non-OPEC Countries Research Articles

Oil supply and oil price determination among OPEC and non-OPEC countries: Bayesian Granger network analysis

Oil supply and oil price determination among OPEC and non-OPEC countries: Bayesian Granger network analysis

Comparative Study of Exchange Traded Energy Products Worldwide and Potential Areas in India

The globalization of trade in Indian economy and relatively free movement of financial assets, risk management through derivatives products has become a necessity in India. Until the 1970s, the price of oil was relatively stable with production largely controlled by the biggest oil companies. The 1970s transformed the industry forever. Two oil price shocks meant that price volatility became a fundamental feature of the market, short-term physical markets rapidly evolved, and the need to hedge emerged. India is one of the non-OPEC countries much dependent on its imports to fulfill the domestic consumption demand as it has a much lower level of production. India is a developing country and the requirement for the oil as a primary energy constituent from the industries in the country is at its peak. By systematically examining and analyzing both information collected through this research in major countries with key figures of the oil prices in trading exchange, and a wide range of information that is in the public domain, this paper foresees trends in exchange traded energy products, prices, and presents actions that India should initiate.

Who Are the Innovators in the Upstream Oil and Gas Industry? Highlights from the Second SPE Global Innovation Survey

Oil and gas have been mainstays of the world’s energy supply for much of the past century and will quite likely continue to play an important role in the global energy mix for many years to come. Despite the steady demand for its products and services, however, the industry that finds and brings these energy resources to market is undergoing significant changes on several fronts. First, it is widely understood that the sector materially contributes to the planet’s overall greenhouse gas emissions, but it is working diligently to reduce its carbon footprint. Second, with much of the world’s “easy oil” already consumed, upstream oil and gas companies will have to use increasingly sophisticated technologies to find and produce tomorrow’s hydrocarbons. Future oil and gas resources—especially in non-OPEC countries—will tend to be deeper, harder to find, and in environments that are significantly more difficult to access than they used to be. Third, policymakers and the public have steadily increased expectations for oil and gas companies with regards to environmental stewardship, safety, and human welfare. In the face of these kinds of challenges, technology will clearly play a pivotal role in the success or failure of oil and gas firms in the future. As a step toward improving how the upstream oil and gas sector develops and deploys new technologies, the first SPE Global Innovation Survey (SPE 166084, SPE-1212-0062-JPT) was put together in 2012 to shed light on several different aspects of how the industry conducts research and development (R&D) and innovation-related activities. The unit of analysis for the first survey was the business unit, and managers from 199 business units around the world responded with data about many aspects of innovation-related activities within and outputs from their respective organizations. While organizations clearly play an important role in the innovation process, these activities are invariably underpinned by the creativity, know-how, and imagination of individual people. Therein lies the motivation for the second SPE Global Innovation Survey, which was conducted in 2017. It dove deeper into the industry than the previous survey, this time asking individuals from a broad range of roles, levels of responsibility, cultures, and geographical locations about the innovation-related dimensions of their jobs within the upstream oil and gas industry. A deeper understanding of the roles of individuals in the innovation process is more important than ever as the organizations that make up the industry are being fundamentally transformed. Some of the largest oil and gas companies are reinventing themselves as “energy companies” rather than continuing to focus on their oil and gas legacies and are significantly overhauling major aspects of their businesses. How organizations configure their human resources has also changed considerably since the beginning of the COVID-19 pandemic. Individual-level innovative behaviors are therefore more important to understand than ever as the oil and gas sector’s institutions are changing and adapting in the face of these tectonic changes—and the people in the industry are the building blocks that will be reorganized as these changes occur.

