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The Biggest Oil Producers in the Middle East

The Biggest Oil Producers in the Middle East

The Middle East was responsible for producing nearly 27.9 million barrels of oil per day in 2014, about 30% of world production. The region includes four of the top eight oil-producing countries in the world and six of the top 14. Most oil production in the Middle East is dominated by state-owned enterprises. However, many international oil companies engage in oil production and related activities across the region through joint ventures, production-sharing agreements and other business models.

1. Saudi Arabia
Saudi Arabia produced more than 11.6 million barrels of oil per day in 2014, nearly 12.5% of world output or about one out of every eight barrels. The country ranked as the world’s biggest oil producer in the decade from 2003 to 2012, after which it fell to second place due to surging oil production in the United States. Saudi Arabia remains the world’s largest petroleum exporter. With proven oil reserves of about 266 billion barrels and relatively low production costs, Saudi Arabia should maintain its position as a top-three oil producer for the foreseeable future.

Saudi Arabia’s oil and gas industry is controlled by Saudi Aramco, which is itself controlled by Saudi Arabia’s Ministry of Petroleum and Mineral Resources and the Supreme Council for Petroleum and Minerals. Saudi Aramco is not publicly traded. Although international oil companies do not participate in oil production in Saudi Arabia, several companies partner with Saudi Aramco in joint-venture refineries and petrochemical plants in the country. These partners include Exxon Mobil Corporation, Royal Dutch Shell plc, Sumitomo Chemical Co., Ltd. and Total S.A.

2. United Arab Emirates
The United Arab Emirates (UAE) is a federation of seven emirates, including Dubai and the capital of the federation, Abu Dhabi. UAE produced nearly 3.5 million barrels of oil per day in 2014 to rank as the world’s sixth-biggest producer. Each of the seven emirates controls oil production within its borders. However, Abu Dhabi is home to about 94% of the proven oil reserves in UAE territory and, thus, it has an outsized role in establishing the federation’s oil policy.

The state-owned Abu Dhabi National Oil Company (ADNOC) controls oil production operations in Abu Dhabi under the direction of the emirate’s Supreme Petroleum Council. Most oil production in Abu Dhabi is organized under production-sharing agreements between ADNOC and international oil companies. Other emirates utilize similar production-sharing agreements and service contracts to organize oil production. Some of the biggest international companies involved in UAE oil production include BP plc, Royal Dutch Shell plc, Total S.A. and Exxon Mobil Corporation.

3. Iran
Iran produced about 3.4 million barrels of oil per day in 2014, the third consecutive year of depressed production. Prior to 2012, Iran produced more than 4 million barrels of oil per day for eight consecutive years. Most of the recent production downturn can be attributed to the effects of international economic sanctions placed on Iran during this period. According to the U.S. Energy Information Administration (EIA), sanctions have had especially severe effects on upstream oil and gas investment, including numerous cancelled investment projects.

In July 2015, Iran came to an agreement with the permanent members of the U.N. Security Council and Germany on the Joint Comprehensive Plan of Action (JCPOA), in which Iran agreed to strict limits on its nuclear program in exchange for the removal of international economic sanctions. As of September 2015, implementation of the agreement on Iran’s part is expected no earlier than the first half of 2016. Once Iran has met all of its initial obligations with respect to the JCPOA, sanctions are to be lifted.

Oil and gas production in Iran is controlled by the state-owned National Iranian Oil Company (NIOC) under the direction of the Supreme Energy Council. While the Iranian constitution bans private or foreign ownership of the country’s natural resources, international companies have historically participated in oil exploration and development in the country through buyback contracts, a contract model that does not convey equity rights to the international company. According to the EIA, Iran is in the process of developing new oil contract models to attract foreign investments once sanctions are lifted. Other reports suggest Iran plans to invite a number of international oil majors to do business in the country, including ConocoPhillips Co., Exxon Mobil Corporation, Royal Dutch Shell plc and Total S.A., among others.

4. Iraq
Iraq produced nearly 3.4 million barrels of oil per day in 2014, just a few thousand barrels per day fewer than Iran. The country has achieved production gains in every year since 2005, two years after the start of the Iraq War. Production in 2014 was higher than any other year since at least 1980, when the country produced just more than 2.5 million barrels per day. The EIA reports that ambitious development plans are in place to increase oil production in Iraq to as many as 9 million barrels per day by 2020. However, the country faces numerous challenges that could limit progress toward these goals, including political instability, continuing violence and inadequate infrastructure.

Oil production in most of Iraq falls under control of the Ministry of Oil in Baghdad. The Ministry operates through several state-owned companies, including the North Oil Company, the Midland Oil Company, the South Oil Company and the Missan Oil Company. In the autonomous Kurdistan region of Iraq, oil production is controlled by the local Ministry of Natural Resources. Well more than a dozen major international oil companies are involved in Iraqi oil production. U.S. and European oil majors include Exxon Mobil Corporation, Occidental Petroleum Corporation, BP plc, Royal Dutch Shell plc and Total S.A. Other international oil giants in Iraq include China National Petroleum Corporation, known as CNPC; China National Offshore Oil Corporation, known as CNOOC; Malaysia’s Petroliam Nasional Berhad, known as Petronas; and Gazprom Neft OAO.

