Oil Giants Research Articles

Global Challenges Facing the Oil and Gas Industry

In the current environment of corporate misdeeds and nondisclosure, the public yearns for honesty, integrity, and open communication. In the absence of these attributes, assumptions are drawn and beliefs are formed based on appearances. For example, the public often assumes that oil and gas companies have a value system nurtured by greed and power. How else to explain the exorbitant prices charged at the gas pump? And no wonder negative perceptions exist; the industry image the public often sees is one littered with such incidents as Exxon’s Valdez spill, Enron’s accounting debacle, the Russian oil giants vs. the Russian Federation, and Royal Dutch Shell’s disclosure of reserves. Geopolitical events around the globe related to labor strife, terrorist risk, pipeline disruptions, and war contribute to the population’s suspicion of the industry. A lack of communication attributed to the energy industry has masked the facts, and miscommunication by special-interest groups has disguised the truth. If the energy industry were to transform its efforts from reactive lobbying to improving its public image, it could circumvent a great deal of negative campaigning and ridicule. For a combative strategy, the industry might consider adopting a policy of open communication, detailing energy’s value to society and educating the general public. A Failure to Communicate Historically, the energy industry has consistently contributed to society in a positive manner. However, it has failed to communicate in a proactive and unified voice. The industry has not established a platform to educate and inform the world community of its achievements and accomplishments. The industry should promote its contributions, technological developments, and implementation of good business practices. Then, the people of the world might begin to appreciate that the comforts that energy provides are the result of hard-working and dedicated personnel in the energy sector. In addition, energy companies should keep promoting the developments that have increased global standards of living, and in the developing countries with fossil fuel reserves, the industry should develop these natural resources in parallel with the development of social infrastructure. Does the world population understand that petroleum provides variations of plastics and other materials used in everyday conveniences and in medical devices that prolong human life? Do young people understand that fertilizers manufactured from natural resources contribute to high agricultural yields, producing food for millions of people around the world? The industry must make a concerted effort to educate the misinformed and provide the public with the knowledge base to make informed decisions. Thousands of jobs have been created both directly and indirectly by the industry, as well as billions of dollars paid through taxes into nations’ coffers. The industry needs to convey how much time and effort employees contribute to the community and the commitment by both executives and employees to adhere to high ethical standards, and finally, it needs to make assurances that the industry is concerned about protecting the environment. If and when a mistake is made, the industry needs to readily admit the mistake, apologize, and advocate proactive measures to correct the occurrence and mitigate the consequences. Corruption of foreign officials should never be tolerated by any company, regardless of the country of origin. Our youth need to be educated on the industry overall, inspired with interest, and given the opportunity for career paths.

A Robust Strategy for Sustainable Energy

A Robust Strategy for Sustainable Energy Klaus S. Lackner and Jeffrey D. Sachs Once again the debate has intensified over whether energy as a commodity is running out. Just six or seven years ago the world seemed awash in oil, yet today many pundits predict the end of oil and indeed the end of the fossil-fuel era.1 With its recent merger with the California-based oil company Unocal, Chevron has placed a bet on ever-increasing oil prices.2 Two other oil giants, BP and ExxonMobil, on the other hand, have publicly stated that resources appear plentiful.3 Even if the world's oil resources are indeed plentiful, world energy supply remains very much constrained. As a world population headed toward 9 billion strives for a standard of living that the industrialized nations take for granted, energy demand will increase rapidly, straining the entire supply chain from exploration to refining. To complicate matters further, oil and gas resources are concentrated in a small region of the world, leading to a more fragile and more volatile trading system that shows strong monopolistic tendencies. In addition to all of this, environmental concerns pose perhaps the toughest constraint of all. [End Page 215] Forecasts of future energy consumption and of trends in energy infrastructure development are fraught with enormous uncertainties.4 Strategies for long-term energy planning must be robust to unpredictable variations in the dynamics of world development. This paper develops robust strategies for maintaining economic growth and worldwide development while overcoming shortages in some of the raw resources, as well as supply constraints due to environmental concerns, that threaten to block access to most conventional energy sources. The paper will make the case that the known energy resource base is more than sufficient to provide a growing world population with energy on the scale to which the industrial countries have grown accustomed and to which the developing countries now aspire—but only if far-sighted investments are undertaken in a timely way. Environmental constraints will be more difficult to overcome, but they, too, have promising solutions, and again a long lead time will be needed. The key to both the supply-side and the environmental concerns will be the timeliness with which decisions are made. Today's technology base is insufficient to provide clean and plentiful energy for 9 billion people. To satisfy tomorrow's energy needs, it will not be enough simply to apply current best practices. Instead, new technologies, especially carbon capture and sequestration (CCS) at large industrial plants, will need to be brought to maturity. Fortunately, CCS and certain other needed technologies are already in early implementation. However, without substantial progress in the way energy is found, transformed, and transported, the world will indeed run into a severe energy crisis. The main arguments of the paper can be stated as follows: — The use of large quantities of energy is central to the functioning of an advanced economy. There are severe limits to energy conservation even in the long run. Global economic growth will bring about significant increases in primary energy demand. — Energy resources are fungible, especially among the fossil fuels. For example, coal can be converted into liquid fuels such as gasoline at low cost. So, too, can other, nonconventional fossil fuels like oil sands and shale and potentially the methane hydrates that are abundant on the sea floor. Noncarbon energy sources such as nuclear and solar energy could [End Page 216] each provide a substantial fraction of the world's long-term energy needs, but both present problems in the short term. — There are no serious long-term (century-scale) shortages of fossil-fuel supply once the interconvertibility of oil and other fossil fuels is taken into account. Even the arrival of "peak oil"—the point at which oil production reaches a maximum—would not mean a global energy shortage at today's prices. However, the transition from oil to other sources of liquid fuel will require a significant lead time, and engineering that transition should be part of public policy. — The greater constraints are likely to emerge from environmental concerns, especially the rising concentration of atmospheric carbon dioxide (CO2) acting as a greenhouse...

