[SUPER RICH] ‘Black tears’ of oil tycoons

South Korea often proclaims to itself as “a country that does not produce oil” ― a sort of rallying cry to encourage itself to survive in a largely oil-based world order. Oil is necessity for improving one’s industries, and some people have become billionaires by taking over oil production, distribution and filtration.

The total assets of the current 85 oil billionaires and eight royal families in the oil business amount to $550 billion, much higher than Korea’s yearly budget.

But the oil industry is facing another change: the Organization of Petroleum Exporting Countries, fearing an energy paradigm shift toward shale gas, has increased supply and lowered petroleum prices, showing that OPEC is willing to continue its oil-based economic activities even at the cost of dwindling returns.

Some of the biggest victims of the oil price war are the oil tycoons themselves, as many who have invested heavily are losing their assets. Meanwhile, others have taken the occasion as an opportunity to recoup. Here we take a look at how different oil billionaires have been faring.

Middle East

Oil riches in the Middle East are mainly owned by royal families, with seven members of royal families from six countries controlling nearly half (45 percent) of the world’s oil production.

Although the price of oil from the Middle East has fallen due to the rising production of shale gas in the U.S., the royal families have decided that it is more important to continuously expand and keep their market share by matching the price of shale gas rather than to raise oil prices.

King Abdullah bin Abdulaziz of Saudi Arabia is one of the leading figures of the Middle Eastern oil industry with about $17 billion in assets.

U.S.

Low oil prices have affected many oil tycoons in America, which has the most oil billionaires aside from the royal families. Their collective assets, which until recently were worth $202.6 billion, have lost 10 percent of their value.

The assets of Charles and David Koch of Koch Industries, worth $49.4 billion last year, have shrunk to $41.5 billion due to low oil prices.

Harold Hamm, president of Continental Resources, has been significantly affected by the low oil prices. His net assets were worth $22.6 billion last June but have shrunk to $8.5 billion.

Russia

Russia produces 13.8 percent of the world’s oil, and with extensive assistance from the government, its oil barons are commonly referred to as “Putin’s friends.”

Victor Vekselberg, who owns TNK-BP in Russia and Ukraine, sold the company to Russian national oil company Rosneft, gaining $14.4 billion in the process. Roman Abramovich, after buying oil company Sibneft, has about $9.4 billion in assets.

However, the ongoing low oil prices have also been a concern for Russia’s oil rich, as oil and natural gas accounts for 68 percent of total national exports. Some may already be feeling the impact. Mikhail Fridman, chairman of Alfa Group, has seen his assets drop $3.8 billion since last March, from $17.6 billion to $13.8 billion.


India

In India, the assets of the oil rich have decreased dramatically compared to when oil prices were high. India’s oil rich used to be worth $61.6 billion, but were worth $35.8 billion as of this month. Mukesh Dhirubhai Ambani, chairman of Reliance Industries, has seen a 33 percent decrease in his properties, now worth $19.7 billion.

China

Meanwhile, Chinese billionaires have experienced a different situation. Xi Jinping’s government has been targeting former oil rich associated with the China National Petroleum Corporation for corruption, and private oil companies have taken their place as the emerging oil tycoons.

The total value of the assets of the new oil rich is $21.4 billion, a 279 percent increase. According to Hurun Report, Sit Kwong Lam, chairman of Brightoil Petrolium, has $2.9 billion in assets.

China’s private oil rich have continued to profit due to its status as the leading oil importer. China has viewed the falling oil prices as an opportunity to stock up on oil reserves and increase its imports, reaching an average of 7 million barrels per day for the first time. It has been using the oil reserves to help local businesses.

According to BP, an average of 91.3 million barrels per day were consumed worldwide in 2014. Considering the drop in oil prices, there were about $600 billion in losses ― the equivalent of the annual GDP of Sweden. Should the price war continue, there could be both positive and negative effects for the Korean superrich as well, and it is therefore important to track the situation of the oil billionaires today.

By Korea Herald Special Investigative Team
(sangyj@heraldcorp.com)

Kwon Nam-keun/Hong Seung-wan/Sung Yeon-jin/Bae Ji-sook/Yoon Hyun-jong/Min Sang-seek/Kim Hyun-il/Sang Youn-joo