 18 large refiners of petroleum products. In addition, it ranked fourth among non-government-controlled companies, worldwide. In the chemicals segment, CPChem ranks within the top 10 producers of its major product lines, based on average 2008 production capacity. Leading market position in a number of its key product lines enhances ConocoPhillips brand image. Extensive refining and marketing operations

ConocoPhillips has extensive refining operations. As on December 31, 2008, the company owned or had an interest in 12 operating refineries in the US. The refining capacity of the company is also integrated with its upstream and downstream businesses. In the US, as of December 31, 2008, the company marketed gasoline, diesel, and aviation fuel through approximately 8,340 outlets in 49 states. It markets its products under the brand names of Phillips 66, Conoco, and 76 other brands. In Europe, at December 31, 2008, the company had marketing operations in five countries. The company uses the JET brand name to market retail and wholesale products in Austria, Germany, and the UK. In addition, a joint venture in which ConocoPhillips has equity interest markets products in Switzerland under the Coop brand name. The company also markets aviation fuels, liquid petroleum gases, heating oils, transportation fuels, and marine bunkers to commercial customers and into the bulk or spot market in these countries and Ireland.

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Further, for the same period, the company had approximately 1,260 marketing outlets in its European operations, of which approximately 860 were company-owned and 400 were dealer-owned. Through its joint venture operations in Switzerland, the company also has interests in 200 additional sites. Large refining and marketing operations, which is also geographically diversified and integrated into upstream and downstream segments, provides a competitive advantage to the company. Wide geographic presence

ConocoPhillips has wide presence across various regions. The company divides its geographic division as US, Norway, UK, Australia, Canada, and other foreign countries. The companys global operations and regional brand identity gives it competitive advantage over its competitors and also indicates that the company has a wider scope in increasing its revenues by utilizing its global presence. Further, its world wide presence reduces exposure to economic conditions or political stability in any once country or region.

Weaknesses
Decline in oil production

The companys oil production in FY2008 declined significantly compared with the financial year ended December 2006 (FY2006). Its crude oil production has declined from 972,000 barrels per day in FY2006 to 806,000 barrels per day in FY2008, at a negative CAGR of 9%. Further, its crude oil production has also decreased from its Middle East and Africa and the US market in which it serves. Its crude oil production from the Middle East and Africa operations declined from 106,000 barrels per day in FY2006 to 78,000 barrels per day in FY2008. Moreover, the companys crude oil production from the US has declined from 367,000 barrels per day in FY2006 to 335,000 barrels per day in FY2008. A declining trend of oil production could hamper the revenue growth of the company. Declining reserves

The companys oil reserves have been declining. Its proved reserves for FY2008 were 8.08 billion barrels of oil equivalent (BOE), compared with 8.72 billion BOE in FY2007. This excludes the estimated 1,893 million BOE and 1,838 million BOE included in the LUKOIL Investment segment at year-end 2008 and 2007, respectively. It also excluded the companys share of Canadian Syncrude, which was 249 million barrels at year-end 2008, compared with 221 million at year-end 2007. Declining reserves can reduce investor confidence in short term.

Opportunities
Increasing demand for refined products in China

Over the next 10 years, it is expected that about 60% of the worlds petrochemical demand growth to occur in Asia, with more than one-third in China alone. The demand for refined petroleum products in China is expected to rise sharply in the coming decades. China, despite substantial additions to refining capacity over the next three decades, is expected to Global Top 10 Energy Companies
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remain a net importer of refined products in 2030. The refining capacity in China is forecast to increase from 6.2 million barrels per day in 2006 to 14.6 million barrels per day in 2030. ConocoPhillips has exploration interests in China. For instance, the company has 49% share in the Peng Lai 19-3 field in Bohai Bay Block 11-05, whose production averaged 14,000 barrels of oil per day in 2008. The company also holds a 49% interest in the nearby Peng Lai 25-6 field. Its Xijiang development consists of two fields located approximately 80 miles south of Hong Kong in the South China Sea. The companys ownership in these fields ranges from 12.3% to 24.5%. Facilities include two manned platforms and a floating production, storage and offloading (FPSO) vessel. Its combined net production of oil from the Xijiang fields averaged 7,000 barrels per day in 2008. It also has a 24.5% interest in the offshore Panyu field, also located in the South China Sea, which produced 12,000 net barrels of oil per day in 2008. The company can, therefore, leverage its existing presence in China to export refined products or establish fresh refining capacity and take advantage of the increasing demand foe refined products in the country. Strategic initiatives to expand global presence

The company has taken several strategic initiatives. For instance, in July 2008, ConocoPhillips and Abu Dhabi National Oil Company (ADNOC) signed an interim agreement to develop the Shah Gas Field in Abu Dhabi. Under the interim agreement, ConocoPhillips and ADNOC would jointly share the ongoing cost of front-end engineering and design (FEED) and project mobilization for the Shah Gas Field development. This project, in which ConocoPhillips would have a 40% interest (the remaining being held by ADNOC), involves the development of natural gas condensate reservoirs within the Shah Gas Field. The project will involve the construction of a new one billion cubic feet/day natural gas processing plant at Shah, new natural gas and liquid pipelines and sulfur-exporting facilities at Ruwais in United Arab Emirates (UAE). Further, in September 2008, ConocoPhillips and Origin Energy announced their plan to create a long-term Australasian natural gas business focused on coal bed methane production and liquefied natural gas (LNG) processing and sales. The fifty-fifty joint venture would be comprised of coal bed methane development, operated by Origin Energy, and a LNG project, operated by ConocoPhillips. As planned, the joint venture would market the LNG, primarily targeted to Asian markets, with ConocoPhillips leading the marketing venture for the first 10 years. With this investment, ConocoPhillips gained access to the leading coal bed methane resource in Australia, comprising 8.1 million net acres. Further, in December 2008, ConocoPhillips acquired its first LNG cargo for the Zeebrugge LNG terminal in Belgium. The cargo was delivered in December 2008. In February 2008, ConocoPhillips had entered into an agreement with an affiliate of GDF Suez which provides ConocoPhillips long-term access to the Northwest Europe LNG market through GDF Suezs regasification capacity at the Zeebrugge terminal. This arrangement diversified ConocoPhillips LNG market access position in the Atlantic Basin by adding access in Northwest Europe to the companys existing re-gasification capacity in the Freeport LNG terminal and planned capacity in the Golden Pass LNG terminal, both located in the US Gulf of Mexico. Such strategic initiatives by ConocoPhillips could help it in expanding its global presence.

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Increase in demand for natural gas in North America

The US Energy Department projects that the US would become more dependent on natural gas in the next two decades. Natural gas demand in North America is expected to rise from 72.6 billion cubic feet (bcf) per day in 2001 to 93.8 bcf per day in 2012. The US would account for 79% of total demand in 2012, while Canada would account for 11% and Mexico for 10%. North America will require an additional 21.2 Bcf per day of natural gas supply by 2012. In particular, natural gas will be required for incremental electric power generation in all three countries. In April 2008, the company along with BP announced its plans of investing $600 million in the Alaska Gas Pipeline. The pipeline is expected to move approximately four billion cubic feet of natural gas per day to markets, and would be the largest private sector construction project ever built in North America. The agreement with BP has hence placed the company in an ideal position to exploit growing demand for natural gas in North America. Collaborations to develop new technologies

The company has entered into several collaborations with various research institutes. For instance, in July 2008, ConocoPhillips signed a $5 million, multi-year sponsored research agreement with the Colorado Center for Biorefining and Biofuels (C2B2), a research center of the Colorado Renewable Energy Collaboratory, to develop new ways to convert biomass into low-carbon transportation fuels. Further, in December 2008, ConocoPhillips and the University of Kansas announced a three-year collaborative nanotechnology research program which will focus on the development and testing of new technologies for oilfield stimulation to enhance recovery to help meet growing energy demand. ConocoPhillips will contribute $400,000 per year to the program. Such collaborations could provide ConocoPhillips with innovative technology for the production of biofuels and development of new technologies for oilfield stimulation to enhance recovery. This in turn could lead to lowering of operating expenses and hence improved profitability.

Threats
Environmental regulations

ConocoPhillipss businesses are subject to numerous laws and regulations relating to the protection of the environment. With rising awareness of the damage to the environment caused by industry, especially regarding global warming, regulatory standards have been continuously tightened in recent years. One of the most important developments in this area has been the introduction of the Kyoto Protocol for the reduction of greenhouse gases. The protocol calls on industrialized countries to reduce their greenhouse gas emissions level by 5.2% on an average annual basis during the 2008-12 period, compared with 1990 emissions levels. Further, in 2005, the US environmental protection agency (EPA) issued a clean air interstate rule (CAIR), to reduce the emission levels. According to the rule, the states have to reduce the allowable sulfur dioxide (SO2) emissions by 70% and reduce Nitrous Oxide (NOX) emissions by 60%, by 2015 compared with the 2003 levels. The company is governed by

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these regulations which could impose new liabilities on the company. This could result in a material decline in ConocoPhillips profitability in the short term. Risks associated with conducting business outside the US

The company faces risks associated with conducting business outside the US. Approximately 56% of the companys crude oil, natural gas, and natural gas liquids production in 2008 were derived from production outside the US. For the same period, the companys 62% of proved reserves, as of December 31, 2008, were located outside the US. The company is, therefore, subject to risks associated with operations in international markets. These risks include changes in foreign governmental policies relating to crude oil, natural gas, natural gas liquids; refined product pricing and taxation; other political, economic, or diplomatic developments; and changing political conditions and international monetary fluctuations. Such international political and economic developments could damage the companys operations and materially reduce its profitability and cash flows. Intense competition

ConocoPhillips faces intense competition in the markets it operates in. It competes with private, public, and state-owned companies in all facets of the petroleum and chemicals businesses. Upstream, the companys E&P segment competes with numerous other companies in the industry to locate and obtain new sources of supply and to produce oil and natural gas in an efficient, cost-effective manner. The companys midstream segment, through its equity investment in DCP Midstream and the companys consolidated operations, competes with numerous other integrated petroleum companies, as well as natural gas transmission and distribution companies. Downstream, the companys R&M segment competes primarily in the US, Europe, and the Asia Pacific region. Some of the major competitors of the company include Chevron, BP, ExxonMobil, Royal Dutch Shell, Hess, Marathon Oil, and Occidental Petroleum. Such an intense competition threatens to erode the market share of the company. Economic or industry downturns

Downturns or weakness in the economy in general or in key industries, such as automotive, engineering, and machinery, may adversely affect ConocoPhillips customers, which may cause the demand for the companys products and services to decline. Many of the companys customers are in industries and businesses that are cyclical in nature and affected by changes in general economic conditions or conditions specific to their respective markets, such as automotive industries. Product demand in ConocoPhillips customers end markets is based on numerous factors such as interest rates, general economic conditions, consumer confidence, and other factors beyond the companys control. Downturns in demand from the automotive, engineering, and machinery industry, or any of the other industries the company serves, could adversely affect the companys financial results.

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Recent developments
In February 2008, ConocoPhillips entered into a license agreement with Angola LNG for the application and use of ConocoPhillips proprietary natural gas liquefaction technology. The agreement provided a license to utilize the ConocoPhillips Optimized CascadeSM Process in the development of Angola LNGs liquefied natural gas (LNG) facility to be built in Angola. In April 2008, the company, along with BP, announced its plans of investing $600 million in the Alaska Gas Pipeline. The pipeline was expected to move approximately four billion cubic feet of natural gas per day to markets. In May 2008, Saudi Arabian Oil Company (Saudi Aramco) and ConocoPhillips announced their intensions to construct a grassroots, 400,000 barrel-per-day, full-conversion refinery in the Yanbu Industrial City, in The Kingdom of Saudi Arabia. The refinery would be designed to process Arabian heavy crude which would be supplied by Saudi Aramco and the company was aiming to start the refinery in 2013. In July 2008, ConocoPhillips signed a $5 million, multi-year sponsored research agreement with the Colorado Center for Biorefining and Biofuels (C2B2), a research center of the Colorado Renewable Energy Collaboratory, to develop new ways to convert biomass into low-carbon transportation fuels. In the same month, ConocoPhillips and Abu Dhabi National Oil Company (ADNOC) signed an interim agreement to develop the Shah Gas Field in Abu Dhabi. In September 2008, ConocoPhillips and Origin Energy (an Australian integrated energy company) announced their plan to create a long-term Australasian natural gas business focused on coal bed methane production and liquefied natural gas (LNG) processing and sales. In November 2008, Saudi Aramco and ConocoPhillips agreed to halt the bidding process associated with the construction of the planned 400,000 barrel per day export refinery at the Yanbu Industrial City, in Saudi Arabia (which was announced in May 2008), citing uncertainties in the financial and contracting markets. The current bidding process had requested that bids were to be submitted during December 2008. Instead, it was planned that the project will be re-bid in the second quarter of 2009. In December 2008, ConocoPhillips and the University of Kansas announced a three-year collaborative nanotechnology research program which will focus on the development and testing of new technologies for oilfield stimulation to enhance recovery to help meet growing energy demand. ConocoPhillips will contribute $400,000 per year to the program. Further in December 2008, ConocoPhillips and Peabody Energy (a coal company) announced the filing of an air permit with the Commonwealth of Kentucky to site a coal-to-natural-gas facility near Central City in Muhlenberg County. In the same month, ConocoPhillips acquired its first LNG cargo for the Zeebrugge LNG terminal in Belgium. In May 2009, ConocoPhillips and Anadarko Petroleum Corporation (an independent oil and gas exploration and production company) announced the discovery and test production from two wells in the National Petroleum Reserve-Alaska. Both wells were located in the Greater Mooses Tooth Unit, approximately 20 miles southwest of the Colville River Unit development on the North Slope of Alaska. ConocoPhillips was the operator of and held a 78% interest in the Greater Mooses Tooth Unit, while Anadarko Petroleum Corporation held the remaining 22% interest.

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China Petroleum & Chemical Corporation (Sinopec)


Company overview
China Petroleum & Chemical Corporation (Sinopec) is a vertically integrated energy and chemical company. China Petrochemical Corporation (Sinopec Group), a state owned company, holds a stake of 75.8% in the company. Sinopec is primarily engaged in the upstream, midstream, and downstream operations including exploration, production, refining, marketing, and distribution of oil and natural gas. It is China's largest producer and supplier of refined oil products and major petrochemical products. The company primarily operates in China. It is headquartered in Beijing, China and employs more than 358,300 people. The company recorded revenues of CNY1,420,321 million (approximately $204,739.3 million) in the financial year ended December 2008 (FY2008), an increase of 21% over the financial year ended December 2007 (FY2007). The operating profit of the company was CNY28,123 million (approximately $4,053.9 million) in FY2008, a decrease of 67.2% compared with FY2007. The net profit was CNY29,769 million (approximately $4,291.2 million) in FY2008, a decrease of 47.3% compared with FY2007.

Business description
China Petroleum & Chemical Corporation (Sinopec) is one of the largest producer and marketer of oil products and petrochemical products. It is a vertically integrated energy and chemical company with upstream, midstream, and downstream operations. The principal operations of Sinopec and its subsidiaries include exploration, development, production, and marketing of crude oil and natural gas, oil refining and marketing, and production and sales of petrochemicals, chemical fibers, chemical fertilizers, and other chemicals. The company's business activities also include storage and pipeline transportation of crude oil and natural gas, and import and export of crude oil, natural gas, refined oil products, petrochemicals, chemicals, and other related commodities. The company operates through more than 80 subsidiaries and branches mainly located in China. Sinopec primarily operates through five principal business segments: exploration and production, refining, marketing and distribution, chemicals, and the corporate and others segment. The exploration and production segment explores and develops oil fields, produces crude oil and natural gas, and sells products to the refining segment of the company. Most of its oil and gas reserves are located in the eastern, western, and southern parts of China, covering 0.965 million square kilometers with 334 exploration licenses, and 190 exploitation licenses covering 18105 square kilometers. At the end of 2008, Sinopec had proved oil and gas reserves of 4,001 million barrels of oil equivalent (mmboe), 2,841 million barrels (mmbbls) of proved reserve of crude oil, and 69,593 billion cubic feet (bcf) of proved reserve of natural gas. In FY2008, the company produced 296.8 million barrels of crude oil and 2,931 billion cubic feet (bcf) of natural gas. Sinopecs refining business segment processes and purifies crude oil, which is sourced from the exploration and production segment of the company and external suppliers and manufacturers, and sells petroleum products. Sinopec is Global Top 10 Energy Companies
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the largest refiner of petroleum in China based on crude oil throughput. The company's major oil products include gasoline, kerosene, diesel, lube oil, chemical light feedstock, fuel oil, solvent oil, petroleum wax, asphalt, petroleum coke, liquefied petroleum gas (LPG), propylene, and benzene products for refining. The company has 33 branches (subsidiaries), mainly located in China's southeast coastal area, middle, and lower reaches of Yangtze River and North China. At the end of FY2008, the company's total processing capacity reached 186 million tons per annum. In FY2008, the output of gasoline, kerosene, and diesel reached 105.86 million tons. The company also produced 22.99 million tons of chemical light feedstock, 1.21 million tons of lube oil, 8.05 million tons of LPG, 0.44 million tons of petroleum wax, 2.75 million tons of asphalt, 10.34 million tons of petroleum coke, 4.88 million tons of commodity heavy oil, and 0.51 million tons of solvent oil. The marketing and distribution segment owns and operates oil depots and service stations in China, and distributes and sells refined petroleum products (mainly gasoline and diesel) in China through wholesale and retail sales networks. The principal market of Sinopec covers 20 provinces, autonomous regions, municipalities, and special administrative regions (SARs) in the northern, eastern, central, and southern parts of China (including Hong Kong SAR). In addition, the company's marketing network extends to 11 provinces, autonomous regions, and municipalities in the northeastern and northwestern parts of China as well as Chuanyu (Sichuan-Chongqing) region. At the end of FY2008, the company owned 29,279 retail stations, among which 632 sites are under franchise agreement. The chemicals segment manufactures and markets petrochemical products, derivative petrochemical products, and other chemical products mainly to external customers. Sinopec is the largest producer and distributor of petrochemicals in China. It produces and distributes a range of petrochemical products, including intermediates, synthetic resin, synthetic fiber monomers and polymers, and chemical fertilizer. At the end of FY2008, the company had 10 ethylene plants (including two joint venture companies), 26 synthetic resin plants, 13 producers of synthetic fiber monomers and polymers, eight synthetic fiber plants, five synthetic rubber plants, and six urea plants. The corporate and others segment consists principally of trading activities of the import and export subsidiaries and the companys research and development activities.

SWOT analysis Strengths


Market leadership position

Sinopec enjoys a strong market position in China. It is one of the largest integrated energy and chemical company in China. It is China's largest producer and supplier of refined oil products (including gasoline, diesel, and jet fuel) and major petrochemical products (including petrochemical intermediates, synthetic resin, synthetic fiber monomers and polymers, synthetic fiber, and chemical fertilizer). It is also China's second largest crude oil producer. Furthermore, as of December 31, 2008, the company's refining capacity was the third largest in the world. In addition, the company's sales network for gasoline and diesel products is the third largest retail network in the world in terms of the number of service stations, with

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29,279 company-operated service stations as of December 31, 2008. A strong market position would enhance the revenues and profitability of the company. Vertically integrated operations

Sinopec is a vertically integrated energy and chemical company with upstream, midstream, and downstream operations. As part of its upstream operations, Sinopec explores and develops oil fields, and produces crude oil and natural gas. At the end of FY2008, Sinopec had proved oil and gas reserves of 4,001 million barrels of oil equivalent (mmboe); and in FY2008, the company produced 296.8 million barrels of crude oil and 2,931 billion cubic feet (bcf) of natural gas. The companys midstream operations include storage and pipeline transportation of crude oil and natural gas. In downstream, Sinopec processes and purifies crude oil, and manufactures and markets petrochemical products, derivative petrochemical products, and other chemical products. The company also owns and operates oil depots and service stations in China, and distributes and sells refined petroleum products. The company's vertically integrated operations give it significant competitive advantage in terms of economies of scale, synergies, and cross-marketing opportunities. Increased revenues

Sinopec has recorded strong financial performance in recent years. The revenues of the company have increased at a CAGR of 24% during the period 2005-08 to reach CNY1,420,321 million (approximately $204,739 million) in FY2008. Furthermore, revenues rose by about 21% in FY2008, as compared with FY2007. In addition, the company recorded strong revenue growth across most of its segments in FY2008. The revenues of marketing and distribution, refining, and exploration and production segments increased by 21.7%, 10.6%, and 29.2%, respectively, in FY2008 over the previous year (these three segments contributed about 68% of the companys revenues in FY2008). Robust revenue growth strengthens the market position of the company and in turn fuels its profitability.

Weaknesses
Dependence on third party crude oil suppliers

Sinopec is heavily dependant upon outside sources for its crude oil requirements. The company purchases about 82% of its total crude oil requirements (for the refining segment), of which about 73.8% are from imports and 4.4% are from China National Offshore Oil Corporation (CNOOC) and 3.1% from PetroChina Company. The expenditure on crude oil was CNY678.8 billion (approximately $97.8 billion) in FY2008, representing an increase of 40.3% over FY2007. This expense accounted for 46% of the total operating expense in FY2008. The company's dependence on outside sources for crude oil puts it at a disadvantage against companies sourcing all their crude oil requirements from owned production.

