What do Chevron Corp., Shell and Norway's state-owned Statoil have in common?
They're all petroleum companies that announced deals with technology vendors in the past two weeks to develop online marketplaces where any company can buy supplies that these gas and oil companies use to run their businesses, from pencils and paper to engineering and construction services.
"This is another landgrab, a space race, where everyone wants to be first in this market," said Bruce Richardson, an analyst at AMR Research Inc. in Boston. He likened the news to similar announcements from General Motors Corp. and Ford Motor Co. on Nov. 2. "We're in the very early phases of hype. But I think the difference between this and the hula hoop is that the [online] exchanges will have staying power."
The theory is that leveraged buying will produce better prices for everyone and that companies will be able to find supplies, compare prices, track purchases and streamline ordering more easily.
But one of the problems with online trading exchanges that are built around any one big company is built-in bias. "Anybody that thinks these are independent exchanges is deluding themselves. Competitors won't do transactions over them," said AMR analyst Pierre Mitchell. Consequently, many of the online exchanges now being built and billed as industrywide networks "will collapse, basically, to private extranets," Mitchell said.
What differentiates the Petrocosm Marketplace, announced last week by San Francisco-based Chevron and Mountain View, Calif.-based Ariba Inc., is its unique equity structure, under which participants, including Chevron's competitors, can be granted equity in the exchange based on how much business they do over the network. Chevron, Ariba and Crosspoint Venture Partners in Woodside, Calif., are minority stakeholders in Petrocosm, which is scheduled to go live in the second quarter.
Statoil's global marketplace, announced the day before Petrocosm, is also pegged for a second-quarter launch. SAP AG is providing the software infrastructure.
Meanwhile, Shell is working with Commerce One Inc. in Walnut Creek, Calif., on yet another marketplace for the energy industry. Initially, Shell will have a majority stake in the joint venture. Commerce One and the joint venture staff will also have an equity stake.
Plans call for Commerce One to grant Shell 4.28 million shares of its stock in exchange for the right to receive shares in the new company prior to its initial public offering.
"Executives at big companies are determined to get involved in these exchanges - to create them or invest in them," said analyst Vernon Keenan at Keenan Vision Inc. in San Francisco. "But I think there will be general skepticism, especially among other buyers, that they're not going to be fair."
Julia King contributed to this report.