5. Kuwait
Kuwait produced almost 2.8 million barrels of oil per day in 2014, placing it just outside the top 10 oil producers in the world. It has maintained consistent production of between about 2.5 million and 2.8 million barrels per day for more than a decade. However, according to the EIA, Kuwait has been struggling to raise production to 4 million barrels per day during this period, falling short due to inadequate foreign investment and related delays in new oil production projects.

The Ministry of Petroleum carries out oil policy in Kuwait through the state-owned Kuwait Petroleum Corporation and its subsidiaries. International oil companies have long been denied access to Kuwait because the Kuwaiti constitution does not allow foreign companies ownership stakes in Kuwaiti natural resources, or the revenues associated with those resources. This means standard joint ventures and production-sharing agreements used in other countries are outlawed in Kuwait.

In 1988, the Ministry of Petroleum spearheaded a plan to increase oil production in Kuwait by attracting international operators through the use of incentivized contract models allowable under the constitution. However, the country’s National Assembly, which is responsible for approving all such contractual agreements, is not fond of the program and has delayed its implementation for years.

The US States That Produce the Most Oil

The US States That Produce the Most Oil

A boom in oil production is profoundly changing the U.S. economy and impacting worldwide energy markets. As of 2015, 90% of U.S. oil production, excluding federal offshore drilling, comes from eight states: Texas, North Dakota, California, Alaska, New Mexico, Oklahoma, Colorado and Wyoming. The surge in U.S. output is due in large part to the wide use of horizontal hydraulic fracturing, or fracking, as new technologies give drillers access to some of the largest oil deposits in the world that were once too tight to exploit. Fracking is controversial as some believe the chemicals injected into the wells lead to extensive pollution of the water supply. Some also argue the unconventional horizontal drilling awakens dormant faults, causing earthquakes.

With domestic crude oil production averaging 9.4 million barrels a day over the first six months of 2015, the United States bypassed Russia and Saudi Arabia as the world’s largest producer of crude oil. This increased production is attracting manufacturers back to the U.S. Producing 90% of the energy it consumed in 2014, the U.S. imported less foreign oil every year from 2005 to 2015. Investors looking to get into the domestic energy markets may want to pay attention to shale drillers such as Exxon Mobil Corporation and Chesapeake Energy Corporation, which spent about $120 billion in 2014 in the U.S., more than double the amount spent five years earlier.

Texas

While other states have seen a boom in recent years, Texas is still the epicenter of the U.S. oil industry, with 27 operable refineries, more than any state. Texas produced 1.2 billion barrels of oil in 2014, which accounted for 36% of total U.S. output, and the state has almost one-third of all proven oil reserves with 10.5 billion barrels. If Texas were its own country, it would be the sixth-largest oil producer in the world. With increasing horizontal drilling of the state’s Eagle Ford Shale and Permian Basin, Texas is ramping up production, averaging 3.6 million barrels a day in 2015, up from 3.1 million in 2014. For those looking to invest in Texas, Exxon and Houston-based AT&T, Inc. are a good start.

North Dakota

The North Dakota oil boom is completely transforming the western portion of the state, which rests atop the Bakken Shale formation and the Williston Basin, two of the largest oil reserves in the world. Companies such as Whiting Petroleum Corporation, Continental Resources, Inc. and Hess Corporation are among the largest players in the region making these deposits profitable with the technological advancements in fracking. With oil production increasing by 1,000% between 2003 and 2015, North Dakota has 5.7 billion barrels of proven reserves and produced 397 million barrels in 2014. When combined with output from Texas, the two states provide half the entire U.S. oil output.

California

Excluding federal offshore areas, California ranked third in the nation in crude oil production with over 200 million barrels in 2014. Despite an overall decline in production since the mid-1980s, California has 2.9 billion in proven reserves, behind only Texas and North Dakota. California ranks third in the nation in petroleum refining capacity and accounts for more than one-tenth of the total U.S. capacity. To meet strict federal and state environmental regulations, California refineries are configured to produce cleaner fuels, and they often operate at or near maximum capacity because of the high demand for these petroleum products.

Alaska

While oil production has slowed in recent years in response to enhanced exploration and drilling in the plains, Alaska is still one of the largest oil-producing states with 181 million barrels of output and 2.9 billion barrels in reserve in 2014. The North Slope contains more than a dozen of the largest oil fields in the U.S. Although production has fallen to less than 300,000 barrels per day from its peak of 1.6 million barrels per day in 1988, the region is still one of the most profitable for ConocoPhillips Co.

Oklahoma

Production in Oklahoma has more than doubled since 2005 to more than 128 million barrels in 2014, pushing its way into the top five of the most productive oil-producing states. Oklahoma is the intersection of many of the largest national pipelines. The small city of Cushing is home to the world’s largest oil storage facility, where one-fifth of the country’s commercial crude oil is stored and where the primary U.S. oil price, known as West Texas Intermediate, is determined. Oklahoma City-based Continental Resources, Inc. has a leading presence in the Anadarko Woodford play, and Oklahoma is actively expanding its shale operation throughout the plains.