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Lack of geographical diversification

Sinopec generates all its revenues from the Chinese market. Geographical concentration limits the growth potential of the company and exposes it to economic downturns in China. Lack of geographical diversification limits the growth potential of the company. Decline in crude oil reserves

Sinopecs proved reserve of crude oil has seen a decline over the last three years. For the period 2006-08, the companys crude oil reserve has declined at a CAGR of 7%, from 3,295 million barrels (mmbbls) in FY2006 to 2,841 mmbbls in FY2008. The companys ability to achieve sustainable development is dependent on certain extent on its ability in discovering or acquiring additional oil and natural gas reserves and further exploring its current reserve base. To obtain additional reserves, the company faces inherent risks associated with exploration and development and with acquiring activities. The company has to invest a large amount of money, however, whether the company can obtain additional reserves is not certain. If the company fails to acquire additional reserves through further exploration and development or acquisition activities, the oil and natural gas reserves and production of the company would decline further which would adversely affect the companys financial situation and operation performance.

Opportunities
Growth through joint ventures and alliances

Growth through joint ventures and alliances has long been a strategy of Sinopec. For instance, Sinopec and BP signed a memorandum of understanding to set up an acetic acid factory in the southwest of China, in January 2008. In April 2008, Sinopec signed a joint venture (JV) agreement in China with Mitsubishi Chemical Corporation and Mitsubishi EngineeringPlastics Corporation. The JV would engage in manufacturing and sales of polycarbonate resin, as well as bis phenol A, the raw material used in the production of polycarbonate resin. Sinopec and Zhejing Provincial Government signed an agreement to jointly construct China's single integrated refining and petrochemical complex in Zhejiang Province, in May 2008. Upon completion, the annual processing capacity would reach approximately 300,000 barrels per day. In the same month, Sinopec and SK signed an ethylene framework agreement in Beijing. In May 2009, Praxair (China) Investment, a wholly-owned subsidiary of Praxair, set up a joint venture in Guangzhou, southern China with Sinopec. The joint venture named, Praxair-GPC Industrial Gases, would produce, sell, and distribute industrial gases such as oxygen, nitrogen, and argon for a wide range of industrial applications. The company's joint ventures and alliances would allow it to further strengthen its existing business as well as help Sinopec to gain a strong foothold in new sectors and markets. Increased emphasis on exploration and production

Sinopec has developed a strategy to expand its oil and gas resources. In FY2008, in the exploration and production segment, new breakthroughs have been made in such regions as northeastern Sichuan, Tahe, and the matured fields in eastern China. In FY2008, the company completed 13,892 kilometers of 2D seismic and 6,080 square kilometers of 3D Global Top 10 Energy Companies
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seismic exploration, and drilled 544 exploration wells with a total footage of 1,768.1 kilometers. The company also achieved an addition of proved reserve of oil and gas of 267.6 million barrels of oil equivalent. With respect to development, the Sichuan-East China Gas project has been progressing on schedule and the construction of the Songnan gas field is on track. Meanwhile, the production capacity building in key areas has been strengthened and the development scheme of reserve through enhanced efforts in developing marginal reserves has been optimized, resulting in a steady increase in oil and gas production. Newly added crude production capacity for FY2008 is 5.8 million tonnes/year and the newly added production capacity of natural gas is 1.334 billion cubic meters/year. The output of crude oil was 41.8 million tonnes and the output of natural gas was 8.3 billion cubic meters, an increase of 1.8% and 3.7% respectively, from the previous year. While the outputs of crude oil in the matured fields in eastern China had been stable over the past years, the production in the newly developed western fields has accelerated. A strategic emphasis on exploration and production would increase the operational output of the company which would directly affect the reserves and the financials of the company. This has achieved even more importance as Sinopecs proved reserve of crude oil has seen a decline over the last three years. High demand potential in China

China is the worlds second largest consumer of oil. Chinas continuing robust economic growth and accelerating industrialization will propel the demand for petroleum and petrochemical products upwards. Demand will be driven by continued petrochemical demand, agricultural and fishing activities, and construction. Together with the large demandsupply gaps for these products in China, there is much room for further expansion of both the domestic supply and the imports of these products. Aggressive investment, both domestic and foreign, is expected to be made in the industry in the next decade. Sinopec would be in an excellent position to exploit the growth in petroleum industry, boosting its revenues and solidifying its position.

Threats
Intense competition

Sinopec faces intense competition in the oil and gas industry. It competes both in China and international markets. Its main competitors in China are PetroChina Company (PetroChina) and China National Offshore Oil Corporation (CNOOC). In its exploration and production operations, Sinopec competes with CNOOC for the acquisition of desirable crude oil and natural gas prospects. The companys refining and marketing and chemicals operations compete with PetroChina and CNOOC. The companys products also face competition from imported refined products and chemical products. As a result of Chinas entry into the WTO, the competition is further intensified from foreign producers of refined products and chemical products. Such an intense competition threatens to erode the market share of the company.

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Government regulations and control

Sinopecs operations, like those of other Chinese oil and gas companies, are subject to extensive regulations and control by the Chinese government. Although the government is gradually liberalizing the market entry regulations on petroleum and petrochemicals sector, the petroleum and petrochemical industries in China are still subject to some forms of regulations, which include: issuing crude oil and nature gas production license, issuing crude oil and oil products business license, setting ex-refinery prices and the upper limit for retail, wholesale and supply prices of gasoline, diesel and other oil products, the imposing of the special oil income levy, formulation of import and export quotas and procedures, and formulation of safety, quality, and environmental protection standards. These regulations and control affect many material aspects of the company's operations, such as exploration and production licensing, industry-specific and product-specific taxes and fees, and environmental and safety standards. As a result, Sinopec could face significant constraints on its ability to implement its business strategies, to develop or expand its business operations, or to maximize its profitability. The company's business could also be adversely affected by future changes in certain policies of the Chinese government with respect to the oil and gas industry. Such government regulations and control could have a negative impact on the operations of the company. Environmental laws and regulations

Together with other companies in the industries in which Sinopec operates, it is subject to numerous national, regional, and local environmental laws and regulations concerning its oil and gas exploration and production operations, petroleum and petrochemical products, and other activities. These laws and regulations require an environmental evaluation report to be submitted and approved prior to the commencement of exploration, production, refining, and chemical projects. It also restricts the type, quantities, and concentration of various substances that can be released into the environment in connection with drilling and production activities. The environmental laws and regulations also limit or prohibit drilling activities within protected areas and certain other areas; and impose penalties for pollution resulting from oil, natural gas and petrochemical operations, including criminal and civil liabilities for serious pollution. These laws and regulations could also restrict air emissions and discharges to surface and subsurface water resulting from the operation of natural gas processing plants, chemical plants, refineries, pipeline systems, and other facilities that the company owns. In addition, Sinopecs operations are subject to laws and regulations relating to the generation, handling, storage, transportation, disposal, and treatment of solid waste materials. It is anticipated that the environmental laws and regulations to which the company is subject to would become increasingly strict. These environmental laws and regulations could therefore have an increasing impact on the companys operations.

Recent developments
Sinopec and BP signed a memorandum of understanding to set up an acetic acid factory in the southwest of China, in January 2008. Sinopec and BASF submitted the technical and commercial feasibility study for the approval of the planned

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$900 million expansion of their joint chemical Verbund site in Nanjing to the Chinese government, in March 2008. The site was operated by the joint venture BASF-YPC. In April 2008, Sinopec signed a joint venture (JV) agreement in China with Mitsubishi Chemical Corporation and Mitsubishi Engineering-Plastics Corporation. The JV would engage in manufacturing and sales of polycarbonate resin, as well as Bis Phenol A, the raw material used in the production of polycarbonate resin. Sinopec and Zhejing Provincial Government signed an agreement to jointly construct China's single integrated refining and petrochemical complex in Zhejiang Province, in May 2008. Upon completion, the annual processing capacity would reach approximately 300,000 barrels per day. In the same month, Sinopec and SK signed an ethylene framework agreement in Beijing. In July 2008, Sinopec and Petrolimexis, the largest Vietnamese state-owned petroleum trading company, planned to invest up to $4.5 billion to establish a refining factory in Khanh Hoa, Vietnam. In September 2008, Linde entered into a joint venture with Sinopec Fujian Petrochemical Company (FPCL), a subsidiary of Sinopec, for the long-term supply of industrial gases to customers in the province of Fujian in south-eastern China. Sinopec planned to invest CNY10 billion (approximately $1.5 billion) to build a, eco-petrochemical city in Hangzhou, China, in 3-5 years, in October 2008. In the same month, the company planned to build a refining and petrochemical complex in Shanghai to increase fuel supply to the metropolis. The company also signed a strategic cooperation agreement with the Shanghai government on investment in the project. In March 2009, Sinopec entered into agreements with certain of its subsidiaries to acquire property rights, equity interests, submarine pipeline, cable testing and maintenance devices, and certain other assets. In the following month, Total E&P Canada, a wholly-owned subsidiary of TOTAL, sold a 10% interest in the Northern Lights Partnership (NLP) to SinoCanada Petroleum Corporation, a subsidiary of Sinopec. Praxair (China) Investment, a wholly-owned subsidiary of Praxair, set up a joint venture in Guangzhou, southern China with Sinopec, in May 2009. The joint venture, named Praxair-GPC Industrial Gases, would produce, sell, and distribute industrial gases such as oxygen, nitrogen, and argon for a wide range of industrial applications.

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Eni SpA
Company overview
Eni is an energy company engaged in the oil and gas exploration and production, refining and marketing, electricity generation, natural gas distribution, petrochemicals, oilfield services, and engineering industries. The company operates in about 70 countries. It is headquartered in Rome, Italy and employs about 79,000 people. The company recorded revenues of E127,848 million (approximately $188,107.9 million) in the financial year ended December 2008 (FY2008), an increase of 20.2% over the financial year ended December 2007 (FY2007). The operating profit of the company was E18,641 million (approximately $27,427.2 million) in FY2008, a decrease of 1.2% compared with FY2007. The net profit was E8,825 million (approximately $12,984.6 million) in FY2008, a decrease of 11.8% compared with FY2007.

Business description
Eni is an integrated energy company. The company and its consolidated subsidiaries are engaged in upstream and downstream oil and gas activities, electricity generation, petrochemicals, oilfield services, and offshore engineering. The company operates in about 70 countries. Eni generates revenues through seven segments: exploration and production, refining and marketing, gas and power, engineering and construction, petrochemicals, corporate and financial companies, and other activities. The exploration and production segment is engaged in the oil and natural gas exploration, field development, and production activities in 39 countries. The segment also conducts liquefied natural gas (LNG) operations in these countries. The company carries out exploration and production activities mainly in Italy, the UK, Norway, Libya, Egypt, Angola, Nigeria, Congo, the US, Kazakhstan, Russia, and Australia. Eni's proved reserves as of December 2008 totaled 6,242 million barrels of oil equivalent (mmboe). In FY2008, Eni's proved reserves replacement ratio was 136%. As of December 31, 2008, Eni's mineral right portfolio consisted of 1,244 exclusive or shared rights for exploration and development in 39 countries on five continents for a total net acreage of 415,4954 square kilometers. Refining and marketing operations are based predominantly on Eni's own production capacity. Eni operates 8 (owned and co-owned) blending plants, in Italy, Europe, North and South America, Africa, and the Far East. These plants manufacture finished and fatty lubricants. Eni also sells liquefied petroleum gas (LPG) and oxygenats. The company sells refined products across Europe under the Agip brand, operating 4,409 service stations in Italy and 1,547 in the rest of Europe. The refining and marketing segment undertakes refining and marketing of petroleum products mainly in Italy and in the rest of Europe. In FY2008, the company processed 35.84 million tonnes (mmtonnes) of crude oil and other feedstock. The company sold 50.68 mmtonnes of refined products in FY2008, of which 28.92 mmtonnes were sold in Italy. Retail sales of refined product at operated service stations amounted to 12.67 mmtonnes including Italy and the rest of Europe. The retail market share of Eni in Italy through its Agip-branded network of service stations was 30.6% in FY2008.

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The gas and power segment undertakes the supply, transport, distribution, and marketing of natural gas and liquefied natural gas (LNG). The segment is also engaged in power generation. The company sold around 104.23 billion cubic meters (bcm) of gas in FY2008. This includes 6 bcm of sales made directly by the Enis exploration and production segment in Europe and the US. Sales in Italy totaled 52.87 bcm, while sales in other European markets totaled 43.03 bcm. The natural gas transport network of the company in Italy is operated by its subsidiary Snam Rete Gas. The network comprises high and medium pressure pipelines for natural gas transport of approximately 31,474-kilometer in length. The company distributes natural gas in Italy through its wholly owned subsidiary Italgas and other subsidiaries. As of December 31, 2008, they distributed natural gas to 1,320 municipalities through a low pressure network consisting of approximately 49,400 kilometers of pipelines. Eni conducts its electricity generation activities through its wholly owned subsidiary, EniPower, which owns and manages power stations with an installed capacity of 4.9 gigawatts as of December 31, 2008. The company produces electricity and steam at its operated sites of Livorno, Taranto, Mantova, Ravenna, Brindisi, Ferrera Erbognone, and Ferrara. Eni conducts all of its electricity generation in Italy and sells the bulk of the energy it produces directly to distributors. In FY2008, the company sold 29.93 terawatt-hours (TWh) of electricity. Eni operates a re-gasification terminal in Italy and holds interests in a number of LNG facilities in Europe, Egypt, and the US. Eni conducts the oilfield services, construction, and engineering activities through its subsidiary Saipem and Saipems controlled entities. Eni owns a 42.9% interest in Saipem. The segment provides services of offshore construction, particularly fixed platform installation, subsea pipe laying and floating production systems, and onshore construction. It also provides offshore and onshore drilling services and engineering and project management services to the oil and gas, refining, and petrochemical industries. The companys petrochemical operations are concentrated in Italy and other countries in Western Europe. Eni conducts its petrochemical business through its subsidiary, Polimeri Europa. It produces olefins and aromatics, basic intermediate products, polyethylene, polystyrenes, and elastomers. In FY2008, the company sold 4.7 mmtonnes of petrochemical products. Stogit, another subsidiary of Eni, manages the natural gas storage and modulation activity with an integrated system comprising of reserves, gas treatment plants, compression plants and a dispatching center. Eni also supplies services to buildings, employees, and gives support to business, offering the client a complete package through its subsidiary, EniServizi. In addition, Eni is also engaged in recruiting, training, and development of resources through it subsidiaries. The corporate and financial companies segment constitutes Eni Corporate and certain Eni subsidiaries engaged in treasury, finance, and other general and business support services. Eni Corporate is the department of the parent company and performs group strategic planning, human resources management, finance, administration, information technology, legal affairs, international affairs, and corporate research and development functions. Through Sofid, Eni International, and Eni Insurance, Eni carries out lending, factoring, leasing, financing Enis projects around the world, and insurance activities, principally on an intercompany basis. EniServizi, Eni Corporate University, AGI,

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and other minor subsidiaries are engaged in providing group companies with diversified services (training, business support, real estate, and general purposes services to group companies). The other activities segment encompasses results of operations of Enis subsidiary Syndial which runs minor petrochemical activities and reclamation and decommissioning activities pertaining to certain discontinued businesses.

SWOT Analysis Strengths


Strong market position in the European natural gas market

Eni leads the European market in terms of gas sales, with a strong market position in domestic market, as well as in highly attractive markets such as the Iberian Peninsula, Turkey, and Germany. Eni is engaged in the distribution and sale of natural gas to residential and commercial customers, primarily in Italy. The company has built this position leveraging on its unique and diverse portfolio of equity and contracted gas from 11 different countries; growing integrated LNG business with access to both liquefaction and regasification plants. The company has access to a very large set of transportation and storage assets domestically and across Europe. It serves a strong customer base of more than 5.6 million. Moreover, Eni operates a large network of integrated infrastructures for transporting natural gas in Europe, linking key consumption basins with the main producing areas (North Africa, Russia, and the North Sea). In Italy, Eni operates almost all the national transport network. The company operates the only LNG regasification terminal in Italy through its subsidiary GNL Italia. Eni's leadership position in the fast-growing European gas market provides the company with a strong platform for future growth, as well as with stable and robust cash flows. Presence across the energy value chain

Eni operates in a wide range of businesses worldwide and commands presence across the energy value chain through its subsidiaries. The company engages in fully integrated petroleum operations, chemicals operations, mining operations of coal, power generation, and energy services. In the upstream segment, the company operates in the exploration and production of hydrocarbons in Italy, North Africa, West Africa, the North Sea, the Gulf of Mexico and Australia. It also operates in areas with great exploration and production potential such as the Caspian Sea, the Middle and Far East, India, and Alaska. In the midstream segment, Eni operates in the supply, transport, distribution, and sale of natural gas. It is also involved in the power generation and distribution business in Italy through its subsidiary, EniPower. In the downstream segment, Eni processes and market refined products. It leads the Italian market through the Agip brand. In addition, Eni operates in offshore and onshore drilling and construction, and in the field of engineering services to the oil, refining, and petrochemical industries. Eni also produces basic chemicals, polyethylene, and elastomers and styrenics through its subsidiary, Polimeri Europa.

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Enis presence across the energy value chain provides the company with opportunities to optimize its business while minimizing business risks. Strong research and development (R&D) capabilities

Eni has strong research and development (R&D) capabilities. The company conducts research to develop technologies to tackle the environmental issues and climate change to overcome limits in accessing to hydrocarbon resources. The research activities of the company are also focused on strengthening partnerships with producing countries and developing renewable sources of energy. Eni focuses its research and development activities on reducing the costs of finding and recovering hydrocarbons, upgrading heavy oils, monetizing stranded gas, and protecting the environment. To tackle environmental issues, Eni intends to develop the Along with Petroleum program. This program aims to identify and develop research projects on the most advanced aspects of large scale use of renewable energy sources and energy efficiency. The company would invest E102 million (approximately $150.1 million) for the program in the next four years. Through this program, Eni would focus on the fields of greenhouse effect mitigation through bio-fuels, photovoltaics, solar energy, hydrogen production from renewable sources, as well as carbon dioxide capture and geological sequestration. The company filed 96 applications for patents in FY2008. It spent E217 million (approximately $319.3 million) on R&D in FY2008. R&D expenses in previous years were E208 million (approximately $306 million) in FY2007, E220 million (approximately $323.7 million) in FY2006, and E204 million (approximately $300.2 million) in FY2005. The number of employees dedicated to research and development activities in FY2008 was 1,098. Over the next four years, Eni plans to invest approximately E1.1 billion (approximately $1.6 billion) for developing its technology. The company's strong R&D capabilities provide it with a competitive advantage and help it to improve the efficiency of its products and processes.

Weaknesses
Administrative actions and fines

Eni was subject to several administrative actions and fines in FY2008. In April 2008, Eni was fined E3.24 million (approximately $4.4 million) by the Italian energy and gas regulator. The company was fined for not providing its clients the adequate information on gas bills. In particular, Eni did not provide the necessary information regarding the possibility of paying the bills by installments, an important option when the amount of the gas bill is high. Further, in October 2008, the European Commission fined nine petrochemicals companies a total of E676 million ($994.6 million) for forming a paraffin mafia to fix prices and carve up markets for paraffin wax. Sasol was fined the highest, E318.2 million (approximately $468.2 million). The other companies fined were TOTAL (E128.1 million [$188.5 million]), Exxon Mobil (E83.6 million [$123 million]), RWE (E37.4 million [$55 million]), Eni (E29 million [$42.7 million]), Hansen & Rosenthal (E24 million [$35.3 million]), MOL (E23.7 million [$34.9 million]), Repsol (E19.8 million [$29.1 million]), and Tudapetrol (E12 million [$17.7 million]).

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Such administrative actions and fines and the resultant penalties could affect the credibility of the company and erode its profits. Weak performance of the petrochemicals segment

The petrochemical operations of Eni have recorded a consistent decline in earnings. The operating profit of the petrochemicals segment has declined from E172 million (approximately $253.1 million) in FY2006 to an operating loss of E822 million (approximately $1,209.4 million) in FY2008. This decline was driven by lower selling margins of commodity chemicals, particularly the margin on cracker and on aromatic products (paraxylene). The lower margins were a result of a significant increase in the cost of oilbased feedstock. A decline in the operating of the segment could affect the profitability of the company.

Opportunities
Increasing demand for liquefied natural gas (LNG)

The worldwide gas demand is expected to rise at an annual rate of approximately 2.8% through 2020, outpacing the expected annual growth rate in total energy consumption. In Europe, Eni expects gas demand to grow at an average annual rate of 2% by 2020, reaching 722 billion cubic meters (bcm). The usage of gas in power generation is expected to drive the growth. Most of the European gas requirement is expected to be satisfied by imports via pipeline. European gas imports will cover at least 80% of consumption from the current level of 60%, due to domestic production decrease, stressing European dependence on producing countries. In the medium-term, Eni plans to increase worldwide gas sales targeting a volume of 124 bcm by 2012, leveraging on expected growth in international sales that are projected to achieve an average annual rate of increase of 7% and upon synergies deriving from the Distrigas acquisition. Over the long-term, the company expects Italian gas demand to increase at an average growth rate of approximately 2% through 2020, reaching an amount of 106.7 billion cubic meters (bcm) in 2020 (gas volumes are projected at 94.2 bcm in 2012), driven by rising consumption in the power generation sector. Overall the company expects that import capacity will increase by 25 bcm by 2012 of which 90% available by 2010. Currently, Eni is participating in LNG projects in Italy, Egypt, Spain, and the US. Eni acquired a participation stake of 13.6% in the Angola LNG consortium from Sonangol Gas Natural (Sonagas) in December 2007. The consortium would construct a liquefaction plant in Soyo, 350 kilometers north of Luanda, with a yearly capacity of 5.2 million metric tons of LNG. The company intends to grow international sales and increase operational efficiency to develop a global LNG business. The company is in an ideal position to exploit growing demand for LNG.

