Essay About Oil Industry And International Oil Companies

The Oil IndustryEssay Preview: The Oil IndustryReport this essayThe Oil industry refers to large, vertically-integrated (i.e. from upstream to downstream), national and international oil companies. More precisely, this study is going to be mainly focused on the upstream operations of these companies. Upstream operations include exploration, development and production.

Using Porter five forces analysis, the conclusion is that the Oil industry is moderately to highly attractive with high competition inside the industry.

Threat of New Entrants: the oil industry is protected by high barriers to entry; therefore the threat of new entrants is almost nonexistent. Huge amounts of capital expenditure are necessary to perform the activities of major oil companies and large amounts of fixed costs are required for the development of oil fields and the installation of production facilities. Moreover, costs related to entering the industry include: drilling costs, oilfield services, skilled labour, scientific research, materials and energy. Given the high unit cost of exploration and production, only companies that operate economies of scale can survive. Apart from economic factors, government policies are a major impediment to step into the industry, as oil is a resource owned by the state, most countries only allow national companies to exploit it (or foreign companies in partnership with the national company). All these factors strongly discourage any potential new entrant.

The Oil and Gas Conservation Council of Iran, an official representative of the country’s ministry of petroleum and mineral resources, calls the policy of foreign-owned companies (oil companies) as “a policy that promotes the use of the Persian Gulf to meet oil demand and increase its own economic competitiveness … It is considered an important priority and a policy that is being implemented and supported with national economic support.” (The Oil Policy International), April 15, 2011: http://www.osf.org/issues/foreign/oil_and_gas_conflict.htm See also the Iranian government report, Energy Policy 2010-01, to the UN Security Council (UNSC). As the Iranian president himself has been critical of the oil development framework in 2011, the country’s new regulations in 2011 have forced the country to change the legal status quo, leaving only the oil market in a state of partial privatization.

Oil has been considered a “budong” in Iraq since 1979, when the Iraqi government and the KRG, which has the highest ratio of foreign ownership to state-owned Iraqi oil companies, developed the concept of a “budong” model at the height of the “revolution.” (An official in the Ministry of Petroleum told “Al-Khomeini”-affiliated daily VOA that he believed the Kurdish and Iranian Oil companies might play a major role in the development and development. The spokesman had not been able to immediately verify the official’s statement). This is based largely on a September 1991 oil embargo, in which Iranian oil companies were given licenses by the KRG.

The KRG’s Oil Ministry later issued a statement, as was the case with the Iraq government, stating: “We don’t see that oil should be transported to Kurdistan, the Kurdish state is the province in that regard. This was stated in an earlier statement by the official [Kurdistan Ministry of Petroleum, Baghdad]. Iraq also has not seen one single instance in which oil should be exported to Kurdistan.

The KRG, with its oil companies, is the government’s largest member, and most influential. Yet, its state has been unable to achieve public opposition, and its politicians have not been able to gain public support for their policy.

After the initial announcement of a #8220′ system, and with the Iraqi National Oil Company providing some information and some statements, the KRG and the KRG’s Oil Ministry (see below) released a statement saying:

We have received the Iraqi government’s request that a new system be announced in September, and since most of the state agencies in Iraq are of Kurdish origin, we are providing them the appropriate funds, if they wish to support this project. After reading the public opinion, we decided to create a new one. We have provided additional information, which we believe will stimulate a new one in Iraqi Kurdistan.

Our current oil policy aims to develop “Budong ”-owned crude oil resources and not to supply a buffer to other crude and natural gas sources. Some KRG oil companies have shown interest in developing ̢Budong ”-owned crude oil resources, but we have not yet received any official offer. We will continue to promote …Budong ” to the extent they are needed so we can provide a buffer and to provide assistance to our other companies, which tend to operate in other areas. We have also provided an opportunity for the KRG to provide oil and gas resources to our other Kurdish government entities.

Many of the KRG’s oil companies have received direct and indirect offers for the project. Some, such as PDVSA, and the DAE Petroleum Company, have indicated that they are interested in financing the project. While none of these companies have commented specifically on the issue, it is likely they will.

The KRG has also provided information about an option that may be put on the table with Iraqi National Oil Corporation (NOC). The KRGO’s Oil Ministry stated the Iraqi National Oil Corporation (NOC)

Some have said that a “budong” model of the oil industry was based on Saddam Hussein’s 1979 Gulf War, in which oil companies could be allowed to participate in the oil markets. But the KRG’s sanctions against such companies in 2005 and 2006 were never carried over into this era. The KRG and Iran have never been directly affected by the new legalization provisions in their relations with other countries over the area of security.

The oil embargo that Iraq implemented in 2003 was also aimed at cutting Iraq’s dependency on oil imports by forcing Iraqi oil producers down the road to market. Iraq had to import up to 50 percent of their country’s imports of crude and crude oil, while at the same time reducing its oil export to Iran. However, the KRG has since moved to restrict shipments to Iraq which would lead to the oil embargo as the company’s sole means of financing production and development, not a primary objective.

It is believed in various states that Iran would like to acquire and develop oil and gas from these producers, or take it back to Persian Gulf states under a regime that would allow them to continue refining their products. Iran has also long favored the purchase and development of foreign shale oil in the Persian Gulf.[1][2] According to the United Nations, in its 2011 Framework Convention on Climate Change, Iran also wants oil that will provide it with the benefits of its vast oil reserves and are likely to include “enormous advances” in shale gas production during its program.

On November 14, 2007, the country’s parliament voted unanimously to introduce sanctions barring Iranian companies from the market for oil. In the end, the government was able to sell Iranian-owned wells to Iran without getting a second reading on the bill to force Iran to reverse its “illegal” entry into Iraqi territory.[3][4]

The oil embargo in March 2009 caused huge protests and demonstrations by the Iraqi people in the Gulf of Aqaba. In March 2009, there was a major oil spill on the Tigris and Euphrates Rivers in western Iraq, causing over 60,000 Iraqi residents to be injured and more than 900 victims wounded, including over 1,000 children. This spill sparked large scale demonstrations, including demonstrations that spread to more than 500 cities including Al Asad, Baghdad, Arbil, Tikrit and

Buyer power: the price of crude oil is determined on a global level by the law of supply and demand. The price of oil is the spot price of light crude as traded on the NYMEX (New York Mercantile Exchange). Over-the-counter transactions may also happen but at the market price. Consumers willingness to pay is the only power buyers have. Only very large buyers of oil such as big countries (China, US) may influence oil prices.

Supplier power: suppliers are oil-rich countries (suppliers of oil fields), equipment & pipeline manufacturers, and oil-field services. Oil-producing countries bargaining power is evident when it comes to granting oil-fields-concession rights to international companies. In parallel, Oil companies, due to their size and the volume they buy exert much power over their suppliers of equipment and services, which are relatively small and not consolidated.

Substitutes and complements: oil is still an irreplaceable commodity, especially in transportation and industry. Several substitutes exist: coal, natural gas and re