New Mexico

Thanks to horizontal drilling, primarily in Lee and Eddy counties in the southeastern part of the state, New Mexico’s oil production has more than doubled since 2009, seeing an incredible 30% jump from 2012 to 2013 alone. By producing 124 million barrels in 2014 and with 1.2 billion barrels in reserve, oil production is clearly one of the most important drivers of the state’s economy. This region comprises a confluence of conventional formations and newer shale formations that are shared with Texas’ Permian basin region.

Colorado

While other states may get more publicity about the booming oil industry, Colorado has seen a dramatic increase with production tripling from just 30 million barrels in 2009 to over 94 million in 2014, or about one of every 50 barrels of U.S. output. New production is coming from the Niobrara Shale formation in the Denver-Julesburg Basin in northeastern Colorado. With experts estimating that approximately 2 billion barrels of oil are recoverable from the Niobrara, Colorado’s oil reserves of 896 million barrels are sure to increase.

Wyoming

Thirty-nine percent of U.S. coal comes from Wyoming and is the focus of the state’s energy industry, but oil production continues to increase thanks to ongoing drilling of the Niobrara Shale formation. Wyoming produced 760 million barrels in 2014, with 723 million barrels in reserve. EOG Resources, Inc. is one of the most aggressive drillers in the region with plans to expand with hundreds of new wells.

4 of the Biggest Oil Producers in Latin America

4 of the Biggest Oil Producers in Latin America

Latin American oil production is dominated by Brazil, Mexico and Venezuela, countries that were responsible for about 75% of the region’s total output in 2014. These countries are also giants on the international stage, ranking as the world’s ninth, 10th and 12th biggest oil producers , respectively. Colombia also makes a good showing in the world rankings, coming in at 19th. The following list provides production figures for each of the region’s top four oil producers in addition to a few details on each country’s oil industry.

1. Brazil

Brazil accounted for oil production of about 2.95 million barrels per day in 2014, continuing a nearly unbroken trend of increasing annual oil production since at least 1980. According to the U.S. Energy Information Administration (EIA), more than 90% of Brazil’s oil production is extracted from deep-water oil fields offshore. In recent years, Brazil has made some of the world’s biggest new oil discoveries in its offshore pre-salt basins. In late 2014, national production estimates were updated to reflect developments of these new fields. The country expects production to rise to 4 million barrels per day by 2022.

Petroleo Brasileiro S.A., also known as Petrobras, is the biggest oil producer in Brazil by a substantial margin, accounting for about 2.1 million barrels per day and over 72% of Brazil’s 2014 oil production. The Brazilian government holds 50.3% of the company’s voting shares and controls another 9.9% of the company through shares held by the Brazilian Development Bank. Petrobras is listed on the BM&FBOVESPA exchange in São Paulo and has American Depositary Receipt (ADR) listings on the New York Stock Exchange. International oil companies operating in Brazil include Chevron Corporation, Royal Dutch Shell plc, BP plc, Repsol S.A. and China Petroleum and Chemical Corporation, also known as Sinopec.

2. Mexico

Mexico produced just more than 2.8 million barrels of oil per day in 2014, roughly in line with production figures from the last five years. This level of production is down from previous decades, mostly due to declining output from mature oil fields. From 1991 to 2010, Mexico maintained oil production above 3 million barrels per day, including eight years exceeding 3.5 million barrels per day. While Mexico maintains its position as the third-largest crude oil exporter in the Americas, it has become a net importer of refined products, primarily gasoline and diesel.

From 1938 to 2013, Mexico’s oil industry was monopolized by the state-owned oil and gas company Petroleos Mexicanos, also known as Pemex. Industry reforms were initiated in 2013 in hopes of attracting greater foreign investment to reverse production declines in the country. Pemex remains under state ownership and as of 2015, controls development rights to 83% of Mexico’s proven reserves of oil.

Mexico has not yet been successful in its efforts to attract significant foreign investment. Two offshore exploration and production blocks have been awarded to a consortium including the London-listed Premier Oil plc; the privately held American company Talos Energy, LLC.; and the privately held Mexican company Sierra Oil & Gas S. de R.L. de C.V. However, 12 other blocks available at the same auction failed to attract sufficient bids. Major oil companies including Chevron, BP and Royal Dutch Shell have expressed interest in entering Mexico but are not producing in the country as of September 2015.

3. Venezuela

Venezuela produced nearly 2.7 million barrels of oil per day in 2014. Production in recent years is down from the prior two decades, when daily production fluctuated around the 3 million barrel mark, including a high of more than 3.5 million barrels per day in 1997. As of 2014, proven oil reserves in Venezuela amount to nearly 298 billion barrels; these are the biggest reserves in the world ahead of Saudi Arabia’s 266 billion barrels and Canada’s 173 billion barrels.

The Venezuelan oil industry is dominated by the state-owned oil and gas company, Petroleos de Venezuela S.A. The company was established in 1976 immediately after nationalization of the oil industry. In the 1990s, reforms were introduced to liberalize the industry, but policy instability has been the norm in the years since, especially after President Hugo Chavez came to power in 1999. In 2006, Chavez introduced policies that required renegotiation of existing joint ventures with international oil companies. International operators were required to grant a 60% minimum share of every project to Petroleos de Venezuela. More than a dozen international companies, including Chevron and Royal Dutch Shell, acceded to the demands. The Venezuelan operations of two companies, Total S.A. and Eni S.p.A., were nationalized after renegotiations failed. Other international companies chose to exit Venezuela soon after, including Exxon Mobil Corporation and ConocoPhillips Co.