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Expansion of exploration and production operations

The company expects to grow its exploration and production operations from organic as well as inorganic development in North Africa, West Africa, and the Caspian region through its biggest projects. In FY2008, Eni pursued a number of acquisitions of assets and investments and signed certain major deals in core areas. In May 2008, Eni signed an agreement with the Republic of Congo for the exploration and development of oil sands in the West African country. The agreement included the construction of a new natural-gas-fired power plant, with a capacity of 450 MW, near the Djeno oil terminal. Furthermore, Eni signed a memorandum of understanding with Petroleos de Venezuela for the exploration and development of two offshore areas in the Latin America, in September 2008. Subsequently, Eni was awarded the operatorships and participating interests in two exploration licenses in the Barents Sea, offshore Norway, and a participating interest in another license in the same area, in May 2009. These investments aim to develop its production assets and thereby increase the companys production capacity. Portfolio developments

Eni increased its portfolio holdings in the FY2008 through a number of transactions. For instance, in January 2008, Eni completed the acquisition of the entire share capital of Burren Energy, with producing assets in Congo and Turkmenistan. Following the acquisition, Eni also acquired control of the Indian oil company Hindustan Oil Exploration. A strategic oil deal was closed with the Libyan national oil company NOC based on the framework agreement signed in October 2007. This deal, effective from January 2008, extended the duration of Eni oil and gas properties until 2042 and 2047, respectively, and identifies a number of projects aiming at monetizing substantial gas reserves. A number of agreements were also signed with the partner Suez regarding long-term supplies of electricity, gas, and LNG, entailing proceeds of E1.56 billion (approximately $2.3 billion). The acquisition of the entire share capital of First Calgary Petroleum, a Canadian oil and gas company, was executed in November 2008. The company engaged in exploration and development activities in Algeria. Production start up is expected in 2011 with a projected plateau of approximately 30 thousand barrel of oil equivalent per day (kboe/d) net to Eni by 2012. In June 2008, the purchase of a 52% stake and the operatorship of fields in the Hewett Unit were finalized including relevant facilities in the North Sea. Eni targets to develop a storage capacity of 5 bcm supporting the seasonal swings of gas demand in the UK. Development of portfolio holding would increase the revenue growth of the company in the near future. This in turn would help the company to consolidate its position in the European energy sector.

Threats
Environmental regulations

Enis business is subject to numerous laws and regulations relating to the protection of the environment. With rising awareness of the damage to the environment caused by industry, especially regarding global warming, regulatory standards have been continuously tightened in recent years. One of the most important developments in this area has been the introduction of the Kyoto Protocol for the reduction of greenhouse gases. The protocol calls on industrialized

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countries to reduce their greenhouse gas emissions level by 5.2% on an average annual basis during the 2008-2012 period, compared with 1990 emissions levels. The company is governed by these regulations which could impose new liabilities. This could result in a material decline in the companys profitability in the short term. Regulations concerning Iran

In September 2006, Iran and Libya Sanction Act (ILSA), the US legislation implementing sanctions against Iran and Libya was amended and extended until December 2011. As per this amendment, the President of the US is authorized to initiate an investigation into the possible imposition of sanctions against persons to have knowingly made investments of $20 million or more in any 12-month period in the petroleum sector in Iran. Eni has been operating in Iran since 1957. Enis activities are concentrated in the offshore of the Persian Gulf and onshore. The main producing fields of South Pars phases 4 and 5 in the offshore of the Persian Gulf and Darquain located onshore accounted for 88% of the companys production in Iran in FY2007. Eni also holds 45% interest in the Dorood field. In FY2007, production net to Eni averaged 26 kboe/d. Moreover, the company is carrying upgrading by drilling additional wells to increase capacity of the existing treatment plant and gas-injection. The production capacity would rise from the present 50 thousand barrels per day (kbbl/d) to over 160 kbbl/d (14 net to Eni) by 2009. The US has intensified its push for tougher sanctions on Iran over the country's nuclear program. The exit from Iran would cost Eni between $2 billion and $3 billion. Therefore, operations in Iran amid the mounting tensions over Irans nuclear program could increase political risks for the company. Disruptions in Nigeria

Nigeria is the world's eighth-biggest oil exporter. However, the violence in the country affected the industry with the output cut by a fifth since early 2006, increasing the oil prices. In the country Enis pipelines were attacked by the residents, in July 2008. The attacks stemmed from a community dispute with foreign oil companies. Residents in Nigeria's restive Niger Delta blew up the pipeline linking the Tebidaba flowstation and Brass River export terminal on July 16, 2008. The pipelines feed the Brass terminal, the country's main oil-export terminal. Following the attack, Eni shut 47,000 barrels a day of production after two pipelines attacked suffered a sudden loss of pressure. Such disruptions could force the companies operating in the country to declare force majeure on their shipments. Consequently, the company could be affected with defaults in fulfilling its contractual obligations to clients. Liberalization of the Italian natural gas market

The Italian natural gas market was liberalized by passing a decree in January 2003. Consequently, Italian customers are free to choose their supplier of natural gas. Eni has a presence across all the phases of the natural gas chain. The decree introduced rules which could significantly impact Enis operations.

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Eni has been experiencing rising competition in its natural gas business since the liberalization process of the Italian natural gas market. This resulted in lower sales margins for the company. Some of its competitors are supplied by the company itself on the basis of long-term contracts. To comply with the regulatory thresholds relating to volumes supplied through the national transport network and sales volumes in Italy, Eni sold part of its gas availability under its take-or-pay supply contracts to third parties importing to Italy and marketing them to Italian customers. Enis expects its margins on gas sales in Italy to remain under pressure in the future considering Enis gas availability under its take-or-pay supply contracts, build-up of Enis supplies to the competitors. In addition, entry of new competitors into the Italian market and capital projects to expand the transport capacity of import pipelines to Italy and to build new import infrastructures, particularly LNG terminals would add to the pressure. Therefore, liberalization of the Italian natural gas market and the evolution of Italian regulations in the natural gas sector, represent risk with regards to the gas sales margins. Consequently, Enis results of operations and cash flows could be adversely affected.

Recent developments
Eni launched its new website, Eni.it, linking it with the company's stakeholders, in January 2008. A new company, South Stream, 50% owned by Eni and Gazprom, was incorporated in the same month. The new company was established to complete the technical, economic, and political feasibility study for the South Stream pipeline by the end of 2008. Eni acquired 18 exploration leases in the northern offshore of Alaska, in February 2008. The acquisition was subject to the approval of local authorities. Out of the 18 leases, 14 were joint bids with Statoil-Hydro. In the following month, Eni reached an agreement with Helvetia-Compagnia Svizzera di Assicurazioni for the sale of 100% of Padana Assicurazioni, of which Eni owned 26.75% and Sofid (99.61% owned by Eni) 73.25%. Eni obtained 32 new exploration licenses in the US Gulf of Mexico, in March 2008. Out of the 32 leases, 17 were joint bids with various partners and the remaining 15 were bid for solely by Eni. Eni would be the operator for all of the licenses. In May 2008, Eni signed an agreement with Suez-Tractebel (Suez) for the acquisition of a 57.2% stake in the Belgian company Distrigas. In the same month, Eni signed an agreement with the Republic of Congo for the exploration and development of oil sands in the West African country. The agreement included the construction of a new natural-gas-fired power plant, with a capacity of 450 MW, near the Djeno oil terminal. Eni signed a memorandum of understanding with Tullow Oil for the acquisition of Tullow Oil's 52% interest in the Hewett Unit fields in the UK North Sea, in June 2008. The acquisition of Tullow Oil's stake would raise Eni's total interest in the unit to 89%. In July 2008, Eni and Altergaz (participated by Eni with a 38% share) signed an agreement with Societe du Gaz de Bordeaux, gas distributor in the municipality of Bordeaux, for the acquisition of 17% stake in Gaz the Bordeaux Energie Services. In the following month, Eni acquired 20% stake in Hindustan Oil Exploration Company, and increased its holding in the company to 47.2%. In the same month, the company and Angola's state oil company Sonangol signed a memorandum of understanding (MoU) on broad economic, industrial, and social cooperation in Angola. The company also bought five new exploration licenses in the US Gulf of Mexico for about $11 million, in August 2008. In the same month, the transaction Global Top 10 Energy Companies
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between Eni and Helvetia-Compagnia Svizzera di Assicurazioni for the sale of 100% of Padana Assicurazioni was successfully completed after the transaction was approved by the related supervisory authority. Eni signed a memorandum of understanding with Petroleos de Venezuela for the exploration and development of two offshore areas in the Latin America, in September 2008. In October 2008, Eni and Enel signed an agreement with Gazprom to develop the Russian Arctic Gas and Urengoil assets. In the same month, Eni completed an asset-swap deal with GDF Suez, which included Eni getting a majority stake in Distrigas. Under the terms of the deal, Eni bought a 57.3% stake in Distrigas. In return, Eni sold a portfolio of assets to GDF Suez, including the gas distribution networks in Rome and neighboring towns. Further in October 2008, Eni and its partners in the North Caspian Sea PSA consortium signed the final agreement with the Kazakh authorities, implementing the new contractual and governance framework of the Kashagan project. In the new operating model Eni, with a reduced stake of 16.81%, was confirmed as the operator of phase one of the project and would retain operatorship of the onshore operations of phase 2 of the development plan. Eni completed the acquisition of 57.3% stake in Distrigas from Suez-Tractebel, in November 2008. The transaction was completed through Eni Gas & Power Belgium (Eni Belgium). In the same month, Eni acquired First Calgary Petroleums. Eni and Angola's state oil company Sonangol signed three deals aimed to boost hydrocarbon exploration and energy infrastructure of the African country, in February 2009. In the same month, Eni sold the Stogit and Italgas units to the natural gas grid company it controls, Snam Rete Gas, as part of its effort to exit these regulated activities. In March 2009, Gazprom received a permission from Federal Antimonopoly Service to purchase a 20% stake in Gazprom Neft from Eni. In the same month, Eni discovered a new hydrocarbons deposit on the concession of Abu Qir in Egypt that would allow a growth in the production of gas in the order 30% corresponding to 1.8 million cubes meters of gas and 850 condensed barrels per day. In April 2009, Eni signed under the patronage of the Russian government, several cooperation agreements in Russia and abroad with the main Russian energy companies Gazprom, Inter Rao UES, Rosneft, Transneft, and Stroytransgas, with whom it would start a wide program of strategic cooperation involving different activities in the energy field. In the same month, Eni completed the sale of 20% stake of Gazprom Neft to Gazprom. Eni completed the acquisition of Distrigas, through its 100% controlled subsidiary Eni Gas & Power Belgium (Eni Belgium), in May 2009. In the same month, Eni executed a strategic alliance with Quicksilver Resources, an independent US natural gas producer, to acquire a 27.5% interest in the Alliance area, located between the cities of Fort Worth and Dallas in Northern Texas. Subsequently, Eni was awarded the operatorships and participating interests in two exploration licenses in the Barents Sea, offshore Norway, and a participating interest in another license in the same area.

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PetroChina Company Limited


Company Overview
PetroChina is engaged in production of crude oil and natural gas. The company is controlled by China National Petroleum Corporation (CNPC). PetroChina primarily operates in China. It is headquartered in Beijing, China and employs about 477,800 people. The company recorded revenues of CNY1,071,146 million (approximately $154,405.7 million) during the financial year ended December 2008 (FY2008), an increase of 28.1% over the financial year ended December 2007 (FY2007). The operating profit of the company was CNY159,300 million (approximately $22,963.1 million) during FY2008, a decrease of 20.7% compared with FY2007. The net profit was CNY114,431 million (approximately $16,495.2 million) in FY2008, a decrease of 22% compared with FY2007.

Business description
PetroChina is engaged in a range of activities related to petroleum and natural gas, including exploration, development, and production and sales of crude oil and natural gas; and refining, transportation, storage, and marketing of crude oil and petroleum products. These activities also include production and sale of basic petrochemical products, derivative chemical products, and other chemical products. PetroChina is controlled by China National Petroleum Corporation (CNPC), an integrated international energy company, which holds 86.71% equity interest in the company. The company primarily operates in China. PetroChina operates through five business segments: exploration and production, refining and marketing, chemicals and marketing, natural gas and pipeline, and others. The exploration and production segment is engaged in crude oil and natural gas exploration, development, production, and sales. Substantially all of the company's total estimated proved crude oil and natural gas reserves are located in China, principally in northeastern, northern, southwestern, and northwestern China. The Songliao basin, located in Heilongjiang and Jilin provinces in northeastern China, including the Daqing and Jilin oil regions, accounts for a significant portion of PetroChinas crude oil production. The company also has significant crude oil reserves and operations in the area around the Bohai Bay. The Bohai Bay basin includes the Liaohe, Dagang, Huabei, and Jidong oil regions. PetroChina's proved natural gas reserves and production are generally concentrated in northwestern and southwestern China, specifically in the Erdos, Tarim, and Sichuan basins. The company holds exploration licenses covering a total area of approximately 446.4 million acres and production licenses covering a total area of approximately 16.4 million acres. As of December 2008, the companys estimated proved developed and undeveloped reserves were approximately 11,221.3 million barrels of crude oil and approximately 61,189.2 billion cubic feet of natural gas. For the same period, proved developed reserves accounted for 74.2% and 43.6% of its total proved developed and undeveloped crude oil and natural gas reserves, respectively. In FY2008, the total crude oil and natural gas output of the company was 1,181.5 million barrels of oil equivalent, including 870.7 million barrels of crude oil and 1,864.2 billion cubic feet of marketable natural gas.

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The refining and marketing segment is engaged in refining, transportation, storage, and marketing of crude oil and petroleum products. The company conducts its refining and marketing operations in China through 26 refineries, 22 regional sales and distribution branch companies, and one lubricants branch company. These operations include the refining, transportation, storage, and marketing of crude oil, and the wholesale, retail, and export of refined products, including gasoline, diesel, kerosene, lubricant, paraffin, and asphalt. In FY2008, the companys refineries processed 849.8 million barrels of crude oil and produced approximately 73.97 million tons of gasoline, diesel, and kerosene; and sold approximately 85.74 million tons of these products. The company's refineries are located in eight provinces, four autonomous regions and one municipality in the northeastern, northwestern, and northern regions of China. The company markets a wide range of refined products, including gasoline, diesel, kerosene, and lubricants, through a network of sales personnel and independent distributors and a broad wholesale and retail distribution system across China. In FY2008, the companys refining and marketing segment had a market share of 37.5% in Chinas retail sector. For the same period, the company had 17,456 service stations, of which 16,725 were owned service stations and sales volume per service station was 9.6. The chemicals and marketing segment produces and markets basic petrochemical products, derivative petrochemical products, and other chemical products through 12 chemical plants and four chemical products sales companies. The chemical plants and sales companies are located in five provinces, three autonomous regions, and two municipalities in China. Most of the company's chemical plants are co-located with its refineries and are also connected with the refineries by pipelines. PetroChina's exploration and production, refining and marketing, and natural gas and pipeline operations supply substantially all of the hydrocarbon feedstock requirements for its chemicals operations. The company produces petrochemicals that include propylene, ethylene, and benzene. It also produces synthetic resins, synthetic fiber, synthetic rubber, intermediates (alkylbenzene), and other chemicals (such as urea). The company's chemical products are distributed to a number of industries that manufacture components used in a range of applications, including automotive, construction, electronics, medical manufacturing, printing, electrical appliances, household products, insulation, packaging, paper, textile, paint, footwear, agriculture, and furniture industries. In FY2008, the chemicals and marketing segments production of chemical products and ethylene were 16.27 million tons and 2.68 million tons, respectively. The natural gas and pipeline segment of the company is engaged in the sale of natural gas and the transmission of natural gas, crude oil, and refined products. As of December 2008, the company owned and operated 11,028 km of crude oil pipeline and 5,656 km of refined product pipeline. The segment owns and operates approximately 24,037 km of natural gas pipelines in China, which represented the majority of China's onshore natural gas pipelines. The company's existing natural gas pipelines form regional natural gas supply networks in northwestern, southwestern, northern, and central China as well as the Yangtze River Delta. The segment also has an extensive network for the transportation, storage, and distribution of both crude oil and refined products, which covers many regions of China.

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The other segment comprises the assets, liabilities, income, and expenses relating to cash management, financing activities, the corporate center, research and development, and other business services to the operating business segments of the company.

SWOT analysis Strengths


Integrated oil and gas operations

PetroChina has vertically integrated operations as it is involved in both upstream and downstream oil and natural gas businesses. The company's vertically integrated business gives it advantages related to operational efficiencies. The company is engaged in crude oil and natural gas exploration, development, and production. It is also engaged in the refining, transportation, storage, and marketing of crude oil; and the wholesale, retail, and export of refined products, including gasoline, diesel, kerosene, and lubricant. PetroChina also produces and markets basic petrochemical products, derivative petrochemical products, and other chemical products. It is also natural gas transporter and seller. PetroChina's vertically integrated operations enable the company to derive synergies across the oil and natural gas value chain. Strong operational performance

PetroChina has a strong operational performance. It had significant reserves in FY2008. As of December 2008, the companys estimated proved developed and undeveloped reserves were approximately 11,221.3 million barrels of crude oil and approximately 61,189.2 billion cubic feet of natural gas. For the same period, proved developed reserves accounted for 74.2% and 43.6% of its total proved developed and undeveloped crude oil and natural gas reserves, respectively. In FY2008, the total crude oil and natural gas output of the company was 1,181.5 million barrels of oil equivalent, including 870.7 million barrels of crude oil and 1,864.2 billion cubic feet of marketable natural gas. Further, in 2008, PetroChinas refineries processed 849.8 million barrels of crude oil and produced approximately 73.97 million tons of gasoline, diesel, and kerosene. For the same period, the company had 17,456 service stations, of which 16,725 were owned service stations and sales volume per service station was 9.6. PetroChina also has a strong pipeline network. As of December 2008, the company owned and operated 11,028 kilometers (km) of crude oil pipeline and 5,656 km of refined product pipeline. For the same period, the company owned and operated approximately 24,037 km of natural gas pipelines. PetroChinas strong infrastructure provides it with a competitive edge. Strong player in China

PetroChina is one of the largest crude oil and natural gas producer and seller in China. The company accounts for approximately 40% of China's oil refining. The company also operates 26 refineries and markets a wide range of refined products, including gasoline, diesel, kerosene, and lubricants. In FY2008, the companys refining and marketing segment

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had a market share of 37.5% in Chinas retail sector. A strong market position in one of the fastest growing economies in the world gives the company a platform for future growth.

Weaknesses
Lack of operations in eastern and southern China

The eastern and southern regions of China have a higher demand for refined products and chemical products than the western and northern regions. However, most of PetroChina's refineries and chemical plants are located in the western and northern regions of China. As a result, the company incurs relatively higher transportation costs for delivery of its refined products and chemical products to certain areas of the eastern and southern regions from its refineries and chemical plants in western and northern China. While the company continues to expand the sales of these products in the eastern and southern regions of China, it faces competition from Sinopec and China National Offshore Oil Corp (CNOOC). This puts the company at a competitive disadvantage. Operating loss of refining and marketing segment

The company recorded operating losses from its refining and marketing segment in FY2008. PetroChina's loss from operations in its refining and marketing segment amounted to CNY82,970 million (approximately $11,960.1 million) during FY2008. For FY2007 also the segment had recorded an operating loss of CNY20,680 million (approximately $2,981 million). As the refining and marketing segment is the biggest revenue generator for the company, accounting for 73.8% of the company's revenues in FY2008, operating loss of the segment could have a negative impact on the overall financial performance of PetroChina. Ownership of the company by CNPC

China National Petroleum Corporation (CNPC) owns 86.71% of PetroChinas share capital. This ownership enables CNPC to elect PetroChinas entire Board of Directors without the concurrence of any of the companys other shareholders. Accordingly, CNPC is in a position to control PetroChinas policies, management, and affairs. CNPC could also affect the timing and amount of dividend payments and adopt amendments to certain of the provisions of PetroChinas articles of association. Additionally, CNPCs interests may sometimes conflict with those of some or all of PetroChinas minority shareholders. The ownership of PetroChina by CNPC limits its operations.

