Ebook: The State and the International Oil Market: Competition and the Changing Ownership of Crude Oil Assets

Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Chapter 1 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Chapter 2 REDRAWING THE BOUNDARIES BETWEEN STATE AND COMPANY . . . 3 Chapter 3 STATE PARTICIPATION IN THE ECONOMY . . . . . . . . . . . . . . . . . . . . . 25 Chapter 4 INTERNATIONAL ECONOMIC INSTABILITY . . . . . . . . . . . . . . . . . . . . . 49 Chapter 5 THE FAILURE OF OPEC TO SECURE ECONOMIC RENTS . . . . . . . . . . 67 Chapter 6 TURNING BLACK GOLD INTO DEVELOPMENT . . . . . . . . . . . . . . . . . . 81 Chapter 7 NATIONAL OIL COMPANIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Chapter 8 AMBITIOUS CONSOLIDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 Chapter 9 STRATEGIC CONSOLIDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 PREFACE This book has been kicking around my desk for quite some time. On and off I returned to my work on the role of the state in the economy and the international oil market, but for a long time I was not satisfied with the shape it was in. I understand now that I needed the insights developed over the past couple of years on the role of the state, regulation, liberalization, privatization, and the recent events in the international oil industry to bring all my ideas together in a more coherent format. It was the events that followed the Asian financial crisis that drew me back to finish writing this book. The early beginnings of this book were developed at the Institute of International Affairs, Chatham I-louse, in London, where I was a research fellow with the Energy and Environment Programme in 1992 and 1993. At the Colorado School of Mines, I had the opportunity to test my ideas in a graduate class, and continue the research.

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The dominant position of the oil-producing countries is being challenged in the international oil market by the large international oil companies. The large private international oil companies, already comparable in size to the largest of the NOCs, have managed to make significant advances in efficiency in the field of organization, finance, human capital and technology. Their ability to compete has improved dramatically since 1973. Moreover, the availability of new opportunities for exploration in the former Soviet Union has allowed the private international oil companies to expand their activities and lure capital away from the OPEC countries. As a result, the average cost of a barrel of oil produced by the private companies has decreased substantially since the 1970s. At the same time, costs for the NOCs have increased due to organizational inefficiencies. The difference between `low-cost-extraction' oil and `high-cost-extraction' oil, the critical element in the competitive advantage of the OPEC countries, has been significantly narrowed. Unless the oil-producing countries acknowledge the root of their problems, they will end up surrendering their remaining competitive advantage by clinging to an obsolete oil regime.

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The dominant position of the oil-producing countries is being challenged in the international oil market by the large international oil companies. The large private international oil companies, already comparable in size to the largest of the NOCs, have managed to make significant advances in efficiency in the field of organization, finance, human capital and technology. Their ability to compete has improved dramatically since 1973. Moreover, the availability of new opportunities for exploration in the former Soviet Union has allowed the private international oil companies to expand their activities and lure capital away from the OPEC countries. As a result, the average cost of a barrel of oil produced by the private companies has decreased substantially since the 1970s. At the same time, costs for the NOCs have increased due to organizational inefficiencies. The difference between `low-cost-extraction' oil and `high-cost-extraction' oil, the critical element in the competitive advantage of the OPEC countries, has been significantly narrowed. Unless the oil-producing countries acknowledge the root of their problems, they will end up surrendering their remaining competitive advantage by clinging to an obsolete oil regime.
Content:
Front Matter....Pages i-vii
Introduction....Pages 1-2
Redrawing the Boundaries Between State and Company....Pages 3-24
State Participation in the Economy....Pages 25-48
International Economic Instability....Pages 49-66
The Failure of OPEC to Secure Economic Rents....Pages 67-80
Turning Black Gold into Development....Pages 81-96
National Oil Companies....Pages 97-126
Ambitious Consolidation....Pages 127-150
Strategic Consolidation....Pages 151-154
Back Matter....Pages 155-170

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The dominant position of the oil-producing countries is being challenged in the international oil market by the large international oil companies. The large private international oil companies, already comparable in size to the largest of the NOCs, have managed to make significant advances in efficiency in the field of organization, finance, human capital and technology. Their ability to compete has improved dramatically since 1973. Moreover, the availability of new opportunities for exploration in the former Soviet Union has allowed the private international oil companies to expand their activities and lure capital away from the OPEC countries. As a result, the average cost of a barrel of oil produced by the private companies has decreased substantially since the 1970s. At the same time, costs for the NOCs have increased due to organizational inefficiencies. The difference between `low-cost-extraction' oil and `high-cost-extraction' oil, the critical element in the competitive advantage of the OPEC countries, has been significantly narrowed. Unless the oil-producing countries acknowledge the root of their problems, they will end up surrendering their remaining competitive advantage by clinging to an obsolete oil regime.
Content:
Front Matter....Pages i-vii
Introduction....Pages 1-2
Redrawing the Boundaries Between State and Company....Pages 3-24
State Participation in the Economy....Pages 25-48
International Economic Instability....Pages 49-66
The Failure of OPEC to Secure Economic Rents....Pages 67-80
Turning Black Gold into Development....Pages 81-96
National Oil Companies....Pages 97-126
Ambitious Consolidation....Pages 127-150
Strategic Consolidation....Pages 151-154
Back Matter....Pages 155-170
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