Petroleum Exporting Countries Research Articles

Economic growth in OPEC nations: The role of renewable energy consumption, CO2 emissions, and foreign direct investment

Background: The nations that make up OPEC (the Organization of the Petroleum Exporting Countries) have traditionally depended on gas and oil export earnings. However, there is a significant global shift towards renewable energy in an effort to reduce the impact of climate change. This research aims to analyze the effect of Renewable Energy Consumption, CO2 Emissions, and Foreign Direct Investment (FDI) on the Economic Growth in OPEC Nations partially and simultaneously. Methods: In this research, panel data regression analysis techniques are combined with quantitative research approaches. Secondary data from the World Development Indicators (WDI) for the years 2001–2020 were used in this research. Finding: This research showed that the Renewable Energy Consumption and CO2 Emissions variables do not affect economic growth in OPEC countries. Meanwhile, the foreign direct investment variable has a positive and significant effect on economic growth in OPEC countries. Conclusion: OPEC countries need to diversify their economies and reduce their dependence on oil as there is a global shift towards cleaner energy. Novelty/Originality of this article: This study analyzes the impact of Renewable Energy Consumption, CO2 Emissions, and Foreign Direct Investment on Economic Growth in OPEC countries using panel data regression analysis. The study's findings show that only Foreign Direct Investment positively and significantly impacts economic growth.

Do OPEC+ policies help predict the oil price: A novel news-based predictor

The OPEC+, composed of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil-producing countries, exerts considerable influence over the global crude oil market. However, existing literature lacks a comprehensive application of this factor in oil price forecasting, primarily due to the complexity of measuring such policy evolutions. To address this research gap, this study develops a news-based OPEC+ policy index based on text mining methods for comprehensive analysis and forecasting of the oil price. First, by crawling and mining news headlines related to OPEC+ production decisions, a dynamic and high-frequency (weekly) OPEC+ policy index is established. Second, the linear and nonlinear relationship between the proposed OPEC+ policy index and the WTI crude oil futures price is thoroughly examined, assessing the potential predictive power of the index in explaining the movements of the crude oil price. Third, the forecasting efficacy of the constructed index on the oil price is rigorously evaluated across eight econometric and machine learning models. Key findings include: (1) The proposed weekly OPEC+ policy index demonstrates strong concordance with OPEC+ production change decisions, exhibiting notable peaks and troughs corresponding to OPEC+ Ministerial Meetings. (2) The relationship analysis demonstrates a strong linear and nonlinear association between the proposed OPEC+ policy index and the crude oil price. (3) For oil price prediction, models incorporating our proposed OPEC+ policy index demonstrate superior performance compared to models without this index. In particular, the index exhibits a more significant predictive effect within three-week forecasting horizons and performs exceptionally well during periods of pandemic and the Russia-Ukraine conflict. In addition, the OPEC+ policy index also exhibits a significant predictive effect on the daily crude oil price and natural gas price, further confirming the robust and powerful forecasting capability of this index within the energy system.

Influence assessment of shut-in duration and well startup sequence in different geological and field conditions

During 2019-2021, about half of well stock at West Siberian oil fields were shut down for a long period (up to one and a half year) due to oil production restrictions under the agreement between Russia and OPEC (Organization of the Petroleum Exporting Countries). There have never been such large-scale and prolonged shutdowns before. After starting from a long-term shutdown, the flow rate of some wells increased, while others decreased.The main aim of research is to assess the geological and technological factors affecting the results of starting wells after a long shutdown. Statistical methods were used, including multivariate regression analysis, assessing the influence of parameters on each other using trend lines on cross-plots, as well as constructing and comparing maps of geological and technological parameters.As a result, the influence of the duration of downtime, the simultaneity of shutdown of production and injection wells and compensation of production by injection was determined. That will help to reduce losses in case of repeated production restrictions by selecting optimal candidates for shutdown.

