Oil companies facilitate or exploit

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  • Privately held companies have the goal of maximizing shareholder value. Themanagement of the company may accomplish that goal through organizingproduction so that a profit is made in the current time frame as well as in the future.They also might make investment decisions to take advantage of opportunities toraise the company’s rate of return. They also have the motivation to achieveproductive efficiency to hold down costs to enhance the profitability of any givenrevenue level. This activity is thought to benefit consumers by assuring that physicalshortages are avoided and that the good is available at the lowest price consistentwith demand and supply factors.In the oil industry, maximization of shareholder value is taken to mean that thevalue of oil resources should be maximized through managing production,exploration, and development activities to assure a functioning market. To ensurethe long-term viability of the company, reserve replacement is necessary. For thecompany to grow, it must have the ability to expand production and sales to meetdemand growth in newly developing economies as well as in developed areas.Technical efficiency in all parts of the supply chain leads to cost minimization aswell as improvements in product performance and environmental integrity.
  • Privately held companies have the goal of maximizing shareholder value. Themanagement of the company may accomplish that goal through organizingproduction so that a profit is made in the current time frame as well as in the future.They also might make investment decisions to take advantage of opportunities toraise the company’s rate of return. They also have the motivation to achieveproductive efficiency to hold down costs to enhance the profitability of any givenrevenue level. This activity is thought to benefit consumers by assuring that physicalshortages are avoided and that the good is available at the lowest price consistentwith demand and supply factors.In the oil industry, maximization of shareholder value is taken to mean that thevalue of oil resources should be maximized through managing production,exploration, and development activities to assure a functioning market. To ensurethe long-term viability of the company, reserve replacement is necessary. For thecompany to grow, it must have the ability to expand production and sales to meetdemand growth in newly developing economies as well as in developed areas.Technical efficiency in all parts of the supply chain leads to cost minimization aswell as improvements in product performance and environmental integrity.
  • Privately held companies have the goal of maximizing shareholder value. Themanagement of the company may accomplish that goal through organizingproduction so that a profit is made in the current time frame as well as in the future.They also might make investment decisions to take advantage of opportunities toraise the company’s rate of return. They also have the motivation to achieveproductive efficiency to hold down costs to enhance the profitability of any givenrevenue level. This activity is thought to benefit consumers by assuring that physicalshortages are avoided and that the good is available at the lowest price consistentwith demand and supply factors.In the oil industry, maximization of shareholder value is taken to mean that thevalue of oil resources should be maximized through managing production,exploration, and development activities to assure a functioning market. To ensurethe long-term viability of the company, reserve replacement is necessary. For thecompany to grow, it must have the ability to expand production and sales to meetdemand growth in newly developing economies as well as in developed areas.Technical efficiency in all parts of the supply chain leads to cost minimization aswell as improvements in product performance and environmental integrity.
  • Privately held companies have the goal of maximizing shareholder value. Themanagement of the company may accomplish that goal through organizingproduction so that a profit is made in the current time frame as well as in the future.They also might make investment decisions to take advantage of opportunities toraise the company’s rate of return. They also have the motivation to achieveproductive efficiency to hold down costs to enhance the profitability of any givenrevenue level. This activity is thought to benefit consumers by assuring that physicalshortages are avoided and that the good is available at the lowest price consistentwith demand and supply factors.In the oil industry, maximization of shareholder value is taken to mean that thevalue of oil resources should be maximized through managing production,exploration, and development activities to assure a functioning market. To ensurethe long-term viability of the company, reserve replacement is necessary. For thecompany to grow, it must have the ability to expand production and sales to meetdemand growth in newly developing economies as well as in developed areas.Technical efficiency in all parts of the supply chain leads to cost minimization aswell as improvements in product performance and environmental integrity.
  • Privately held companies have the goal of maximizing shareholder value. Themanagement of the company may accomplish that goal through organizingproduction so that a profit is made in the current time frame as well as in the future.They also might make investment decisions to take advantage of opportunities toraise the company’s rate of return. They also have the motivation to achieveproductive efficiency to hold down costs to enhance the profitability of any givenrevenue level. This activity is thought to benefit consumers by assuring that physicalshortages are avoided and that the good is available at the lowest price consistentwith demand and supply factors.In the oil industry, maximization of shareholder value is taken to mean that thevalue of oil resources should be maximized through managing production,exploration, and development activities to assure a functioning market. To ensurethe long-term viability of the company, reserve replacement is necessary. For thecompany to grow, it must have the ability to expand production and sales to meetdemand growth in newly developing economies as well as in developed areas.Technical efficiency in all parts of the supply chain leads to cost minimization aswell as improvements in product performance and environmental integrity.