THE GLOBAL POLICY AND OIL PRICE: MODERN ENERGY POLICY IN OPEC PRIORITIES

The article is devoted to the current problem of modern energy policy in the priorities of OPEC countries. In particular, the influence of pandemic and geopolitical situations in the world on the oil market is investigated. One of the most important areas for the international community is energy, which is one of the main guarantors of universal security in the modern world. The agreement to reduce oil production by OPEC and non-OPEC countries has become the most significant example of international multilateral cooperation in the energy sector in recent years. During 2017-2020, the OPEC+ agreement managed to stabilise the oil market significantly. In 2017, the average price of Brent on the market reached a new agreement from 1 May 2020 to 1 May 2022. The list of participants has been significantly expanded. In addition to the 24 OPEC+ countries, a number of G-20 countries supported the deal, including the USA, which, although not formally part of the cooperation due to legal specifics, expressed their willingness to help stabilise the situation on a voluntary basis. This was an unprecedented signal to the market. To date, the purpose of OPEC is to coordinate activities and develop a common policy regarding oil production among the member countries of the organization, maintain stable oil prices, ensure stable supply of oil to consumers, get return on investment in the oil industry. In addition, an important mission of OPEC is to coordinate and standardize the oil policies of member countries, determine the most effective collective means of protecting the interests of producing countries, and cooperate with non-OPEC countries, which include Russia, Norway, and Mexico, in order to implement initiatives to stabilize the global oil market. This article examines the effectiveness of OPEC in shaping oil prices and its ability to manage the conditions created by pandemic situations and the impact of the oil market on the current geopolitical processes taking place on the world stage.

ANALYSIS OF INTERNATIONAL OIL PRODUCTION COMPETITON USING GAME THEORY

Uluslararası ham petrol piyasasında oyuncuların OPEC (Petrol İhraç Eden Ülkeler Örgütü) üye ülkeleri ile OPEC’e üye olmayan petrol üreten ülkeler (non-OPEC) oldukları varsayımı yaygındır. Söz konusu oyuncuların kâr maksimizasyonu ve/veya petrol piyasalarını kontrol edebilme hedefiyle üretim seviyesi ve fiyat gibi çeşitli strateji kümeleri kullanarak rekabet eğilimine girmeleri söz konusu piyasanın oyun modelleri ile analiz edilebilirliğini ortaya koymaktadır. Bu çalışmanın amacı, OPEC ve non-OPEC ülkelerinin rekabete dayalı petrol üretim miktarlarını oyun teorisi temelinde analiz etmektir. Bu amaç doğrultusunda, oyunculara ait 1972-2019 dönemini kapsayan üretim miktarları ve ham petrol fiyat serileri kullanılmıştır. Petrol piyasalarındaki rekabetin varlığına işaret eden üretim fonksiyonlarına ait katsayılar Tam Bilgi En Küçük Kareler (FMOLS- Fully Modified Ordinary Least Square) yöntemi ile tahmin edilmiştir. Elde edilen modellerden Cournot-Nash ve Stackelberg denge çözümleri hesaplanmıştır. Cournot-Nash denge düzeyine göre Stackelberg denge düzeylerinde lider oyuncunun üretiminin artığı, takipçi oyuncunun üretim düzeyinin ise azaldığı görülmüştür. Bulgular Cournot-Nash denge çıktılarının Stackelberg denge çıktılarından daha yüksek olduğu çalışmalar ile paralellik göstermiştir. Oyuncuların üretim miktarı ve fiyat stratejileri vasıtasıyla optimum üretim düzeyine ulaşmaları için Cournot-Nash dengesinde kalmaları önerilmektedir.

Board gender diversity and environmental disclosure: evidence from the banking sector

PurposeThis study aims to examine the relationship between board gender diversity and environmental disclosure (ED) in the banking sector.Design/methodology/approachData pooled from Bloomberg database on 2,116 banks from the period of 2007 to 2016 ends up with 7,951 observations. Panel regression model that include random effects was used to test study hypothesis.FindingsThe findings showed that when female board members were between 21% and 50%, it had a significant positive effect on the ED disclosure. Furthermore, the results showed that bank located in non-OPEC countries have better gender diversity in their board and greater ED than non-OPEC countries. Moreover, the results demonstrated that the board diversity and ED are better in banks that are located in countries that ranked 26–50 in oil production.Originality/valueAlthough findings of this research clearly discussed the importance of board diversity in enhancing ED, the results of this study give us a crucial signal as a wake-up call for regulators to start considering women quota on board for higher ED.