Resource curse in OPEC with varied levels of financial regulations and constraints: The role of oil price shocks and digital finance

Economic growth and development are crucial for global economies, and a nation's physical, human, and natural resources significantly impact its trajectory. Natural resource-rich nations can benefit or face the resource curse. Henceforth, this study examines the economic growth of Organization of the Petroleum Exporting Countries (OPEC), considering digital finance, financial regulations, and oil price shocks. Understanding the intricate relationship between oil price fluctuations and digital finance within diverse financial regulatory frameworks is essential for a comprehensive grasp of the resource curse in OPEC. The research employed a bias-corrected dynamic panel and MMQR model to analyze datasets from 2004 to 2022. The study reveals that Oil price shocks have led to higher economic growth when there are moderate financial constraints. However, they have a detrimental effect when the financial system is either very constrained or highly unconstrained. Digital finance has been shown to enhance Gross Domestic Product (GDP) across various levels of financial regulations. The GDP of OPEC experiences a significant adverse effect when digital finance and oil price shocks are coupled, particularly in the presence of stringent financial rules. This outcome is mainly attributed to the adverse influence of oil prices. The findings above underscore the need for moderate levels of financial regulations that support the favorable influence of oil prices and digital finance on GDP. The study additionally suggests a prospective strategy for enhancing GDP growth in OPEC nations: facilitating digital finance.

JOINT VENTURE, TECHNOLOGY TRANSFER AND THE PERFORMANCE OF NIGERIAN OIL AND GAS INDUSTRY

Purpose: The objective of this study is to examine joint venture, technology transfer on the performance of Nigeria's oil and gas sector between 1981-2021. Theoretical Framework: It is indisputable that the Nigerian oil and gas sector is not at peak performance when compared to what is obtainable from its peers in the Organization of Petroleum Exporting Countries (OPEC) (Iheukwumere, 2021; OPEC, ASB 2020). One of the factors responsible for the abysmal performance is ineffective and incoherent technology transfer management through joint venture arrangements (Odusina, 2022). Therefore, there is a need to empirically investigate the impact of joint venture arrangements on Nigeria's oil and gas sector production which lacks sufficient research. Methodology: The ex-post facto design was used where data were collected through secondary sources on the aggregate output of the joint venture companies and the total yearly output of the upstream sector of Nigeria’s oil and gas industry represented the performance of the Nigerian oil and gas sector in the period 1980 to 2021. The collected data were analyzed using the Quantile Autoregressive Distributed Lag (QARDL) approach to test for short and long-run impacts. Findings: The study revealed that there is a significant impact of joint venture arrangements on oil and gas production in both the short run and long run. Research, Practical & Social Implication: The study therefore recommends that policymakers and industry stakeholders should carefully evaluate the terms and conditions of joint ventures to ensure their alignment with the goals of maximizing oil and gas production. Originality/Value: The use of joint venture as a proxy for technology transfer in the production of oil and gas in Nigeria and use of secondary data between 1980-2021 for joint ventures is an eye-opener for further exploration of the study areas in oil and gas production management, particularly in the area of technology transfer, which lacks sufficient research.

A Kingdom of Possibility

A Kingdom of Possibility

Does resource richness help in uplifting the economic status of resource‐abundant developing countries? Evidence from Organization of Petroleum Exporting Countries using methods of movements quantile regression

AbstractIt has been clearly shown that despite having an abundance of natural resources, several resource‐rich countries have experienced slower economic growth that makes it challenging for them to use these resources as a driver of growth. The relationship between economic growth and natural resources has remained an issue of debate over the decades. However, the question of natural resources being a curse or blessing for resource‐abundant economies is still unanswered and gathered the attention of many researchers. The goal of the present study is to provide fresh insights on the matter by estimating the relationship between economic growth, oil resources and natural resources in top oil‐rich Organization of Petroleum Exporting Countries (OPEC) over the 1990–2020 period. The augmented mean group (AMG) and recently introduced methods of movements quantile regression (MMQR) are applied in the study for empirical estimation as the cross sectional dependence and slope heterogeneity are present in data series. The findings of both AMG and MMQR regressions show that oil resource richness does not contribute to uplifting the economic status of the studied countries. However, opposite findings are found for natural resources. Moreover, Granger causality analysis shows that unidirectional causal association is present between natural resources and economic growth but oil resources and economic growth have no causal relationship. It is concluded from the findings that the oil resources confirm the resource curse hypothesis, whereas natural resources confirm the resource bless hypothesis. The findings recommend the policymakers and government to enact adequate policies to connect rent‐based industries to other sectors and improvements in the financial sector to make an avenue for rents to effect economic growth. Most importantly, the government is recommended to pair these measures with anti‐corruption policies to ensure the sustainable use of the resources.

