Major Oil Exporters Research Articles

Oil & Iran's Nuclear Programme

For a country with supposedly the third largest proven crude oil reserves in the world and the fifth largest oil exporter, the prospect of ceasing to be a major oil exporter by 2015 might seem like a nightmare scenario. Yet, already Iran is looking at the future of its oil industry with mounting trepidation. In the face of steadily declining production capabilities of its major onshore oilfields, deteriorating well reservoirs from past over-production, fast-rising domestic consumption and shortage of reserves and investment funds, Iran is under mounting pressure to remedy the situation if it is to avoid being relegated to the ranks of small oil exporters by 2015.

Russia's evolving energy policy for its eastern regions, and implications for oil and gas cooperation between Russia and China

Cooperation between Russia and China began in the early 1950s when the Soviet Union provided China with the technology and skills required to develop a modern oil industry. This assistance was withdrawn in 1958 as Sino-Russian relations deteriorated. During the following decades, each country developed its oil and gas industries independently of each other. Russia became a major exporter of natural gas to Europe, whilst China became a significant exporter of oil, mainly to East Asia. This situation changed in the early 1990s for two reasons. First, the collapse of the Soviet Union triggered a transformation of policies and incentives within the newly independent states, including within the Russian Federation. Second, China itself was becoming a net importer of oil and was starting to understand the potential benefits of increasing the use of natural gas for its energy supply. By the mid-1990s, government agencies and energy companies in both Russia and China had identified that an undeniable logic existed for the construction of major oil and gas export pipelines from Russia to China.1 Such projects appeared to address a wide range of economic, commercial, energy and diplomatic priorities for both nations, not least because other forms of economic interaction were progressing only very slowly at that time.2 By the late 1990s, considerable optimism existed that decisions were imminent on a number of important projects, especially in relation to the construction of pipelines to bring oil and natural gas from Russia to China.

Environmental Degradation of Russian Coastal Regions: Exploring the Gulf of Finland

An American geographer and Russian ecologist discuss current and prospective environmental hazards precipitated by large-scale infrastructure projects on Russia's southern coast of the Gulf of Finland. The region, investigated by both authors during the course of regular field research from 1999 to 2009, is one of the best environmentally preserved coastlines of the Baltic Sea with abundant potential greenfield sites, largely due to its closed-border-zone status during the Soviet period. A favorable location for trade also places the region under intense development pressure. The authors devote particular attention to two major developments, a multifunctional port complex (which inter alia serves as a major pipeline terminus and oil export port) and expansion of an existing nuclear power plant. Based on extensive personal observations and government documents, they analyze the emerging environmental threat posed by these initiatives as well as the challenging political environment that discourages public participation and local involvement in spatial planning.

Oil Funds: Perils and Opportunities

Soaring oil prices since the early 2000s has led to a historic transformation of wealth from consuming regions to major oil exporters. In recent years many of these exporters have set up oil funds to utilize their massive and growing oil revenues. These funds are divided into two categories – stabilization and saving funds. Their large investments in Western markets have raised concern that they might be driven by political and strategic interests rather than commercial concerns. This study examines oil funds in the Persian Gulf. It discusses US and European proposals to regulate oil fund investments and argue against excessive regulation.

Today Versus tomorrow: The Sensitivity of the Non-Oil Current Account Balance to Permanent and Current Income

This paper applies the Permanent Income Model to the non-oil current accounts of the major oil exporters to assess the extent to which national consumption decisions in these countries are made on the basis of permanent versus current income. A test of whether the return on oil wealth and oil balance coefficients sum to unity is accepted for all specifications that adjust the return on wealth for future population changes. For oil-exporting countries outside Africa, around half of the fluctuations in the private sector non-oil balance are driven by considerations of changes in permanent income (the return on oil wealth) rather than current income. By contrast, for the public sector and African countries permanent income has little or no effect.

Sovereign wealth funds: dangers and opportunities

Soaring oil prices since the early 2000s have led to a historic transformation of wealth from consuming regions to major oil exporters. In recent years many of these exporters have set up oil funds to utilize their massive and growing oil revenues. These funds are divided into two categories—stabilizing and saving. Their large investments in western markets have raised concerns that they might be driven by political and strategic interests rather than commercial ones. This article examines oil funds in the Persian Gulf, Norway and Russia. It discusses US and European proposals to regulate oil funds' investments. The article examines the International Monetary Fund's efforts to forge a consensus on a ‘code of conduct’ that would guide the relationship between oil funds and the recipient markets. The analysis argues against excessive regulation.