Impact of OPEC Member Countries' Interaction with the Russian Federation on the Oil Sector

The purpose of the research is to study the causes, course, and main motives of OPEC's interaction with the Russian Federation, as well as to analyse the positions of each of the parties and determine the potential consequences of interaction within OPEC+ for the global oil market. The study examined the specifics of OPEC's cooperation with oil-producing non-OPEC countries, primarily with the Russian Federation. The results highlighted the significance of the Declaration on Cooperation as a fundamental document regulating the restriction of oil production on the world market between OPEC member countries and non-OPEC oil-producing countries. It was concluded that the interaction between OPEC member countries and Russia within the framework of OPEC+ affected the global oil market and regulates it in a certain way. Decisions within OPEC+ to reduce or increase the production of this resource affect global oil prices.

Corruption and Oil Rent: an Empirical Analysis of Panel Data

For some countries, having abundant natural resources such as oil has become a catalyst for economic development. However, for other countries this has ceased to be a blessing and has become a phenomenon characterized by unfavorable economic and institutional performance. This paradox is known as the curse of natural resources and has been studied by various authors since the 19th century. Corruption is among the main causes involved in this dynamic, affecting the efficient distribution of resources and long-term economic growth. The purpose of this study is to analyze the hypothesis that oil revenue increases corruption and whether this relationship is maintained depending on institutional and economic variables. It also determines whether there is a difference between the OPEC and non-OPEC member countries. To address the research questions, a main econometric model and two auxiliary models are developed. The first includes variables linked to the oil sector; the second incorporates institutional variables such as accountability, regulatory framework and political stability; and the third considers variables that capture the macroeconomic environment of the countries. The work is carried out during the period 1990-2017 and includes a sample of 47 countries, where 28% belong to OPEC. A panel data model is used through the minimum generalized squares methodology (FGLS) to make a more robust estimation. As the most relevant finding of the study, it was obtained that, with an increase of 1 percentage point in oil revenue as a percentage of GDP, the corruption index increases by 0.001806 units, this result being statistically significant at 1%. Similarly, when control variables at the institutional level and the macroeconomic environment are included, the relationship between oil revenue and corruption remains statistically significant. Finally, it was not possible to empirically prove that there is a significant difference between this relationship when discriminating between OPEC and non-OPEC countries.

Strategic interactions and price dynamics in the global oil market

In a simplified theoretical framework, we model the strategic interactions between OPEC and non-OPEC producers and the implications for the global oil market. Depending on market conditions, OPEC may find it optimal to act either as a monopolist on the residual demand curve, to move supply in-tandem with non-OPEC, or to offset changes in non-OPEC supply. We evaluate the implications of the model through a Structural Vector Auto Regression (VAR) that separates non-OPEC and OPEC production and allows OPEC to respond to supply increases in non-OPEC countries. This is done by either increasing production (Market Share Targeting) or by reducing it (Price Targeting). We find that Price Targeting shocks absorb half of the fluctuations in oil prices, which have left unexplained by a simpler model (where strategic interactions are not taken into account). Price Targeting shocks, ignored by previous studies, explain around 10 percent of oil price fluctuations and are particularly relevant in the commodity price boom of the 2000s. We confirm that the fall in oil prices at the end of 2014 was triggered by an attempt of OPEC to re-gain market shares. We also find the OPEC elasticity of supply three times as high as that of non-OPEC producers.

EXPORT SOPHISTICATION AND ITS IMPACT ON GROWTH: CASE STUDY FOR MENA COUNTRIES

This study initially calculates export sophistication of Middle East and North Africa (MENA) countries to 
 make a comparison in the region and in between OPEC and non-OPEC countries for 2004-2016 period. 
 Secondly, short and long run empirical analysis are applied to examine the effect of export sophistication 
 on GDP per capita growth controlling for several macroeconomic variables. Lastly, panel VAR is utilized 
 to decompose the variation in growth rate. Empirical findings suggest positive effect of sophistication on 
 growth rate controlling for oil prices and OPEC membership and export sophistication is observed to be 
 the key variable to explain the variation in growth rate out of several candidate variables.

Exogenous Oil supply Shocks in OPEC and Non-OPEC Countries

This paper expands Kilian’s (2008) original time series of exogenous oil supply shocks along two dimensions. First, we extend the sample period to include production shortfalls in OPEC member states during 2004:10-2019:12. Second, we also consider production shortfalls in non-OPEC countries. Our extended time series of exogenous oil supply shocks displays statistically significant correlation with alternative estimates of oil supply shocks based on vector-autoregressive models. At the same time, it requires a limited number of assumptions about the counterfactual evolution of production in the countries under consideration and escapes thus the current debate about the validity of common identifying restrictions in multivariate structural models.