Analysis of Crude Oil Market Volatility and Macroeconomic Conditions: Empirical Evidence from Nigeria

This study aims to investigate the relationship between the volatility of the crude oil market and the macroeconomic conditions in Nigeria. The author used the methods of the auto-regressive distributed lag (ARDL) model in conjunction with the generalized autoregressive conditional heteroscedasticity (GARCH) to determine the extent of volatility using a monthly dataset from January 2012 to December 2022. The author regressed the crude oil price volatility index on Organization of the Petroleum Exporting Countries (OPEC) production quotas, conflicts, GDP growth rate, exchange rate and inflation. The results indicate that oil price volatility relates negatively to GDP, implying that the volatility of crude oil prices dampens growth in Nigeria. The paper concludes that rising oil prices heighten inflation, depreciate the exchange rate and depress growth in Nigeria. To hedge against oil price volatility, the paper recommends that the Nigerian government adopt policy measures that would increase energy efficiency and reduce the country’s dependency on oil exports through diversification in other related productive sectors such as agriculture and manufacturing.

Reasons Behind Words: OPEC Narratives and the Oil Market

We analyze the content of the Organization of the Petroleum Exporting Countries(OPEC) communications and whether it provides information to the crude oil market. To this end, we derive an empirical strategy which allows us to measure OPEC’s public signal and test whether market participants find it credible. Using Structural Topic Models, we analyze OPEC narratives and identify several topics related to fundamental factors, such as demand, supply, and speculative activity in the crude oil market. Importantly, we find that OPEC communication reduces oil price volatility and prompts market participants to rebalance their positions. Our analysis indicates that market participants assess OPEC communications as providing an important signal to the crude oil market.

Analysis of the relationship between the profitability of market portfolios and the profitability of shares of companies in the oil sector

Purpose: This article aims to elucidate whether the particularity of the high level of explanation of the relationship between the return on the market and the return on shares of companies in the oil sector in Brazil occurs similarly in other markets.
 Methodology: The oil companies considered were listed as the main ones by Forbes, Fortune and Exame magazines. Their shares and market movement were obtained from their respective host countries stock exchanges, and other information on institutional websites (e.g: OPEC - Organization of the Petroleum Exporting Countries). As theoretical support, CAPM and APT metrics were applied between from January 2, 2015, to March 31, 2021.
 Results: Considering the privileged position of the fuel sector for the movement of the level of economic activity of the countries, the result of this research confirmed that the particularity of the Brazilian scenario is observed in other countries with regard to the high level of explanation of the return of the superior market portfolio at 50%. The research observed that the Explanation Coefficient tends to capture in a more significant way the effects of crises that come from local economic contexts and impacts on the world economy, such as a possible reduction in the level of gross domestic product of countries such as the United States or China. As for the unexpected event, such as Covid-19, the model, in principle, did not present the same result, which could be observed in the quarterly analyses.
 Contributions of the Study: Research can help managers and investors, as by demonstrating similarities one can predict future events or assist in decision-making.

What drives OPEC production policy?

