Page 27 - Cost_Competitiveness
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The Institute of Cost Accountants of India
within months after spending $25 billion adoption of natural gas across the globe
in acquiring XTO, a leading natural gas is part of a very long-term strategy. As
player. the adoption of natural gas increases, it
should drive the prices for natural gas up,
Given the company’s recent energy making the investment more fnancially
outlook report predicting natural gas to attractive in the long run.
be the number two global energy source
by 2030 and its recent acquisition of XTO, The energy industry is a mature industry
ExxonMobil’s tilt towards oil appears to with conventional, fossil-fuel-based
be a signifcant strategic move. energy sources, such as oil and coal,
dwindling slowly. While the supply of
5.1 ExxonMobil Sees Burgeoning conventional light crude oil is declining,
Demand for Natural Gas there is still an estimated three trillion
barrels of heavy crude oil in the world,
ExxonMobil raised market expectations equalling approximately 100 years of
for its revenue growth when it stated that global consumption at current levels.
the demand for natural gas in heating
homes and businesses and for generating Current technology allows only a fraction
electricity will grow by two percent of heavy crude oil (400 billion barrels) to
annually between now and the year 2030. be recovered cost effectively.
This statement, along with the company’s
recent acquisition of XTO Energy for $25 Therefore, boosting investment in
billion, shows the company’s belief in and unconventional oil exploration and
commitment to its energy outlook. processing technology is important
to building a sustainable competitive
5.2 Key Analysis advantage. The total cycle for producing
oil is between two and fve years for
Global energy demand is expected already developed felds, and seven
to increase 35 percent by 2030. The to twelve years in unproven felds, so
demands for transportation, residential investments in technology need to be far
and commercial use are all expected to in advance.
rise in the next two decades; however,
the growth rate of the current energy Currently, the technologies to extract
supply is not expected to keep pace with oil from unconventional sources are not
increasing demand, calling for investment yet fully developed. Though the goals
in the discovery and production of energy of “supermajor” oil companies are
from all types of sources. essentially the same, there is a sharp
contrast in strategy.
The natural gas market is currently
oversupplied, keeping the price of ExxonMobil made less investment to grow
natural gas low, resulting in a lower level organically and has relied on its XTO
of sustained proftability. Additionally, the acquisition to boost its reserves; whereas
www.icmai.in
The Institute of Cost Accountants of India
within months after spending $25 billion adoption of natural gas across the globe
in acquiring XTO, a leading natural gas is part of a very long-term strategy. As
player. the adoption of natural gas increases, it
should drive the prices for natural gas up,
Given the company’s recent energy making the investment more fnancially
outlook report predicting natural gas to attractive in the long run.
be the number two global energy source
by 2030 and its recent acquisition of XTO, The energy industry is a mature industry
ExxonMobil’s tilt towards oil appears to with conventional, fossil-fuel-based
be a signifcant strategic move. energy sources, such as oil and coal,
dwindling slowly. While the supply of
5.1 ExxonMobil Sees Burgeoning conventional light crude oil is declining,
Demand for Natural Gas there is still an estimated three trillion
barrels of heavy crude oil in the world,
ExxonMobil raised market expectations equalling approximately 100 years of
for its revenue growth when it stated that global consumption at current levels.
the demand for natural gas in heating
homes and businesses and for generating Current technology allows only a fraction
electricity will grow by two percent of heavy crude oil (400 billion barrels) to
annually between now and the year 2030. be recovered cost effectively.
This statement, along with the company’s
recent acquisition of XTO Energy for $25 Therefore, boosting investment in
billion, shows the company’s belief in and unconventional oil exploration and
commitment to its energy outlook. processing technology is important
to building a sustainable competitive
5.2 Key Analysis advantage. The total cycle for producing
oil is between two and fve years for
Global energy demand is expected already developed felds, and seven
to increase 35 percent by 2030. The to twelve years in unproven felds, so
demands for transportation, residential investments in technology need to be far
and commercial use are all expected to in advance.
rise in the next two decades; however,
the growth rate of the current energy Currently, the technologies to extract
supply is not expected to keep pace with oil from unconventional sources are not
increasing demand, calling for investment yet fully developed. Though the goals
in the discovery and production of energy of “supermajor” oil companies are
from all types of sources. essentially the same, there is a sharp
contrast in strategy.
The natural gas market is currently
oversupplied, keeping the price of ExxonMobil made less investment to grow
natural gas low, resulting in a lower level organically and has relied on its XTO
of sustained proftability. Additionally, the acquisition to boost its reserves; whereas
www.icmai.in