Although policy uncertainty remains in Venezuela even after the death of Hugo Chavez in 2013, many international oil and gas companies continue to maintain operations in the country. Chevron and the Chinese oil giant China National Petroleum Corporation both signed investment agreements with Petroleos de Venezuela in 2013 to update and expand on existing joint ventures. In 2015, the Russian energy conglomerate, Rosneft OAO, agreed to a $14 billion investment plan, the largest reported international investment in the Venezuelan oil industry in recent years.

4. Colombia

Columbia accounted for production of just more than 1 million barrels of oil per day in 2014. The country has made substantial production gains in recent years, raising output from under 550,000 barrels per day in 2007. According to the U.S. EIA, recent high rates of growth in oil, gas and coal production in Colombia can be attributed to energy industry reforms introduced in 2003. These reforms primarily worked to make investments in Colombian energy exploration and production more attractive to international companies. International investment in the oil industry reached more than $4.8 billion in 2014, about 30% of total foreign direct investment (FDI) in the country. Colombia attracted only $278 million in oil-sector FDI in 2003.

Prior to the 2003 energy reforms, the Colombian oil and gas industry was controlled by Ecopetrol S.A., a state-owned oil and gas company and industry regulator. The reforms removed regulatory functions from Ecopetrol and opened up Colombia to international competition. Ecopetrol remains under the control of the Colombian state, which holds 88.5% of its outstanding shares. The company is listed on the Colombian Stock Exchange and has ADR listings on the New York Stock Exchange and the Toronto Stock Exchange.

Ecopetrol was responsible for producing about 580,000 barrels of oil per day in 2014, approximately 57% of Colombian production. More than 100 international oil and gas companies operate in Colombia, often in joint ventures with Ecopetrol or other operators. The biggest international oil and gas producers in the country include Chevron; Repsol and its subsidiary Talisman Energy, Inc.; Occidental Petroleum Corporation; and Exxon Mobil.

The 6 Biggest Russian Energy Companies

The 6 Biggest Russian Energy Companies

Russia ranks high among the top energy-producing countries in the world. According to the most recent industry data available, Russia is the world’s single biggest producer of crude oil, the second-biggest producer of natural gas and the sixth-biggest producer of coal. Russia also ranks as the fourth-biggest producer of both nuclear power and hydropower.

Most of Russia’s biggest energy companies, including global giants such as Gazprom, Rosneft, and Lukoil, operate primarily in the oil and gas industry, with interests spanning the full length of the oil and gas supply chain. However, a hydroelectric power company, RusHydro, also makes a showing on this list of Russia’s biggest energy companies by market capitalization.

1. Gazprom

Gazprom is Russia’s biggest energy company by a substantial margin. The company controls the largest natural gas reserves in the world, from which it produced more than 2.6 billion barrel of oil equivalents (BOE) in 2014, accounting for 72% of Russia’s total gas output for the year. Oil production amounted to about 257 million barrels. Additionally, Gazprom’s gas turbine power plants account for about 15% of Russia’s installed power generating capacity. Gazprom is ultimately controlled by the Russian government, which holds just over 50% of the company’s outstanding shares. Its market capitalization is nearly $50.5 billion.

2. Rosneft

Rosneft is Russia’s biggest oil producer, accounting for more than 40% of total output in 2014. The company reported production of more than 1.5 billion barrels, more than double the production of its closest competitor, Lukoil. Rosneft also produced over 345 million BOE of natural gas, making it the third-largest gas producer in the country. Rosneft has a market capitalization of more than $41 billion. Nearly 70% of its outstanding shares are held by the Russian state.

3. Lukoil

Lukoil produced about 707 million barrels of oil and more than 92 million BOE of natural gas in 2014 to place it firmly in the top tier of Russian energy giants. Like Gazprom and Rosneft, Lukoil controls large gas and oil reserves inside Russia in addition to substantial operations outside the country. Although the company’s power generation assets have grown substantially in recent years, it accounts for less than 1% of the country’s installed generation capacity. Lukoil has a market capitalization of more than $28.3 billion.

4. Surgutneftegas

Although Surgutneftegas has no substantial business operations outside Russia, it ranks among the world’s largest 250 companies in any industry. It reported production of about 447 million barrels of oil and more than 55 million BOE of natural gas in 2014. The company also maintains a power generation business primarily to produce electricity for its own oil and gas production and processing operations. Surgutneftegas has a market capitalization of over $19.2 billion.

5. Tatneft

Tatneft is another integrated oil and gas company with primary operations focused on the domestic market. It is a far smaller producer than its Russian rivals, reporting production of about 193 million barrels of oil and about 5.5 million BOE of natural gas in 2014. Tatneft’s production and refining operations are focused in Tatarstan, a republic in the Russian Federation. Roughly 36% of the company’s outstanding shares are held by the Tatarstan government. Tatneft has a market capitalization of more than $10.6 billion.