Opportunities
Potential of forest bio-fuel development

The development of forest bio-fuel offers enormous potential to PetroChina in the alternate energy resources sector. PetroChina entered into a framework agreement with the State Forestry Administration (SFA) of China on the development of forest bio-fuel and officially kicked off the construction of the first batch of forest bio-fuel tree breeding bases in Yunnan and Sichuan, in 2007. By the end of 2010, PetroChina plans to build an annual non-grain ethanol capacity of more than 2 million tons (which would make up more than 40% of the aggregate output of the country),

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establish an annual commercial production scale of 200 thousand tons of forest bio-diesel, and support the establishment of forest bio-fuel raw material bases of over 6 million mu (1 mu = 666.7 square meters). This would enable PetroChina to take the advantage offered by the global renewable energy market. Strategic initiatives to meet demand for natural gas in China

PetroChina has taken a number of strategic initiatives to meet demand for natural gas in China. For instance, in December 2008, PetroChina acquired Sun World from CNPC, which indirectly held interests in CNPC (Hong Kong). This acquisition would allow PetroChina to explore potential opportunities to jointly develop city gas, vehicle fuel gas, and other natural gas businesses in end-user markets. By combining PetroChinas advantage in the resources and supply of natural gas, and by leveraging on the independent and flexible platform provided by CNPC (Hong Kong) in business management and operation and capital market operation, PetroChina intends to jointly exploit the opportunity with CNPC (Hong Kong) in the growing natural gas end-user market in China. PetroChina also intends to promote the development of its upstream and midstream natural gas business. The company is also taking steps to import LNG. For instance, in March 2009, PetroChina signed a joint venture agreement with its local and foreign partners for the Jiangsu LNG import terminal project (Jiangsu LNG project) in eastern China. Jiangsu LNG project, in which PetroChina has a 55% stake, targets a terminal with a first phase capacity of 3.5 million tonnes per year (mt/year) on a man-made island offshore Rudong in Jiangsu province, with completion expected in early 2011. A planned second-phase expansion would take the terminal's capacity to 6.5 million mt/year. The Jiangsu terminal is expected to receive the first LNG shipment by 2011. When completed, the receiving terminal will be connected to China's West-East gas pipeline system and other domestic pipelines, to provide supply of gas to meet the demand for clean energy in the Jiangsu province. The terminal would import LNG from Qatar and Australia and other producers. Further, in April 2009, PetroChina set up PetroChina Dalian LNG Company. The company, in which PetroChina has a 75% stake, is responsible for the construction and operation of the Dalian LNG receiving terminal project (Dalian LNG project). The Dalian LNG project would mainly receive LNG from Australia and Qatar and would supply gas for both residential and industrial uses. Such strategic initiatives could help the company to meet the natural gas demand in China. Increasing demand for refined products in China

Over the next 10 years, it is expected that about 60% of the worlds petrochemical demand growth to occur in Asia, with more than one-third in China alone. The demand for refined petroleum products in China is expected to rise sharply in the coming decades. China, despite substantial additions to refining capacity over the next three decades, is expected to remain a net importer of refined products in 2030. The refining capacity in China is forecast to increase from 6.2 million barrels per day in 2006 to 14.6 million barrels per day in 2030. To capture the rising demand, the company has been making investments in the Middle East projects. For instance, in June 2008, Qatar Petroleum International (an oil and gas exploration company) signed a letter of intent with PetroChina and Shell China to commence the joint preliminary studies to assess the viability of building a refinery and petrochemical

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manufacturing complex and to market its products in China. PetroChina would hold 51% stake in the proposed project, while 24.5% stake would be held by Qatar Petroleum International and 24.5% stake by Shell China. Such investments would enable PetroChina to establish fresh refining capacity and take advantage of the increasing demand for refined products in China.

Threats
Intense competition

PetroChina faces intense competition in the oil and gas industry. It competes both in China and international markets. Its main competitors in China are Sinopec, including its subsidiary China National Star Petroleum Corporation (CNSPC), and China National Offshore Oil Corporation (CNOOC). In its exploration and production operations, PetroChina competes with Sinopec for the acquisition of desirable crude oil and natural gas prospects. The companys refining and marketing, and chemicals and marketing operations compete with Sinopec and CNOOC. The companys products also face competition from imported refined products and chemical products. As a result of Chinas entry into the WTO, the competition is further intensified from foreign producers of refined products and chemical products. The companys natural gas and pipeline operations competes with the suppliers of natural gas in Beijing Municipality, Tianjin Municipality, Hebei Province, Shanghai Municipality, Jiangsu Province, Zhejiang Province, Anhui Province, Henan Province, Hubei Province, Hunan Province, and the northwestern regions of China. Such an intense competition threatens to erode the market share of the company. Government regulations and control

PetroChina's operations, like those of other Chinese oil and gas companies, are subject to extensive regulations and control by the Chinese government. These regulations and control affect many material aspects of the company's operations, such as exploration and production licensing, industry-specific and product-specific taxes and fees, and environmental and safety standards. As a result, PetroChina could face significant constraints on its ability to implement its business strategies, to develop or expand its business operations or to maximize its profitability. The company's business could also be adversely affected by future changes in certain policies of the Chinese government with respect to the oil and gas industry. For instance, since 2006, the company had been subject to a crude oil special gain levy imposed by the Chinese government. As a result, the company recorded an aggregate of CNY44,662 million (approximately $6,438 million) and an aggregate of CNY85,291 million (approximately $12,294.7 million) as such levy to the Chinese government in relation to its domestic sales of crude oil in FY2007 and in FY2008, respectively. Such government regulations and control could have a negative impact on the operations of the company. Environmental laws and regulations

Together with other companies in the industries in which PetroChina operates, it is subject to numerous national, regional, and local environmental laws and regulations concerning its oil and gas exploration and production operations, petroleum and petrochemical products, and other activities. These laws and regulations require an environmental evaluation report to Global Top 10 Energy Companies
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be submitted and approved prior to the commencement of exploration, production, refining, and chemical projects. It also restricts the type, quantities, and concentration of various substances that can be released into the environment in connection with drilling and production activities. The environmental laws and regulations also limit or prohibit drilling activities within protected areas and certain other areas; and impose penalties for pollution resulting from oil, natural gas and petrochemical operations, including criminal and civil liabilities for serious pollution. These laws and regulations could also restrict air emissions and discharges to surface and subsurface water resulting from the operation of natural gas processing plants, chemical plants, refineries, pipeline systems, and other facilities that the company owns. In addition, PetroChina's operations are subject to laws and regulations relating to the generation, handling, storage, transportation, disposal, and treatment of solid waste materials. It is anticipated that the environmental laws and regulations to which the company is subject to would become increasingly strict. These environmental laws and regulations could therefore have an increasing impact on the companys operations.

Recent developments
In April 2008, the company entered into an acquisition agreement with CNPC. Pursuant to this agreement, the company acquired the northeastern inspection, maintenance, and repair business division of CNPC. In June 2008, PetroChina acquired the refined products sales assets and business from CNPC. In the same month, Qatar Petroleum International (an oil and gas exploration company) signed a letter of intent with PetroChina and Shell China to commence the joint preliminary studies to assess the viability of building a refinery and petrochemical manufacturing complex and to market its products in China. PetroChina would hold 51% stake in the proposed project, while 24.5% stake would be held by Qatar Petroleum International and 24.5% stake by Shell China. In September 2008, PetroChina signed its first agreement to market natural gas from Myanmar that would be transported from blocks off Myanmar through a pipeline to Yunnan province in China's southwest. In November 2008, the company acquired assets under the risk operation service business from CNPC. In December 2008, PetroChina acquired Sun World from CNPC, which indirectly held interests in CNPC (Hong Kong). In March 2009, PetroChina signed a joint venture agreement with its local and foreign partners for the Jiangsu liquefied natural gas (LNG) import terminal project in eastern China. In April 2009, PetroChina set up PetroChina Dalian LNG Company. The company, co-invested by PetroChina, Dalian Port (PDA), and Dalian Construction Investment, would be responsible for the construction and operation of the Dalian LNG receiving terminal project. PetroChina had a 75% stake in PetroChina Dalian LNG Company, while 20% and 5% of stakes were held by Dalian Port (PDA) and Dalian Construction Investment, respectively.

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OAO Gazprom
Company overview
Gazprom is one of the largest gas producing companies in the world. The companys core activities include exploration, production, transportation, processing, and marketing of natural gas, as well as refining and production of crude oil and gas condensate. The company primarily operates in Europe. It is headquartered in Moscow, Russia. The company recorded revenues of RUR3,518,960 million (approximately $142,130.8 million) in the financial year ended December 2008 (FY2008), an increase of 45.2% over the financial year ended December 2007 (FY2007). The operating profit of the company was RUR1,260,306 million (approximately $50,903.8 million) in FY2008, an increase of 79.6% over FY2007. The net profit was RUR742,928 million (approximately $30,006.9 million) in FY2008, an increase of 12.9% over FY2007.

Business description
Gazprom is a vertically integrated energy company. It is engaged in gas exploration, processing, transport, and marketing. The company is also involved in the refining and production of crude oil and gas condensate. It operates Russia's domestic gas pipeline network and delivers gas to countries across Central Asia and Europe. Gazprom relies heavily on Western exports. Gazprom primarily operates in Europe. The companys operates through six business segments: production of gas, transportation of gas, distribution of gas, refining, production of crude oil and gas condensate, and other. Gazprom is involved in the exploration and production of natural gas and hydrocarbons. Major natural gas reserves (over 90 %) are concentrated in the 14 largest fields: those being developed the Urengoyskoye, Yamburgskoye, Zapolyarnoye, Medvezhye, Komsomolskoye, Yamsoveyskoye, Orenburgskoye, Astrakhanskoye, and YuzhnoRusskoye fields; those ready for the development the Bovanenkovskoye, Kharasaveyskoye, and Shtokmanovskoye fields; and those being explored the Severo-Kamennomysskoye and Kamennomysskoye-more fields. Gazproms licensed areas account for over 60% of the explored gas reserves in Russia and about 17% of world resources. The companys gas transportation system includes a vast network of trunk pipelines, compressor stations, and underground gas storage facilities (UGSF). Its gas transportation system receives 706.7 billion cubic meters (bcm) of natural gas including 119.8 bcm of natural gas from 33 companies which are entitled to access Gazproms gas transportation system. The length of Gazproms gas trunk pipelines is 158.2 thousand kilometers (km) which includes 45.1 thousand km of pipeline branches. Moreover, it has 218 compressor stations which are currently in operation and which are used for gas transportation. The installed capacity of the companys 3,641 gas pumping units is 41,400 megawatts (MW). In FY2007, Gazprom commissioned gas trunk pipelines and pipeline branches with a total length of 1,156.5 km and four compressor stations with a capacity of 355,000 kilowatts (kW) to operate at gas pipelines, and one compressor station with a capacity of 68,000 kW to operate at UGSF. Gazprom operates 25 underground gas storage facilities in Russia.

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Gazprom refines its hydrocarbon raw materials through gas refining and gas production subsidiaries (gas refining), Gazprom Neft (oil refining), and Sibur Holdings companies (gas and oil chemistry). Gazprom performs primary refining of the purchased hydrocarbon raw materials and produces final products based on processing agreements signed with various refining organizations, including Sibur Holdings subsidiaries. Gazproms aggregate hydrocarbon processing and refining capacity amounted to 52.5 bcm of natural gas and 28.6 million tons of unstable gas condensate and oil per year. Further, it has the following six refineries in operation: the Astrakhan Gas Refinery, the Orenburg Gas Refinery, the Sosnogorsky Gas Refinery, the Orenburg Helium Plant, the Urengoi Condensate Preparation Plant, and the Surgut Condensate Stabilization Plant. Gazprom Nefts major refinery is the Omsk Oil Refinery (with the installed capacity of 19.5 million tons per year). Gazprom Neft also controls 38.8 % of voting shares in Moscow Oil Refinery (with the installed capacity of 12.15 million tons per year) and a 50 % shareholding in NGK Slavneft that owns two oil refineries: Yaroslavnefteorgsintez (with the installed capacity of 15.2 million tons) and the Yaroslavl Oil Refinery (with the installed capacity of 0.3 million tons), Sibur Holdings produces most of the groups petrochemical products. In 2007, Sibur Holding produces synthetic rubbers, tires, high pressure polyethylene, and polypropylene. Sibur Holding also produces plastics for a variety of purposes, high octane gasoline components, and other materials used in the automotive, agricultural, construction, and aerospace Industries. Gazprom sells gas in the domestic and foreign market. The company sells over 50% of its natural gas in the domestic market. It is the only supplier of natural gas to the regulated domestic market. Gazprom is diversifying its areas of operations by developing its activities in the electric power industry. The company is actively pursuing electric power and carbon trading in France, the Netherlands, Belgium, Ireland, and Germany.

SWOT analysis Strengths


Strong market position in the natural gas market

Gazprom has large natural gas and hydrocarbon reserves. Gazprom licensed areas accounted for more than 60% of the natural gas reserves in Russia and about 17% of natural gas reserves globally. In addition, Gazprom is the largest natural gas producer in Russia, and one of the largest in the world. It owns both natural gas fields and oil wells, and pumps the oiland-gas equivalent of the entire Saudi Arabian petroleum output. Gazprom produces over 550 billion cubic meters (bcm) of natural and associated gas. The natural gas production has been increasing due to the commissioning of the new facilities at the Kharvutinskaya area of the Yamburgskoye field and at the Yuzhno Russkoye field with capacities of 12.1 and 1.3 bcm, respectively. The natural gas reserves have also increased as a result of the extensive geologic exploration work. The companys strong market position in the natural gas market gives it significant competitive advantage, and provides it with a platform for growth.

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Strong gas transportation network

Gazprom owns the worlds largest gas transportation system, the Unified Gas Supply System (UGSS) of Russia. Gazproms gas transportation system includes a vast network of trunk pipelines, compressor stations, and underground gas storage facilities (UGSF). The length of Gazproms gas trunk pipelines is 158.2 thousand kilometers (km), which includes 45.1 thousand km of pipeline branches. Moreover, it has 218 compressor stations which are currently in operation and which are used for gas transportation. The installed capacity of the companys 3,641 gas pumping units is 41,400 megawatts (MW). In FY2007, Gazprom commissioned gas trunk pipelines and pipeline branches with a total length of 1,156.5 km and four compressor stations with a capacity of 355,000 kilowatts (kW) to operate at gas pipelines, and one compressor station with a capacity of 68,000 kW to operate at UGSF. Its gas transportation system receives natural gas from 33 companies which are entitled to access Gazproms gas transportation system. Gazprom is also active in distribution markets in Austria, Belgium, the Netherlands, and throughout Eastern Europe. The companys gas transportation network allows it direct control over its natural gas distribution and transportation activities. Furthermore, the company leverages its pipeline network to trade its natural gas in European markets. Strong financial performance

Over the years, Gazprom has delivered consistent financial results. The company had a strong asset base of RUR7,168,568 million (approximately $289,538.5 million) in FY2008, an increase of 5.5% over FY2007. The revenues of the company have increased at a CAGR of 38% during 200408, from RUR976,776 million (approximately $39,452 million) in FY2004 to RUR3,518,960 million (approximately $142,130.8 million) in FY2008. Furthermore, the revenues of the company increased by 45.2% in FY2008 over FY2007. The companys profits have followed a similar trend. The operating profit of the company has increased at a CAGR of 48% during 200408, from RUR262,611 million (approximately $10,606.9 million) in FY2004 to RUR1,260,306 million (approximately $50,903.8 million) in FY2008. The net profit of the company has increased at a CAGR of 37% during 200408, from RUR209,449 million (approximately $8,459.6 million) in FY2004 to RUR742,928 million (approximately $30,006.9 million) in FY2008. Steady financial performance enables the company to manage its operations well and also increases the financial flexibility of the company.

Weaknesses
Aging of pipelines

Gazprom needs to replace its pipelines since it is over dependent on its pipelines which is aged between 21 and 33 years and above 33 years for transporting the gas. About 40% of the companys pipelines are aged between 21 and 33 years, 23.5% are aged over 33 years, 25.6% are aged between 11 and 20 years, and 11.2% of trunk pipelines are aged less than 10 years. The refurbishment of these pipelines will call for additional capital expenditure. In FY2007, Gazprom invested RUB39.1 billion (approximately $1.6 billion) towards the reconstruction and technical refurbishment of its Unified Gas Supply System (UGSS). The additional capital expenditure on refurbishment of pipeline impacts the expansion plan and would add to the margin pressures for the company.

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Maturing gas fields

The companys natural gas production from its major fields in Western Siberia (Urengoyskoye, Yamburgskaya, Medvezhye, and Zapolyarnoye) has been declining over the past few years. The decrease in natural gas production at the Urengoyskoye and Medvezhye fields and the Yamburgskaya area was caused both by the natural decrease in production and the limited natural gas withdrawal. Despite the fact that the company has been investing heavily in developing new fields, the maturing fields will impact Gazproms gas production in the near term.

Opportunities
Investment in Methane extraction

One of the major directions in implementation of Gazproms strategy for the expansion of its resource base is to establish a new industry of methane production at coal fields in Russia. Estimates show that forecast methane resources located in coal beds in Russia are comparable with traditional natural gas fields in terms of their volumes and amount to 50 trillion cubic meters (tcm). The Kuzbass field with its forecast methane resources of 13 tcm is currently the most suitable for commercial production. In some areas of Kuzbass the density of methane resources reaches up to 3 bcm per square km, which is comparable with that at natural gas fields in the Northern areas of the Tyumen Region. Its advantages in geologic and production parameters, the availability of infrastructure, and natural gas consumers located as close as 15 to 150 km from the Kuzbass field determines the economic efficiency of commercial production of methane there. Gazprom has been carrying out experiments since 2003 testing technologies for methane production from coal beds. Forecast annual production volumes at the available licensed area may reach up to 5 bcm in the period from 2010 through 2012 and up to 20 bcm after 2020. Further, in 2007, Gazprom acquired a 54% shareholding in GPK Kuznetsk that holds licenses for the exploration, development, and production of methane from coal beds and of other hydrocarbons within the YuzhnoKuzbasskaya group of coal fields with estimated methane resources of 6.1 tcm. In early 2008, Gazproms shareholding in GPK Kuznetsk was increased to 100%. This investment would materially diversify the companys product base and enhance the overall competitiveness of Gazproms products. Prudent acquisitions

Gazprom follows aggressive acquisition strategy. In July 2008, Gazprom agreed to buy a 25% stake in gas transport firm DalTransGas from Rosneft. Under the agreement, Gazprom and Rosneft would consider the possibility of pumping additional gas from the Gazprom-controlled Sakhalin-2 project. Gazprom and Rosneft would also work towards raising the transport capacity of the Okha-Komsomolsk-on-Amur pipeline to 4.5 bcm of gas per year. Further, in January 2008, the company acquired a 50% stake in the Central European Gas Hub (CEGH), wholly-owned by OMV Gas International, a subsidiary of OMV, Austrias largest oil and gas group. Additionally, the agreement contains the accord between the companies to implement joint underground gas storage projects both in Austria and neighboring countries.

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Such prudent acquisitions would strengthen the companys product portfolio and would drive the top line growth in the coming years. Globalization

Gazprom is consistently pursuing its business globalization strategy, thus actively expanding the geography of its supplies. In July 2008, Gazprom signed an agreement to participate in investment projects in Turkmenistan. The company would fund and construct new gas mains from the eastern part of Turkmenistan, develop field infrastructure, and increase the capacity of the Turkmen section of the Pre-Caspian gas pipeline to up to 30 bcm of gas per year. In June 2008, GM&T Retail, a subsidiary of Gazprom, received a supply and shipping license for the Irish market. In the same month, the company opened a representative office in Algeria, to pursue developing opportunities in Africa. Gazprom plans to participate in large-scale gas projects in Alaska, Nigeria, and Libya. Gazprom has also proposed to set up a company in Turkey for urban gas distribution and for extension of the Blue Stream pipeline to Israel. The proposed company would also build new gas storage facilities in Turkey. Additionally in 2008, the company signed an agreement with Gas Natural for a strategic partnership in liquefied natural gas and other lines of business. Initially, the focus would on trading LNG cargoes and could be extended to include power, carbon and pipeline gas trade. This deal which marks the companys entry into the Iberian market provides it with access to the Spanish LNG market. In March 2008, Gazprom and Bolivian state-owned petroleum company, Yacimientos Petroliferos Fiscales Bolivianos (YPFB), signed an agreement on geological exploration in Bolivia. Pursuant to the agreement, exploration would be carried out at blocks Sunchal, Acero, and Carohuaicho, located in southeastern Bolivia. In May 2009, Gazprom and Bulgarian Energy Holding signed a cooperation agreement with regard to a gas pipeline for natural gas transit through the territory of the Republic of Bulgaria as part of the South Stream project. Geographically diversified investments in various projects would provide the company with an advantage of maintaining a high level of diversity within the companys generating assets. In addition, it would also enable the company to tap opportunities in new as well as existing markets. Growth through alliances and joint ventures

Growth through joint ventures and alliances acquisitions and alliances has long been a strategy of Gazprom. For instance, in February 2008, Gazprom entered into a joint venture with Russia-based coal producer, Siberian Coal Energy Company (SUEK), under which the electricity and coal assets of both companies would be united. According to the agreement signed between the two entities, SUEK would contribute power generation, coal-mining, and processing assets to the new company. In September 2008, TOTAL signed a cooperation agreement with Gazprom and Yacimentos Petroliferos Fiscales Bolivianos (YPFB) to explore the Azero block within the framework of a joint venture company in which Total and Gazprom owned equal stakes. Gazprom and E.ON signed an agreement to jointly develop Yuzhno-Russkoye oil and gas field in October 2008. In the same month, Gazprom and Petrovietnam signed a 30-year oil and gas contract for blocks 129, 130, 131, and 132 in the Vietnam continental shelf.

