Behind the impressive financial results of Saudi Aramco, ExxonMobil, Chevron and Shell, a much more significant strategic realignment is underway: the large Western energy groups are gradually giving up direct control of critical oil infrastructure, limiting their exposure to ever-increasing geopolitical risks.
BP’s decision to put its North Sea fields up for sale, combined with its withdrawal from the management of the BTC pipeline and Shell’s corresponding strategy, shows that the energy giants do not see a temporary crisis, but a new era of permanent conflict, where pipelines, fields and tankers are becoming targets.
The companies continue to earn billions from high oil prices, but at the same time they are making sure that they are not the ones who will bear the greatest costs if the energy war escalates.
Trump denounces oil companies’ excessive profits
Donald Trump has publicly attacked oil companies, saying they are “making too much money” as soaring oil prices have significantly increased the cost of fuel in the United States.
The timing is not coincidental. With the midterm elections approaching and polls showing Democrats gaining ground, the White House sees energy accuracy becoming a political issue.
The average price of gasoline in the United States has risen about 37% since the start of the conflict with Iran, burdening American households.
Record profits for Aramco, ExxonMobil, Chevron and Shell
- Saudi Aramco announced a 33% increase in profits, to $33.4 billion.
- ExxonMobil more than doubled its profit to $14.5 billion.
- Chevron reported a profit of $12.1 billion, more than quadrupling from last year.
- Shell reported a profit of nearly $10 billion, its second-best quarterly performance in history.
High Brent prices and limited transportation through the Strait of Hormuz are acting as a profitability multiplier for the entire energy sector.
The paradox
But the really interesting element is not the super-profits. It is that at the same time British Petroleum (BP) is proceeding with one of the largest strategic divestments in recent decades.
BP has put up for sale all of its oil and gas assets in the British North Sea. These are five offshore production complexes, with a total production of around 110,000-115,000 barrels of oil equivalent per day, an amount corresponding to around 5% of the company’s total production.
This cannot be seen as a corporate resource game, mainly because BP, although born 110 years ago in the Persian oil fields, where the British were then actively involved in all aspects of the industry, has reached its current size precisely thanks to North Sea oil, better known as the Brent benchmark.
BP was essentially built on North Sea oil and Brent, which for decades was the global benchmark for crude oil pricing.
From operators to investors
The sale of the fields is not an isolated case. A few weeks ago, BP handed over the operational management of the Baku-Tbilisi-Ceyhan (BTC) pipeline to Azerbaijan’s state-owned SOCAR, retaining only its shareholding.
At the same time, Shell decided to sell 35% of the Aphrodite field in the Cypriot EEZ, with the Hungarian state-owned MOL as the preferred buyer, while Chevron and NewMed Energy remain in the project.
The common feature of all these moves is obvious. The large Western energy groups are gradually reducing their direct operational exposure and are becoming more financial investors than managers of critical energy infrastructure.
Pipeline attacks change everything
Officially, BP attributes its withdrawal to the depletion of reserves and the increased tax burden in the UK. However, the real reasons are deeper.
British oil “sharks”, having strangled the entire chain for a century, suddenly began to transfer the resource and transportation base to local state control.
The explosion of the Nord Stream pipelines, Ukrainian drone attacks on Caspian energy facilities, Houthi attacks in the Red Sea, and the crisis in the Strait of Hormuz have created a new reality. Energy infrastructure is now treated as military targets.
For an operator, this means huge insurance costs, increased liabilities to customers and significant risks of compensation in the event of an outage. In contrast, a simple shareholder maintains his financial participation without bearing the entire operational and legal risk.
Companies are anticipating that the crisis is here to stay
The simultaneous emergence of two phenomena—explosive profitability and divestment from natural infrastructure—leads many to the conclusion that the big energy groups are anticipating a long period of geopolitical instability.
In other words, they do not doubt that demand for oil and gas will remain high. But they are questioning the security of owning and managing the infrastructure itself.
In this new environment, the strategy seems to be changing: less exposure to pipelines, terminals and offshore facilities, more indirect participation through equity stakes and investments.
The “Maneuvers”
There is a theory that the big oil and gas players, whose public and shadow representatives are at the top of the government, have certain information and are conducting preemptive maneuvers.
It is likely that this information was used to assess the long-term risks, leading to the decision to abandon the role of physical operator and retain only the functions of shareholder and investor.
These actions are more than logical, given the terrorist attack on Nord Stream, the Ukrainian drone attacks on oil terminals in the Caspian Sea and, of course, the prolonged blockade of the Strait of Hormuz.
In the event of physical damage to any oil and gas pipeline, the risks translate into significant losses for the operator, as the contractual terms guarantee a stable and secure flow – that is, fulfillment of the contract.
The sabotage of three Nord Stream pipelines and the attacks on tankers clearly demonstrated that it is much safer to indirectly control, rather than possess, the logistics routes.
High prices
In the new reality of rising tensions, the actual cost of producing barrels and cubic meters is becoming secondary, as the conflicts show no signs of abating, meaning demand and prices will remain consistently high.
The increasing number of attacks on pipelines and tankers suggests that, if current trends continue, the cost of insuring terminals, gas compressor stations and other production and logistics infrastructure could soon exceed profits.
The cost of security will be borne solely by the operator for an indefinite period, while subsequent losses will be shared among shareholders, and the operator’s share may be minimal, meaning that compensation will be significantly less than the investment.
For now, it seems that the major oil industry leaders are not expecting either an overall improvement in hydrocarbon markets or a reduction in the likelihood of attacks on critical infrastructure vulnerabilities.
Apparently, the forecasts are so ominous that the British have decided to leave behind the natural levers and resort to the economic safety net.