6. RusHydro

RusHydro is the biggest hydroelectric power company in the Russian utilities industry. As of 2014, the company has a total installed electricity generation capacity of about 38.5 gigawatts, just less than Gazprom’s 39 gigawatts of installed capacity. RusHydro also has ongoing wind, tidal and geothermal energy projects, many of which are still in the research and development phase. The Russian state holds nearly 67% of outstanding shares in RusHydro. The company has a market capitalization of nearly $3.5 billion.

Here are the 5 biggest Russian oil companies

As the world’s third-largest oil producer and second-largest natural gas producer, Russia is home to some of the biggest integrated oil and gas companies in the world. In fact, Russia’s biggest companies by oil production volume include several mainstays on lists of the world’s biggest companies.

All of Russia’s largest oil companies maintain substantial upstream and downstream oil and gas operations, including sprawling exploration and production divisions, petroleum refineries and petrochemical plants, and retail service stations. The top five oil companies are ranked here according to oil production volume in 2014, the most recent year for which figures are available.

1. Rosneft

Rosneft is Russia’s biggest oil company, with reported production of about 1.5 billion barrels in 2014. The company also ranks as Russia’s third biggest natural gas company, with production amounting to more than 345 million barrel of oil equivalents (BOE). Rosneft has a market capitalization of nearly $38.7 billion, making it the highest publicly valued company in this list.

Rosneft maintains exploration and production activities across Russia and in 10 other countries, including the United States, Canada, Brazil, Norway and Vietnam. It operates 13 refineries in Russia and has an interest in seven additional refineries in Western and Eastern Europe. Rosneft also operates a network of over 2,400 retail gasoline service stations and is Russia’s largest supplier of jet fuel.

2. Lukoil

Lukoil produced nearly 707 million barrels of oil in 2014 and ranked as the second-biggest producer in the country. The company’s natural gas production came in at more than 92 million BOE on the year. It has a market capitalization of more than $27.7 billion.

In addition to gas and oil exploration and production activities across Russia, Lukoil operates in 12 other countries in Europe, Africa and the Middle East. Its refining and petrochemical operations include six refineries in Russia and an interest in five more refineries in New Zealand and Europe. Lukoil also operates power generation facilities in Russia and gasoline service stations in Russia, Europe and the U.S.

3. Gazprom Neft

Gazprom Neft is a subsidiary of the Russian energy giant Gazprom. Although Gazprom Neft has an independent listing on the Moscow Exchange, its parent holds more than 95% of its outstanding shares. The Russian government, in turn, holds 50% of Gazprom shares.

Gazprom Neft produced about 482 million barrels of oil in 2014. Natural gas production amounted to about 104 million BOE during the year. The company has production operations in Russia, Iraq, Venezuela and several other countries. It operates four refineries in Russia and another in Belarus. Nearly 1,750 Gazprom Neft service stations operate in Russia and Europe. Gazprom Neft has a market capitalization of nearly $10.5 billion.

4. Surgutneftegas

Surgutneftegas falls just behind Gazprom Neft with crude oil production of nearly 447 million barrels in 2014. Gas production rose to about 55.3 million BOE on the year. The company’s operations are mostly confined to the domestic market. In addition to its exploration and production activities, the company operates a refinery and a gas processing plant, produces petrochemicals, and runs a power generation business. Surgutneftegas also operates nearly 300 service stations. It has a market capitalization of over $18.5 billion.

5. Tatneft

Tatneft produced almost 193 million barrels of oil in 2014, in addition to gas production of almost 5.5 million BOE. The company produces oil and gas primarily within Russia, although international projects are in development. Tatneft operates a refining and petrochemical complex, a second refining facility and a gas processing plant. A tire manufacturing facility is housed in the refining and petrochemical complex, where a total of 12.5 million tires were produced in 2013. Tatneft distributes refined petroleum products through its network of more than 650 service stations in Russia, Ukraine and Belarus. The company has a market capitalization of more than $9.7 billion.

Here are the 5 Largest Chinese Oil Companies (SNP)

China’s biggest crude oil companies are state-owned energy conglomerates with sprawling international operations in oil and gas exploration and production; petroleum and chemical processing; storage and transportation; and many other functions along the oil and gas supply chain. This list includes the top five Chinese producers of crude oil by volume, ranked according to gross revenues reported in 2014 consolidated financial statements.

China Petroleum & Chemical Corp.

China Petroleum and Chemical Corp. (NYSE: SNP), known as Sinopec, is an oil, gas and chemical giant with more than $440 billion in consolidated revenue. The company produced nearly 361 million barrels of crude oil in 2014. Domestic oil production amounted to roughly 311 million barrels, while production from overseas oil fields amounted to about 50 million barrels. Sinopec takes the top spot in this list on the basis of its consolidated revenue, but it is China’s second-biggest crude oil producer by volume.

Sinopec maintains vast operations along the full length of the oil supply chain, from exploration and drilling to retail sales at more than 30,000 gasoline service stations. Sinopec was established in 1998 after the reorganization of its predecessor company, China Petrochemical Corporation. Sinopec issued shares on the Hong Kong Stock Exchange in 2000. It has since been listed on the Shanghai Stock Exchange and the New York Stock Exchange.

China National Petroleum Corporation

China National Petroleum Corporation, or CNPC, is the second-biggest Chinese crude oil producer by consolidated revenue and the biggest by production volume. In 2014, the company reported more than $425 billion in consolidated revenue and production of nearly 1.2 billion barrels of crude oil. Domestic crude oil production amounted to about 830 million barrels, while overseas production topped 368 million barrels.