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Further, in March 2009, Gazprom and Siirtec Nigi (an Italian company dealing with the adoption of proper and attracted technologies for sulfur recovery, acid gas removal and ecological purification) signed an engineering and construction contract for a gas treatment unit (GTU). The unit is to be installed at the Portovaya compressor station (CS) of the Nord Stream gas trunkline. In the same month, the company and MFB (Hungarian Development Bank) signed a basic cooperation agreement for the construction of a gas pipeline and transit of natural gas across Hungary within the South Stream project. Gazprom and Royal Dutch Shell signed LNG and natural gas supply contracts, in April 2009. The agreements included the purchase of liquid natural gas (LNG) by both Shell Eastern Trading and Gazprom Global LNG from Sakhalin Energy Investment Company. The company's joint ventures and alliances would allow it to further strengthen its existing business as well as help Gazprom to gain a strong foothold in new sectors and markets.

Threats
Regulated pricing

Gazprom sells gas in Russia at wholesale prices regulated by the Russian government. Typically, the government sets a maximum level on natural gas prices. Russian domestic natural gas prices are just one-fifth of the level paid by export customers in Europe. However, in November 2006, the Russian government announced to more than double domestic natural gas prices by early next decade to make the economy more efficient, but it avoided a steep increase. In accordance with the resolutions adopted by the Government of the Russian Federation, the Federal Tax Service (the FTS of Russia) increased regulated wholesale natural gas prices by 15% in 2007 and 25% in 2008. The Russian government projects an increase in the gas prices 19.7% in 2009 and 27.7% in 2010. Considering this accelerated indexation, the level of gas prices for 2010 are expected to reimburse only 66% of investment needed to provide for natural gas supply to the domestic market. Lower regulated natural gas prices could impact the profit margins of the company. Weather sensitivity

The natural gas business is seasonal and dependent on weather conditions in the service areas. For instance, unusually warm weather in 2007 forced Russian natural gas producers to lower 2007 exports to European countries. In 2007, natural gas production declined by 1.3% compared with 2006 due to the decrease in natural gas consumption in the domestic market and lower volumes of Russian gas exports to European countries because of the abnormally warm winter of 2006/2007. Many major European customers are contemplating to scale down their gas purchase obligations due to warm winters in Europe in recent years. Such a move could impact the top line growth of Gazprom. Fluctuations in crude oil and natural gas prices

Gazproms operations could be affected by changes in crude oil and natural gas prices. Crude oil prices continue to be affected by political developments worldwide, pricing decisions and production quotas of OPEC, and volatile trading patterns in the commodity futures markets. Natural gas prices also continue to be highly volatile. In periods of sharply

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lower commodity prices, Gazprom could curtail production and capital spending projects, as well as delay or defer drilling wells in certain areas because of lower cash flows. Decline in crude oil and natural gas prices and the corresponding declining demand could affect Gazproms level of production and lead to decline in overall topline growth for the company. Economic slowdown in the European Union

Europe is a key market for Gazprom. According to International Monetary Funds (IMF) World Economic Outlook, April 2009, the European Union economy could face slowdown in 2009. The GDP growth rate in the European Union declined from 2.7% in 2007 to 0.9% in 2008. The region is forecasted to record a negative growth rate of 4.2% in 2009. A weak economic outlook for the region could depress industrial development and impact the demand for the companys products.

Recent developments
In January 2008, the company acquired a 50% stake in the Central European Gas Hub (CEGH), wholly-owned by OMV Gas International, a subsidiary of OMV, Austrias largest oil and gas group. Additionally, the agreement contained the accord between the companies to implement joint underground gas storage projects both in Austria and neighboring countries. In February 2008, Gazprom entered into a joint venture with Russia-based coal producer, Siberian Coal Energy Company (SUEK), under which the electricity and coal assets of both companies would be united. According to the agreement signed between the two entities, SUEK would contribute power generation, coal-mining, and processing assets to the new company. In the same month, Gazprom and .ON signed a memorandum of understanding in Dusseldorf to jointly build and operate a gas-turbine power station in the vicinity of Lubmin (Germany). In March 2008, Gazprom and Bolivian state-owned petroleum company, Yacimientos Petroliferos Fiscales Bolivianos (YPFB), signed an agreement on geological exploration in Bolivia. Pursuant to the agreement, exploration would be carried out at blocks Sunchal, Acero, and Carohuaicho, located in southeastern Bolivia. In April 2008, Gazprom and Siemens, Europe's leading engineering conglomerate, entered into a strategic partnership agreement. The agreement between the companies opened way to new opportunities for deeper cooperation between the companies in Russia and abroad. In the same month, Gazprom and VNG sign agreement of cooperation in the underground gas storage sector. In the following month, TsentrCaspneftegaz, a joint venture set up by Gazprom and LUKOIL on a parity basis, discovered a major oil and gas condensate field within the Tsentralnaya structure. The structure was located in the central part of the Middle Caspian Sea on the border between Russia and Kazakhstan. In June 2008, Gazprom signed a five-year accord on gasification with the Republic of Sakha (Yakutia), to jointly develop an investment project for the gasification of Yakutia and for the development and conservation of hydrocarbon resources in the region. In the same month, the company opened a representative office in Algeria, the first in Africa. Further in June 2008, the company signed a five-year accord on gasification with Republic of Buryatia in Russia, to jointly develop an investment project for the gasification of Buryatia, conversion of energy program and for the conservation of motor vehicles, and agricultural equipment to gas in the region.

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The Board of Directors of the company approved a sales and purchase agreement with Daltransgaz (a company engaged in distribution and transmission of gas) for the Sakhalin Komsomolsk Khabarovsk Phase I First Startup Complex gas pipeline, in July 2008. In the same month, the company and Rosneft signed an agreement of cooperation on gas supply to the regions of the Far Eastern Federal District (FEFD). In September 2008, Gazprom signed a five-year accord on gasification with Penza Oblast to jointly develop an investment project for the gasification of Penza Oblast, conversion of energy program, and for the conservation of motor vehicles and agricultural equipment to gas. In the same month, Gazprom and Nigerian National Petroleum Corporation signed a memorandum of understanding (MoU). The MoU stipulated the implementation of joint projects in geological exploration, hydrocarbons production, and transportation, as well as in associated petroleum gas gathering and processing systems engineering and power industry facilities construction in Nigeria. Further in September 2008, Gazprom and Kogas signed a MoU on natural gas supplies from Russia to South Korea. The MoU stipulated the possibility of laying a pipeline for natural gas supplies to South Korea across the Korean Peninsula. In the same month, TOTAL signed a cooperation agreement with Gazprom and Yacimentos Petroliferos Fiscales Bolivianos (YPFB) to explore the Azero block in Bolivia within the framework of a joint venture company in which Total and Gazprom owned equal stakes. Gazprom and E.ON signed an agreement to jointly develop the Yuzhno-Russkoye oil and gas field in Russia, in October 2008. In the same month, Gazprom and Petrovietnam signed a 30-year oil and gas contract for blocks 129, 130, 131, and 132 in the Vietnam continental shelf. In November 2008, Gazprom and Schlumberger signed a framework agreement on technological cooperation development. The agreement stipulated introduction of new advanced technologies developed by Schlumberger for the purpose of raising exploration and development efficiency in Gazproms fields located in Russia and abroad, as well as cooperation in scientific researches, novel technology development, and staff training. In the same month, BASF and Gazprom launched natural gas production through the joint venture Achimgaz in Siberia. Gazprom started the construction and the welding of the first joint of the Bovanenkovo Ukhta gas trunkline system, in December 2008. The Bovanenkovo Ukhta gas trunkline system was intended for gas transportation from the Bovanenkovskoye field, the largest on the Yamal Peninsula, to the Unified Gas Supply System of Russia. In the same month, Gazkomplektimpex, a wholly owned subsidiary of Gazprom and Rolls-Royce, signed a contract for the supply of gas pumping units (GPU). In line with the contract, Rolls-Royce would supply within 2010 six GPU with 50 MW in capacity and two GPU with 27 MW in capacity to the Portovaya compressor station (CS) of the Nord Stream gas trunkline. Further in December 2008, Gazproms subsidiary, Gazprom Export, signed a memorandum of mutual understanding with Moravskie Naftove Doly on construction of gas storage facility in the Czech Republic. An agreement was signed between Gazprom and the Leningrad Oblast Government for 2009, in February 2009. Pursuant to the agreement the parties would continue comprehensive development of the Leningrad Oblast gas supply system with due regard of the Nord Stream gas trunkline project. In the same month, Gazprom and Thales Alenia Space (European leader in satellite systems and a major player in orbital infrastructures), signed the contract for manufacturing and delivering two Yamal-400 new generation communications satellites. Global Top 10 Energy Companies
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In the following month, Gazprom and Siirtec Nigi (an Italian company dealing with the adoption of proper and attracted technologies for sulfur recovery, acid gas removal, and ecological purification) signed an engineering and construction contract for a gas treatment unit (GTU). The unit would be installed at the Portovaya compressor station (CS) of the Nord Stream gas trunkline. In the same month, Gazprom and MFB (Hungarian Development Bank) signed a basic cooperation agreement for the construction of a gas pipeline and transit of natural gas across Hungary within the South Stream project. Gazprom and Royal Dutch Shell signed LNG and natural gas supply contracts, in April 2009. The agreements included the purchase of liquid natural gas (LNG) by both Shell Eastern Trading and Gazprom Global LNG from Sakhalin Energy Investment Company. In May 2009, Gazprom and Bulgarian Energy Holding signed a cooperation agreement with regard to a gas pipeline for natural gas transit through the territory of Bulgaria as part of the South Stream project. In the same month, DESFA (operator, developer, and exploiter of the national gas transportation system in Greece) and Gazprom signed a basic cooperation agreement on implementation of the South Stream project on the territory of Greece. Further in May 2009, Gazprom and Srbijagas signed a basic cooperation agreement on implementation of the South Stream project on the territory of Serbia. Further in the same month, Enel and Eni agreed to sell a 51% stake in Russian company SeverEnegia to Gazprom for about $1.5 billion.

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Financial Analysis

FINANCIAL ANALYSIS Exxon Mobil Corporation

Table 9: Exxon Mobil CorporationFinancial highlights, 200408

Parameters Income Statement Total Revenue Cost of Goods and Services Gross Profit Operating Expense Operating Income Net Income Balance Sheet Total Current Assets Total Assets Total Current Liabilities Total Liabilities Total Shareholders Equity Cash Flow Cash from Operating Activities Cash from Investing Activities Cash from Financing Activities Closing Cash Balance Key Statistics Total Common Shares Outstanding Year-end Share Price Market Capitalization Enterprise Value Number of Employees Free Cash Flow Key Ratios P/E Ratio Earnings per Share (EPS) EV/EBITDA EV/Sales Profitability Ratio Gross Margin Operating Margin Net Income Margin

Currency

Unit

2008

2007

2006

2005

2004

USD USD USD USD USD USD

Million Million Million Million Million Million

459,579.0 (288,810.0) 170,769.0 (104,479.0) 84,070.0 45,220.0

390,328.0 (232,852.0) 157,476.0 (99,821.0) 71,879.0 40,610.0

365,467.0 (213,255.0) 152,212.0 (95,273.0) 69,107.0 39,500.0

358,955.0 (213,002.0) 145,953.0 (96,951.0) 60,727.0 36,130.0

291,252.0 (163,547.0) 127,705.0 (91,833.0) 42,655.0 25,330.0

USD USD USD USD USD

Million Million Million Million Million

72,266.0 228,052.0 49,100.0 115,087.0 112,965.0

85,963.0 242,082.0 58,312.0 120,320.0 121,762.0

75,777.0 219,015.0 48,817.0 105,171.0 113,844.0

73,342.0 208,335.0 46,307.0 97,149.0 111,186.0

60,377.0 195,256.0 42,981.0 93,500.0 101,756.0

USD USD USD USD

Million Million Million Million

59,725.0 (15,499.0) (44,027.0) 31,437.0

52,002.0 (9,728.0) (38,345.0) 33,981.0

49,286.0 (14,230.0) (36,210.0) 28,244.0

48,138.0 (10,270.0) (26,941.0) 28,671.0

40,551.0 (14,910.0) (18,268.0) 18,531.0

NA USD USD USD NA USD

Million Absolute Million Million Absolute Million

4,976.0 79.8 397,234.1 379,780.1 79,900.0 40,407.0

5,382.0 93.7 504,239.6 484,106.6 80,800.0 36,615.0

5,729.0 76.6 439,013.3 422,920.3 82,100.0 33,824.0

6,133.0 56.2 344,490.6 327,337.6 83,700.0 34,299.0

6,401.0 51.3 328,115.3 321,829.3 85,900.0 28,565.0

NA USD NA NA

Absolute Absolute Absolute Absolute

8.8 9.1 3.9 0.8

12.4 7.5 5.8 1.2

11.1 6.9 5.3 1.2

9.5 5.9 4.6 0.9

13.0 4.0 6.1 1.1

NA NA NA

% % %

37.2 18.3 10.2

40.3 18.4 10.7

41.6 18.9 11.1

40.7 16.9 10.3

43.8 14.6 9.0

Global Top 10 Energy Companies


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Financial Analysis

Resource Management Return on Equity Return on Capital Employed Return on Assets Financial Strength Quick Ratio Interest Coverage Ratio Debt to Equity Ratio Operational Efficiency Asset Turnover Ratio Receivable Turnover Ratio Inventory Turnover Ratio Revenue per Employee Net income per Employee Other Capex to Revenues Capex Revenue by Division Upstream Downstream Chemical Corporate and financing Revenues by Geography The US Canada Japan The UK Belgium Germany France USD USD USD USD USD USD USD Million Million Million Million Million Million Million 137,615.0 33,677.0 30,126.0 29,764.0 25,399.0 20,591.0 18,530.0 121,144.0 27,284.0 26,146.0 25,113.0 20,550.0 17,445.0 14,287.0 112,787.0 25,281.0 27,368.0 24,646.0 16,271.0 19,458.0 13,537.0 110,553.0 28,842.0 28,963.0 24,805.0 11,281.0 21,653.0 14,412.0 88,382.0 21,689.0 25,485.0 22,549.0 0.0 17,649.0 12,231.0 USD USD USD USD Million Million Million Million 39,113.0 382,060.0 38,388.0 18.0 28,656.0 324,816.0 36,826.0 30.0 32,875.0 298,457.0 34,098.0 37.0 30,054.0 297,680.0 31,186.0 35.0 23,033.0 240,413.0 27,781.0 25.0 NA USD % Million 4.2 19318 3.9 15387 4.2 15462 3.9 13839 4.1 11986 NA NA NA USD USD Absolute Absolute Absolute Absolute Absolute 2.0 18.6 25.4 1.7 14.0 21.4 1.7 14.9 21.3 1.8 16.1 22.7 1.5 14.1 17.2 NA NA NA Absolute Absolute Absolute 1.2 124.9 0.1 1.3 179.7 0.1 1.3 105.7 0.1 1.4 122.4 0.1 1.2 66.9 0.1 NA NA NA % % % 38.5 47.0 19.2 34.5 39.1 17.6 35.1 40.6 18.5 33.9 37.5 17.9 24.9 28.0 13.0

5,751,927.4 4,830,792.1 4,451,486.0 565,957.4 502,599.0 481,120.6

4,288,590.2 3,390,593.7 431,660.7 294,877.8

Source: Datamonitor, Company reports NA Not Applicable.

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Financial Analysis

Table 10: Exxon Mobil CorporationKey industryspecific ratios, 2004-08

Financial Ratios Current Ratio Quick Ratio Net Working Capital Ratio Return on Asset Return on Equity Net Income Margin Operating Margin (Return on Sales) Asset Turnover Ratio Inventory Turnover Ratio Receivable Turnover Ratio Debt to Equity Ratio Interest Coverage Ratio Dividend Per Share Earning Per Share Market to Book Ratio Price Earning Ratio Return on Capital Employed Long Term Debt Ratio Total Debt Ratio Dividend Yield Dividend Payout Enterprise Value / EBIT Enterprise Value / EBITDA CAPEX to Revenues

2008 1.47 1.23 0.10 0.19 0.39 10.20% 18.29% 1.96 25.41 18.58 0.08 124.92 1.62 9.09 3.52 8.78 0.47 0.04 0.05 0.02 0.18 4.52 3.94 4.2%

2007 1.47 1.28 0.11 0.18 0.34 10.66% 18.42% 1.69 21.36 13.98 0.08 179.70 1.42 7.55 4.14 12.42 0.39 0.04 0.05 0.02 0.19 6.74 5.75 3.9%

2006 1.55 1.33 0.12 0.18 0.35 11.10% 18.91% 1.71 21.29 14.94 0.07 105.67 1.33 6.89 3.86 11.11 0.41 0.04 0.05 0.02 0.19 6.12 5.25 4.2%

2005 1.58 1.38 0.13 0.18 0.34 10.29% 16.92% 1.78 22.65 16.11 0.07 122.43 1.17 5.89 3.10 9.53 0.37 0.04 0.05 0.02 0.20 5.39 4.61 3.9%

2004 1.40 1.18 0.09 0.13 0.25 8.96% 14.65% 1.49 17.24 14.06 0.08 66.86 1.08 3.96 3.22 12.95 0.28 0.03 0.05 0.02 0.27 7.54 6.14 4.1%

Source: Datamonitor, Company reports

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Global Top 10 Energy Companies


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Financial Analysis

Royal Dutch Shell Plc

Table 11: Royal Dutch ShellFinancial highlights, 200408

Parameters Income Statement Total Revenue Cost of Goods and Services Gross Profit Operating Expense Operating Income Net Income Balance Sheet Total Current Assets Total Assets Total Current Liabilities Total Liabilities Total Shareholders Equity Cash Flow Cash from Operating Activities Cash from Investing Activities Cash from Financing Activities Closing Cash Balance Key Statistics Total Common Shares Outstanding Year-end Share Price Market Capitalization Enterprise Value Number of Employees Free Cash Flow Key Ratios P/E Ratio Earnings per Share (EPS) EV/EBITDA EV/Sales Profitability Ratio Gross Margin Operating Margin Net Income Margin Resource Management Return on Equity Return on Capital Employed Return on Assets Financial Strength

Currency

Unit

2008

2007

2006

2005

2004

USD USD USD USD USD USD

Million Million Million Million Million Million

458,361.0 (394,373.0) 63,988.0 (20,343.0) 50,989.0 26,277.0

355,782.0 (295,496.0) 60,286.0 (19,534.0) 50,459.0 31,331.0

318,845.0 (262,104.0) 56,741.0 (19,063.0) 44,780.0 25,442.0

306,731.0 (252,034.0) 54,697.0 (17,356.0) 44,772.0 25,311.0

266,386.0 (222,706.0) 43,680.0 (17,460.0) 32,255.0 18,540.0

USD USD USD USD USD

Million Million Million Million Million

116,570.0 282,401.0 105,529.0 155,116.0 127,285.0

115,397.0 269,470.0 94,384.0 145,510.0 123,960.0

91,885.0 235,276.0 76,748.0 129,550.0 105,726.0

97,892.0 219,516.0 84,964.0 128,592.0 90,924.0

62,049.0 187,446.0 54,852.0 101,376.0 86,070.0

USD USD USD USD

Million Million Million Million

43,918.0 (28,915.0) (9,394.0) 15,188.0

34,461.0 (14,570.0) (19,393.0) 9,656.0

31,696.0 (20,861.0) (13,741.0) 9,002.0

30,113.0 (8,761.0) (18,573.0) 11,730.0

26,537.0 (5,964.0) (13,592.0) 9,201.0

NA USD USD USD NA USD

Million Absolute Million Million Absolute Million

6,121.7 26.3 160,729.3 170,391.3 102,000.0 8,806.0

6,210.3 42.1 261,654.3 272,105.3 104,000.0 10,356.0

6,308.7 35.2 222,311.1 238,301.1 108,000.0 8,600.0

6,525.0 31.3 204,256.6 212,442.6 109,000.0 14,197.0

10,724.0 113,000.0 12,971.0

NA USD NA NA

Absolute Absolute Absolute Absolute

6.1 4.3 2.6 0.4

8.4 5.0 4.3 0.8

8.7 4.0 4.2 0.7

8.1 3.9 3.7 0.7

0.2 -

NA NA NA

% % %

14.0 11.1 5.8

16.9 14.2 9.0

17.8 14.0 8.3

17.8 14.6 8.6

16.4 12.1 7.2

NA NA NA

% % %

20.9 28.8 9.5

27.3 28.8 12.4

25.9 28.2 11.2

28.6 33.3 12.4

21.5 24.3 9.9

Global Top 10 Energy Companies


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Financial Analysis

Quick Ratio Interest Coverage Ratio Debt to Equity Ratio Operational Efficiency Asset Turnover Ratio Receivable Turnover Ratio Inventory Turnover Ratio Revenue per Employee Net income per Employee Other Capex to Revenues Capex Revenue by Division Exploration and production Gas and power Oil sands Oil products Chemicals Corporate Revenues by Geography Europe The US Other Americas Rest of the world

NA NA NA

Absolute Absolute Absolute

0.9 43.2 0.2

0.9 45.5 0.1

0.9 39.0 0.1

0.9 41.9 0.1

0.9 30.5 0.2

NA NA NA USD USD

Absolute Absolute Absolute Absolute Absolute

1.7 12.5 15.5 4,493,735.3 257,617.6

1.4 9.7 10.8 3,420,980.8 301,259.6

1.4 10.5 12.2 2,952,268.5 235,574.1

1.5 11.5 14.3 2,814,045.9 232,211.0

1.4 11.3 14.5 2,357,398.2 164,070.8

NA USD

% Million

7.7 35112

6.8 24105

7.2 23096

5.2 15916

5.1 13566

USD USD USD USD USD USD

Million Million Million Million Million Million

20,841.0 24,576.0 558.0 368,853.0 43,494.0 39.0

14,963.0 15,982.0 1,069.0 282,665.0 41,046.0 57.0

16,750.0 16,035.0 1,159.0 248,581.0 36,306.0 14.0

23,970.0 13,766.0 237,210.0 31,018.0 767.0

18,400.0 9,625.0 210,424.0 26,877.0 1,060.0

USD USD USD USD

Million Million Million Million

196,968.0 100,818.0 39,686.0 120,889.0

148,465.0 87,548.0 29,628.0 90,141.0

136,307.0 80,974.0 24,666.0 76,898.0

122,684.0 101,308.0 21,351.0 61,388.0

94,206.0 103,429.0 18,099.0 50,652.0

Source: Datamonitor, Company reports NA Not Applicable.