Iran Standoff: Repercussions for the Global Oil Market

The pressures on Iran to roll back its uranium enrichment programme have increased with the UN Security Council imposing harsher sanctions and Washington indicating that it is even ready to carry out military strikes on Iran's nuclear facilities. The Iranian leadership, on the other hand, continues to claim that its nuclear programme is peaceful and is essential for producing electricity and helping economic development to meet the needs of a growing population. Iran has threatened that, if attacked, it would retaliate by cutting off its oil exports and even disrupt shipping in the crucial Strait of Hormuz through which most of West Asian oil is transported. Given that Iran is an important producer of energy resources, this stand-off between Iran and the West has raised concerns that it could be a prelude to war, similar to the events that unfolded in Iraq in 2003. This article looks at the potential impact on the international oil market, and specifically on India, if oil supplies are terminated from a major oil exporter. It argues that although disruption of supplies from Iran will not have a major impact on global oil supplies per se, given that Iranian exports comprise only 2.5 million barrels per day, nonetheless the speculative impact on prices could be devastating.

Major oil exporters may profit rather than lose, in a carbon-constrained world

The Organization of Petroleum Exporting Countries (OPEC) claims compensation for losses in expected oil export revenues due to CO 2 mitigation measures in developing countries. These losses are expected for two primary reasons: a reduction in the consumption of oil in importing countries and a reduction in the producer price of oil (taxation in an importing country implies a transfer of rents from producers to consumers). So far, most studies have focused on these two mechanisms and corroborated that revenue losses for OPEC are to be expected. However, there are also mechanisms that may be expected to raise the price of oil products. In a cost-effective regime for dealing with climate change, i.e., a regime in which all or most countries participate and in which the same carbon price is applied on all carbon-emitting activities, the cost of using unconventional oil, or synthetic diesel from coal, will increase even more than the cost of using conventional oil. Given that reserves of conventional oil are expected to dwindle over time, heavy oils and coal to liquids might set the long-run price for liquid fuels, which means that the price of oil would increase beyond the carbon fee; i.e., the rent on conventional oil would increase. We use an energy-economic optimization model to analyze these three mechanisms. We find that the net present value of OPEC revenue from conventional oil increases slightly (at most by 4 percent) with a global CO 2 restriction regime. We also consider conditions under which this result does not hold.

Russia and the United States: No Longer Rivals, Not Yet Partners

At the start of the twentieth century, consumer oil supplies were almost entirely controlled by Russia and the United States. Today, the market is much less monopolistic: there are major oil export centers in the Middle East, North and West Africa, South America, and the North Sea. But Russia remains a leading oil supplier to the global market. In 2006, it became the world leader in deliveries, surpassing Saudi Arabia. The United States, on the other hand, has, over the past century, become the world's largest oil importer. Half of the oil used in the United States is brought in from other countries.Despite the changes that have taken place, the former rivals have not become strategic partners. In looking for alternatives to Persian Gulf oil supplies, the United States is inclined to West Africa. Seeking to reduce its dependence on the European market, Russia is increasing its cooperation with the countries of the Asia-Pacific region.Although they need each other, Russia and the United States are nonetheless moving in opposite directions. This is regrettable, particularly if you consider that the world is on the threshold of creating a global natural gas market.Beginning of the Twentieth Century: The Rise and Fall of Baku OilFor Russia, the beginning of the twentieth century was marked by the active development of the Baku oil industry. In 1901 the area produced 220,000 barrels per day (bpd), more than half of the world's output. As in the United States, the main role in the development of the Russian oil production sector was played by private capital.However, in the United States this capital came from within the country. The founder of the famous Standard Oil Trust was John Davison Rockefeller, the son of a doctor from New York. Investors in Russian oil production were not only domestic companies (the Nobel Brothers Petroleum Company and the Russian General Oil Corporation) but also French (the Rothschilds) and later Anglo-Dutch (Royal Dutch/Shell).The 1917 revolution and subsequent nationalization changed the direction of development of the Russian oil industry.For American and European companies, the 1920s and 1930s were a period of active international expansion. In 1928 the managers of Royal Dutch/Shell, Standard Oil of New Jersey (the future Exxon), and the Anglo-Persian Oil Company (the future BP) reached an agreement on joint measures to explore and develop deposits in the world's main oil-producing regions. They were later joined by Standard Oil of California (the future Chevron), Standard Oil of New York (the future Mobil), Texas Company (the future Texaco), and Gulf Oil. The informal association came to be called the Sisters. The consortium's coordinated actions allowed it to monopolize oil production and supply on the world markets for several decades.At the same time, the Soviet Union was making efforts to restore production-which had decreased considerably because of the civil war and the nationalization of the oil industry-in the Baku region. This was achieved only on the eve of World War II. However, the successes were undermined by the striving of Hitler's Germany to obtain control over the Baku oil fields. Production capacity had to be evacuated to the central regions of the country, and as a result, Baku's oil production once again fell to 1901 levels.The 1950s and 1960s: The USSR as the New Player on the World MarketThe postwar years were marked by the increasing influence of the oil-producing states on the development of the global oil industry. The understanding that Enrico Mattei, head of the Italian concern ENI, reached with the Iranian authorities played an important role in this development. Attempting to break the monopoly of the Seven Sisters, offered new, more profitable cooperation terms to the host side. For the first time, in 1957, income was split between the investor (ENI) and the host country (Iran) in a 25:75 ratio (the Mattei Formula). …