Catch-Up and Competitiveness in China: The Case of Large Firms in the Oil Industry. By Jin Zhang. [London and New York: RoutledgeCurzon, 2004. xx +230 pp. $114.95. ISBN 0-415-33321-0.

Jin Zhang's study of the oil industry examines the challenges China faces in its efforts to create indigenous firms capable of competing with the world's leading companies. The task of catching up with the international oil giants is daunting for China's oil firms not only because the global oil business is one with a high cost of entry in terms of experience (the top companies have been around the longest), but also because, as Zhang observes, they are chasing a moving target. The international oil industry of today is fundamentally different from that of the 1980s and early 1990s when the Chinese government embarked on its tortuous path to reform China's oil sector. The mergers that occurred between the world's major oil companies in the late 1990s created a smaller group of much larger companies at the apex of the international oil industry, greatly expanding the gap between these companies and China's aspiring giants. Furthermore, many state-owned firms have disappeared from the ranks of the world's leading oil companies, a development that runs counter to China's strategy of catapulting its “national champions” into this peer group.Zhang illustrates the magnitude of these challenges facing China's aspiring oil giants through her systematic comparison of BP and Shell with PetroChina and Sinopec, the partially-privatized subsidiaries of the state-owned China National Petroleum and Natural Gas Group Company (CNPC) and Sinopec Group respectively, on a number of key business and organizational criteria. At first glance, the lead these “super majors” have over the Chinese companies in terms of business capabilities such as financial performance, technological prowess and the quality of their reserve portfolios, is more striking than the advantage the super majors have in organizational capabilities such as structure and leadership. Indeed, the organizational structures of PetroChina and Sinopec resemble those of BP and Shell. Zhang notes, however, that beneath these superficial similarities lie two critical differences between the Chinese companies and the super majors, differences that arguably constitute the greatest obstacle to the Chinese oil companies “catching up” with the super majors.

Cyp‐Rus investment flows to central and Eastern Europe ‐ Russia's direct and indirect investments via Cyprus to Cee

Abstract This paper deals with Russian investments to ten Eastern European EU candidate countries. Eastern European countries are an important destination for Russian OFDI, and the share of Russia in many CEEC's inward FDI stock is substantial. Russian investments to these countries are mostly connected to the internationalisation of Russian energy sector. Russian oil and gas giants have been actively investing to almost all eastern EU candidate countries. However, OFDI constitutes only a small part of Russian capital abroad, as it covers merely 10 % of the Russian capital flight. Cyprus has been an important landing place for Russian capital flight and is currently the biggest direct investor to Russian economy. Also the investment flow from (or via) Cyprus to other Eastern European countries is relatively big. Significant share of these Cypriot investments are considered to be of Russian origin. This paper tries to anticipate the effects of the legislative changes, due to Cyprus's EU accession in 2004, ...