Moderation Role of Energy Prices on Financial Instability, Trade Openness and Economic Growth in Non-OPEC Countries

This paper examined the interaction effect of energy price on the relationship between financial instability, trade openness and non-OPEC countries economic growth. The paper used panel time series data from 1970-2018. In addition, the paper applied second generation approach. The results of the cointegration test revealed a long run relationship among the variables. Moreover, the results showed that financial instability, energy price, and 2014 energy crisis have negative effect on economic growth, while, trade openness has positive effect on the economic growth. Additionally, the results confirmed that the interaction term of energy prices and financial instability is negatively affecting the economic growth, but interaction term of energy prices and trade openness is positively affecting the economic growth of non-OPEC countries (emerging ASEAN economies). However, the results of causality test indicated one-way causal relationship from financial instability to economic growth, energy price to economic growth, and trade openness to economic growth. The empirical findings also suggested that interventions from the policymakers of the emerging ASEAN country could provide rigidity or policies on financial repression, instead of a more flexible financial system, designed to expand growth and stability in focused macroeconomic policies through financial rules. In order to control energy use and stabilize prices in ASEAN countries, there should be a comprehensive energy policy, which may have a negative impact on their economies, as most of the emerging ASEAN countries have not relied on oil revenues.

Oil Volatility Spillover into Oil Dependent Equity-Sector Stock Returns: Evidence from Major Oil Producing Countries

In this paper, we study the effects of oil price volatility on the stock market relevant sectors from several oil producing countries. We investigate the interdependence between oil prices and sector stock indices within OPEC markets and selected major non-OPEC countries such as Russia and United States. By exploring the time-varying dynamics of oil prices and sector-stock indices on the sectoral reaction to oil price shocks we investigate how the shocks in oil prices affect the correlation dynamics of the different sectors. Our study finds that different sectors display heterogeneous dynamic correlation pattern with different oil price shocks origins in different countries. Specifically, the GARCH coefficients in several sectors, such as, industrial, energy and healthcare in some of oil-producing middle-eastern countries are not significant. In addition, the negative coefficients for some sectors in some of the countries indicate the existence of hedging opportunities for portfolio managers.

Саудовская Аравия на мировом рынке нефти

The goal of the article is to analyze the role of Saudi Arabia in the world oil market and in the world economy for a long historical period. It is shown that strategically behavior of Saudi Arabia always was and continues to be subordinated to ensuring the stable supply of oil into the world oil market. Under the Saudi Arabia leadership OPEC aims at pursuing an economically rational and responsible policy, supporting the balance of the demand for oil and its supply thus allow¬ing to avoid deep and lasting oil price decline. Until the very recently an important factor impacting the formulation of Saudi oil policy was maintaining of strategic interaction with the US. The restructuring of the world oil market driven by the shale revolution and nearing peak of global demand for oil have created new challenges for Saudi Arabia oil strategy. The OPEC+ situational agreement enacted since 2017 by OPEC and non-OPEC countries to voluntary reduce levels of oil production temporarily allows to keep a supply – demand balance in the world oil market preventing from substantial drop in oil prices. At the same time the agreement opens opportunities for competitors, first of all American producers of tight oil, to maintain and expand export niches. Shale revolution created a situation when oil interests of the US and Saudi Arabia came into open conflict. For political and strategic considerations, a price war in order to crowd American oil producers with their relatively high production costs out of the market is not a feasible option for the Kingdom. Attempts to transform the state oil company Saudi Aramco into a mega supermajor utilizing on the global economic and financial potential have failed as the leading international banks and corporations avoided the company’s IPO. The failure of Saudi Aramco partial privatization is a signal of a false start of a company to open the Saudi economy to large-scale in-flow of foreign investment. Paradoxically the long-term perspectives of Saudi Arabia crucially depend on how effectively it will use in the coming 10–20 years oil export earnings for diversification of national economy outside the oil sector. Acknowledgements. The article was prepared within the project “Post-crisis world order: challenges and technologies, competition and cooperation” supported by the grant from Ministry of Science and Higher Education of the Russian Federation program for research projects in priority areas of scientific and technological development (Agreement № 075-15-2020-783).