Resource Wealth and the Risk of Civil War Onset: Results from a New Dataset of Natural Resource Rents, 1970—1999

The existing literature identifies natural resource wealth as a major determinant of civil war. The dominant causal link is that resources provide finance and motive (the “looting rebels” model). Others see natural resources as causing “political Dutch disease,” which in turn weakens state capacity (the “state capacity” model). In the looting rebels model, resource wealth first increases, but then decreases the risk for civil war as very large wealth enables governments to constrain rebels, whereas in the state capacity model, large resource wealth is unambiguously related to higher risk of war. This research note uses a new dataset on natural resource rents that are disaggregated as mineral and energy rents for addressing the resources-conflict relationship. We find that neither a dummy variable for major oil exporters nor our resource rents variables predict civil war onset with a 1000-battle-death threshold coded by Fearon and Laitin (2003) in the period after 1970 for which rents data are available. However, using a lower threshold of 25 battle deaths, we find that energy wealth, but not mineral wealth, increases the risk for civil war onset. We find no evidence for a nonlinear relationship between either type of resources and civil war onset. The results tentatively support theories built around state capacity models and provide evidence against the looting rebels model of civil war onset.

Oil Shocks and External Balances

This paper studies the effects of demand and supply shocks in the global crude oil market on several measures of countries' external balance, including the oil and non-oil trade balances, the current account, and changes in net foreign assets (NFA) during 1975-2004. We explicitly take a global perspective. In addition to the U.S., the Euro area and Japan, we consider a number of country groups including oil exporters and middle-income oil-importing economies. We find that the effect of oil shocks on the merchandise trade balance and the current account, which depending on the source of the shock can be large, depends critically on the response of the nonoil trade balance, and differs systematically between the U.S. and other oil importing countries. Using the Lane-Milesi-Ferretti NFA data set, we document the presence of large and systematic (if not always statistically significant) valuation effects in response to oil shocks, not only for the U.S., but also for other oil-importing economies and for oil exporters. Our estimates suggest that increased international financial integration will tend to cushion the effect of oil shocks on NFA positions for major oil exporters and the U.S., but may amplify it for other oil importers.

