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, according to the latest report by Brand Finance – the world’s leading brand valuation consultancy.
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.
Savio D’Souza, Valuation Director, Brand Finance commented:
“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.”
Shell retains top spot
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.
Last year’s ranking saw the new arrival of Saudi Aramco, following the top oil exporter’s recording-breaking IPO. Aramco is the second most valuable oil & gas brand, although its gap behind Shell has widened since it shed 20% of brand value to US$37.5 billion this year.
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 on road to recovery
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.
ADNOC’s strategic direction pays off
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.
Oil & gas’s first challenger brand – Neste
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.
Oceans apart – US brands taking different approach to European peers
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, Chevronis 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.
PETRONAS is sector’s strongest
Malaysia’s PETRONAS is the world’s strongest oil & gas brand, with a BSI score of 87.0 out of 100 and a corresponding AAA brand strength rating. While an NOC by definition, its global marketing strategy, including key strategic sponsorships, have grown international recognition of the brand. The sponsorship of the F1 Mercedes team this year paid dividends to the brand, as Lewis Hamilton secured yet another title for the team in 2020. After 5 years as CEO, Wan Zulkiflee departed PETRONAS in mid-2020, and has been succeeded by Tengku Muhammad Taufik. Mr. Taufik has already been recognised as a reputable leader in the industry, ranking 3rd among the top oil brand CEOs in the Brand Finance Brand Guardianship Index 2021.
Note to Editors
Every year, Brand Finance puts 5,000 of the biggest brands to the test, evaluating their strength and quantifying their value, and publishes nearly 100 reports, ranking brands across all sectors and countries. The world’s 50 most valuable oil & gas brands are included in the Brand Finance Oil & Gas 50 2021 report.
The full Brand Finance Global Oil & Gas 50 2021 ranking, additional insights, charts, more information about the methodology, as well as definitions of key terms are available in the Brand Finance Oil & Gas 50 2021 report.
Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Please see below for a full explanation of our methodology.
About Brand Finance
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.
Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes nearly 100 reports which rank brands across all sectors and countries.
Brand Finance is a regulated accountancy firm, leading the standardisation of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671, and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Definition of Brand
Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand value refers to the present value of earnings specifically related to brand reputation. Organisations own and control these earnings by owning trademark rights.
All brand valuation methodologies are essentially trying to identify this, although the approach and assumptions differ. As a result, published brand values can be different.
These differences are similar to the way equity analysts provide business valuations that are different to one another. The only way you find out the “real” value is by looking at what people really pay.
As a result, Brand Finance always incorporates a review of what users of brands actually pay for the use of brands in the form of brand royalty agreements, which are found in more or less every sector in the world.
This is known as the “Royalty Relief” methodology and is by far the most widely used approach for brand valuations since it is grounded in reality.
It is the basis for our public rankings but we always augment it with a real understanding of people’s perceptions and their effects on demand – from our database of market research on over 3000 brands in over 30 markets.
Brand Valuation Methodology
For our rankings, Brand Finance uses the simplest method possible to help readers understand, gain trust in, and actively use brand valuations.
Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668.
Our Brand Strength Index assessment, a balanced scorecard of brand-related measures, is also compliant with international standards (ISO 20671) and operates as a predictive tool of future brand value changes and a control panel to help business improving marketing.
We do this in the following four steps:
1. Brand Impact
We review what brands already pay in royalty agreements. This is augmented by an analysis of how brands impact profitability in the sector versus generic brands.
This results in a range of possible royalties that could be charged in the sector for brands (for example a range of 0% to 2% of revenue).
2. Brand Strength
We adjust the rate higher or lower for brands by analysing Brand Strength. We analyse brand strength by looking at three core pillars: “Investment” which are activities supporting the future strength of the brand; “Equity” which are real perceptions sourced from our original market research and other data partners; “Performance” which are brand-related measures of business results, such as market share.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+, in a format similar to a credit rating.
3. Brand Impact x Brand Strength
The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4. Brand Value Calculation
We determine brand-specific revenues as a proportion of parent company revenues attributable to the brand in question and forecast those revenues by analysing historic revenues, equity analyst forecasts, and economic growth rates.
We then apply the royalty rate to the forecast revenues to derive brand revenues and apply the relevant valuation assumptions to arrive at a discounted, post-tax present value which equals the brand value.
Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.
The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.