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OVERVIEW |
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The New Dialogue: National and
International Oil Companies
The world's oil industry is suffering from an increasing
mismatch between resources and capabilities. This
particularly concerns the research and development
effort, the innovation potential and the renewal of the
global oil industry. Since the upstream nationalisation
of the 1970s, vertical integration, which was the
historical pattern of organisation of the oil industry,
has essentially been broken up, with contrasting effects
for the oil exporters and the oil buyers.
For the past thirty years, the bulk of the oil entering
international trade has been sold by the oil exporting
countries' national oil companies who generally enjoy
exclusive or preferential access to their countries' oil
resources and government-owners that often run their oil
policies with a long time-horizon and correspondingly
modest expectations for company dividends. Against this
backdrop, as well as insufficient competition, the
national oil companies of many oil exporting countries
have not seen technological and managerial progress as a
priority and in many cases only make modest efforts in
research and development. Moreover, their management is
often opaque and little is known about their mode of
operations.
By contrast, the large, integrated international
countries with high shares of the products markets and
large refining operations, have generally faced a
precarious crude supply situation, exposed to both
volume and price risks. During the lax world oil market
of the late 1980s and the 1990s, this was no great cause
for concern, as oil supplies seemed abundant and real
prices were falling, which caused the oil industry to
restructure through mergers, acquisitions and
organisational changes. The price risk, competition and
exposure to the scrutiny of financial markets have
represented strong incentives for technological and
managerial progress and to enhance transparency and cut
costs.
Hopes of getting back into equity crude positions in the
Middle East for a long time led to cutbacks in the
research and development efforts. Over the past few
years, however, hopes about the Middle East and other
oil exporters, such as Russia and Venezuela, have been
dashed. Instead, the industry is focusing on prospects
in frontier areas such as the deep-water Atlantic Ocean
and the Arctic. As a consequence, the research and
development effort is being stepped up markedly.
Against this backdrop, there is an evident potential for
closer cooperation between the international oil
industry and the national oil companies of the oil
exporting countries, for the benefit of both parties.
This 2 day form will address these issues and provide a
platform for discussion and debate.
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