Abstract The Organization of Petroleum Exporting Countries (OPEC) is the international organization with the function of coordinating and unifying the petroleum policies of its member countries. It centrally controls much of the world’s oil supply. While this is generally accepted, it is not well understood how OPEC exercises this broad function, what drives its decision-making. The article closes this gap in the literature through a close study of the published OPEC production policies for the period of 2019–2022. The article finds that internally predicted demand was the primary driver, over external factors that could also have affected production decisions, such as sanctions on OPEC or OPEC+ members, the rise of US shale oil, or climate change mitigation. It follows that consumer states can most effectively influence OPEC petroleum production decision-making by reducing their own oil consumption. The article finally places these findings into a broader context of the law of international organizations, where organizations have a responsibility to exercise their functions within evolving international law. Their decision-making can then be assessed through the three vector-matrix that this article proposes, comprising internal drivers, external factors, and the position of third states.

Testing the resources curse hypothesis: Unleashing the role of national governance and financial development in OPEC countries

Financial development is an inclusive objective for economies worldwide, but its connection with natural resources remains a topic of debate. This study aims to address this gap by investigating the impact of the resource-curse hypothesis on economic development in Organization of the Petroleum Exporting Countries (OPEC) countries during the period 1996 to 2021, given their substantial natural resources. Employing a cross-sectional ARDL (CS-ARDL) framework and validating the cointegration results with the Pedroni, Westerlund, and Kao Co-integration tests, this research surprisingly challenges the conventional wisdom of the resource-curse hypothesis. Instead, it reveals that natural resource rents can be beneficial for promoting financial development in high-income resource-rich economies. Furthermore, the study uncovers positive associations between financial development and key factors such as government effectiveness, regulatory quality, renewable energy adoption, economic growth, and urbanization. The findings underscore the significance of strong institutional frameworks in fostering financial development and offer valuable policy recommendations to enhance financial progress in OPEC countries.

Can U.S. strategic petroleum reserves calm a tight market exacerbated by the Russia–Ukraine conflict?

Recent changes in global petroleum markets have driven the debate regarding the use of strategic petroleum reserves (SPRs) as a price management tool during periods marked by extreme price volatility. We examine the price management role of the U.S. SPR under typical market conditions and in extreme emergencies. Furthermore, we discuss the White House's hypotheses that (a) boosted Organization of the Petroleum Exporting Countries' (OPEC) production and releases from the U.S. SPR result in a negative pressure on U.S. gasoline inflation, and (b) crude oil releases from the U.S. SPR helps balance the global oil market. The threshold cointegration results indicate that U.S. SPR releases impact neither OPEC production nor imported input prices. We apply a hybrid open-economy Phillips curve to model gasoline inflation, accounting for backward- and forward-looking price settings, domestic and global slackness, and energy security. We distinguish between normal-, super-, and hyper-backwardation and -contango oil markets using threshold cointegration and regression techniques. Our results demonstrate that SPR releases and OPEC output increases generally decrease inflation, with a crucial exception being the hyper-backwardation market, as seen in 2021–2022. This period was characterized by severely constrained global supply buffers, including OPEC's spare capacity, exacerbated by the Russia–Ukraine conflict. For this period, we conclude that (1) the impact of OPEC production changes on gasoline inflation would be negligible, (2) excess domestic demand relative to domestic supply raises concerns about domestic energy security, and (3) the unprecedentedly large SPR drawdowns are likely to have caused the market to panic and contributed to gasoline price increases, contrary to arguments suggesting that the 2022 releases eased domestic gasoline prices. We conclude that the SPR is an ineffective price control mechanism during crises and may not have the strategic value previously thought in an extremely tight oil market.

Global Crude Oil Price, Oil Revenue and Economic Performance: Dutch Disease Hypothesis

