oil companies facilitate or exploit
DESCRIPTION
The presentation defines the role of oil companies, their working and game strategyTRANSCRIPT
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OIL COMPANIESFACILITATE OR EXPLOIT
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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.
AIM
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History of oil companiesOPEC and its objectivesHow do NOCs and Politics effect each other
Case Studies for positive and negative impacts
Role of oil companies in economic developmentRole of OCACConclusionQuestions
Sequence
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NOC and IOC : HISTORY
Jostling for positions
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NOC and IOC : HISTORY
The world's energy security lies in their hands.
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NOC and IOC : HISTORY
14 of the Top-20 are NOCs or newly privatized
NOC
NOC
NOC
NOC
IOC
IOC
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NOC and IOC : HISTORY
State monopolies
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NOC and IOC : HISTORY
Ranking Petroleum Intelligence Weekly
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1619
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Seven Sisters
The five American oil giants
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Seven Sisters
100% operating monopoly
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Seven Sisters
End to the reign of the original `Seven Sisters'
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Super-majors
Deflation of oil prices
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Super-majors
Big Five
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OPEC
Change in the game
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OPEC
Sit and negotiate
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OPEC
NOCs rapidly rising
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OPEC
History of OPEC
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OPEC
Intergovernmental Organization
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OPEC
OPEC later joined by nine other Members
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OPEC Objectiveco-ordinate and unify petroleum policies secure fair and stable prices regular supply of petroleum fair return on capital
OPEC
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IOCs LOSING GROUND TO NOCs
Partners of choice
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IOCs LOSING GROUND TO NOCs
Access to the energy markets of the world
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IOCs LOSING GROUND TO NOCs
IOCs' share of world oil reserves
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IOCs LOSING GROUND TO NOCs
NOCs share of the world oil reserves
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NOCs and Politics
A new generation of NOCs
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NOCs and Politics
The NOCs need to secure energy supply
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NOCs and Politics
NOCs to meet important national goals
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NOCs and Politics
NOCs susceptible to politicsBoth domestic and international
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NOCs and Politics
NOCs as the tools of a country's policy
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ROLE OF NOCS IN ECONOMIC DEVELOPMENT
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Objectives
Shareholder value maximization model
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Objectives
Owned by National governments
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Objectives
NOCs respond to Governments
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Objectives
Strategy of developed nations NOC
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Objectives
Strategy of less developed country’s NOC
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Wealth Distribution
Redistributing the oil wealth of the nation to the society in general
Fuel subsidies Employment policiesSocial welfare programs
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Wealth Distribution
Downside ExpensiveArtificially low price
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Jobs Programs
Jobs programs for the domestic economy
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Jobs Programs
Saudi AramcoLowest ratio of employees to oil produced
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Jobs Programs
Russian based-companies Highest jobs producers
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Economic Uplift
Tools in process of economic development
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Economic Uplift
Conduit for technology transfers
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Economic Uplift
Local content rules
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Economic Uplift
Pakistan : An examplePrice of diesel gone up by a massive 13%Petrol by 10%
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Foreign Policy
A tool to achieve foreign policy goals
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Foreign Policy
Political relationships
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Foreign Policy
Oil is a strategic commodity
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Foreign Policy
NOC being tied to geopolitical aims
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Foreign Policy
Politically motivated
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Energy Security
Security on the demand side
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Energy Security
Oil exporter and importer relationship
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Energy Security
Diversify customer base
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Energy Security
Diversity of producers
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Energy Security
Exclusive rights to desired supplies of oil
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Vertical Integration
Roots in upstream operations
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Vertical Integration
Value added from producing and selling
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Vertical Integration
Gain access to un available markets
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Vertical Integration
Mitigation of risk through vertical integration
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Vertical Integration
Volatile oil prices
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Vertical Integration
Ability to become more profitable
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Role of PSO in Economic Development
The Downstream Oil Sector
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Role of PSO in Economic Development
Keep the wheels of the economy moving
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Role of PSO in Economic Development
With an annual sales of Rs. 1 trillion
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Role of PSO in Economic Development
Direct employment of over 100,000 people
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Role of PSO in Economic Development
Indirect employment of 24,000 persons
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Role of PSO in Economic Development
Capital investment of over 30 billion
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Role of PSO in Economic Development
Annual generation of taxes around Rs. 200 Billion
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Role of PSO in Economic Development
A world class IT infrastructure
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Role of PSO in Economic Development
Skill sets ranging from TechnicalITFinanceSalesMarketing & HR
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Role of PSO in Economic Development
Significant contributor to the national well-being
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NOCs and Politics
A role in and are affected by the politicsDomestic and international
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NOCs and Politics
Foreign and strategic policies of governments
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NOCs and Politics
National level politics
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NOCs and Politics
Use of NOCs to increase the power
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NOCs and PoliticsIran Case Study
Public and private actors considerable support
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NOCs and Politics
Iran subsidized gas rateThe political cost of removing subsidiesContradiction between political and economic reformsThe Iran’s caseDecline in efficiency of hydrocarbon sectorA neo-patrimonial authoritarianFinal arbiter in a fight
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Saudi Aramco Case Study
Three fundamental goals
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Saudi Aramco Case Study
Maintain a certain amount of spare capacity
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Saudi Aramco Case Study
Fill the gap in supplies
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Saudi Aramco Case Study
Win geopolitical clout
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Saudi Aramco Case Study
Actual rate of decline in the Kingdom
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Saudi Aramco Case Study
Vehicle for economic growth
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Saudi Aramco Case Study
The Saudi gas initiative
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Saudi Aramco Case Study
Heavily politicized process
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Saudi Aramco Case Study
Sustain a long term market for oil
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Saudi Aramco Case Study
Oil competitive with other sources of energy
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Saudi Aramco Case Study
Saudia Aramco : A successful NOC
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Saudi Aramco Case Study
Western model of management
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Oil Company Advisory Committee
OCAC , Pakistan
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Oil Company Advisory Committee
Change over the last 30 years
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Oil Company Advisory Committee
Gradually deregulated
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Oil Company Advisory Committee
Permission to import fuel
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Oil Company Advisory Committee
Pivotal role in rationalizing the imports
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Oil Company Advisory Committee
Focal body for the Government
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Objective of OCAC
Downstream oil industry at various forums
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Objective of OCAC
Establish demand and supply balances
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Objective of OCAC
Infrastructure Upgrades and De-bottlenecking
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Objective of OCAC
Collect, prepare and circulate various trade statistics
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Objective of OCAC
Comment on and convey collective views
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Objective of OCAC
Develop plans/suggestions to help Government
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Members of OCAC
Comprise of the country’s five Refineries
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Members of OCAC
Ten oil companies
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Areas of Focus
Effective supply logistics management
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Areas of Focus
Plan to overcome any port constraints
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Areas of Focus
Identifying the right energy source for Pakistan
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Areas of Focus
Petroleum product improvement plans
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Areas of Focus
Ensure the continued viability
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CONCLUSION
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QUESTIONS
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Spot market price effect
Before 1970After the oil crisis in 1973Benchmark of oil priceTwo prices concept
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Fixed price mechanism
Fixed price is the pegging price made between buyer and sellerRefinery to pay in 30 days after the B/LRefinery requires the buyer to pay in 5-15 daysThis kind of price method is rarely applied
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Product Oil pricing method
Pricing methodsPricing unitsPricing basis
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Pricing period
Bill of landing dateMutual agreementMultiple modes