  • National oil companies may be involved inredistributing the oil wealth of the nation to the society in general. Thisredistribution can be accomplished through fuel subsidies, employment policies, andsocial welfare programs among other programs. Fuel subsidies are common,reducing the price of gasoline in Venezuela to $0.11 per gallon, $0.21 per gallon inIran, and $0.64 per gallon in Saudi Arabia.7 In contrast, gasoline had an averageprice of $5.77 in Norway, one of the higher observed price levels in the world. Whilesubsidized fuel prices reduce energy prices to the general population, enhanceindustrial and transportation resources, and protect the domestic economy from thedamaging effects of volatile world petroleum prices, the downside is that they arevery expensive in terms of lost potential revenues for the national oil company. Theartificially low price encourages demand growth, corruption, inefficient use of fuels,and even arbitrage-based smuggling schemes. The expanded use of fuelsdomestically leads to reduced exports and tightens supply in world markets, leadingto higher prices in the oil-importing countries. Examples of subsidy programs withthese effects include those observed in Iran, Nigeria, and Indonesia among others
  • National oil companies may be involved inredistributing the oil wealth of the nation to the society in general. Thisredistribution can be accomplished through fuel subsidies, employment policies, andsocial welfare programs among other programs. Fuel subsidies are common,reducing the price of gasoline in Venezuela to $0.11 per gallon, $0.21 per gallon inIran, and $0.64 per gallon in Saudi Arabia.7 In contrast, gasoline had an averageprice of $5.77 in Norway, one of the higher observed price levels in the world. Whilesubsidized fuel prices reduce energy prices to the general population, enhanceindustrial and transportation resources, and protect the domestic economy from thedamaging effects of volatile world petroleum prices, the downside is that they arevery expensive in terms of lost potential revenues for the national oil company. Theartificially low price encourages demand growth, corruption, inefficient use of fuels,and even arbitrage-based smuggling schemes. The expanded use of fuelsdomestically leads to reduced exports and tightens supply in world markets, leadingto higher prices in the oil-importing countries. Examples of subsidy programs withthese effects include those observed in Iran, Nigeria, and Indonesia among others
  • Although the results vary with the demographic of thecountry, national oil companies can be viewed as jobs programs for the domesticeconomy. Table 4 shows that private oil companies have varying levels ofemployment for each one million barrels of oil equivalent produced, but the degreeof variation is higher for the national oil companies. The data shows Saudi Aramcowith the lowest ratio of employees to oil produced. The low ratio may be the resultof efficiency within the organization, the large quantities of oil produced, or it mayreflect the small population and overall wealth of Saudi Arabia that minimizes theneed for a jobs program. The two Chinese national oil companies, CNOOC andPetroChina, are near the lowest and also the highest in terms of number of employeesper barrel of oil equivalent produced. This outcome is likely the result of differentoperational requirements, or different treatment of the companies by the government.
  • Although the results vary with the demographic of thecountry, national oil companies can be viewed as jobs programs for the domesticeconomy. Table 4 shows that private oil companies have varying levels ofemployment for each one million barrels of oil equivalent produced, but the degreeof variation is higher for the national oil companies. The data shows Saudi Aramcowith the lowest ratio of employees to oil produced. The low ratio may be the resultof efficiency within the organization, the large quantities of oil produced, or it mayreflect the small population and overall wealth of Saudi Arabia that minimizes theneed for a jobs program. The two Chinese national oil companies, CNOOC andPetroChina, are near the lowest and also the highest in terms of number of employeesper barrel of oil equivalent produced. This outcome is likely the result of differentoperational requirements, or different treatment of the companies by the government.
  • Although the results vary with the demographic of thecountry, national oil companies can be viewed as jobs programs for the domesticeconomy. Table 4 shows that private oil companies have varying levels ofemployment for each one million barrels of oil equivalent produced, but the degreeof variation is higher for the national oil companies. The data shows Saudi Aramcowith the lowest ratio of employees to oil produced. The low ratio may be the resultof efficiency within the organization, the large quantities of oil produced, or it mayreflect the small population and overall wealth of Saudi Arabia that minimizes theneed for a jobs program. The two Chinese national oil companies, CNOOC andPetroChina, are near the lowest and also the highest in terms of number of employeesper barrel of oil equivalent produced. This outcome is likely the result of differentoperational requirements, or different treatment of the companies by the government.