DATAMONITOR

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Financial Analysis

Table 12: Royal Dutch ShellKey industry specific ratios, 200408

Financial Ratios Current Ratio Quick Ratio Net Working Capital Ratio Return on Asset Return on Equity Net Income Margin Operating Margin (Return on Sales) Asset Turnover Ratio Inventory Turnover Ratio Receivable Turnover Ratio Debt to Equity Ratio Interest Coverage Ratio Dividend Per Share Earning Per Share Market to Book Ratio Price Earning Ratio Return on Capital Employed Long Term Debt Ratio Total Debt Ratio Dividend Yield Dividend Payout Enterprise Value / EBIT Enterprise Value / EBITDA CAPEX to Revenues

2008 1.10 0.92 0.04 0.10 0.21 5.78% 11.12% 1.66 15.51 12.54 0.18 43.17 1.55 4.29 1.26 6.12 0.29 0.08 0.13 0.06 0.36 3.34 2.64 7.7%

2007 1.22 0.89 0.08 0.12 0.27 8.97% 14.18% 1.41 10.80 9.71 0.15 45.54 1.45 5.05 2.11 8.35 0.29 0.07 0.10 0.03 0.29 5.39 4.28 6.8%

2006 1.20 0.89 0.06 0.11 0.26 8.25% 14.04% 1.40 12.19 10.49 0.15 38.97 1.29 4.03 2.10 8.74 0.28 0.06 0.10 0.04 0.32 5.32 4.15 7.2%

2005 1.15 0.92 0.06 0.12 0.29 8.56% 14.60% 1.51 14.34 11.48 0.14 41.92 1.62 3.88 2.25 8.07 0.33 0.06 0.10 0.05 0.42 4.74 3.74 5.2%

2004 1.13 0.85 0.04 0.10 0.22 7.23% 12.11% 1.42 14.48 11.27 0.17 30.46 0.24 0.07 0.11 0.33 0.24 5.1%

Source: Datamonitor, Company reports

DATAMONITOR

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Financial Analysis

BP Plc

Table 13: BPFinancial highlights, 200408

Parameters Income Statement Total Revenue Cost of Goods and Services Gross Profit Operating Expense Operating Income Net Income Balance Sheet Total Current Assets Total Assets Total Current Liabilities Total Liabilities Total Shareholders Equity Cash Flow Cash from Operating Activities Cash from Investing Activities Cash from Financing Activities Closing Cash Balance Key Statistics Total Common Shares Outstanding Year-end Share Price Market Capitalization Enterprise Value Number of Employees Free Cash Flow Key Ratios P/E Ratio Earnings per Share (EPS) EV/EBITDA EV/Sales Profitability Ratio Gross Margin Operating Margin Net Income Margin Resource Management Return on Equity Return on Capital Employed Return on Assets

Currency

Unit

2008

2007

2006

2005

2004

USD USD USD USD USD USD

Million Million Million Million Million Million

361,143.0 (296,165.0) 64,978.0 (33,805.0) 36,347.0 21,157.0

284,365.0 (226,681.0) 57,684.0 (30,719.0) 33,284.0 20,845.0

265,906.0 (210,476.0) 55,430.0 (28,241.0) 34,898.0 22,315.0

239,792.0 (184,618.0) 55,174.0 (26,171.0) 34,084.0 22,026.0

192,024.0 (145,385.0) 46,639.0 (24,083.0) 26,521.0 17,075.0

USD USD USD USD USD

Million Million Million Million Million

66,384.0 228,238.0 69,793.0 136,935.0 91,303.0

80,202.0 236,076.0 77,231.0 142,386.0 93,690.0

75,339.0 217,601.0 75,352.0 132,977.0 84,624.0

75,290.0 206,914.0 71,997.0 127,253.0 79,661.0

61,443.0 194,630.0 63,126.0 117,738.0 76,892.0

USD USD USD USD

Million Million Million Million

38,095.0 (22,767.0) (10,509.0) 8,197.0

24,709.0 (14,837.0) (9,035.0) 3,562.0

28,172.0 (9,518.0) (19,071.0) 2,590.0

26,721.0 (1,729.0) (23,303.0) 2,960.0

23,378.0 (11,331.0) (12,835.0) 1,359.0

NA USD USD USD NA USD

Million Absolute Million Million Absolute Million

18,730.3 7.6 142,649.2 168,462.2 92,000.0 7,395.0

18,922.8 12.3 232,436.1 260,881.1 98,100.0 4,068.0

19,510.5 11.1 216,937.7 239,198.7 97,000.0 10,941.0

20,657.0 10.7 221,261.2 238,252.2 96,200.0 12,572.0

21,526.0 9.8 210,677.5 233,752.5 102,900.0 6,727.0

NA USD NA NA

Absolute Absolute Absolute Absolute

6.7 1.1 3.6 0.5

11.2 1.1 5.9 0.9

9.7 1.1 5.4 0.9

10.0 1.1 5.6 1.0

12.3 0.8 6.7 1.2

NA NA NA

% % %

18.0 10.1 6.0

20.3 11.7 7.4

20.8 13.1 8.5

23.0 14.2 9.3

24.3 13.8 9.0

NA NA NA

% % %

22.9 22.9 9.1

23.4 21.0 9.2

27.2 24.5 10.5

28.1 25.3 11.0

22.2 20.2 8.8

Global Top 10 Energy Companies


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Financial Analysis

Financial Strength Quick Ratio Interest Coverage Ratio Debt to Equity Ratio Operational Efficiency Asset Turnover Ratio Receivable Turnover Ratio Inventory Turnover Ratio Revenue per Employee Net income per Employee Other Capex to Revenues Capex Revenue by Division Exploration and production Refining and marketing Other businesses and corporate Gas, power and renewables Innovene operations Revenues by Geography UK Rest of Europe US Rest of world USD USD USD USD Million Million Million Million 81,773.0 82,031.0 123,364.0 73,975.0 61,149.0 66,342.0 102,319.0 54,555.0 54,576.0 61,947.0 94,903.0 54,480.0 49,085.0 54,652.0 93,011.0 43,044.0 33,141.0 42,566.0 78,646.0 37,671.0 USD USD USD USD USD Million Million Million Million Million 40,239.0 318,121.0 2,783.0 33,657.0 248,307.0 2,401.0 16,429.0 228,779.0 1,009.0 19,689.0 14,604.0 201,919.0 13,044.0 22,601.0 (12,376.0) 9,944.0 160,117.0 11,825.0 21,417.0 (11,279.0) NA USD % Million 8.5 30700 7.3 20641 6.5 17231 5.9 14149 8.7 16651 NA NA NA USD USD Absolute Absolute Absolute Absolute Absolute 1.6 12.9 13.7 3,925,467.4 229,967.4 1.3 8.7 10.0 2,898,725.8 212,487.3 1.3 8.1 10.9 2,741,299.0 230,051.5 1.2 7.5 10.4 2,492,640.3 228,960.5 1.0 6.3 9.3 1,866,122.4 165,937.8 NA NA NA Absolute Absolute Absolute 0.7 23.5 0.4 0.7 23.9 0.3 0.7 48.6 0.3 0.8 44.8 0.2 0.7 34.0 0.3

Source: Datamonitor, Company reports NA Not Applicable.

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Table 14: BPKey Industry Specific Ratios, 200408

Financial Ratios Current Ratio Quick Ratio Net Working Capital Ratio Return on Asset Return on Equity Net Income Margin Operating Margin (Return on Sales) Asset Turnover Ratio Inventory Turnover Ratio Receivable Turnover Ratio Debt to Equity Ratio Interest Coverage Ratio Dividend Per Share Earning Per Share Market to Book Ratio Price Earning Ratio Return on Capital Employed Long Term Debt Ratio Total Debt Ratio Dividend Yield Dividend Payout Enterprise Value / EBIT Enterprise Value / EBITDA CAPEX to Revenues

2008 0.95 0.71 -0.01 0.09 0.23 6.00% 10.06% 1.56 13.66 12.93 0.36 23.50 0.55 1.13 1.56 6.74 0.23 0.11 0.21 0.07 0.49 4.63 3.56 8.5%

2007 1.04 0.69 0.01 0.09 0.23 7.44% 11.70% 1.25 9.97 8.69 0.33 23.89 0.43 1.10 2.48 11.15 0.21 0.10 0.20 0.03 0.39 7.84 5.95 7.3%

2006 1.00 0.75 NM 0.11 0.27 8.50% 13.12% 1.25 10.88 8.05 0.28 48.60 0.39 1.14 2.56 9.72 0.25 0.08 0.17 0.04 0.34 6.85 5.43 6.5%

2005 1.05 0.77 0.02 0.11 0.28 9.31% 14.21% 1.19 10.43 7.47 0.24 44.79 0.36 1.07 2.78 10.05 0.25 0.08 0.14 0.03 0.33 6.99 5.56 5.9%

2004 0.97 0.73 -0.01 0.09 0.22 8.99% 13.81% 0.99 9.29 6.26 0.30 34.00 0.28 0.79 2.74 12.34 0.20 0.10 0.18 0.03 0.35 8.81 6.67 8.7%

Source: Datamonitor, Company reports NM Not Meaningful.

DATAMONITOR

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Chevron Corporation

Table 15: Chevron CorporationFinancial highlights, 200408

Parameters Income Statement Total Revenue Cost of Goods and Services Gross Profit Operating Expense Operating Income Net Income Balance Sheet Total Current Assets Total Assets Total Current Liabilities Total Liabilities Total Shareholders Equity Cash Flow Cash from Operating Activities Cash from Investing Activities Cash from Financing Activities Closing Cash Balance Key Statistics Total Common Shares Outstanding Year-end Share Price Market Capitalization Enterprise Value Number of Employees Free Cash Flow Key Ratios P/E Ratio Earnings per Share (EPS) EV/EBITDA EV/Sales Profitability Ratio Gross Margin Operating Margin Net Income Margin Resource Management Return on Equity

Currency

Unit

2008

2007

2006

2005

2004

USD USD USD USD USD USD

Million Million Million Million Million Million

264,958.0 (172,566.0) 92,392.0 (57,382.0) 43,057.0 23,931.0

214,091.0 (134,632.0) 79,459.0 (53,832.0) 32,440.0 18,688.0

204,892.0 (129,515.0) 75,377.0 (48,106.0) 32,497.0 17,138.0

193,641.0 (128,711.0) 64,930.0 (43,714.0) 25,775.0 14,099.0

150,865.0 (95,116.0) 55,749.0 (39,142.0) 21,042.0 13,328.0

USD USD USD USD USD

Million Million Million Million Million

36,722.0 161,165.0 32,023.0 74,517.0 86,648.0

39,377.0 148,786.0 33,798.0 71,698.0 77,088.0

36,304.0 132,628.0 28,409.0 63,693.0 68,935.0

34,336.0 125,833.0 25,011.0 63,157.0 62,676.0

28,665.0 93,208.0 18,795.0 47,978.0 45,230.0

USD USD USD USD

Million Million Million Million

29,632.0 (17,081.0) (10,400.0) 9,347.0

24,977.0 (13,933.0) (14,295.0) 7,362.0

24,323.0 (12,219.0) (11,848.0) 10,493.0

20,105.0 (11,561.0) (7,668.0) 10,043.0

14,690.0 (3,499.0) (6,224.0) 9,291.0

NA USD USD USD NA USD

Million Absolute Million Million Absolute Million

2,004.2 74.0 148,253.0 147,935.0 67,000.0 9,966.0

2,090.4 93.3 195,100.2 194,768.2 65,000.0 8,299.0

2,164.6 73.5 159,160.0 158,440.0 62,500.0 10,510.0

2,232.7 56.8 126,749.6 129,452.6 59,000.0 11,404.0

2,107.1 52.5 110,644.9 112,558.9 56,000.0 8,380.0

NA USD NA NA

Absolute Absolute Absolute Absolute

6.2 11.9 2.8 0.6

10.4 8.9 4.7 0.9

9.3 7.9 4.0 0.8

9.0 6.3 4.1 0.7

8.3 6.3 4.3 0.7

NA NA NA

% % %

34.9 16.3 9.1

37.1 15.2 8.8

36.8 15.9 8.4

33.5 13.3 7.3

37.0 13.9 8.9

NA

29.2

25.6

26.0

26.1

29.5

Global Top 10 Energy Companies


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Financial Analysis

Return on Capital Employed Return on Assets Financial Strength Quick Ratio Interest Coverage Ratio Debt to Equity Ratio Operational Efficiency Asset Turnover Ratio Receivable Turnover Ratio Inventory Turnover Ratio Revenue per Employee Net income per Employee Other Capex to Revenues Capex Revenue by Division Upstream Downstream Chemicals All other Intersegment sales Revenues by Geography The US International Intersegment revenues

NA NA

% %

33.3 15.4

28.2 13.3

31.2 13.3

25.6 12.9

28.3 14.3

NA NA NA

Absolute Absolute Absolute

0.9 0.1

1.0 195.4 0.1

1.1 72.1 0.1

1.2 53.5 0.2

1.4 51.8 0.2

NA NA NA USD USD

Absolute Absolute Absolute Absolute Absolute

1.7 13.8 28.4 3,954,597.0 357,179.1

1.5 10.7 27.0 3,293,707.7 287,507.7

1.6 11.8 29.5 3,278,272.0 274,208.0

1.8 13.1 36.2 3,282,050.8 238,966.1

1.6 12.1 31.9 2,694,017.9 238,000.0

NA USD

% Million

7.4 19666

7.8 16678

6.7 13813

4.5 8701

4.2 6310

USD USD USD USD USD

Million Million Million Million Million

82,318.0 219,938.0 2,170.0 1,817.0 (41,285.0)

65,221.0 178,274.0 1,959.0 1,606.0 (32,969.0)

59,829.0 170,748.0 1,799.0 1,304.0 (28,788.0)

48,537.0 166,198.0 1,489.0 1,181.0 (23,764.0)

33,793.0 133,890.0 1,400.0 1,095.0 (19,313.0)

USD USD USD

Million Million Million

133,658.0 172,585.0 (41,285.0)

108,482.0 138,578.0 (32,969.0)

104,713.0 128,967.0 (28,788.0)

105,167.0 112,238.0 (23,764.0)

79,929.0 90,249.0 (19,313.0)

Source: Datamonitor, Company reports NA Not Applicable.

DATAMONITOR

Global Top 10 Energy Companies


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Financial Analysis

Table 16: Chevron CorporationKey industry specific ratios, 200408

Financial Ratios Current Ratio Quick Ratio Net Working Capital Ratio Return on Asset Return on Equity Net Income Margin Operating Margin (Return on Sales) Asset Turnover Ratio Inventory Turnover Ratio Receivable Turnover Ratio Debt to Equity Ratio Interest Coverage Ratio Dividend Per Share Earning Per Share Market to Book Ratio Price Earning Ratio Return on Capital Employed Long Term Debt Ratio Total Debt Ratio Dividend Yield Dividend Payout Enterprise Value / EBIT Enterprise Value / EBITDA CAPEX to Revenues

2008 1.15 0.93 0.03 0.15 0.29 9.07% 16.25% 1.71 28.37 13.84 0.10 2.58 11.94 1.71 6.20 0.33 0.04 0.07 0.03 0.22 3.44 2.81 7.4%

2007 1.17 1.01 0.04 0.13 0.26 8.78% 15.15% 1.52 27.02 10.68 0.09 195.42 2.29 8.94 2.53 10.44 0.28 0.05 0.06 0.02 0.26 6.00 4.73 7.8%

2006 1.28 1.11 0.06 0.13 0.26 8.40% 15.86% 1.59 29.51 11.77 0.14 72.06 2.03 7.92 2.31 9.29 0.31 0.07 0.09 0.03 0.26 4.88 3.96 6.7%

2005 1.37 1.21 0.07 0.13 0.26 7.33% 13.31% 1.77 36.24 13.08 0.20 53.48 1.69 6.31 2.02 8.99 0.26 0.12 0.12 0.03 0.27 5.02 4.09 4.5%

2004 1.53 1.37 0.11 0.14 0.29 8.89% 13.95% 1.62 31.89 12.14 0.24 51.83 1.54 6.33 2.45 8.30 0.28 0.14 0.15 0.03 0.24 5.35 4.33 4.2%

Source: Datamonitor, Company reports

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TOTAL S.A.

Table 17: TOTALFinancial highlights, 200408

Parameters Income Statement Total Revenue Cost of Goods and Services Gross Profit Operating Expense Operating Income Net Income Balance Sheet Total Current Assets Total Assets Total Current Liabilities Total Liabilities Total Shareholders Equity Cash Flow Cash from Operating Activities Cash from Investing Activities Cash from Financing Activities Closing Cash Balance Key Statistics Total Common Shares Outstanding Year-end Share Price Market Capitalization Enterprise Value Number of Employees Free Cash Flow Key Ratios P/E Ratio Earnings per Share (EPS) EV/EBITDA EV/Sales Profitability Ratio Gross Margin Operating Margin Net Income Margin Resource Management Return on Equity Return on Capital Employed Return on Assets

Currency

Unit

2008

2007

2006

2005

2004

USD USD USD USD USD USD

Million Million Million Million Million Million

264,805.9 (163,577.7) 101,228.2 (66,376.6) 34,851.6 15,581.5

233,578.2 (129,610.3) 103,967.8 (66,741.5) 37,226.4 19,393.7

226,295.0 (122,708.3) 103,586.8 (68,083.3) 35,503.4 17,314.7

202,466.7 (103,061.5) 99,405.2 (63,844.4) 35,560.8 18,057.8

171,914.3 (82,099.3) 89,815.0 (64,764.0) 25,051.0 15,990.5

USD USD USD USD USD

Million Million Million Million Million

69,238.3 174,074.2 50,506.7 101,990.3 72,083.9

70,974.5 167,057.4 52,470.9 101,056.0 66,001.4

62,954.2 154,818.8 49,322.3 95,492.9 59,325.9

64,375.5 156,173.9 49,184.0 96,371.3 59,802.6

48,465.9 127,663.8 39,398.1 81,157.6 46,506.1

USD USD USD USD

Million Million Million Million

27,468.4 (16,265.7) (1,166.8) 18,128.4

26,022.1 (14,957.6) (4,917.2) 8,810.4

23,631.2 (14,086.6) (10,898.2) 3,668.1

21,583.1 (14,870.8) (7,453.8) 6,353.2

21,572.8 (11,347.0) (11,349.9) 5,679.4

NA USD USD USD NA USD

Million Absolute Million Million Absolute Million

2,371.8 57.2 135,785.6 154,250.9 96,959.0 7,399.4

2,395.5 83.6 200,305.4 221,408.8 96,442.0 8,775.1

2,425.8 80.4 195,052.9 222,075.6 95,070.0 6,192.9

615.1 76.8 47,270.5 68,212.1 112,877.0 5,111.4

635.0 58.2 36,952.5 54,392.3 111,401.0 8,472.0

NA USD NA NA

Absolute Absolute Absolute Absolute

8.7 6.6 3.5 0.6

10.3 8.1 4.8 0.9

11.3 7.1 5.1 1.0

2.6 29.4 1.5 0.3

2.3 25.2 1.6 0.3

NA NA NA

% % %

38.2 13.2 6.1

44.5 15.9 8.5

45.8 15.7 7.9

49.1 17.6 9.2

52.2 14.6 9.5

NA NA NA

% % %

22.6 28.2 9.1

30.9 32.5 12.1

29.1 33.7 11.1

34.0 33.2 12.7

34.4 28.4 12.5

Global Top 10 Energy Companies


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Financial Analysis

Financial Strength Quick Ratio Interest Coverage Ratio Debt to Equity Ratio Operational Efficiency Asset Turnover Ratio Receivable Turnover Ratio Inventory Turnover Ratio Revenue per Employee Net income per Employee Other Capex to Revenues Capex Revenue by Division Upstream Downstream Chemicals Corporate Operating Income by Division Upstream Downstream Chemicals Corporate Revenues by Geography France Rest of Europe North America Africa Asia-Pacific and rest of world USD USD USD USD USD Million Million Million Million Million 64,174.0 121,769.6 20,601.7 18,365.3 39,895.4 55,835.9 108,521.6 18,250.5 15,303.4 35,666.8 54,277.7 104,453.4 19,173.0 14,839.9 33,551.0 50,558.2 79,050.7 25,988.3 12,218.0 34,651.5 43,975.4 66,979.8 24,667.0 8,995.8 27,296.3 USD USD USD USD Million Million Million Million 34,529.4 1,215.3 (85.3) (807.8) 28,695.5 7,097.7 2,095.2 (662.1) 29,878.5 4,961.4 1,465.5 (801.9) 27,103.6 7,497.9 1,646.4 (687.1) 18,897.9 5,352.7 1,313.9 (513.5) USD USD USD USD Million Million Million Million 35,688.8 199,401.9 29,647.5 67.7 28,994.2 175,401.4 29,139.9 42.7 30,577.4 167,566.5 28,121.7 29.4 30,733.3 147,036.9 24,667.0 29.4 22,124.5 127,853.6 21,902.4 33.8 NA USD % Million 7.6 20069.0776 7.4 17247.047 7.7 17438.322 8.1 16471.6513 7.6 13100.8116 NA NA NA USD USD Absolute Absolute Absolute Absolute Absolute 1.6 10.5 9.5 2,731,112.0 160,701.8 1.5 8.7 6.9 2,421,954.8 201,092.2 1.5 8.3 6.8 2,380,299.1 182,126.1 1.4 8.2 6.4 1,793,693.0 159,977.3 1.3 8.3 6.0 1,543,202.6 143,540.2 NA NA NA Absolute Absolute Absolute 1.1 23.7 0.5 1.0 14.2 0.4 0.9 13.9 0.5 0.9 19.9 0.4 0.9 24.3 0.5

Source: Datamonitor, Company reports NA Not Applicable.