Like Sinopec, CNPC operates businesses along the full length of the oil supply chain, from initial exploration to retail. Most CNPC operations are organized under a subsidiary company, PetroChina. PetroChina was established in 1999 and listed on the New York Stock Exchange and the Hong Kong Stock Exchange in 2000. It was listed on the Shanghai Stock Exchange in 2007.

China National Offshore Oil Corporation

China National Offshore Oil Corporation, known as CNOOC, was established in 1982 to focus on oil and gas exploration and production in China’s offshore waters. It has since developed into an international company with operations in more than 40 countries. CNOOC posted more than $95 billion in consolidated revenue in 2014. Crude oil production topped 501 million barrels, with more than 289 million barrels from domestic oil fields and 212 million barrels originating overseas.

In addition to oil and gas exploration and production, CNOOC is also engaged in refining, power generation, retail marketing, and engineering and technical services. Most of the company’s primary operations are organized under its subsidiary, CNOOC Limited. CNOOC Limited was established in 1999 and listed on the New York Stock Exchange and the Hong Kong Stock Exchange in 2001.

Sinochem Group

Sinochem Group was established in 1950 during the reorganization of China’s largest international trading firm, China National Chemicals Import & Export Corporation. Sinochem Group remains the largest chemical company in the country but has expanded its operations to include energy, real estate, agriculture and financial services.

Sinochem Group reported consolidated revenue of more than $77 billion dollars in 2014. It began serious development of its oil and gas business in 2003 and has since acquired rights to 39 blocks of oil and gas reserves in 11 countries. It reported production of more than 25 million barrels of oil, making it China’s fifth largest crude oil producer by volume. Sinochem Group owns more than 300 subsidies. Three subsidiaries, Sinochem International, Franshion Properties and Sinofert, are listed on the Shanghai Stock Exchange.

Yanchang Petroleum

Yanchang Petroleum traces its history to 1905 and the first oil enterprise established in China, the Yanchang Oil Plant. The company engages in oil and gas exploration and production and refining operations in locations around the world. It reported consolidated revenue of nearly $2.9 billion in 2014. Crude oil production amounted to more than 91.5 million barrels. Most of Yanchang Petroleum’s primary operations are organized under its subsidiary Yanchang Petroleum International Limited, which is listed on the Hong Kong Stock Exchange.

Here are the 5 Largest Chinese Insurance Companies

The Chinese insurance market has grown at a furious pace in recent years. Between 2000 and 2014, the industry grew about 1,200% in size as measured by written premiums. During this same period, most of the largest Chinese insurance companies listed shares on the Hong Kong Stock Exchange and other exchanges as part of an effort to reform the industry by reducing government control, increasing transparency, and exposing the companies to the demands of the market and shareholders. Today, the biggest insurance companies in China rank among the largest companies in the world in terms of market capitalization.

China Life Insurance Co., Ltd.

With a market capitalization of about $107 billion, China Life Insurance Co., Ltd. (NYSE: LFC) is the biggest insurance company in China and one of the top insurance companies in the world. China Life traces its roots to the founding of the People’s Republic of China in 1949. It operates life insurance and property and casualty insurance businesses, and it also offers asset management services and other financial services.

China Life maintains a substantial nationwide service network, with nearly 750,000 dedicated agents and more than 60,000 service outlets. The company’s customer base approaches a combined 200 million people in individual and group life insurance policies, long-term health insurance policies and annuities. China Life is listed on the Shanghai Stock Exchange, the Hong Kong Stock Exchange and the New York Stock Exchange.

Ping An of China

Ping An of China was founded in 1988 and held its initial public offering (IPO) in 2004. While the company began as a property and casualty insurance company, it has since expanded into the life insurance, banking, online financial services and wealth management businesses with the stated goal of becoming a comprehensive financial services provider. It has a market capitalization of about $90 billion.

Ping An employs more than 225,000 full-time employees and partners with more than 625,000 sales agents across China. The company counts more than 89 million customers across its business units. Ping An is listed on the Shanghai Stock Exchange and the Hong Kong Stock Exchange.

China Pacific Insurance

China Pacific Insurance Group is an integrated insurance provider offering property and casualty insurance, life insurance and reinsurance products, as well as asset management and investment services. The company counts more than 300,000 agents across its businesses and serves about 80 million customers across the country. China Pacific Insurance traces its roots to 1991. It was listed on the Shanghai Stock Exchange in 2007 and the Hong Kong Stock Exchange in 2009. It has a market capitalization of more than $33 billion.

People’s Insurance Company of China Group

People’s Insurance Company of China Group was established in 1949. Today, its subsidiaries count more than 300 million customers in property and casualty insurance, life insurance, health insurance, and real estate. Its most substantial subsidiary is PICC Property and Casualty Company, which sells a wide variety of non-life insurance products, including auto, homeowners, commercial property and agricultural policies. People’s Insurance Company of China Group owns approximately 69% of outstanding PICC Property and Casualty shares. People’s Insurance Company of China Group is listed on the Hong Kong Stock Exchange. It has a market capitalization of about $21 billion.