CYP-RUS INVESTMENT FLOWS TO CENTRAL AND EASTERN EUROPE ‐ RUSSIA'S DIRECT AND INDIRECT INVESTMENTS VIA CYPRUS TO CEE

This paper deals with Russian investments to ten Eastern European EU candidate countries. Eastern European countries are an important destination for Russian OFDI, and the share of Russia in many CEEC's inward FDI stock is substantial. Russian investments to these countries are mostly connected to the internationalisation of Russian energy sector. Russian oil and gas giants have been actively investing to almost all eastern EU candidate countries. However, OFDI constitutes only a small part of Russian capital abroad, as it covers merely 10 % of the Russian capital flight. Cyprus has been an important landing place for Russian capital flight and is currently the biggest direct investor to Russian economy. Also the investment flow from (or via) Cyprus to other Eastern European countries is relatively big. Significant share of these Cypriot investments are considered to be of Russian origin. This paper tries to anticipate the effects of the legislative changes, due to Cyprus's EU accession in 2004, on the role of Cypriot offshore sector as a landing place for Russian capital.

BP‐Amoco brings out the best in its people

The merger between oil giants British Petroleum (BP) and US‐based Amoco brought about more benefits, more quickly than either organization had forecast. It is regarded by some as one of the most successful mergers of two large international groups. An important reason was the extensive preparations made for the merger.

Russian Gas and Oil Giants Conquer Markets in the West

Russian firms are not integrated to the global business world solely via investments from the West to the East but also through investments from Russia to other countries. This article proves that some significant Russian corporations have already taken root in Western economies, including the US market. The first wave of the Russian companies in the West increases the pressure to analyze them as potential partners or competitors. This article uses a REM model to describe the foreign operations of the two biggest Russian corporations, Gazprom and LUKoil. The fast-expanding activities of Russian firms abroad signify that a new era in international business has begun on the eve of this millennium.

Giant field discoveries of the 1990s

This paper summarizes the geologic and geographical characteristics of 76 discoveries exceeding 500 million bls oil equivalent (recoverable) during the last decade. Most new oil giants are in the Gulf of Mexico, Mexico, Brazil, North Africa, West Africa, and the Middle East. Gas giants are concentrated in South America and along a swath from the Caspian, through the Middle East and Asia to Australia (Figures 1 and 2). Five overlapping themes play a significant role—close-in exploration (redrills, extensions, deeper pools, step-outs in a trend); deeper targets; new frontiers in the deepwater Cenozoic; increased gas exploration; and advances in technology.

ELF RETURNS FIRE FROM TOTALFINA

two French oil giants TotalFina and Elf Aquitaine will most likely combine, but it's not at all clear which one will come out on top. Elf Aquitaine has responded to the unsolicited takeover bid made by TotalFina on July 5 (C&EN, July 12, page 4) with a takeover plan of its own. counteroffer, unprecedented in France, changes the complexion of what had seemed to be a hostile but fairly straightforward acquisition attempt. With its bid, Elf is conceding the logic of combining with TotalFina, but it claims to have made a superior offer for one key reason: It wants to separate the two firms' oil and chemical operations into two new companies. Elf Chairman Philippe Jaffre says TotalFina's bid hews to a traditional model of the integrated oil and chemicals company that has become outdated in recent years. The major oil refiner of the 21st century will be an oil producer, refiner, and ...

New Corporate Governance Paradigms for Transnational Enterprises – Shell and strategic futures for big oil

This paper comments on and positions within the issues of corporate governance the process by which Shell, one of the world’s largest and most successful corporations, first committed important errors in its environmental, community and communications strategies and then responded. It forecasts some of the cultural and structural issues which need to be investigated in order to offset future likelihood of Shell committing similar errors in future.In exploring recent episodes in corporate governance, Shell’s company culture is seen as one of the ‘7 sisters’ of the world energy oligopoly.1 Alongside OPEC, the Organisation of Petroleum Exporting Countries, the oil giants of America and Europe provide the underpinning for a world system of economic supremacy. In terms of ethics and environmental performance, this hegemony is potentially benign. However, given their dependence on carbon‐based fossil fuels, these giants of the global economy may also tip the biosphere towards deterioration.The commentary is aimed at a strategic evaluation of Shell’s recent problems. Ethical or societal issues on which the critical events reflect requires separate consideration. An attempt to contribute to cultural dimensions of corporate governance theory concludes the paper.

96/01150 Re-emergence of oil and gas giants

96/01150 Re-emergence of oil and gas giants

Facing the Oil Giants: Labor Bargaining in the 1990s

Now I'd like to turn to the energy and oil industries. On the demand side, as always, a serious recession like the present one means stagnant demand for energy and oil. In the last three years, overall U.S. energy consumption has increased by less than half a percent a year, while oil consumption has actually decreased at about the same rate.This article can also be found at the Monthly Review website, where most recent articles are published in full.Click here to purchase a PDF version of this article at the Monthly Review website.

Oil giants exaggerated Harrisburg–Izvestiya

Oil giants exaggerated Harrisburg–Izvestiya

Oil giants: mixed feelings on chemicals

Oil giants: mixed feelings on chemicals