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Table 18: TOTALKey industry specific ratios, 200408

Financial Ratios Current Ratio Quick Ratio Net Working Capital Ratio Return on Asset Return on Equity Net Income Margin Operating Margin (Return on Sales) Asset Turnover Ratio Inventory Turnover Ratio Receivable Turnover Ratio Debt to Equity Ratio Interest Coverage Ratio Dividend Per Share Earning Per Share Market to Book Ratio Price Earning Ratio Return on Capital Employed Long Term Debt Ratio Total Debt Ratio Dividend Yield Dividend Payout Enterprise Value / EBIT Enterprise Value / EBITDA Capex to Revenues

2008 1.37 1.09 0.11 0.09 0.23 6.09% 13.16% 1.55 9.47 10.46 0.49 23.69 3.07 6.57 1.88 8.71 0.28 0.19 0.28 0.05 0.47 4.43 3.51 7.6%

2007 1.35 0.96 0.11 0.12 0.31 8.53% 15.94% 1.45 6.88 8.69 0.43 14.19 2.77 8.10 3.03 10.33 0.32 0.19 0.25 0.03 0.34 5.95 4.82 7.4%

2006 1.28 0.93 0.09 0.11 0.29 7.89% 15.69% 1.46 6.83 8.31 0.50 13.94 2.43 7.14 3.29 11.27 0.34 0.20 0.28 0.03 0.34 6.26 5.08 7.7%

2005 1.31 0.93 0.10 0.13 0.34 9.19% 17.56% 1.43 6.38 8.18 0.44 19.91 8.40 29.36 0.79 2.62 0.33 0.19 0.24 0.11 0.29 1.92 1.53 8.1%

2004 1.23 0.88 0.07 0.13 0.34 9.54% 14.57% 1.35 6.02 8.33 0.47 24.25 9.95 25.18 0.79 2.31 0.28 0.19 0.25 0.17 0.40 2.17 1.56 7.6%

Source: Datamonitor, Company reports

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ConocoPhillips

Table 19: ConocoPhillipsFinancial highlights, 200408

Parameters Income Statement Total Revenue Cost of Goods and Services Gross Profit Operating Expense Operating Income Net Income Balance Sheet Total Current Assets Total Assets Total Current Liabilities Total Liabilities Total Shareholders Equity Cash Flow Cash from Operating Activities Cash from Investing Activities Cash from Financing Activities Closing Cash Balance Key Statistics Total Common Shares Outstanding Year-end Share Price Market Capitalization Enterprise Value Number of Employees Free Cash Flow Key Ratios P/E Ratio Earnings per Share (EPS) EV/EBITDA EV/Sales Profitability Ratio Gross Margin Operating Margin Net Income Margin Resource Management Return on Equity Return on Capital Employed Return on Assets Financial Strength

Currency

Unit

2008

2007

2006

2005

2004

USD USD USD USD USD USD

Million Million Million Million Million Million

240,842.0 (181,818.0) 59,024.0 (31,878.0) 32,241.0 (16,998.0)

187,437.0 (135,119.0) 52,318.0 (29,594.0) 29,440.0 11,891.0

183,650.0 (130,146.0) 53,504.0 (27,947.0) 30,265.0 15,550.0

179,442.0 (134,148.0) 45,294.0 (24,856.0) 24,360.0 13,529.0

135,076.0 (98,257.0) 36,819.0 (23,413.0) 15,246.0 8,129.0

USD USD USD USD USD

Million Million Million Million Million

22,816.0 142,865.0 21,780.0 87,700.0 55,165.0

26,606.0 177,757.0 26,882.0 88,774.0 88,983.0

25,066.0 164,781.0 26,431.0 82,135.0 82,646.0

19,612.0 106,999.0 21,359.0 54,268.0 52,731.0

15,021.0 92,861.0 15,586.0 50,138.0 42,723.0

USD USD USD USD

Million Million Million Million

22,658.0 (17,616.0) (5,764.0) 755.0

24,550.0 (8,562.0) (15,340.0) 1,456.0

21,516.0 (29,993.0) 7,065.0 817.0

17,628.0 (11,016.0) (5,684.0) 2,214.0

11,959.0 (7,788.0) (3,399.0) 1,387.0

NA USD USD USD NA USD

Million Absolute Million Million Absolute Million

1,520.9 51.8 78,783.6 106,583.6 33,800.0 3,559.0

1,613.8 88.3 142,502.2 163,906.2 32,600.0 12,759.0

1,690.4 72.0 121,627.2 149,146.2 38,400.0 5,920.0

1,377.8 58.2 80,163.3 91,674.3 35,600.0 6,008.0

1,389.5 43.4 60,327.2 75,047.2 35,800.0 2,463.0

NA USD NA NA

Absolute Absolute Absolute Absolute

(4.6) (11.2) 2.6 0.4

12.0 7.4 4.3 0.9

7.8 9.2 4.0 0.8

5.9 9.8 3.2 0.5

7.4 5.9 3.9 0.6

NA NA NA

% % %

24.5 13.4 (7.0)

27.9 15.7 6.4

29.1 16.5 8.5

25.2 13.6 7.6

27.3 11.3 6.0

NA NA NA

% % %

(23.6) 26.6 (10.6)

13.9 19.5 6.9

23.0 21.9 11.4

28.3 28.4 13.5

19.0 19.7 8.8

Global Top 10 Energy Companies


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Quick Ratio Interest Coverage Ratio Debt to Equity Ratio Operational Efficiency Asset Turnover Ratio Receivable Turnover Ratio Inventory Turnover Ratio Revenue per Employee Net income per Employee Other Capex to Revenues Capex Revenue by Division Exploration and Production Midstream Refining and Marketing LUKOIL Investment Chemicals Emerging Businesses Corporate and Other Revenues by Geography US Australia Canada Norway UK Other foreign countries

NA NA NA

Absolute Absolute Absolute

0.8 34.5 0.5

0.8 23.5 0.2

0.8 27.8 0.3

0.7 49.0 0.2

0.7 27.9 0.4

NA NA NA USD USD

Absolute Absolute Absolute Absolute Absolute

1.5 17.0 39.0 7,125,503.0 (502,899.4)

1.1 12.3 28.8 5,749,601.2 364,754.6

1.4 14.1 29.3 4,782,552.1 404,947.9

1.8 17.3 36.3 5,040,505.6 380,028.1

1.5 15.4 26.8 3,773,072.6 227,067.0

NA USD

% Million

7.9 19099

6.3 11791

8.5 15596

6.5 11620

7.0 9496

USD USD USD USD USD USD USD

Million Million Million Million Million Million Million

69,818.0 6,564.0 164,230.0 11.0 199.0 20.0

48,154.0 4,861.0 134,201.0 10.0 198.0 13.0

50,166.0 3,424.0 129,877.0 13.0 160.0 10.0

48,525.0 3,086.0 127,280.0 14.0 192.0 13.0

34,192.0 3,033.0 97,646.0 14.0 177.0 14.0

USD USD USD USD USD USD

Million Million Million Million Million Million

166,496.0 2,735.0 5,226.0 3,036.0 29,699.0 33,650.0

131,433.0 1,633.0 4,727.0 2,479.0 20,680.0 26,485.0

127,869.0 5,554.0 2,480.0 19,510.0 28,237.0

130,874.0 5,676.0 3,280.0 19,043.0 20,569.0

96,449.0 3,653.0 3,975.0 14,828.0 16,171.0

Source: Datamonitor, Company reports NA Not Applicable.

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Table 20: ConocoPhillipsKey industry specific ratios, 200408

Financial Ratios Current Ratio Quick Ratio Net Working Capital Ratio Return on Asset Return on Equity Net Income Margin Operating Margin (Return on Sales) Asset Turnover Ratio Inventory Turnover Ratio Receivable Turnover Ratio Debt to Equity Ratio Interest Coverage Ratio Dividend Per Share Earning Per Share Market to Book Ratio Price Earning Ratio Return on Capital Employed Long Term Debt Ratio Total Debt Ratio Dividend Yield Dividend Payout Enterprise Value / EBIT Enterprise Value / EBITDA Capex to Revenues

2008 1.05 0.81 0.01 (0.11) (0.24) (7.03%) 13.39% 1.50 39.03 16.99 0.50 34.48 1.88 (11.18) 1.43 (4.63) 0.27 0.22 0.23 0.04 (0.17) 3.31 2.58 7.9%

2007 0.99 0.83 NM 0.07 0.14 6.39% 15.71% 1.09 28.82 12.31 0.24 23.50 1.65 7.37 1.60 11.98 0.20 0.13 0.14 0.02 0.22 5.57 4.34 6.3%

2006 0.95 0.75 (0.01) 0.11 0.23 8.51% 16.48% 1.35 29.32 14.10 0.33 27.84 1.35 9.20 1.47 7.82 0.22 0.17 0.20 0.02 0.15 4.93 3.97 8.5%

2005 0.92 0.74 (0.02) 0.14 0.28 7.56% 13.58% 1.80 36.31 17.31 0.24 49.01 1.19 9.82 1.52 5.93 0.28 0.13 0.15 0.02 0.12 3.76 3.20 6.5%

2004 0.96 0.73 (0.01) 0.09 0.19 6.04% 11.29% 1.45 26.80 15.37 0.35 27.92 0.89 5.85 1.41 7.42 0.20 0.19 0.19 0.02 0.15 4.92 3.94 7.0%

Source: Datamonitor, Company reports NM Not Meaningful.

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China Petroleum & Chemical Corporation (Sinopec)

Table 21: China Petroleum & Chemical CorporationFinancial highlights, 200408

Parameters Income Statement Total Revenue Cost of Goods and Services Gross Profit Operating Expense Operating Income Net Income Balance Sheet Total Current Assets Total Assets Total Current Liabilities Total Liabilities Total Shareholders Equity Cash Flow Cash from Operating Activities Cash from Investing Activities Cash from Financing Activities Closing Cash Balance Key Statistics Total Common Shares Outstanding Year-end Share Price Market Capitalization Enterprise Value Number of Employees Free Cash Flow Key Ratios P/E Ratio Earnings per Share (EPS) EV/EBITDA EV/Sales Profitability Ratio Gross Margin Operating Margin Net Income Margin Resource Management Return on Equity Return on Capital Employed Return on Assets

Currency

Unit

2008

2007

2006

2005

2004

USD USD USD USD USD USD

Million Million Million Million Million Million

204,739.3 (186,453.0) 18,286.3 (26,070.2) 4,053.9 4,291.2

169,213.2 (141,560.2) 27,653.0 (20,441.6) 12,377.3 8,149.2

149,179.1 (124,288.9) 24,890.2 (17,882.0) 11,623.1 7,726.9

115,213.2 (94,794.8) 20,418.4 (15,399.4) 9,837.7 5,975.7

86,085.9 (64,865.5) 21,220.5 (15,384.8) 9,091.4 5,192.1

USD USD USD USD USD

Million Million Million Million Million

23,685.4 110,682.3 39,574.5 63,304.6 47,377.6

26,684.5 105,622.3 38,250.9 61,305.8 44,316.5

21,116.5 88,051.4 31,190.0 49,947.7 38,103.7

21,198.3 79,144.1 25,227.8 46,811.1 32,333.0

17,337.1 68,412.7 21,085.8 40,586.0 27,826.7

USD USD USD USD

Million Million Million Million

9,760.7 (15,879.3) 6,022.2 1,001.6

17,239.5 (16,373.6) (765.4) 1,109.4

13,334.9 (14,902.9) 414.9 1,018.1

11,274.5 (11,174.9) (699.3) 2,028.0

9,958.0 (10,665.9) 724.8 2,361.3

NA USD USD USD NA USD

Million Absolute Million Million Absolute Million

69,922.0 1.0 70,756.3 96,538.3 358,304.0 (5,706.6)

69,922.0 3.4 236,156.8 257,118.7 334,377.0 1,486.5

69,922.0 1.3 91,922.8 111,144.3 340,886.0 1,240.3

69,922.0 0.7 46,969.3 65,619.4 364,528.0 2,092.3

69,922.0 0.6 43,945.5 59,484.0 389,451.0 623.0

NA USD NA NA

Absolute Absolute Absolute Absolute

16.5 0.1 9.1 0.5

29.0 0.1 13.8 1.5

11.9 0.1 6.8 0.7

7.9 0.1 4.6 0.6

8.5 0.1 4.3 0.7

NA NA NA

% % %

8.9 2.0 1.8

16.3 7.3 5.0

16.7 7.8 5.3

17.7 8.5 5.6

24.7 10.6 7.0

NA NA NA

% % %

9.4 5.7 4.0

19.8 18.4 8.4

21.9 20.4 9.2

19.9 18.2 8.1

18.7 19.2 7.6

Global Top 10 Energy Companies


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Financial Strength Quick Ratio Interest Coverage Ratio Debt to Equity Ratio Operational Efficiency Asset Turnover Ratio Receivable Turnover Ratio Inventory Turnover Ratio Revenue per Employee Net income per Employee Other Capex to Revenues Capex Revenue by Division Exploration and production Refining Marketing and distribution Chemicals Corporate and others Operating Income by Division Exploration and production Refining Marketing and distribution Chemicals Corporate and others USD USD USD USD USD Million Million Million Million Million 9,595.9 (8,870.7) 5,507.8 (1,888.7) (290.5) 7,029.6 (1,506.7) 5,150.0 1,918.1 (213.8) 9,107.7 (3,706.1) 4,358.2 2,084.1 (220.8) 6,967.3 (509.7) 1,492.0 2,060.8 (172.7) 3,692.3 856.7 2,121.3 2,698.6 (277.5) USD USD USD USD USD Million Million Million Million Million 3,806.0 18,691.6 115,726.1 29,896.1 36,619.4 2,946.0 16,902.5 95,074.4 31,345.7 22,944.6 2,873.8 16,537.6 84,763.4 28,256.9 16,747.5 2,883.9 11,937.1 66,206.9 23,176.9 11,008.4 2,302.1 9,137.4 49,420.4 18,164.8 7,061.3 NA USD % Million 7.6 15467.295 9.3 15753 8.1 12094.617 8.0 9182.21085 10.8 9335.00985 NA NA NA USD USD Absolute Absolute Absolute Absolute Absolute 1.9 79.0 12.2 571,412.2 11,976.4 1.7 61.6 9.3 506,055.2 24,371.4 1.8 69.5 9.4 437,621.7 22,667.0 1.6 65.5 8.5 316,061.3 16,393.1 1.3 61.2 7.0 221,044.4 13,331.9 NA NA NA Absolute Absolute Absolute 0.3 2.5 0.5 0.3 11.7 0.4 0.2 11.4 0.4 0.3 11.5 0.5 0.4 13.8 0.5

Source: Datamonitor, Company reports NA Not Applicable.

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Table 22: China Petroleum & Chemical CorporationKey industry specific ratios, 200408

Financial Ratios Current Ratio Quick Ratio Net Working Capital Ratio Return on Asset Return on Equity Net Income Margin Operating Margin (Return on Sales) Asset Turnover Ratio Inventory Turnover Ratio Receivable Turnover Ratio Debt to Equity Ratio Interest Coverage Ratio Dividend Per Share Earning Per Share Market to Book Ratio Price Earning Ratio Return on Capital Employed Long Term Debt Ratio Total Debt Ratio Dividend Yield Dividend Payout Enterprise Value / EBIT Enterprise Value / EBITDA Capex to Revenues

2008 0.60 0.25 (0.14) 0.04 0.09 1.84% 1.98% 1.89 12.24 79.05 0.50 2.48 0.03 0.06 1.49 16.49 0.06 0.18 0.33 0.03 0.42 23.81 9.06 7.6%

2007 0.70 0.26 (0.11) 0.08 0.20 5.00% 7.31% 1.75 9.31 61.63 0.42 11.74 0.03 0.12 5.33 28.98 0.18 0.18 0.27 0.01 0.25 20.77 13.81 9.3%

2006 0.68 0.24 (0.11) 0.09 0.22 5.32% 7.79% 1.78 9.35 69.48 0.45 11.36 0.02 0.11 2.41 11.90 0.20 0.16 0.30 0.02 0.21 9.56 6.75 8.1%

2005 0.84 0.33 (0.05) 0.08 0.20 5.60% 8.54% 1.56 8.55 65.51 0.50 11.52 0.02 0.09 1.45 7.86 0.18 0.19 0.30 0.03 0.25 6.67 4.56 8.0%

2004 0.82 0.38 (0.05) 0.08 0.19 7.00% 10.56% 1.26 7.00 61.21 0.48 13.76 0.02 0.07 1.58 8.46 0.19 0.19 0.28 0.03 0.24 6.54 4.33 10.8%

Source: Datamonitor, Company reports

DATAMONITOR

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Eni SpA

Table 23: EniFinancial highlights, 200408

Parameters Income Statement Total Revenue Cost of Goods and Services Gross Profit Operating Expense Operating Income Net Income Balance Sheet Total Current Assets Total Assets Total Current Liabilities Total Liabilities Total Shareholders Equity Cash Flow Cash from Operating Activities Cash from Investing Activities Cash from Financing Activities Closing Cash Balance Key Statistics Total Common Shares Outstanding Year-end Share Price Market Capitalization Enterprise Value Number of Employees Free Cash Flow Key Ratios P/E Ratio Earnings per Share (EPS) EV/EBITDA EV/Sales Profitability Ratio Gross Margin Operating Margin Net Income Margin Resource Management Return on Equity

Currency

Unit

2008

2007

2006

2005

2004

USD USD USD USD USD USD

Million Million Million Million Million Million

188,107.9 (112,422.1) 75,685.7 (49,317.8) 27,427.2 12,984.6

156,596.2 (85,601.1) 70,995.1 (44,450.7) 27,761.2 14,729.6

155,347.0 (84,587.3) 70,759.7 (43,475.2) 28,436.6 13,561.3

137,011.2 (71,458.6) 65,552.6 (41,968.5) 24,758.2 12,930.1

111,414.3 (56,421.5) 54,992.8 (38,775.7) 18,243.1 10,386.2

USD USD USD USD USD

Million Million Million Million Million

54,728.0 171,543.5 52,013.3 106,163.1 65,380.5

50,315.4 149,282.2 44,640.5 89,798.8 59,483.3

44,171.1 129,937.0 34,942.9 72,512.0 57,424.9

37,124.9 123,371.9 33,080.1 69,126.5 54,245.4

29,591.6 107,191.5 27,386.1 59,558.4 47,633.2

USD USD USD USD

Million Million Million Million

32,076.7 (24,951.0) (7,393.5) 2,852.9

22,830.8 (29,569.5) 4,280.1 3,110.4

25,014.3 (10,374.4) (10,442.1) 5,863.3

21,975.9 (10,027.2) (11,511.8) 1,961.3

18,391.8 (9,734.4) (9,213.5) 1,475.8

NA USD USD USD NA USD

Million Absolute Million Million Absolute Million

4,005.4 24.6 98,652.9 131,644.8 78,880.0 10,651.0

4,005.4 36.9 147,625.8 176,196.3 75,862.0 7,244.9

4,005.4 37.5 150,159.9 163,393.1 73,572.0 13,489.2

4,005.4 34.5 138,078.7 157,619.6 72,258.0 11,067.4

4,004.4 27.1 108,528.2 129,009.3 70,348.0 7,358.2

NA USD NA NA

Absolute Absolute Absolute Absolute

7.6 3.2 3.3 0.7

10.0 3.7 4.6 1.1

11.1 3.4 4.4 1.1

10.7 3.2 4.8 1.2

10.4 2.6 5.2 1.2

NA NA NA

% % %

40.2 14.6 7.5

45.3 17.7 10.2

45.5 18.3 9.3

47.8 18.1 9.9

49.4 16.4 10.0

NA

20.8

25.2

24.3

25.4

21.8

Global Top 10 Energy Companies


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Financial Analysis

Return on Capital Employed Return on Assets Financial Strength Quick Ratio Interest Coverage Ratio Debt to Equity Ratio Operational Efficiency Asset Turnover Ratio Receivable Turnover Ratio Inventory Turnover Ratio Revenue per Employee Net income per Employee Other Capex to Revenues Capex Revenue by Division Exploration & Production Gas & Power Refining & Marketing Petrochemicals Engineering & Construction Other activities Corporate and financial companies Operating Income by Division Exploration & Production Gas & Power Refining & Marketing Petrochemicals Engineering & Construction Other activities Corporate and financial companies Revenues by Geography Italy Other European Union Rest of Europe Americas Asia Africa Other areas

NA NA

% %

22.9 8.1

26.5 10.6

29.9 10.7

27.4 11.2

22.9 9.7

NA NA NA

Absolute Absolute Absolute

0.9 2.3 0.5

0.9 4.1 0.5

1.1 4.9 0.3

1.0 4.8 0.3

0.9 4.5 0.4

NA NA NA USD USD

Absolute Absolute Absolute Absolute Absolute

1.2 8.0 13.2 2,384,734.7 164,611.8

1.1 6.9 11.4 2,064,224.3 194,162.9

1.2 7.2 13.8 2,111,496.5 184,327.5

1.2 7.6 15.2 1,896,138.6 178,944.0

1.0 7.2 13.5 1,583,759.0 147,640.1

NA USD

% Million

11.4 21425.6531

10.0 15585.905

7.4 11525.006

8.0 10908.5148

9.9 11033.5786

USD USD USD USD USD USD USD

Million Million Million Million Million Million Million

20,968.1 53,060.9 64,131.3 8,688.3 11,707.5 229.5 226.6

15,894.9 39,539.3 51,680.8 9,668.2 11,029.2 256.0 314.9

12,841.9 40,634.0 54,307.2 9,057.6 9,134.1 445.8 269.3

11,432.3 32,953.6 48,024.5 8,198.3 7,074.2 466.4 329.6

7,548.0 24,731.8 37,277.9 7,109.5 7,052.1 772.5 176.6

USD USD USD USD USD USD USD

Million Million Million Million Million Million Million

24,152.0 5,786.8 (1,505.2) (1,209.4) 1,537.6 (509.1) (1,009.3)

20,286.8 6,072.2 1,072.6 108.9 1,231.5 (653.3) (319.3)

22,923.5 5,594.0 469.4 253.1 743.0 (915.2) (435.5)

18,527.1 4,886.3 2,732.3 297.2 451.7 (1,374.2) (554.7)

12,042.9 5,043.8 1,589.0 470.8 298.7 (581.2) (534.1)

USD USD USD USD USD USD USD

Million Million Million Million Million Million Million

63,133.7 43,170.6 10,483.3 10,620.1 13,118.5 18,143.1 453.2

54,948.7 33,949.7 8,102.7 9,485.7 8,592.6 11,785.4 1,518.4

53,472.9 35,237.1 10,262.6 9,195.9 8,232.1 8,753.0 1,536.1

48,327.6 28,839.7 7,537.7 8,979.6 6,472.4 7,737.8 584.1

39,873.3 19,267.2 5,545.5 8,519.1 4,543.5 6,103.1 816.6

Source: Datamonitor, Company reports NA Not Applicable.