New China Life Insurance

New China Life Insurance Company was founded in 1996 and has quickly grown into a top-five company in the industry. While its primary business remains life insurance, the company also has growing business interests in the investment industry and the health care industry. New China Life Insurance counts more than 26 million customers, 175,000 agents and 1,600 business locations across the country. The company was listed on both the Hong Kong Stock Exchange and the Shanghai Stock Exchange in 2011. It has a market capitalization of more than $17 billion.

Best Tips – How To Buy Stock In Insurance Companies

Insurance companies offer products that most of us need and in doing so take on many of the risks that we don’t want. Insurance companies tend to be viewed as big, relatively boring financial institutions, but they are, in fact, in the business of protecting others from financial harm and risk management.

Historically, insurance companies were structured as mutual companies, owned by the policyholders and operated only for the benefit of policyholders. On the other hand, stock companies are owned by shareholders and they seek to maximize return to shareholders. In recent years, many mutual companies have converted into stock companies in a process called demutualization. Because mutual companies do not issue shares to the public, only stock companies can be invested in the stock market.

Insurance companies sell policies that promise to payout a benefit to the policyholder if a covered event occurs during the term of the policy. With life insurance, the covered event would be death of the insured. With homeowners insurance that might be a house fire, storm damage or theft.

In exchange for the insurance coverage, the policyholder pays the insurer premiums, which are invested to earn a profit for the company until they are needed to pay out claims

Investing in Insurance Companies
Insurance companies have unique circumstances that make their analysis different from other financial institutions such as banks or lenders.

All insurance companies have a set of future liabilities that they are contractually obliged to pay out given a qualifying event. As a result, they must invest premiums received conservatively in order to have a ready reserve of liquid assets on hand to pay out those claims. Insurance company portfolio managers utilize asset-liability management (ALM) by matching assets to liabilities; rather than the more familiar asset-only management that looks to maximize return while minimizing portfolio risk.

Insurance company portfolios are therefore largely made up of fixed-income securities like high-quality bonds issued by the U.S. government or AAA-rated bonds from large corporations.

Generally speaking, there are two general types of insurance companies outside the health sector: Life insurance and property and casualty insurance. Each has special considerations that investors should consider.

Life Insurance Companies
When evaluating life insurance companies, it is important to know that government regulation directs them to maintain an asset valuation reserve (AVR) as a cushion against substantial losses of portfolio value or investment income. Therefore, these companies tend to have less financial leverage at work than other kinds of financial institutions. This poses potential valuation problems since it implies that insurers value assets at market value but liabilities at book value.

Actuarial science has developed mortality tables that are very good at determining on average when life insurance claims will come due as policyholders pass away. The size of those liabilities are also known in advance because life insurance policies are issued with stated death benefits which do not adjust with inflation. Since both the amount and expected timing of liabilities are fairly well known, these companies seek to invest in portfolios that match the size and duration of those liabilities. The amount of excess return, or the amount by which assets exceed liabilities is referred to as the surplus. Maximizing surplus value and stability are the main objectives of life insurance portfolios. Because life insurance policies typically do not pay a benefit for many years, the investment portfolio of these companies tend to consist of high-quality bonds with maturities many years out.

Life insurance companies must also consider disintermediation risk when policyholders withdraw cash value (take loans against that cash value) from permanent policies causing increased demand for liquidity from the portfolio. This usually occurs during periods of high interest rates. At the same time, high interest rates cause the portfolios of insurers to decline since they are mainly invested in bonds, and the prices of bonds go down as interest rates go up. This combination of factors can lead to increased volatility of returns and greater risk during periods of high interest rates.

Some of the largest publicly listed life insurance companies are: MetLife (MET), Prudential (PRU), Genworth Financial (GNW), Lincoln National (LNC), AXA (AXAHY:OTC) and Aegon (AEG).

Investing in Property & Casualty Companies
Asset-liability management is crucial to property and casualty companies as well, but the risk exposures of these companies vary from life insurers in a number of areas. While the product offerings are more diverse – home, automobile, motorcycle, boat, liability, umbrella, flood etc. – the durations of these liabilities are much shorter: generally a year or less per policy. Therefore, the investment portfolios of these companies will tend to consist of high-quality bonds with maturities of a few months to a year.

Additionally, claims can take a long time to be resolved and paid out. The claims process can be contentious and possibly spend years in litigation before the claim is paid – if it is paid at all.

Many non-life policies also carry inflation risk, as the policies promise to fully replace the value of an item, even if that item is nominally more expensive in the future due to inflation. Taken together, both the timing and amount of liabilities are more uncertain than for life companies.

Property and casualty insurance companies also undergo an underwriting cycle or profitability cycle, which typically lasts 3-5 years. During period of intense business competition, prices on policies are reduced to retain business and capture market share (think of all the advertisements claiming to lower the cost of your car insurance). Frequently, prices of securities in the insurance company’s portfolio fall below sustainable levels and lead to losses as claims on policies are paid out. The company must then liquidate portfolio assets to supplement cash flow, and share prices may drop. Insurers are forced to raise the prices of policies and profitability begins to grow once again, opening the door for renewed competition. As a result, property casualty insurance companies will tend to invest in a portfolio of taxable bonds during the period of the cycle where losses occur and switch to non-taxable bonds such as municipal bonds during periods of positive profits.