Роль геополитических факторов в формировании мирового нефтяного рынка. Анализ и систематизация литературы

Oil export revenues still constitute a considerable part of the national budget, and influence the business cycle, in Russia as well as other oil-exporting countries. Therefore, the identification of the main factors influencing oil prices, an adequate assessment of their significance, as well as a forecast of market developments and possible actions in the international arena are necessary for competent public policy planning and realistic evidence-based budgeting. The activities of the Organization of the Petroleum Exporting Countries (OPEC) are traditionally considered among the main geopolitical factors that significantly influence oil price dynamics.Although at present it is too early to make a full-fledged impact assessment for all factors that influenced oil prices during the current crisis, the first attempts are already being made through situation analyses and academic articles in peer-reviewed journals. However, an analysis of the available studies carried out since the end of the 1960s for all cases of significant oil price fluctuations helps systematize existing findings and answer the following research question: under what circumstances do geopolitical factors play a defining role, and when is their influence extremely limited or completely absent? The goal of this analysis is to identify and generalize the main trends in the oil market and relevant academic research, as well as to clarify OPEC’s role in the current stage of the oil market’s development.Based on this analysis several conclusions are drawn. First, geopolitical factors had varying significance in oil price dynamics depending on the historic period: in the 1960s and 1970s, the influence was determinative; it then started to weaken and became less important compared to economic variables (especially on the demand side). Second, a key feature of the influence of geopolitical factors on the oil market is indirectness: expectations about future events that theoretically could lead to changes in market conditions, primarily oil supply, have a greater impact on prices than the events themselves. Third, OPEC (+) activities and the political processes taking place among its members are still the most significant geopolitical factors affecting the oil market. Moreover, OPEC’s influence as a cartel has been steadily declining since the 1980s. It has lost price-setting power, and now its major function is the adjustment of market-defined prices. Finally, OPEC’s influence has decreased due to several major factors: oil market transformation from the sale of commodities to the sale of financial products, the shale revolution, the development of production in non-OPEC countries that, in case of the United States, are also the largest consumers, and the development of alternative energy and renewable sources.

Determinants of comparative advantage of crude oil production: Evidence from OPEC and non‐OPEC countries

AbstractThis study investigates the determinants of comparative advantage of crude oil production in 10 OPEC and 10 non‐OPEC countries over the period 1990–2016. The study calculates the comparative advantage using the Normalized Revealed Comparative Advantage index (NRCA) and further estimates the relationship between the comparative advantage and three explanatory variables using panel autoregressive distributed lag (panel ARDL) in a separate panel for each group of countries. The result of NRCA shows that all OPEC countries have a comparative advantage in crude oil production, whereas five of the 10 non‐OPEC countries have a comparative advantage in crude oil production. The result of the ARDL indicates that crude oil price (COP) and average of daily production (ADP) positively affect comparative advantage of crude oil production. The effect of natural resources (PR) is negative, suggesting that an increase in PR decreases the comparative advantage of these countries—a result that aligns with the philosophy of Hotelling rent. Finally, bidirectional Granger causality is established between all the investigated variables in both panels.

The Moderating Effect of OPEC and Non-OPEC on the Relationship Between Oil Price Volatility and Accrual Earnings Management in the Oil and Gas Industry

This study is an empirical examination on the relationship between oil price volatility and earnings management in the oil and gas industry, moderated by price-setting abilities of OPEC (Organization of Petroleum Exporting Nations) and price taking abilities of Non-OPEC countries. This study tests discretionary, income-decreasing, current and non-current accruals as a proxy of earnings management. A total sample of 209 firm-year observations from 2008 to 2018 of listed oil and gas firm is collected from the Thomson Datastream database. To incorporate the moderation effect, the samples were divided into two sub-groups, OPEC and Non-OPEC using reserve to production ratio. Firm attributes are included in the analysis as the constant variable such as leverage, current ratio, EBITDA and Growth. The initial results show that, overall, the interaction effect between OPEC/Non-OPEC and oil price volatility is positive and significant to discretionary and income-decreasing accruals. Data samples are limited while comparing OPEC and Non-OPEC countries as not every oil and gas company in OPEC are listed companies and their information is heavily protected. This study contributes to extant earnings management literature regarding political cost, which remains a significant concern to oil and gas companies worldwide.