  • National oil companies are also used by theirgovernments as tools in the overall process of economic development. In somenations, the petroleum industry is the first large economic sector opened to the worldeconomy. As such, the petroleum industry may be the first to introduce concepts ofinternational investment contract and property law, as well as accepted accountingand financial standards, all necessary for economic development to proceed. Theindustry may serve as a conduit for technology transfers to the larger economy. Localcontent rules may be imposed to ensure the development of ancillary servicebusinesses to spread development dollars. The national oil company may also berequired to supply subsidized fuels to industries targeted in the nations’ developmentplans.An example of the development responsibilities of a national oil company is inKazakhstan, where KMG has clearly stated its aims. These objectives includeintegrating Kazakhstan into the world economy and ensuring that KMG’s growth anddevelopment translates into more general economic growth in the nation
  • National oil companies are also used by theirgovernments as tools in the overall process of economic development. In somenations, the petroleum industry is the first large economic sector opened to the worldeconomy. As such, the petroleum industry may be the first to introduce concepts ofinternational investment contract and property law, as well as accepted accountingand financial standards, all necessary for economic development to proceed. Theindustry may serve as a conduit for technology transfers to the larger economy. Localcontent rules may be imposed to ensure the development of ancillary servicebusinesses to spread development dollars. The national oil company may also berequired to supply subsidized fuels to industries targeted in the nations’ developmentplans.An example of the development responsibilities of a national oil company is inKazakhstan, where KMG has clearly stated its aims. These objectives includeintegrating Kazakhstan into the world economy and ensuring that KMG’s growth anddevelopment translates into more general economic growth in the nation
  • National oil companies are also used by theirgovernments as tools in the overall process of economic development. In somenations, the petroleum industry is the first large economic sector opened to the worldeconomy. As such, the petroleum industry may be the first to introduce concepts ofinternational investment contract and property law, as well as accepted accountingand financial standards, all necessary for economic development to proceed. Theindustry may serve as a conduit for technology transfers to the larger economy. Localcontent rules may be imposed to ensure the development of ancillary servicebusinesses to spread development dollars. The national oil company may also berequired to supply subsidized fuels to industries targeted in the nations’ developmentplans.An example of the development responsibilities of a national oil company is inKazakhstan, where KMG has clearly stated its aims. These objectives includeintegrating Kazakhstan into the world economy and ensuring that KMG’s growth anddevelopment translates into more general economic growth in the nation
  • National oil companies are also used by theirgovernments as tools in the overall process of economic development. In somenations, the petroleum industry is the first large economic sector opened to the worldeconomy. As such, the petroleum industry may be the first to introduce concepts ofinternational investment contract and property law, as well as accepted accountingand financial standards, all necessary for economic development to proceed. Theindustry may serve as a conduit for technology transfers to the larger economy. Localcontent rules may be imposed to ensure the development of ancillary servicebusinesses to spread development dollars. The national oil company may also berequired to supply subsidized fuels to industries targeted in the nations’ developmentplans.An example of the development responsibilities of a national oil company is inKazakhstan, where KMG has clearly stated its aims. These objectives includeintegrating Kazakhstan into the world economy and ensuring that KMG’s growth anddevelopment translates into more general economic growth in the nation
  • National oil companies can also be used by their nationalgovernments as a tool to achieve foreign policy goals, leading to direct alliances aswell as national oil company to national oil company ties that can pave the way topolitical relationships. Oil is a strategic commodity in the world economy, and itsproduction and use can foster strategic relationships. For example, Saudi Aramco’sdecision to raise oil output in the wake of the Iraqi invasion of Kuwait, and China’soil-based relationships with Iran, Venezuela, Russia, and others can be viewed aspartly politically motivated.Perhaps the most recent and assertive example of national oil companies beingtied to the geopolitical aims of their government is PDVSA and President Chavezand his Bolivarian Revolution.10 Some believe that Chavez sees the United Statesand its promotion of democracy and global markets as a threat to his revolution. Tocounter what Chavez sees as U.S. expansionism, he is using the promise of economicaid, joint energy projects, and favorable oil pricing to gain influence in LatinAmerica, the Caribbean, and other areas. PDVSA plays an important role in thesepolicies. Recently, the Chavez government has completed deals with Ecquador,Bolivia, Argentina, Nicaragua, and others.11Iran has used the possibility of oil cut-offs to the West as a threat, and possibledeterrent, in the controversy over its pursuit of nuclear weapons. Russia hasinterrupted natural gas deliveries to Europe as a result of its conflicts with membersof the former Soviet Union over supply prices and transport fees.
  • National oil companies can also be used by their nationalgovernments as a tool to achieve foreign policy goals, leading to direct alliances aswell as national oil company to national oil company ties that can pave the way topolitical relationships. Oil is a strategic commodity in the world economy, and itsproduction and use can foster strategic relationships. For example, Saudi Aramco’sdecision to raise oil output in the wake of the Iraqi invasion of Kuwait, and China’soil-based relationships with Iran, Venezuela, Russia, and others can be viewed aspartly politically motivated.Perhaps the most recent and assertive example of national oil companies beingtied to the geopolitical aims of their government is PDVSA and President Chavezand his Bolivarian Revolution.10 Some believe that Chavez sees the United Statesand its promotion of democracy and global markets as a threat to his revolution. Tocounter what Chavez sees as U.S. expansionism, he is using the promise of economicaid, joint energy projects, and favorable oil pricing to gain influence in LatinAmerica, the Caribbean, and other areas. PDVSA plays an important role in thesepolicies. Recently, the Chavez government has completed deals with Ecquador,Bolivia, Argentina, Nicaragua, and others.11Iran has used the possibility of oil cut-offs to the West as a threat, and possibledeterrent, in the controversy over its pursuit of nuclear weapons. Russia hasinterrupted natural gas deliveries to Europe as a result of its conflicts with membersof the former Soviet Union over supply prices and transport fees.