Iran's Economic Policy Dilemma

IN 1979, THE ISLAMIC REPUBLIC OF IRAN (IRI) inherited an economy that was heavily dependent on oil with a small and inefficient manufacturing sector. An eight-year war with Iraq, an influx of refugees, rapid population growth, US economic sanctions and politically expedient policies have resulted in the economic conditions of today, conditions under which the IRI has little room for manoeuvre. The medium- and long-term policies that are called for are obvious yet politically difficult to implement.This article provides a brief overview of the Islamic Republic's economic performance since the revolution of 1979, describes its policy record, and addresses the economic policy dilemma at hand.ECONOMIC PERFORMANCEIn 1988, Iran's real gross domestic product (GDP) was about what it was in 1977, and given population growth of about 60 percent, per capita real incomes had fallen by roughly 40 percent. Recently, GDP growth has been more satisfactory, at an average annual rate of 6.7 percent for 1990-1995 (although unbalanced and with heavy external financing); 3.8 percent for 1995-2000; and more recently, after adopting some reforms, a more balanced 5.8 percent on average for 2000-2003. During 2002-2003, overall growth reached 6.8 percent even though the oil sector contracted, and 6.5 percent growth is projected for 2003-2004. Yet even after these recent successes, real per capita GDP in 2000 was some 30 percent below the levels of the mid-1970s(1) and 20 percent below those levels in 2003. These figures suggest subpar economic performance and rapid population growth over the long haul, although with significant improvement in recent years.Iran's overall export growth has also been less than stellar since the revolution. Total exports in current dollars declined at an annual rate of 2.5 percent, with fuel oil exports--on which Iran depends heavily--declining at an annual rate of 4.3 percent. (Non-fuel exports increased at an annual rate of 10.9 percent.) Petroleum exports declined for most major oil exporters over the same period. But in the case of Iran, two internal developments further exacerbated the decline in oil export revenues: a decline in oil output (and capacity) and a rapid increase in domestic petroleum consumption. The decline in production capacity was due largely to investment shortfalls in the oil sector. The increase in domestic consumption was due to high population growth and one of the world's highest petroleum product price subsidies.Although the economy underperformed and total exports did not fare well, Iran did not resort to significant external borrowing until 1988, after the Iran-Iraq war. Between 1988 and 1993, Iran's external debt exploded from $5.8 billion to $28.5 billion (all figures in US dollars) because of the rapid increase in imports (to meet pent-up demand in the aftermath of the war) and resulted in large current account deficits. Unfortunately, the increased external borrowing did not finance productive investments and Iran received little long-term benefit from the external debt it incurred. This period was followed by several years of current account surpluses because of lower imports. These current account surpluses reduced the stock of external debt to around $7.2 billion 2002.(2) At the same time, gross official reserves increased from $5.3 billion in 1997 to an estimated $21.8 billion in 2002. Iran's debt/GDP ratio stood at 6.3 percent in 2001; its ratio of debt to exports was 30.4 percent; and its debt (excluding short-term debt) service ratio was 6.3 percent.(3) These are low figures by any standard and represent a significant accomplishment relative to most other developing countries.In the social arena, Iran has enjoyed much more success since the revolution: the average Iranian's life expectancy has risen steadily; infant mortality rates have fallen; access to safe water, sanitation and health care have shown significant improvement; the number of physicians, dentists and nurses per person have increased; and immunization rates have risen. …

Russia's oil potential: prospects and implications

AbstractSince the late 1990s, Russia's oil production has experienced a steady resurgence. As a result, Moscow has regained its status as a major oil producer, exporter and crucial player in global energy markets. This paper argues that this rising Russian role should neither be overestimated nor underestimated. It examines some of the main characteristics of the country's oil industry, notably the investment climate, production‐sharing agreement regime and pipeline capacity.Russia's rising production is likely to enhance global energy security. Moscow and other major oil producers share a similar goal — stability of the oil market and international economy. Today's energy market should not be analysed in zero‐sum terms. Major oil producers coordinate their policy with each other and with major consumers.

Geo-historical Trajectories of Democratic Transition: The Case of Nigeria

There has been a long-term, halting diffusion of the liberal democratic state. The literature on democratization, however, tends to underplay issues of geo-historical context. This paper addresses the relationship between geo-historical context and democratization through a case study of Nigeria. Key contextual factors of transition discussed include: international pressure for democratization, geo-political dynamics of pro-democracy coalitions, and local and trans-local political economic relationships. Nigeria under the military governments of Babangida and Abacha (1985–1998) was in a perpetual half-hearted state of transition to democracy. The country's status as a major oil exporter allowed it relative immunity from international pressure for democratization. Beyond repression and neo-patrimonialism, both governments deployed a distinctly spatial resistance strategy, that of state creation. The generals tried to shift attention away from regime failures and excesses, notably the illegitimacy of military rule and economic decline. Mobilization for state creation served to divide opposition to military government because it focused attention at the local scale, as new state movements competed for access to centrally controlled resources and political recognition of their ethno-regional group(s). This transition period produced several legacies for Nigeria's Fourth Republic (1999-). These include: a dysfunctional national state apparatus; problems of national disunity; and a stagnant economy. These legacies of transition present major obstacles to national development and the consolidation of a liberal democratic state. The Nigerian case points to a broader need for an understanding of geo-historical context in assessing prospects for the spread of democracy.