The purpose of this paper is to give a general understanding of the global crude oil price, oil revenue and economic performance vis-à-vis Dutch disease proposition. This work explores the relationship between the price of crude oil and its oil revenue generation on the regions of the Organization of the Petroleum Exporting Countries (OPEC) and non-Organization of the Petroleum Exporting Countries (non-OPEC). The crude oil price has recently been ?uctuating greatly that it cannot be predicted; this ?uctuation causes changes in the oil revenues, thus affecting the economy worldwide. To better understand the factors that affect the crude oil price, this study examined West Texas Intermediate (WTI), Brent, Dubai oil and OPEC oil prices whether the Global oil fluctuation in these countries have a signi?cant effect on the ?uctuation of Oil revenues. Various studies have con?rmed the importance of crude oil prices to the global economy. This study focuses on the relationship between crude oil prices and oil revenue levels. However, therefore, in addition to the in-depth understanding of the relationship between oil prices and oil revenues, the relationship other variables and oil prices is valuable and worthwhile topic to explore. The findings of the studies reviewed revealed that the agriculture sector, manufacturing and telecommunication sector exerted a positive and significant impact on Nigerian economic performance and diversification dwindling oil revenue should be invested heavily on productive non-tradeable sector according to Dutch diseases hypothesis (Riti et al., 2016).

Unveiling the impact of geopolitical conflict on oil prices: A case study of the Russia-Ukraine War and its channels

The Russia-Ukraine War, which has lasted for over a year, has been proven to significantly impact crude oil prices. This article aims to explore the channels through which the Russia-Ukraine War affects crude oil prices and to assist decision-makers in channel intervention to mitigate the impact of the war. To this end, the study proposes a research method called “Compare Real Data with Predicted Data and Match Influencing Factors” (CRP-MIF). The method reveals that the Russia-Ukraine War, through its impact on speculative activities, inventory, and supply-demand balance, combined with production announcements of Organization of the Petroleum Exporting Countries (OPEC), led to sharp short-term fluctuations in international oil prices and rapid price increases. Among these channels, speculative activities, inventory, and supply have a substantial impact. Relevant entities can weaken the impact of the war on oil prices and macroeconomic factors by intervening in these transmission channels. This study provides a new reference paradigm for studying the impact channels of major crisis events on commodity prices.

Derivatives Accident: The Crude Oil Treasure Incident Research

The price of the WTI2005 crude oil futures contract was concluded at -37.63 US dollars per barrel on April 20 at US Eastern Time. This is the first negative price of WTI crude oil since it was listed on the Chicago Stock Exchange, causing vast losses to the Bank of China and crude oil treasure investors. In order to avoid similar accidents in the future, both internal and external risks need to be evaluated. The Bank of China is primarily accountable for the accident as the seller of the crude oil treasure due to its blatant incompetence in regard to the company's products, sales, risks, disclosure, supervision, and internal controls. However, external factors including COVID-19, the Organization of the Petroleum Exporting Countries, the CME Clearing, as well as regulators and consumers of crude oil treasure actually have some obligations thereby providing suggestions to banks, regulators, and investors. This study is vital for the use and regulation of derivatives in light of the rapidly expanding and developing financial sector in China.

Energy Recovery and Economic Evaluation for Industrial Fuel from Plastic Waste.

Plasma gasification is considered an environmentally friendly process to convert plastic waste into fuel oil; a prototype system is described to test and validate the plasma treatment of plastic waste as a strategic vision. The proposed plasma treatment project will deal with a plasma reactor with a waste capacity of 200 t/day. The annual plastic waste production in tons in all regions of Makkah city during 27 years for all months in the years 1994 to 2022 is evaluated. A statistics survey of plastic waste displays the average rate generation ranging from 224 thousand tons in the year 1994 to 400 thousand tons in the year 2022, with an amount of recovered pyrolysis oil; 3.17 × 105 t with the equivalent energy; 12.55 × 109 MJ, and an amount of recovered diesel oil; 2.7 × 105 t with an amount of electricity for sale 2.96 × 106 MW.h. The economic vision will be estimated, using the results of energy generated from diesel oil as an industrial fuel extracted from plastic waste equivalent to 0.2 million barrels of diesel oil, with sales revenue and cash recovery of USD 5 million, considering the sale of each one barrel of diesel extracted from plastic waste in the range of USD 25. It is important to consider that the equivalent barrels of petroleum cost, according to the organization of the petroleum-exporting countries' basket prices, up to USD 20 million. The sales profit (2022) is as follows: for diesel with a sales revenue of diesel oil, USD 5 million, with a rate of return of 4.1%, and a payback period of 3.75 years. The generated electricity reached USD 32 million for households and USD 50 million for factories.