  • National oil companies can also be used by their nationalgovernments as a tool to achieve foreign policy goals, leading to direct alliances aswell as national oil company to national oil company ties that can pave the way topolitical relationships. Oil is a strategic commodity in the world economy, and itsproduction and use can foster strategic relationships. For example, Saudi Aramco’sdecision to raise oil output in the wake of the Iraqi invasion of Kuwait, and China’soil-based relationships with Iran, Venezuela, Russia, and others can be viewed aspartly politically motivated.Perhaps the most recent and assertive example of national oil companies beingtied to the geopolitical aims of their government is PDVSA and President Chavezand his Bolivarian Revolution.10 Some believe that Chavez sees the United Statesand its promotion of democracy and global markets as a threat to his revolution. Tocounter what Chavez sees as U.S. expansionism, he is using the promise of economicaid, joint energy projects, and favorable oil pricing to gain influence in LatinAmerica, the Caribbean, and other areas. PDVSA plays an important role in thesepolicies. Recently, the Chavez government has completed deals with Ecquador,Bolivia, Argentina, Nicaragua, and others.11Iran has used the possibility of oil cut-offs to the West as a threat, and possibledeterrent, in the controversy over its pursuit of nuclear weapons. Russia hasinterrupted natural gas deliveries to Europe as a result of its conflicts with membersof the former Soviet Union over supply prices and transport fees.
  • National oil companies can also be used by their nationalgovernments as a tool to achieve foreign policy goals, leading to direct alliances aswell as national oil company to national oil company ties that can pave the way topolitical relationships. Oil is a strategic commodity in the world economy, and itsproduction and use can foster strategic relationships. For example, Saudi Aramco’sdecision to raise oil output in the wake of the Iraqi invasion of Kuwait, and China’soil-based relationships with Iran, Venezuela, Russia, and others can be viewed aspartly politically motivated.Perhaps the most recent and assertive example of national oil companies beingtied to the geopolitical aims of their government is PDVSA and President Chavezand his Bolivarian Revolution.10 Some believe that Chavez sees the United Statesand its promotion of democracy and global markets as a threat to his revolution. Tocounter what Chavez sees as U.S. expansionism, he is using the promise of economicaid, joint energy projects, and favorable oil pricing to gain influence in LatinAmerica, the Caribbean, and other areas. PDVSA plays an important role in thesepolicies. Recently, the Chavez government has completed deals with Ecquador,Bolivia, Argentina, Nicaragua, and others.11Iran has used the possibility of oil cut-offs to the West as a threat, and possibledeterrent, in the controversy over its pursuit of nuclear weapons. Russia hasinterrupted natural gas deliveries to Europe as a result of its conflicts with membersof the former Soviet Union over supply prices and transport fees.
  • National oil companies can also be used by their nationalgovernments as a tool to achieve foreign policy goals, leading to direct alliances aswell as national oil company to national oil company ties that can pave the way topolitical relationships. Oil is a strategic commodity in the world economy, and itsproduction and use can foster strategic relationships. For example, Saudi Aramco’sdecision to raise oil output in the wake of the Iraqi invasion of Kuwait, and China’soil-based relationships with Iran, Venezuela, Russia, and others can be viewed aspartly politically motivated.Perhaps the most recent and assertive example of national oil companies beingtied to the geopolitical aims of their government is PDVSA and President Chavezand his Bolivarian Revolution.10 Some believe that Chavez sees the United Statesand its promotion of democracy and global markets as a threat to his revolution. Tocounter what Chavez sees as U.S. expansionism, he is using the promise of economicaid, joint energy projects, and favorable oil pricing to gain influence in LatinAmerica, the Caribbean, and other areas. PDVSA plays an important role in thesepolicies. Recently, the Chavez government has completed deals with Ecquador,Bolivia, Argentina, Nicaragua, and others.11Iran has used the possibility of oil cut-offs to the West as a threat, and possibledeterrent, in the controversy over its pursuit of nuclear weapons. Russia hasinterrupted natural gas deliveries to Europe as a result of its conflicts with membersof the former Soviet Union over supply prices and transport fees.
