National Oil Companies in a Globalized Oil Market Research Paper by AcademicHelp

Presents an extensive evaluation of the future of national oil corporations (NOCs) in the globalized oil market.
# 151841 | 9,170 words | 35 sources | 2012 | PK
Published on Oct 12, 2012 in Business (Industries) , Economics (National) , Political Science (General)


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Description:

This paper discusses the value chain of the petroleum industry and the factors that most likely will shape the future of national oil corporations (NOCs) in the globalized energy market by reviewing the the political, historical, and socioeconomic contexts under which NOCs were formed. Next, the author presents both the argument in favor of NOCs and its practical difficulties and setbacks. The paper concludes that, in the future, NOCs are expected to encounter insurmountable challenges in the area of governance and risk management that will continue to shape the perception, value creation and performance of the NOCs. Several figures are included in the paper.

Table of Contents:
Table of Contents
Executive Summary
Introduction
Overview of the Petroleum Sector Value Chain
Industry Participation
Licensing and Contracts
Taxation
Depletion Policy
Value Creation through Integration
Local Content Policies and Value Creation
The Creation of a NOC: Advantages and Issues
History of National Oil Corporations
Industry Participation
The Rise of National Oil Corporations
Post-Colonial World and OPEC Revolution
The Reaction of Consumer States
A New Agenda and Privatization Liberalization
The End of History and Developments from 2000
Arguments in Favor of National Oil Corporations
Historical Context
The Significance of the Petroleum Sector
Political Gains Associated With State Control
Efficiency and Monitoring of Operations
Maximization of Petroleum Rent
Socio-Economic Issues and Priorities
Practical Difficulties and Setbacks with National Oil Corporations
Historical Context and Ideology
Economic Cost Associated with Political Control
Operational Inefficiencies
Lack of Competition
Subsidies and Non Commercial Objectives
Weak Corporate Governance
Funding Requirements and Strategy
Conflict of Interest and Balance of Control
Creation of Value and National Oil Companies
The National Mission
NOCs Indirect Role as Advisor and Regulator
Conclusion

From the Paper:

"The year 1959 saw the world leading oil exporting countries convene a meeting in Cairo. An agreement was reached that the parties were to consult each other on issues of common interest. As part of the agreement, the members suggested the creation of national oil corporations as a way of guaranteeing direct state involvement in the oil sector. The members equally agreed that concessionary contracts include a royalty payment to the host nation plus a 50% income tax. Following the price cuts in 1959 and 1960 by privately owned oil companies, oil producing countries thought of better ways to represent their shared interests. Consequently, the Organization for Petroleum Exporting Countries (OPEC) was formed in 1960. The founder members were Iran, Kuwait, Iraq, Venezuela, and Saudi Arabia. Later, they were joined by Qatar in 1961, Libya and Indonesia in 1962, UAE in 1967, Nigeria 1971, Ecuador in 1973, Gabon 1975, and Angola in 2007. Having significantly reduced its oil reserves, Indonesia left the organization in 2008.
"At the onset, OPEC offered very little to its members as privately owned oil corporations negotiated separately with the host governments with the companies taking a different stand as far as contract terms, extent of oil revenue dependence, and spare production capacities were concerned."

Sample of Sources Used:

  • Al-Mazeedi, W. (1992). Privatizing the National Oil Companies in the Gulf. Energy Policy, 20, 983-94.
  • Center for Energy Economics. (2007).Commercial frameworks for national oil companies. Working Paper, Center for Energy Economics, University of Texas, Houston.
  • Coady, D., El-Said, M., Gillingham, R., Kpodar, K., Medas, P. & Newhouse, D. (2006). The Magnitude and Distribution of Fuel Subsidies: Evidence from Bolivia, Ghana, Jordan, Mali, and Sri Lanka. IMF Working Paper WP/06/247, International Monetary Fund, Washington, DC.
  • Duffy, A. (2012). Governments Spent $409 Billion Subsidizing Fossil Fuels in 2010. Business insider. Retrieved on 21 August 2012 from: http://articles.businessinsider.com/2012-03-13/markets/31158815_1_oil-prices-oil companies-peak-oil-theory>
  • Ertel, M. (2006). Investing ethics: the Norwegian model. Spiegel Online International <http://www.spiegel.de/international/spiegel/investing-in-ethics-the-norwegian-model-a-426733.html>

Cite this Research Paper:

APA Format

National Oil Companies in a Globalized Oil Market (2012, October 12) Retrieved November 29, 2020, from https://www.academon.com/research-paper/national-oil-companies-in-a-globalized-oil-market-151841/

MLA Format

"National Oil Companies in a Globalized Oil Market" 12 October 2012. Web. 29 November. 2020. <https://www.academon.com/research-paper/national-oil-companies-in-a-globalized-oil-market-151841/>

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