How Economies Of Scale Produced The Big Oil Companies We Know Today

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by Savannah Adkins


The term “economies of scale” might as well have been invented for the oil and gas industries. Think about how much it would cost to start a new company with the vision of prospecting and drilling for oil, refining it, and selling it as gasoline. It would cost you billions of dollars to sell that first gallon. But we know too that the oil and gas industries are highly profitable. In fact, even with oil prices slumping, oil and gas companies make up half of Fortune’s 10 largest companies.

Looking at the actual scale of these companies, the numbers become staggering. Consider the following.

  • Collectively, the world’s 10 largest oil companies produce around 40 million barrels of oil per day. That’s enough to fill 2,543 Olympic sized swimming pools, or 40 million standard-sized American bathtubs.
  • The collective revenue of these companies in 2014 was $3.26 trillion. That’s greater than the GDP of the United Kingdom.
  • Oil and gas companies are also huge employers – Chinese-government-owned Sinopec, the world’s largest oil company, employed 358,571 people at last count. That’s over double the number of people employed by Amazon, worldwide.

Of course, the “Big Oil” didn’t spring up overnight. As in all industries that benefit from economies of scale, the oil and gas industry has seen countless mergers and acquisitions. Read our infographic below to see how over a century of mergers and acquisitions have produced the world’s 10 largest oil companies.

The mergers and acquisitions behind world’s largest oil companies.

1. Sinopec

While Sinopec has the greatest annual revenue of any of the world’s oil and gas companies (with $455.06 billion in 2014), it actually has the lowest oil production of any of the companies on our list. Instead, much of its revenue is derived from the sale of other oil-derived products, like fertilizers and chemical fibers.

Headquartered in Beijing, China, Sinopec produces 1.6 million barrels of oil every day and holds $226.67 billion in total assets. Sinopec became a global powerhouse through its acquisitions of New Star Petroleum Company (2001), Hainan Petrochemical Co., LTD (2006), Shengli Petroleum Administration Bureau (2006), Addax Petroleum Corp. (2009), and Daylight Energy (2011).

2. China National Petroleum

Also headquartered in Beijing, China National Petroleum falls just behind Sinopec with a 2014 revenue of $432 billion, but outstrips Sinopec’s daily production, producing 4.4 million barrels of oil a day.

The company’s assets total $481.07 billion. In 2005, China National Petroleum acquired PetroKazakhstan, a Calgary (Canada) based company that saw tremendous growth after opening oilfields in Kazakhstan.

3. Royal Dutch Shell

Royal Dutch Shell is appropriately named – The House of Orange (The Dutch Royal Family) are reported to own a large stake in the company. Shell is headquartered in The Hague, and holds $353.16 billion in total assets and grossed $422.11 billion in revenue in 2014, producing 3.9 million barrels of oil per day.

The company has nearly a century of oil company acquisitions, beginning with Mexican Eagle Petroleum Company (1919), Solarhart (1979), Shell Oil (1985), Enterprise Energy Ireland (2002), Shell Canada (2006), East Resources (2010), and BG Group (2015). BG Group has rights to export American natural gas, a developing and lucrative market for oil companies.

4. ExxonMobil

ExxonMobil is a product of a 1999 merger that was, at the time, the largest in history, creating the single largest company on the planet. In a sense, this was less a merger than a case of two companies being reunited – Exxon and Mobil were both descendants of John D. Rockefeller’s Standard Oil Company (founded in 1870).

Now headquartered in Irving, Texas, ExxonMobil produces 5.3 million barrels of oil per day and had a 2014 revenue of $394.11 billion. ExxonMobil’s total assets are valued at $349.49 billion.

5. Saudi Aramco

Saudi Aramco was originally a joint U.S. -Saudi venture before the Saudi government bought out California oil company Aramco. Headquartered in Dharan, Saudi Arabia, Saudi Aramco has an estimated $30 trillion of assets and produces 12.5 million barrels of oil every day. The company grossed $378 billion in 2014.

6. BP

In 1998, British Petroleum (BP) acquired Amoco. The latter company had a history in innovation in gasoline retail, developing the first examples of the gasoline tanker truck, drive through filling stations and unleaded gas.

The London, UK-based BP now holds an estimated $284.3 billion in total assets and grossed $358.70 billion in 2014. BP has a daily production of 4.1 million barrels. The company acquired Standard Oil of Ohio, originally part of Rockefeller’s Standard Oil Company in 1978. Further acquisitions include Arco (2000; later sold to Tesoro Corporation in 2013), and Burmah Castrol (2000), a London-based oil company with operations in Bangladesh, India, and Myanmar.

7. Total S.A.

Like many of the companies listed here, Total S.A. is less an oil and gas company than a diversified energy company. In 2011, Total S.A. acquired SunPower, a California company focused on the development of solar power implements and created panels that were used to power NASA’s Pathfinder aircraft.

Based in Paris, France, Total S.A. holds $229.79 billion in total assets and produces 2.7 million barrels of oil per day. The French company had grossed $260.02 billion in 2014. Total S.A. has acquired Vickers Petroleum (1980), Petrofina (1999), Elf Aquitaine (2000), and SunPower (2011).

8. Kuwait Petroleum Corporation

Headquartered in Kuwait City, Kuwait, the Kuwait Petroleum Corporation is unique in that it is the only one of the top 10 largest oil companies that has never acquired another oil company. In 2014, Kuwait Petroleum Corporation grossed $251.94 billion. The Kuwaiti company has an average daily oil production of 3.2 million barrels.

9. Chevron Corporation

San Ramon, California based Chevron Corporation produced 3.5 million barrels of oil per day. Chevron’s 2014 revenue was $192.31 billion and the company’s total assets are $266.02 billion. Chevron has acquired U.S. oil companies Gulf Oil (1984), Texaco (2000), and Unocal Corporation (2005), which had operations in the U.S., Afghanistan, Pakistan, and Indonesia.

Fun fact about Gulf Oil: Before its acquisition by Standard Oil of California (later Chevron), Gulf was considered one of the “Seven Sisters,” the huge oil companies that dominated the industry between the 1940s and 1970s, and it represented a major source of revenue for the famous Mellon family of Pittsburgh.

10. Lukoil

Headquartered in Moscow, Russia, Lukoil produces an estimated 2.2 million barrels of oil per day and grossed $144.17 billion in 2014. Lukoil’s total assets are valued at $111.35 billion. The company’s acquisitions include Getty Oil (2000), Scholtzmeyer Bros. (2004), and Turkish oil company Akpet (2008), which increased their international holdings by 18 percent. Interestingly, Getty Oil owned a majority share of the television channel ESPN before its purchase by ABC.


As this history of mergers and acquisitions shows, the oil giants we know today didn’t emerge overnight. From Asia to America, they’ve looked to diversify their operations by investing in green technologies such as solar power, while others strive to purchase companies located across the globe to become the major players they are today.

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