  • Broadly based energy security is among the objectives ofthe national oil companies. Security on the demand side means not allowing oneconsumer to become critical to the national oil company. For example, PDVSA hasrecently tried to direct its oil sales away from the United States in the hope ofreducing U.S. economic influence, and as a way to develop other consuming marketsfor Venezuelan crude oil. However, in some cases technological factors make thisstrategy difficult. A long-standing relationship between an oil exporter and importermay lead to the investment in more-or-less specialized facilities that facilitate the useof the exporting nation’s oil. In the United States-Venezuela case, Venezuelaproduces relatively heavy crude oils, especially from the Orinoco basin projects. TheUnited States has refineries designed to use this crude oil. As Venezuela seeks todiversify its customer base, it must find locations with refinery capacity suited to itscrude oil.In other cases, energy security objectives for national oil companies are definedin terms of security of supply. Supply security objectives in the well-functioningworld oil market are usually defined in terms of the diversity of producers and thesecurity of oil supply lanes. For some countries and their national oil companies, oilsupply security means the ownership, or exclusive rights to, desired supplies of oil.Some analysts have identified China as a nation following this type of strategy. Theattempted purchase of Unocal, the U.S. based oil and natural gas company, by
  • Broadly based energy security is among the objectives ofthe national oil companies. Security on the demand side means not allowing oneconsumer to become critical to the national oil company. For example, PDVSA hasrecently tried to direct its oil sales away from the United States in the hope ofreducing U.S. economic influence, and as a way to develop other consuming marketsfor Venezuelan crude oil. However, in some cases technological factors make thisstrategy difficult. A long-standing relationship between an oil exporter and importermay lead to the investment in more-or-less specialized facilities that facilitate the useof the exporting nation’s oil. In the United States-Venezuela case, Venezuelaproduces relatively heavy crude oils, especially from the Orinoco basin projects. TheUnited States has refineries designed to use this crude oil. As Venezuela seeks todiversify its customer base, it must find locations with refinery capacity suited to itscrude oil.In other cases, energy security objectives for national oil companies are definedin terms of security of supply. Supply security objectives in the well-functioningworld oil market are usually defined in terms of the diversity of producers and thesecurity of oil supply lanes. For some countries and their national oil companies, oilsupply security means the ownership, or exclusive rights to, desired supplies of oil.Some analysts have identified China as a nation following this type of strategy. Theattempted purchase of Unocal, the U.S. based oil and natural gas company, by
  • Broadly based energy security is among the objectives ofthe national oil companies. Security on the demand side means not allowing oneconsumer to become critical to the national oil company. For example, PDVSA hasrecently tried to direct its oil sales away from the United States in the hope ofreducing U.S. economic influence, and as a way to develop other consuming marketsfor Venezuelan crude oil. However, in some cases technological factors make thisstrategy difficult. A long-standing relationship between an oil exporter and importermay lead to the investment in more-or-less specialized facilities that facilitate the useof the exporting nation’s oil. In the United States-Venezuela case, Venezuelaproduces relatively heavy crude oils, especially from the Orinoco basin projects. TheUnited States has refineries designed to use this crude oil. As Venezuela seeks todiversify its customer base, it must find locations with refinery capacity suited to itscrude oil.In other cases, energy security objectives for national oil companies are definedin terms of security of supply. Supply security objectives in the well-functioningworld oil market are usually defined in terms of the diversity of producers and thesecurity of oil supply lanes. For some countries and their national oil companies, oilsupply security means the ownership, or exclusive rights to, desired supplies of oil.Some analysts have identified China as a nation following this type of strategy. Theattempted purchase of Unocal, the U.S. based oil and natural gas company, by