SUPPLY AND DEMAND OF LIGHT NAPHTHA AS POTENTIAL PETROCHEMICAL FEEDSTOCK IN SAUDI ARABIA

ABSTRACT Saudi Arabia is a major crude oil producer and exporter. Additionally, with the completion of its master gas gathering and treatment system petrochemical industries became the Kingdom's second major industrial sector. Currently, the Saudi petrochemical industry depends mainly on (C1) methane and (C2) ethane components of associated gas (AG) and natural gas (NG) as feedstocks. A variety of basic petrochemicals are now being produced principally by plants of the Saudi Basic Industries Corporation (SABIC). There is a necessity of enhancing the use of various under-utilized hydrocarbon resources. At present, one of the favored under-utilized resources and potential candidates for upgrading is light naphtha (LN). Because LN has the advantage of producing a more diverse petrochemical product portfolio than C1 and C2 components, it is expected that LN will assume an increasing importance as feedstock in the future development of petrochemical industries in Saudi Arabia. However, industrial opportunities for economies of large-scale production of petrochemicals based on LN might not be favored. Saudi Arabia's chemical and petrochemical industrial sector has not yet been fully developed, and its production lines are not enough diversified to benefit from LN. The development and expansion of Saudi petrochemical industries usually follows the international trend in this sector, and benefits from its technological achievements. Worldwide global shift in the use of feedstock in this industrial sector will be reflected in the Saudi petrochemical industries. As the world trend is to maximize the utilization of under-utilized petroleum resources, one would expect optimization of LN utilization in Saudi Arabia in the near future.

The Magical State: Nature, Money, and Modernity in Venezuela

In 1935, after the death of dictator General Juan Vicente Gomez, Venezuela consolidated its position as the world's major oil exporter, establishing South America's longest-lasting democratic regime. Endowed with the power of state oil wealth, successive presidents appeared as transcendent figures who could magically transform Venezuela into a modern nation. During the 1974-78 oil boom, dazzling development projects promised to effect this transformation, yet now the state must struggle to appease its foreign creditors, counter a declining economy, and contain a discontented citizenry. In critical dialogue with contemporary social theory, this text examines key transformations in Venezuela's polity, culture and economy, recasting theories of development for other postcolonial nations.

The International Energy Workshop: Results of the 1997 Poll

The International Energy Workshop consists of a network of analysts from across the world concerned with international energy issues. Since 1981, the IEW has been organising an annual poll of projections of crude oil prices, economic growth, primary energy consumption and production, the energy trade and, beginning in the early 1990s, energy‐related carbon emissions. Submitted projections are for 1990–2020 in ten‐year steps; recently, 2050 and 2100 have been added, to cater for climate change scenarios. The IEW poll encourages the submission of responses for five world regions.This paper presents a summary of findings in the 1997 poll. Highlights include the following.The poll medians for 1997 suggest a crude oil price, in 1990 purchasing power, of $20/b in 2000, $27/b in 2010 and $28/b in 2020. Unlike for 2000 and 2010, the 2020 figure diverges considerably from that of the 1996 poll, which registered $39/b.Eastern Europe and the former Soviet Union are not expected to be major global oil exporters until 2010 at least, while China will become a net importer in 2000. OPEC will meet about half global demand by 2020.World primary energy consumption is expected to increase from 8,500 mtoe in 1990 to 13,000 mtoe in 2020. In this period, oil will lose almost seven percentage points of market share, while natural gas will almost double its absolute contribution. OPEC’s natural gas exports are projected to rise from 55 mtoe in 1990 to 300 mtoe in 2020.Finally, the paper compares different projections for decarbonisation, that is, the decline rates of the carbon intensity of GDP and of primary energy supply. It notes that, according to business‐as‐usual projections, the OECD is way off target in meeting the emissions‐reductions goals of the United Nations Framework Convention on Climate Change.

Book Review: Naive Newcomer or Shrewd Salesman? Norway — A Major Oil and Gas Exporter

Book Review: Naive Newcomer or Shrewd Salesman? Norway — A Major Oil and Gas Exporter

ASEAN Oil Movements and Factors Affecting Intra-ASEAN Oil Trade

This article examines the patterns of intra-ASEAN oil trade observed across countries and across time and attempts to explain the factors affecting them. A brief account of the size and direction of ASEAN trade and the role of oil in intra-ASEAN trade are also discussed. Geographical proximity along with the higher regional growth rates of both oil production and consumption, mismatch between domestic refinery yield and product demand, a significant decline in oil demand in major ASEAN oil export destinations, and a weakening role of international oil companies, refinery expansion, and refinery technology were observed to be the major factors affecting intra-ASEAN oil trade.

Present and future position of palm and palm kernel oils in world supply and trade

AbstractThe major production of palm oil has shifted from Nigeria to Malaysia following the program of encouragement instituted by the Malaysian government in the 1950's. Since then oil palm developments have risen dramatically to an estimated 6.6 million tons of palm and palm kernel oils in 1984. This is expected to expand to over 20 million tons in the year 2000. Before that time Indonesia will also become a major producer of palm oil. Palm and palm kernel oils are expected to become the major world fat and oil export, reaching 44% of world totals by 2000.