As oil & gas brands negotiate the fallout from the COVID-19 pandemic, the world’s top 50 most valuable oil & gas brands have lost 16% of brand value on average.
Oil & gas brands play a significant role in the global economy, both for fuelling lives today and determining the nature of energy in the future. For national oil companies (NOCs), economic contribution to national wealth is paramount to their mandate. To ensure this economic contribution is sustainable, NOCs must increasingly venture into new sources of energy for the world after oil.
Integrated international oil companies (IOCs), on the other hand, are guided by the will of their shareholders and by the threat of increased litigation. Particularly in Europe, the rise of ESG investing dictates that IOCs must act fast to retain and attract investors. Increasingly, both NOCs and IOCs are under pressure to reduce carbon footprints, boost sustainability, and move away from traditional oil.
Global dependence on oil is so ingrained that oil consumption only fell by 25% at the peak of COVID travel restrictions. Oil companies cannot simply hit the off switch; critical processes such as vaccine creation and distribution depend upon oil. But with rising global temperatures, humanity desperately needs a rapid, yet smooth transition to new energy forms. Oil companies are best placed to solve the problem, and to lead the transition to cleaner energy. Big oil brands have the expertise and resources to navigate the energy transition, and the Brand Finance Oil & Gas 50 ranking will reflect the brands which do so.
Savio D'Souza, Valuation Director, Brand Finance
Shell remains the world’s most valuable oil & gas brand, and despite an 11% dip in brand value to US$42.2 billion, has widened the gap ahead of second-ranked Saudi Aramco.
Shell investors felt the pinch in 2020 when dividends were cut for the first time since World War 2. While dividends are gradually being restored, the brand is reshaping its business for the future of energy. Shell remains one of the strongest oil & gas brands among consumers due to an extensive global network presence, centralized brand management, and a heritage for high quality fuels. Future brand value performance hinges on progress towards its ambition of becoming a net-zero emissions energy business.
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, customer familiarity, staff satisfaction, and corporate reputation. Alongside revenue forecasts, brand strength is a crucial driver of brand value.
While brand value has fallen, Aramco’s brand strength has remained stable. Despite the improvement in brand strength year-on-year, the Aramco brand is the weakest brand in the top 5, demonstrating that it is the financial might of Aramco which results in its high brand value. Other intangibles such as relationships, particularly with the Saudi Arabian government, play a greater role in performance.
BP faced a decline in brand value of 8% to US$21.4 billion, making it the least impacted of the top five global major oil brands. Although financial outlook dampened performance, the scales were balanced by a strengthening of the brand - its Brand Strength Index (BSI) score increasing from 71.3 out of 100 in 2020 to 74.1 out of 100 in 2021.
BP’s reputation has historically been dampened due to lingering sentiment about the Deepwater Horizon disaster. This year, BP has started to shift global perceptions via the refreshed strategy for a decade of delivery towards net zero ambitions. While industry experts have doubts about the ability of any company to achieve such ambitions, this is a bold step in the right direction towards a more sustainable future.
Total shed 22% in brand value year-on-year. However, our analysis found a boost in sentiment among the general public and investors. Last week, due to diverging policy over climate and subsidies, Total became the first oil major to depart the American Petroleum Institute. As part of Total’s commitment to sustainability, it is expanding its natural gas facilities. Despite security challenges, Total has pushed ahead with its US$20 billion investment in Mozambique, which is set to increase production capacity and facilitate Total’s future growth ambitions.
Ranked in tenth is Abu Dhabi National Oil Company (ADNOC). ADNOC has managed to successfully shelter its brand value during an incredibly challenging year for its industry, with only a 6% brand value loss to US$10.8 billion, making it the most resilient of all National Oil Companies (NOC) globally.
ADNOC’s transformation since 2016 has taken the brand from strength to strength. Under the astute leadership of Group CEO H.E. Dr. Sultan Ahmed Al Jaber, ADNOC has evolved into a trusted global player with one brand and one strategic vision at its core. It has attracted some of the world’s leading institutional investors as partners across its business and has raised more than $64bn through such transactions since the start of its transformation. Due to ADNOC’s competitive advantage in cost and carbon efficiency per barrel of oil produced, it is a likely contender to be “the last barrel standing” in the ongoing transition to a low carbon economy.
ADNOC is actively investing in diversifying its portfolio beyond raw commodity exports with recently announced efforts in hydrogen, ammonia and other value-add Downstream products – part of the brand’s longstanding commitment to future proofing its economic contributions to the UAE and maintaining a legacy of environmental stewardship. To date, the Group has invested in a number of measures to reduce its carbon footprint, notably through a significant expansion by 2030 of carbon, capture and storage (CCS) technology across its business.
ADNOC once again is set to raise the profile of Abu Dhabi and the GCC through the launch of the highly anticipated futures exchange for Murban crude.
Finnish brand Neste is the highest placed new entrant to the ranking in 43rd spot, with a brand value of US$2.2 billion. Neste is the world’s largest producer of renewable diesel and renewable jet fuel refined from waste and residues. Neste continues to challenge the status quo and is rolling out renewable solutions to the polymers and chemicals industries. Perhaps the first challenger brand to the oil & gas ranking, Neste has transformed from a national oil company to an integrated player, leading the path for circular solutions and innovation. Since “Neste Oil” became Neste in 2015, the company market cap has grown by over 800%, demonstrating the energy transition offers opportunity as well as challenge.
American oil & gas brands are taking a different view to their European peers about the pace of the energy transition. Like many NOCs, US energy companies project a solid future demand for oil, and therefore a long remaining lifespan of fossil fuel in the global economy. Under this perspective, executive management are focused on reducing costs and emissions per barrel produced.
Chevron’s low-carbon strategy remains focused on reducing emissions from operations, including by linking renewables to its operations, and investing further in carbon capture and storage – the brand recently announcing investment into carbon capture storage expert, Blue Planet Systems. In downstream, Chevron is leveraging its strong brand to expand its petrochemicals, lubricants, and additives business.
Chevron’s brand value fell by 11% this year to US$15.9 billion, compared to an average fall of 22% for US oil brands in the ranking. Production cuts induced by the oil price plunge meant that April 2020 saw the biggest one-month production cut since the Great Recession.
In 2015 when the Brand Finance Oil & Gas 50 ranking was first released, US brands represented 32% of the ranking’s total brand value, with 21 brands featuring in the top 50. Today, the US accounts for just 22% of total brand value, with 15 brands represented in the top 50.
Texas and Oklahoma-based hydrocarbon exploration brands are among those which no longer rank. As Joe Biden is expected to signal US intentions to re-join the Paris climate accord, the green agenda may become more prevalent for US oil brands in coming years. Brands which fail to adapt - by diversifying into new solutions or by expanding carbon capture - will increasingly be subject to operational, legal, and reputational risk to their brand and business value.