  • Broadly based energy security is among the objectives ofthe national oil companies. Security on the demand side means not allowing oneconsumer to become critical to the national oil company. For example, PDVSA hasrecently tried to direct its oil sales away from the United States in the hope ofreducing U.S. economic influence, and as a way to develop other consuming marketsfor Venezuelan crude oil. However, in some cases technological factors make thisstrategy difficult. A long-standing relationship between an oil exporter and importermay lead to the investment in more-or-less specialized facilities that facilitate the useof the exporting nation’s oil. In the United States-Venezuela case, Venezuelaproduces relatively heavy crude oils, especially from the Orinoco basin projects. TheUnited States has refineries designed to use this crude oil. As Venezuela seeks todiversify its customer base, it must find locations with refinery capacity suited to itscrude oil.In other cases, energy security objectives for national oil companies are definedin terms of security of supply. Supply security objectives in the well-functioningworld oil market are usually defined in terms of the diversity of producers and thesecurity of oil supply lanes. For some countries and their national oil companies, oilsupply security means the ownership, or exclusive rights to, desired supplies of oil.Some analysts have identified China as a nation following this type of strategy. Theattempted purchase of Unocal, the U.S. based oil and natural gas company, by
  • Broadly based energy security is among the objectives ofthe national oil companies. Security on the demand side means not allowing oneconsumer to become critical to the national oil company. For example, PDVSA hasrecently tried to direct its oil sales away from the United States in the hope ofreducing U.S. economic influence, and as a way to develop other consuming marketsfor Venezuelan crude oil. However, in some cases technological factors make thisstrategy difficult. A long-standing relationship between an oil exporter and importermay lead to the investment in more-or-less specialized facilities that facilitate the useof the exporting nation’s oil. In the United States-Venezuela case, Venezuelaproduces relatively heavy crude oils, especially from the Orinoco basin projects. TheUnited States has refineries designed to use this crude oil. As Venezuela seeks todiversify its customer base, it must find locations with refinery capacity suited to itscrude oil.In other cases, energy security objectives for national oil companies are definedin terms of security of supply. Supply security objectives in the well-functioningworld oil market are usually defined in terms of the diversity of producers and thesecurity of oil supply lanes. For some countries and their national oil companies, oilsupply security means the ownership, or exclusive rights to, desired supplies of oil.Some analysts have identified China as a nation following this type of strategy. Theattempted purchase of Unocal, the U.S. based oil and natural gas company, by
  • The current oil futures trading is evolved intricately from spot transaction to forward trading and finally to futures trading, the spot market price is still important to the international oil price system.Spot market was served as a tool for Majors to adjust oil surplus and deficiency and exchange oil products between each other Spot trading only amount to less than 5% of total international oil trading and the spot price normally reflects the price of term surplusThe spot trading increased gradually and the oil spot market is no longer a residual market but became a marginal market which reflects the production and refinery cost of crude oil, and its profitThe spot price has already become the benchmark for oil companies and the government of oil-consuming countries to make the oil policy.At the same time, some term contract began to relate to spot marketThere are two prices in oil spot market one is real spot trading price the other price is the evaluation made by some organizations through the research and track to the price level in the market
  • The price mechanism for oil products varies according to different types and their different specifications But still mainly traded as “floating price” which isbased on a formula.There are several kinds of pricing units in different areas such as metric tons, U.S. barrels, gallons and litersThe pricing basis is mainly quotations published by information agents which is accepted by both parties
  • The pricing period for oil products are mainly five days around Bill of Lading date, more specifically they are two days immediately prior tothe B/L date,the B/L date, and two days immediately after the B/L date. The final price falls on the average of the five mean quotationsThere are also some special pricing methods if mutually agreedThe trade for oil products is more active than crudes and with multiple modes
  • Oil companies facilitate or exploit

    1. 1. 1<br />
    2. 2. OIL COMPANIESFACILITATE OR EXPLOIT<br />2<br />
    3. 3. Aim<br />The aim of my presentation will be to apprise the house about the role of oil companies in facilitating the economic growth of a country, role of OCAC and how National oil companies and domestic politics exploit each other. <br />3<br />
    4. 4. History of oil companies<br />OPEC and its objectives<br />How do NOCs and Politics effect each other<br />Case Studies for positive and negative impacts<br />Role of oil companies in economic development<br />Role of OCAC<br />Conclusion<br />Questions<br />Sequence<br />4<br />
    5. 5. NOC and IOC : HISTORY<br />Jostling for positions<br />5<br />
