Investor-owned oil majors like Exxon will no longer be able to increase their reserves, say analysts, because of new attitudes in oil-producing nations

The performance and strategy of Exxon Mobil Corp. is a good place to start in grasping the twilight years of the investor-owned oil sector that has dominated the extraction of petroleum resources since the industry began in the 1850s.

Putting aside the Valdez debacle of 1989, Exxon has been the best-managed of the oil majors.


Exxon has avoided the faked-reserve scandals that have plagued rival Royal Dutch/Shell PLC, the Alaskan pipeline ruptures and fatal refinery explosions that forced out the CEO of BP PLC, and thoughtmore than twice before committing to its multibillion-dollar bets on gargantuan offshore oil-production platforms, heavy-oil projects in Athabasca, and signing production contracts with the state-owned oil agencies that control about 90 per cent of the world's petroleum reserves. The same state-owned agencies who have an unsettling habit of ripping up those contracts — as in Russia, Venezuela and Kazakhstan, among other countries — to demand a heftier share of output when oil prices skyrocket, as they have in recent years.

As the industry's most consistently successful player, Exxon's dilemmas offer a disturbing forecast for a business in decline. For a variety of reasons, but mostly shifts in geopolitics, it's increasingly easy to imagine a world not too far off in which Exxon and its investor-owned peers have given way to ascendant state-owned resource giants, at least in the "upstream," or exploration and development part of the industry, traditionally the most lucrative end of the business, compared with "downstream" refining and distribution activities.