Some of the largest property and casualty insurance companies listed on stock exchanges where investors can buy shares are: Allstate (ALL), Progressive (PGR), Berkshire Hathaway (which owns Geico and a number of other insurance companies), Travelers (TRV), and Zurich (ZURVY:OTC).

The Bottom Line
Knowing the special circumstances that insurance companies operate under helps in evaluating whether or not a listed insurance company is a good investment and whether the economic environment is conducive to profitability for these companies.

High interest rate environments can be detrimental to life insurance companies as they face disintermediation risk. Property and casualty insurance companies are subject to the ebbs and flows of the profitability cycle. Being able to recognize when the economics of these industries are changing might make for buy or sell signals accordingly. Also keeping in mind the duration and maturities of the bonds in the portfolios of different kinds of insurance companies can help determine how change in interest rates will effect each.

Insurance Premium

What is Insurance Premium

An insurance premium is the amount of money that an individual or business must pay for an insurance policy. The insurance premium is income for the insurance company, once it is earned, and also represents a liability in that the insurer must provide coverage for claims being made against the policy.

BREAKING DOWN Insurance Premium
The price of an insurance premium for a given insurance policy can vary and depends on a variety of factors. Among those factors are the type of insurance coverage, the likelihood of a claim being made, the area where the policyholder lives or operates a business, the behavior of the person or business being covered, and the amount of competition that the insurer faces. For example, the likelihood of a claim being made against a teenage driver living in an urban area may be higher or lower compared to a teenage driver in a suburban area. In general, the greater the risk associated with a policy, the more expensive the insurance policy will be.

Policyholders may choose from a number of options for paying their insurance premiums. Some insurers allow the policyholder to pay the insurance premium in installments, such as monthly or semi-annual payments, or may require the policyholder to pay the total amount before coverage starts.

Insurance premiums may increase after the policy period ends. The insurer may increase the premium if claims were made during the previous period, if the risk associated with offering a particular type of insurance increases, or if the cost of providing coverage increases.

Insurers use the insurance premium to cover the liabilities associated with the policies they underwrite. They may also invest the premium in order to generate higher returns and offset some of the costs of providing the insurance coverage, which can help an insurer keep prices competitive. Insurers will invest the premiums in assets with varying levels of liquidity and return, but they are required to maintain a certain level of liquidity. State insurance regulators set the amount of liquid assets required to ensure insurers can pay claims.

Actuaries, Artificial Intelligence and the Future of Insurance Premium Prices
Generally, insurance companies employ professionals known as actuaries to determine risk levels and premium prices for a given insurance policy. The emergence of sophisticated algorithms and artificial intelligence is fundamentally changing how insurance is priced and sold, and there is an active debate happening between those who say algorithms will replace human actuaries in the future and those who contend the increasing use of algorithms will require greater participation of human actuaries and send the profession into a “next level.”

Lawyer Salary

Salaries for lawyers starting out at firms have remained flat, with an annual pay of $160,000 continuing to be the top of the market, according to a new survey from the National Association for Law Placement.

Some 39 percent of the largest firms — those with 700 lawyers or more — reported paying that amount in the association’s 2015 law associates’ salary survey. This was up from last year, when only 27 percent of the big firms reported paying their new legal hires at the uppermost level.

But the percentage was still below 2009, when nearly two-thirds of the first-year salaries were at the top point of $160,000.

The reason is not that individual firms are paying less, said James G. Leipold, executive director of National Association for Law Placement, but “as more law firms have grown through acquisition and merger, the largest law firms are not as similar to one another as they used to be.”

Mr. Leipold added that there were many firms with more than 700 lawyers that have many smaller regional offices, many of which don’t pay the benchmark first-year salary of $160,000. As a result, he added, “a larger percentage of large law firm starting salaries fall below that mark.”

There are certainly exceptions, with some first-year associates making more than the $160,000 figure. But, for the most part, the ceiling seems to have been stuck at that amount since 2007, when some law firms began to increase starting salaries — a practice that soon began to wane as the economy turned down.

“The simple story is that $160,000 as a starting salary at large law firms is less prevalent than it was immediately prior to the recession,” Mr. Leipold explained. “At large law firms, starting salaries of $145,000 and $135,000, and even $110,000 are common in some markets, though $160,000 is still the dominant or modal salary in large markets.”

In the biggest legal markets — including Boston, Chicago, Los Angeles, New York and Washington — $160,000 is the most common salary at the largest firms that reported paying first years. Only about 60 percent of the largest firms with offices in Los Angeles and Washington said they paid the top amount now — a significant drop from 2009, when 90 percent of firms said they did so.

In New York, however, “the $160,000 starting salary is almost universal,” Mr. Leipold noted. About 85 percent of firms in the city with at least 250 lawyers are paying that amount; about 90 percent of firms with 700 or more lawyers paid first-year hires that amount.

Of course, a newly minted lawyer still can take home more than the top salary: Even first-year lawyers are eligible for annual bonuses that can be in the tens of thousands of dollars at elite firms.

The association said 556 law offices from across the country responded to the survey. Over all, the national median first-year salary at firms of any size was $135,000. That is a rise of $10,000 since 2014, but the association said that fewer smaller firms responded this year than in previous years.