Strategic Interactions and Price Dynamics in the Global Oil Market

In a simplified theoretical framework we model the strategic interactions between OPEC and non-OPEC producers and the implications for the global oil market. Depending on market conditions, OPEC may find it optimal to act either as a monopolist on the residual demand curve, to move supply in-tandem with non-OPEC, or to offset changes in non-OPEC supply. We evaluate the implications of the model through a Structural Vector Auto Regression (VAR) that separates non-OPEC and OPEC production and allows OPEC to respond to supply increases in non-OPEC countries. This is done by either increasing production (Market Share Targeting) or by reducing it (Price Targeting). We find that Price Targeting shocks absorb half of the fluctuations in oil prices, which have left unexplained by a simpler model (where strategic interactions are not taken into account). Price Targeting shocks, ignored by previous studies, explain around 10 percent of oil price fluctuations and are particularly relevant in the commodity price boom of the 2000s. We confirm that the fall in oil prices at the end of 2014 was triggered by an attempt of OPEC to re-gain market shares. We also find the OPEC elasticity of supply three times as high as that of non-OPEC producers.

Nanoparticle-based drilling fluids as promising solutions to enhance drilling performance in Egyptian oil and gas fields

Over the years, the discovery of petroleum in various regions of the world has led to the development of different techniques and equipment to enhance and optimize the drilling and production operations in this vital industry. Egypt is both one of the major oil-producing non-OPEC countries and one of the oldest energy producers in the Middle East. Recently, the Egyptian government have signed several agreements for the exploration of oil and gas in several provinces/regions including; the Mediterranean, the Western desert, the Nile Delta, and the Gulf of Suez. Petroleum companies have given great attention to Egypt’s new discoveries such as Zohr Gas Field, and Nour exploration prospect. Successful drilling operations to reach the oil and gas targets depends strongly on the effectiveness of the drilling fluids. Drilling fluids can be considered as the heart of the drilling process. They are used to fulfil several functions, such as controlling pressure, carrying cuttings and cooling bit and drill strings, stabilizing wellbore as well as controlling fluid losses. Drilling fluid technology is one of the most targeted and developed technologies worldwide. Several studies have examined the use of various types of nanoparticles (NPs) as additives to enhance the properties and improve the performance of the drilling fluid to mitigate the drilling problems. NPs can be defined as a simplest structure with a size in the range of nanometers. The effectiveness of NPs can be accredited to their small sizes and thus, high surface-area-to-volume ratio. NPs were also showed promising enhancements on the rheological and filtration characteristics of the drilling fluid (mud). Additionally, swelling and collapse of shale formations is expected under drilling with water-based mud, which might result in complicating the drilling operation. Adding NPs to the drilling mud was found to minimize the shale permeability and thus, promote the wellbore stability. This research paper discusses the latest applications and presents the most valuable findings concerning the efficient use of NPs in the drilling fluid industry. Based on that, different recommendations are stated. This might help researchers to better understand NPs’ functionality in this area of application and promote using NPs-based drilling muds as cost-effective and environmental-friendly fluids to drill the Egyptian oil and gas wells.

Environmental performance, comparative advantage of crude oil and the role of institutional quality.

This study investigates the relationship between environmental performance and the comparative advantage of crude oil by incorporating the role of institutional quality in 28 oil-producing countries from 2002 to 2014. Using dynamic panel data analysis, the results show that environmental performance and institutional quality along with the conventional factors for comparative advantage are key determinants of the comparative advantage of crude oil. Specifically, while environmental performance negatively affects the comparative advantage of crude oil, it is also negatively associated with the comparative advantage of crude oil. These results are in support of the pollution haven hypothesis in resource-based industry, and it shows a bidirectional relationship between environmental performance and comparative advantage of producing crude oil. Further, the results revealed a vital role played by institutional quality in enhancing the comparative advantage of crude oil and environmental performance. More so, the environmental Kuznets curve (EKC) hypothesis is validated in our result. Finally, a substantial difference in the results between OPEC and non-OPEC countries is confirmed by a set of dummy variables.