    6. 6. NOC and IOC : HISTORY<br />The world's energy security lies in their hands.<br />6<br />
    7. 7. NOC and IOC : HISTORY<br />14 of the Top-20 are NOCs or newly privatized<br />7<br />
    8. 8. NOC and IOC : HISTORY<br />State monopolies<br />8<br />
    9. 9. NOC and IOC : HISTORY<br />Ranking Petroleum Intelligence Weekly<br />12<br />13<br />16<br />19<br />9<br />
    10. 10. Seven Sisters<br />The five American oil giants<br />10<br />
    11. 11. Seven Sisters<br />100% operating monopoly<br />11<br />
    12. 12. Seven Sisters<br />End to the reign of the original `Seven Sisters'<br />12<br />
    13. 13. Super-majors<br />Deflation of oil prices<br />13<br />
    14. 14. Super-majors<br />Big Five<br />14<br />
    15. 15. OPEC<br />Change in the game<br />15<br />
    16. 16. OPEC<br />Sit and negotiate<br />16<br />
    17. 17. OPEC<br />NOCs rapidly rising<br />17<br />
    18. 18. OPEC<br />History of OPEC<br />18<br />
    19. 19. OPEC<br />Intergovernmental Organization<br />19<br />
    20. 20. OPEC<br />OPEC later joined by nine other Members<br />20<br />
    21. 21. OPEC Objective<br />co-ordinate and unify petroleum policies <br />secure fair and stable prices <br />regular supply of petroleum <br />fair return on capital <br />OPEC<br />21<br />
    22. 22. IOCs LOSING GROUND TO NOCs<br />Partners of choice<br />22<br />
    23. 23. IOCs LOSING GROUND TO NOCs<br />Access to the energy markets of the world<br />23<br />
    24. 24. IOCs LOSING GROUND TO NOCs<br />IOCs' share of world oil reserves<br />24<br />
    25. 25. IOCs LOSING GROUND TO NOCs<br />NOCs share of the world oil reserves<br />25<br />
    26. 26. NOCs and Politics<br />A new generation of NOCs<br />26<br />
    27. 27. NOCs and Politics<br />The NOCs need to secure energy supply<br />27<br />
    28. 28. NOCs and Politics<br />NOCs to meet important national goals<br />28<br />
    29. 29. NOCs and Politics<br />NOCs susceptible to politics<br />Both domestic and international<br />29<br />
    30. 30. NOCs and Politics<br />NOCs as the tools of a country's policy<br />30<br />
    31. 31. ROLE OF NOCs IN ECONOMIC DEVELOPMENT<br />31<br />
    32. 32. Objectives<br />Shareholder value maximization model <br />32<br />
    33. 33. Objectives<br />Owned by National governments<br />33<br />
    34. 34. Objectives<br />NOCs respond to Governments<br />34<br />
    35. 35. Objectives<br />Strategy of developed nations NOC<br />35<br />
    36. 36. Objectives<br />Strategy of less developed country’s NOC<br />36<br />
    37. 37. Wealth Distribution<br />Redistributing the oil wealth of the nation to the society in general<br />Fuel subsidies <br />Employment policies<br />Social welfare programs<br />37<br />
    38. 38. Wealth Distribution<br />Downside <br />Expensive<br />Artificially low price<br />38<br />
    39. 39. Jobs Programs<br />Jobs programs for the domestic economy<br />39<br />
    40. 40. Jobs Programs<br />Saudi Aramco<br />Lowest ratio of employees to oil produced<br />40<br />
    41. 41. Jobs Programs<br />Russian based-companies <br />Highest jobs producers<br />41<br />
    42. 42. Economic Uplift<br />Tools in process of economic development<br />42<br />
    43. 43. Economic Uplift<br />Conduit for technology transfers <br />43<br />
    44. 44. Economic Uplift<br />Local content rules<br />44<br />
    45. 45. Economic Uplift<br />Pakistan : An example<br />Price of diesel gone up by a massive 13%<br />Petrol by 10%<br />45<br />
    46. 46. Foreign Policy<br />A tool to achieve foreign policy goals<br />46<br />
    47. 47. Foreign Policy<br />Political relationships<br />47<br />
    48. 48. Foreign Policy<br />Oil is a strategic commodity<br />48<br />
    49. 49. Foreign Policy<br />NOC being tied to geopolitical aims<br />49<br />
    50. 50. Foreign Policy<br />Politically motivated<br />50<br />
    51. 51. Energy Security<br />Security on the demand side <br />51<br />
    52. 52. Energy Security<br />Oil exporter and importer relationship<br />52<br />
    53. 53. Energy Security<br />Diversify customer base<br />53<br />
    54. 54. Energy Security<br />Diversity of producers<br />54<br />
    55. 55. Energy Security<br />Exclusive rights to desired supplies of oil<br />55<br />
    56. 56. Vertical Integration<br />Roots in upstream operations<br />56<br />
    57. 57. Vertical Integration<br />Value added from producing and selling<br />57<br />
    58. 58. Vertical Integration<br />Gain access to un available markets<br />58<br />
    59. 59. Vertical Integration<br />Mitigation of risk through vertical integration<br />59<br />
    60. 60. Vertical Integration<br />Volatile oil prices<br />60<br />
    61. 61. Vertical Integration<br />Ability to become more profitable<br />61<br />
    62. 62. Role of PSO in Economic Development<br />The Downstream Oil Sector<br />62<br />
    63. 63. Role of PSO in Economic Development<br />Keep the wheels of the economy moving<br />63<br />
    64. 64. Role of PSO in Economic Development<br />With an annual sales of Rs. 1 trillion<br />64<br />
    65. 65. Role of PSO in Economic Development<br />Direct employment of over 100,000 people<br />65<br />