DATAMONITOR

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Financial Analysis

Table 24: EniKey industry specific ratios, 200408

Financial Ratios Current Ratio Quick Ratio Net Working Capital Ratio Return on Asset Return on Equity Net Income Margin Operating Margin (Return on Sales) Asset Turnover Ratio Inventory Turnover Ratio Receivable Turnover Ratio Debt to Equity Ratio Interest Coverage Ratio Dividend Per Share Earning Per Share Market to Book Ratio Price Earning Ratio Return on Capital Employed Long Term Debt Ratio Total Debt Ratio Dividend Yield Dividend Payout Enterprise Value / EBIT Enterprise Value / EBITDA Capex to Revenues

2008 1.05 0.88 0.02 0.08 0.21 7.48% 14.58% 1.17 13.20 7.98 0.46 2.27 1.80 3.24 1.51 7.60 0.23 0.17 0.25 0.07 0.56 4.80 3.31 11.4%

2007 1.13 0.95 0.04 0.11 0.25 10.16% 17.73% 1.12 11.35 6.90 0.47 4.14 1.68 3.68 2.48 10.02 0.27 0.16 0.27 0.05 0.46 6.35 4.62 10.0%

2006 1.26 1.06 0.07 0.11 0.24 9.30% 18.31% 1.23 13.83 7.20 0.28 4.87 1.69 3.39 2.61 11.07 0.30 0.11 0.17 0.05 0.50 5.75 4.36 7.4%

2005 1.12 0.96 0.03 0.11 0.25 9.93% 18.07% 1.19 15.15 7.56 0.33 4.81 1.86 3.23 2.55 10.68 0.27 0.12 0.20 0.05 0.58 6.37 4.80 8.0%

2004 1.08 0.93 0.02 0.10 0.22 9.96% 16.37% 1.04 13.47 7.19 0.36 4.52 1.13 2.59 2.28 10.45 0.23 0.14 0.22 0.04 0.44 7.07 5.16 9.9%

Source: Datamonitor, Company reports

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Financial Analysis
PetroChina Company Limited

Table 25: PetroChinaFinancial highlights, 200408

Parameters Income Statement Total Revenue Cost of Goods and Services Gross Profit Operating Expense Operating Income Net Income Balance Sheet Total Current Assets Total Assets Total Current Liabilities Total Liabilities Total Shareholders Equity Cash Flow Cash from Operating Activities Cash from Investing Activities Cash from Financing Activities Closing Cash Balance Key Statistics Total Common Shares Outstanding Year-end Share Price Market Capitalization Enterprise Value Number of Employees Free Cash Flow Key Ratios P/E Ratio Earnings per Share (EPS) EV/EBITDA EV/Sales Profitability Ratio Gross Margin Operating Margin Net Income Margin Resource Management Return on Equity Return on Capital Employed Return on Assets Financial Strength Quick Ratio

Currency

Unit

2008

2007

2006

2005

2004

USD USD USD USD USD USD

Million Million Million Million Million Million

154,405.7 (84,183.7) 70,222.0 (49,045.6) 22,963.1 16,495.2

120,560.3 (56,243.7) 64,316.6 (35,375.4) 28,941.1 21,154.0

99,316.2 (41,795.6) 57,520.6 (28,982.4) 28,538.2 20,501.6

79,603.8 (31,120.1) 48,483.7 (20,782.2) 27,701.4 19,224.1

57,278.6 (18,211.8) 39,066.8 (17,280.3) 21,786.5 14,969.0

USD USD USD USD USD

Million Million Million Million Million

32,357.8 172,140.2 38,104.2 58,140.9 113,999.3

33,954.4 153,906.1 28,717.9 47,494.0 106,412.1

23,384.3 125,722.3 25,929.6 41,152.8 84,569.5

25,355.3 112,158.4 22,175.7 37,865.0 74,293.3

17,622.8 92,032.1 18,815.2 30,368.7 61,663.5

USD USD USD USD

Million Million Million Million

24,578.4 (30,840.5) 1,130.9 4,748.9

29,585.8 (26,737.8) (235.0) 9,896.2

28,556.4 (22,840.7) (10,341.2) 6,999.8

29,390.0 (13,200.7) (6,145.7) 11,662.5

20,424.8 (14,743.1) (5,706.3) 1,684.8

NA USD USD USD NA USD

Absolute Absolute Million Million Absolute Million

183,021.0 1.5 268,309.8 289,778.3 477,780.0 (8,895.2)

183,021.0 4.5 816,801.4 823,413.0 466,502.0 3,294.7

183,021.0 7,748.4 0.0 7,114.7

183,021.0 2,974.1 439,220.0 11,400.0

183,021.0 11,978.3 424,175.0 6,161.7

NA USD NA NA

Absolute Absolute Absolute Absolute

16.3 0.1 7.9 1.9

38.6 0.1 21.3 6.8

0.1 0.2 0.1

0.1 0.1 0.0

0.1 0.4 0.2

NA NA NA

% % %

45.5 14.9 11.8

53.3 24.0 18.6

57.9 28.7 21.7

60.9 34.8 25.3

68.2 38.0 27.1

NA NA NA

% % %

15.0 17.1 10.1

22.2 23.1 15.1

25.8 28.6 17.2

28.3 30.8 18.8

24.3 29.8 16.3

NA

Absolute

0.5

0.7

0.5

0.7

0.6

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Interest Coverage Ratio Debt to Equity Ratio Operational Efficiency Asset Turnover Ratio Receivable Turnover Ratio Inventory Turnover Ratio Revenue per Employee Net income per Employee Other Capex to Revenues Capex Revenue by Division Exploration and production Refining and marketing Chemicals and marketing Natural gas and pipeline Other Operating Income by Division Exploration and production Refining and marketing Chemicals and marketing Natural gas and pipeline Other Revenues by Geography China Others

NA NA

Absolute Absolute

53.8 0.2

55.7 0.1

61.5 0.1

69.6 0.1

52.2 0.2

NA NA NA USD USD

Absolute Absolute Absolute Absolute Absolute

0.9 60.7 6.5 323,173.2 34,524.7

0.9 61.8 4.7 258,434.7 45,346.0

0.8 105.0 4.2 NA Na

0.8 130.4 3.9 181,239.0 43,768.8

0.6 103.4 2.7 135,035.3 35,289.6

NA USD

% Million

21.7 33473.6481

21.8 26291.086

21.6 21441.736

22.6 17990.0642

24.9 14263.066

USD USD USD USD USD

Million Million Million Million Million

17,930.4 113,875.9 14,259.5 8,160.2 179.8

13,411.7 87,510.3 13,219.9 6,264.2 154.2

11,780.1 71,857.8 10,783.6 4,800.2 94.6

9,552.1 57,007.7 9,978.6 3,065.3 -

7,758.0 39,578.5 7,856.2 2,085.9 -

USD USD USD USD USD

Million Million Million Million Million

34,624.5 (11,960.1) (414.7) 2,314.6 (1,601.2)

29,911.6 (2,981.0) 1,128.8 1,801.2 (919.4)

31,692.8 (4,204.0) 729.1 1,295.3 (975.0)

29,994.7 (2,855.6) 472.2 458.8 (368.7)

18,770.2 1,714.1 1,103.5 365.4 (166.6)

USD USD

Million Million

146,335.3 8,070.4

116,431.7 4,128.6

95,898.2 3,417.9

76,618.6 2,985.2

55,457.0 1,821.6

Source: Datamonitor, Company reports NA Not Applicable.

DATAMONITOR

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Table 26: PetroChinaKey industry specific ratios, 200408

Financial Ratios Current Ratio Quick Ratio Net Working Capital Ratio Return on Asset Return on Equity Net Income Margin Operating Margin (Return on Sales) Asset Turnover Ratio Inventory Turnover Ratio Receivable Turnover Ratio Debt to Equity Ratio Interest Coverage Ratio Dividend Per Share Earning Per Share Market to Book Ratio Price Earning Ratio Return on Capital Employed Long Term Debt Ratio Total Debt Ratio Dividend Yield Dividend Payout Enterprise Value / EBIT Enterprise Value / EBITDA CAPEX to Revenues

2008 0.85 0.51 -0.03 0.10 0.15 11.82% 14.87% 0.95 6.52 60.65 0.16 53.76 0.04 0.09 2.35 16.27 0.17 0.04 0.14 0.03 0.46 12.62 7.92 21.7%

2007 1.18 0.74 0.03 0.15 0.22 18.55% 24.01% 0.86 4.74 61.83 0.10 55.71 0.05 0.12 7.68 38.61 0.23 0.05 0.08 0.01 0.44 28.45 21.31 21.8%

2006 0.90 0.48 -0.02 0.17 0.26 21.68% 28.73% 0.84 4.18 105.04 0.12 61.48 0.05 0.11 0.29 0.05 0.10 0.48 0.27 0.21 21.6%

2005 1.14 0.74 0.03 0.19 0.28 25.29% 34.80% 0.78 3.92 130.37 0.14 69.58 0.04 0.11 0.31 0.07 0.12 0.40 0.11 0.08 22.6%

2004 0.94 0.57 -0.01 0.16 0.24 27.09% 38.04% 0.62 2.67 103.42 0.19 52.19 0.03 0.08 0.30 0.09 0.16 0.33 0.55 0.42 24.9%

Source: Datamonitor, Company reports

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Financial Analysis
OAO Gazprom

Table 27: GazpromFinancial highlights, 200408

Parameters Income Statement Total Revenue Cost of Goods and Services Gross Profit Operating Expense Operating Income Net Income Balance Sheet Total Current Assets Total Assets Total Current Liabilities Total Liabilities Total Shareholders Equity Cash Flow Cash from Operating Activities Cash from Investing Activities Cash from Financing Activities Closing Cash Balance Key Statistics Total Common Shares Outstanding Year-end Share Price Market Capitalization Enterprise Value Number of Employees Free Cash Flow Key Ratios P/E Ratio Earnings per Share (EPS) EV/EBITDA EV/Sales Profitability Ratio Gross Margin Operating Margin Net Income Margin Resource Management Return on Equity Return on Capital Employed Return on Assets Financial Strength Quick Ratio

Currency

Unit

2008

2007

2006

2005

2004

USD USD USD USD USD USD

Million Million Million Million Million Million

142,130.8 (37,150.6) 104,980.2 (54,076.4) 50,903.8 30,006.9

97,874.9 (21,536.6) 76,338.2 (47,993.4) 28,344.8 26,578.2

86,923.8 (16,677.6) 70,246.2 (38,411.3) 31,834.9 24,773.0

55,881.4 (7,514.2) 48,367.1 (30,030.7) 18,336.4 12,566.3

39,452.0 (6,042.7) 33,409.3 (22,802.4) 10,606.9 8,459.6

USD USD USD USD USD

Million Million Million Million Million

63,496.1 289,538.5 38,970.1 103,537.9 186,000.6

63,267.6 274,351.3 43,805.1 114,779.0 159,572.4

59,870.3 214,467.9 34,738.2 85,686.1 128,781.8

40,448.7 175,256.0 21,264.1 71,194.5 104,061.5

29,350.6 129,481.8 17,627.3 44,966.8 84,515.0

USD USD USD USD

Million Million Million Million

41,058.5 (36,173.2) (2,782.6) 13,887.4

24,173.7 (36,037.6) 12,509.0 11,273.2

21,975.7 (20,689.8) 3,813.4 10,874.0

11,011.0 (26,391.2) 17,073.1 5,931.9

7,357.0 (10,599.8) 4,702.8 4,287.7

NA USD USD USD NA USD

Million Absolute Million Million Absolute Million

23,600.0 4.4 102,946.0 156,261.7 456,000.0 12,191.2

23,600.0 13.8 326,834.6 390,193.5 445,000.0 2,225.0

22,900.0 12.2 279,847.1 314,226.5 440,000.0 4,163.7

22,900.0 7.9 179,899.1 216,987.6 402,000.0 (71.0)

20,100.0 3.1 62,162.5 83,272.4 392,000.0 (626.8)

NA USD NA NA

Absolute Absolute Absolute Absolute

3.4 1.3 2.7 1.1

12.3 1.1 10.9 4.0

11.3 1.1 8.1 3.6

14.3 0.5 9.3 3.9

7.3 0.4 5.5 2.1

NA NA NA

% % %

73.9 35.8 21.9

78.0 29.0 28.7

80.8 36.6 29.6

86.6 32.8 22.8

84.7 26.9 21.7

NA NA NA

% % %

17.4 20.3 10.6

18.4 12.3 10.9

21.3 17.7 12.7

13.3 11.9 8.2

10.0 9.5 6.5

NA

Absolute

1.3

1.2

1.5

1.6

1.4

Global Top 10 Energy Companies


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Financial Analysis

Interest Coverage Ratio Debt to Equity Ratio Operational Efficiency Asset Turnover Ratio Receivable Turnover Ratio Inventory Turnover Ratio Revenue per Employee Net income per Employee Other Capex to Revenues Capex Revenue by Division Production of gas Transport Distribution Production of crude oil and gas condensate Refining Other Operating Income by Division Production of gas Transport Distribution Production of crude oil and gas condensate Refining Other Unallocated operating expenses Revenues by Geography Russian Federation Former Soviet Union (excluding Russian Federation) Europe and other countries Excise tax, Customs duties Gas transportation sales Other revenues Sales of gas condensate and oil and gas products

NA NA

Absolute Absolute

21.0 0.3

9.1 0.4

18.0 0.3

12.5 0.4

10.4 0.3

NA NA NA USD USD

Absolute Absolute Absolute Absolute Absolute

0.5 6.5 3.5 311,690.3 65,804.5

0.4 4.3 2.4 219,943.5 59,726.2

0.4 5.0 2.2 197,554.0 56,302.3

0.4 5.1 1.2 139,008.4 31,259.5

0.3 4.2 1.1 100,642.8 21,580.7

NA USD

% Million

20.3 28867.2985

22.4 21948.734

20.5 17812.03

19.8 11082.0466

20.2 7983.8509

USD USD USD USD USD USD

Million Million Million Million Million Million

471.7 2,855.0 91,068.3 8,682.0 26,372.9 12,681.0

227.1 1,685.9 61,476.8 6,775.7 21,213.5 6,495.8

171.3 1,393.5 56,844.0 6,935.3 17,569.0 4,010.6

141.5 1,011.8 41,762.1 2,124.2 8,193.9 2,647.9

118.8 1,172.4 30,878.8 4,937.6 2,344.4

USD USD USD USD USD USD USD

Million Million Million Million Million Million Million

1,694.0 5,926.7 34,699.2 4,134.9 6,016.0 (1,304.9) (262.1)

812.7 5,914.3 15,186.8 3,572.4 3,672.1 631.4 (1,444.7)

847.3 5,955.7 17,490.9 4,393.1 2,209.9 1,076.9 (138.9)

559.1 2,320.5 12,940.3 1,613.8 1,140.3 652.6 (890.2)

546.0 1,119.7 8,253.0 1,074.4 88.7 (474.9)

USD USD USD USD USD USD USD

Million Million Million Million Million Million Million

47,918.1 18,745.5 94,120.2 (18,653.0) -

36,611.3 13,878.0 59,779.2 (12,393.6) -

29,861.1 12,034.5 58,694.9 (13,666.8) -

18,267.5 6,082.7 38,181.9 (10,310.4) 1,011.8 2,647.9 -

10,200.6 3,572.1 24,544.8 (7,319.8) 1,172.4 2,344.4 4,937.6

Source: Datamonitor, Company reports NA Not Applicable.

DATAMONITOR

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Table 28: GazpromKey industry specific ratios, 200408

Financial Ratios Current Ratio Quick Ratio Net Working Capital Ratio Return on Asset Return on Equity Net Income Margin Operating Margin (Return on Sales) Asset Turnover Ratio Inventory Turnover Ratio Receivable Turnover Ratio Debt to Equity Ratio Interest Coverage Ratio Dividend Per Share Earning Per Share Market to Book Ratio Price Earning Ratio Return on Capital Employed Long Term Debt Ratio Total Debt Ratio Dividend Yield Dividend Payout Enterprise Value / EBIT Enterprise Value / EBITDA Capex to Revenues

2008 1.63 1.34 0.08 0.11 0.17 21.92% 35.81% 0.50 3.52 6.49 0.29 21.04 0.11 1.27 0.55 3.43 0.20 0.15 0.22 0.02 0.08 3.07 2.66 20.3%

2007 1.44 1.22 0.07 0.11 0.18 28.68% 28.96% 0.40 2.35 4.31 0.38 9.12 0.10 1.13 2.05 12.30 0.12 0.17 0.26 0.01 0.09 13.77 10.91 22.4%

2006 1.72 1.48 0.12 0.13 0.21 29.57% 36.62% 0.45 2.19 4.99 0.30 18.01 0.06 1.08 2.17 11.30 0.18 0.15 0.22 NM 0.06 9.87 8.14 20.5%

2005 1.90 1.58 0.11 0.08 0.13 22.83% 32.81% 0.37 1.24 5.06 0.36 12.54 0.04 0.55 1.73 14.32 0.12 0.19 0.24 0.01 0.08 11.83 9.28 19.8%

2004 1.67 1.37 0.09 0.07 0.10 21.68% 26.89% 0.30 1.15 4.21 0.28 10.44 0.03 0.42 0.74 7.35 0.09 0.15 0.21 0.01 0.07 7.85 5.53 20.2%

Source: Datamonitor, Company reports NM Not Meaningful.

DATAMONITOR

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APPENDIX

APPENDIX
Datamonitor Industry Profiles draw on extensive primary and secondary research, all aggregated, analyzed, cross-checked and presented in a consistent and accessible style. Review of in-house databases created using 250,000+ industry interviews and consumer surveys and supported by analysis from industry experts using highly complex modeling & forecasting tools, Datamonitors inhouse databases provide the foundation for all related industry profiles. Preparatory research Datamonitor also maintains extensive in-house databases of news, analyst commentary, company profiles and macroeconomic & demographic information, which enable our researchers to build an accurate market overview. Definitions market definitions are standardized to allow comparison from country to country. The parameters of each definition are carefully reviewed at the start of the research process to ensure they match the requirements of both the market and our clients. Extensive secondary research activities ensure we are always fully up-to-date with the latest industry events and trends. Datamonitor aggregates and analyzes a number of secondary information sources, including: national/governmental statistics; international data (official international sources); national and international trade associations; broker and analyst reports; company annual reports; business information libraries and databases.

Modeling & forecasting tools Datamonitor has developed powerful tools that allow quantitative and qualitative data to be combined with related macroeconomic and demographic drivers to create market models and forecasts, which can then be refined according to specific competitive, regulatory and demand-related factors. Continuous quality control ensures that our processes and profiles remain focused, accurate and up-to-date.

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