Natural gas rents and institutions as co-growth drivers: evidence from Gas Exporting Countries Forum with a panel 2SLS approach

PurposeThis study aims to investigate the implications of natural gas rents and institutions as co-drivers of economic growth, focusing on the Gas Exporting Countries Forum (GECF) with panel data between 2001 and 2021.Design/methodology/approachThis research paper uses a specialised two stage estimator, the panel instrumental variable technique (panel IV), which takes care of the potential endogeneity issues in the model.FindingsThe findings show that natural gas rent significantly impacts the economic growth of the GECF. On average, natural gas rent increases the sample’s growth rate by about 2.634% percentage points in the short run. The result indicates that the qualities of institutions (political and economic) have a significant positive long-term effect on the economies of the GECF. In addition, the study’s energy price volatility positively correlates with the countries’ growth.Research limitations/implicationsThere might be a need to investigate the effects of natural gas rents and institutions as co-growth drivers in each country within the GECF. The likelihood exists that the impact of natural gas rents and institutions on economic growth at the country’s level may differ from the outcome of such an experiment on the group level. Because of space and time limitations, this study could not carry out the specific country’s investigation of natural gas rents and institutions as a co-growth driver. That limitation may constitute further study to advance this study to a new height.Practical implicationsWith good institutions, natural gas rent is likely to be an alternative growth driver for some economies that rely on fossil fuels like oil as a growth driver. By extension, the GECF has the potential to rival Organisation of Petroleum Exporting Countries (OPEC) in the global energy market, particularly in achieving Sustainable Development Goal number seven. In essence, evidence in this study suggests that natural gas rent has long-term positive effects on the growth of the GECF, conditioned on good institutions. Moreover, the drive of global energy consumption towards sustainable energy usage is an economic blessing for the GECF. By extension, the demand for natural gas would continue to rise, creating opportunities to improve natural gas rents. By implication, the GECF would continue to benefit from the pursuit of sustainability as the world shifts towards energy consumption with less CO2.Originality/valueFirstly, this study models the qualities of institutions for the GECF. Secondly, to the best of the author’s knowledge, this study is the first attempt to examine natural gas rents and the qualities of institutions as co-determinants of economic growth among the GECF (a potential cartel).

Does financial and economic expansion allow for environmental sustainability? Fresh insights from a new composite index and PSTR analysis

Despite the use of different environmental proxies, the economic and financial development (FD)-environmental quality (EQ) nexus is still enigmatic. In this regard, a new composite environmental quality index (CEQI) is used to holistically represent EQ. Moreover, the Panel Smooth Transition Regression (PSTR) method is applied to estimate the Environmental Kuznets Curve (EKC) and the financial development Kuznets Curve (FKC) hypotheses using data from 13 members of the Organization of the Petroleum Exporting Countries (OPEC). The findings reveal that economic growth in the first regime positively affects CEQI while having a negative effect after exceeding the threshold and entering the second regime. Also, FD positively affects CEQI for the first regime and has a negative influence for the second regime. Other factors such as energy consumption and composite trade share (CTS) in both the first and second regimes have a negative effect on CEQI. Accordingly, several environmental quality-improving policies are recommended.

Iraqi National Energy Strategy for Oil and Gas Production: Analysis of Challenges

In this article, Authors try to analyze to limit the range of points that we will be exposed to within the limits of the possibility of implementing programs productivity and export. The effects of development associated with execution of Iraqi energy strategy. And it will be exposure, in this field, to explain Internal and External Challenges. Internal Challenges classified in two directions. A first one relates to the expected development of the Oil Infrastructure and its adequacy to implement the elements of the production/export strategy. A second one relates to the consequences of Energy policies and public policies in the possibility of achieving economic diversification or not. An External Challenge related to the ability or possibility of marketing the quantities of oil to be exported from Iraq in light of the balance Global supply and demand for energy and the role of Iraq in the Petroleum Exporting Countries Organization – OPEC.