    66. 66. Role of PSO in Economic Development<br />Indirect employment of 24,000 persons<br />66<br />
    67. 67. Role of PSO in Economic Development<br />Capital investment of over 30 billion <br />67<br />
    68. 68. Role of PSO in Economic Development<br />Annual generation of taxes around Rs. 200 Billion<br />68<br />
    69. 69. Role of PSO in Economic Development<br />A world class IT infrastructure<br />69<br />
    70. 70. Role of PSO in Economic Development<br />Skill sets ranging from <br />Technical<br />IT<br />Finance<br />Sales<br />Marketing & HR<br />70<br />
    71. 71. Role of PSO in Economic Development<br />Significant contributor to the national well-being<br />71<br />
    72. 72. NOCs and Politics<br />A role in and are affected by the politics<br />Domestic and international<br />72<br />
    73. 73. NOCs and Politics<br />Foreign and strategic policies of governments<br />73<br />
    74. 74. NOCs and Politics<br />National level politics<br />74<br />
    75. 75. NOCs and Politics<br />Use of NOCs to increase the power<br />75<br />
    76. 76. NOCs and PoliticsIran Case Study<br />Public and private actors considerable support<br />76<br />
    77. 77. NOCs and Politics<br />Iran subsidized gas rate<br />The political cost of removing subsidies<br />Contradiction between political and economic reforms<br />The Iran’s case<br />Decline in efficiency of hydrocarbon sector<br />A neo-patrimonial authoritarian<br />Final arbiter in a fight<br />77<br />
    78. 78. Saudi Aramco Case Study<br />Three fundamental goals<br />78<br />
    79. 79. Saudi Aramco Case Study<br />Maintain a certain amount of spare capacity<br />79<br />
    80. 80. Saudi Aramco Case Study<br />Fill the gap in supplies<br />80<br />
    81. 81. Saudi Aramco Case Study<br />Win geopolitical clout<br />81<br />
    82. 82. Saudi Aramco Case Study<br />Actual rate of decline in the Kingdom<br />82<br />
    83. 83. Saudi Aramco Case Study<br />Vehicle for economic growth<br />83<br />
    84. 84. Saudi Aramco Case Study<br />The Saudi gas initiative<br />84<br />
    85. 85. Saudi Aramco Case Study<br />Heavily politicized process<br />85<br />
    86. 86. Saudi Aramco Case Study<br />Sustain a long term market for oil<br />86<br />
    87. 87. Saudi Aramco Case Study<br />Oil competitive with other sources of energy<br />87<br />
    88. 88. Saudi Aramco Case Study<br />SaudiaAramco : A successful NOC<br />88<br />
    89. 89. Saudi Aramco Case Study<br />Western model of management<br />89<br />
    90. 90. Oil Company Advisory Committee<br />OCAC , Pakistan<br />90<br />
    91. 91. Oil Company Advisory Committee<br />Change over the last 30 years<br />91<br />
    92. 92. Oil Company Advisory Committee<br />Gradually deregulated<br />92<br />
    93. 93. Oil Company Advisory Committee<br />Permission to import fuel<br />93<br />
    94. 94. Oil Company Advisory Committee<br />Pivotal role in rationalizing the imports<br />94<br />
    95. 95. Oil Company Advisory Committee<br />Focal body for the Government<br />95<br />
    96. 96. Objective of OCAC<br />Downstream oil industry at various forums<br />96<br />
    97. 97. Objective of OCAC<br />Establish demand and supply balances<br />97<br />
    98. 98. Objective of OCAC<br />Infrastructure Upgrades and De-bottlenecking<br />98<br />
    99. 99. Objective of OCAC<br />Collect, prepare and circulate various trade statistics<br />99<br />
    100. 100. Objective of OCAC<br />Comment on and convey collective views<br />100<br />
    101. 101. Objective of OCAC<br />Develop plans/suggestions to help Government<br />101<br />
    102. 102. Members of OCAC<br />Comprise of the country’s five Refineries<br />102<br />
    103. 103. Members of OCAC<br />Ten oil companies<br />103<br />
    104. 104. Areas of Focus<br />Effective supply logistics management <br />104<br />
    105. 105. Areas of Focus<br />Plan to overcome any port constraints <br />105<br />
    106. 106. Areas of Focus<br />Identifying the right energy source for Pakistan <br />106<br />
    107. 107. Areas of Focus<br />Petroleum product improvement plans<br />107<br />
    108. 108. Areas of Focus<br />Ensure the continued viability<br />108<br />
    109. 109. Conclusion<br />109<br />
    110. 110. Questions<br />110<br />
    111. 111. economy<br />111<br />
    112. 112. Oil Pricing Method Evolution<br />112<br />
    113. 113. Global Spot markets <br />113<br />
    114. 114. Spot market price effect<br />Before 1970<br />After the oil crisis in 1973<br />Benchmark of oil price<br />Two prices concept<br />114<br />
    115. 115. Fixed price mechanism<br />Fixed price is the pegging price made between buyer and seller<br />Refinery to pay in 30 days after the B/L<br />Refinery requires the buyer to pay in 5-15 days<br />This kind of price method is rarely applied<br />115<br />
    116. 116. Product Oil pricing method<br />Pricing methods<br />Pricing units<br />Pricing basis<br />116<br />
    117. 117. Pricing period<br />Bill of landing date<br />Mutual agreement<br />Multiple modes<br />117<br />
    118. 118. Global oil Prices<br />118<br />

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