STATE OIL COMPANIES HAVE MAJOR ROLE IN OIL WORLD
The trendy, but already slightly shop worn phrase "New World Order" is right on the mark when it comes to the oil world and the emergence of powerful state-owned oil companies, which are the subject of the special report that follows. This new order didn't appear suddenly but has been years in the making.
The most significant boost to this development began 20 years ago. That summer of 1973 it appeared that it was going to be business as usual. American troops had departed Viet Nam, Arab Light crude was about $2.40/bbl, and the tankers of the international oil majors (the "seven sisters") ruled the waves from Bantry Bay to the Strait of Malacca. Four of the American sisters produced the largest oil reservoirs in the world in Saudi Arabia.
But events that fall stunned the world.
On Oct. 6 another Middle East war erupted along the Suez Canal and the Golan Heights. Two weeks later Arab oil producers declared an embargo on crude oil shipments to the U.S., the price of crude began a breathtaking spiral upwards, and later the first lines since World War II appeared at U.S. service stations.
The Nixon administration in the U.S. had earlier put practically everything under price controls, including crude oil. After the gasoline lines disappeared and the embargo ended, American motorists realized what a sweet deal price controlled crude gave them at the pump, and they sent consumption to record levels. This of course propped up the world price of crude.
These events, and the flood of money that poured into the treasuries of crude oil exporting countries, inspired them to demand more control over their hydrocarbons, chart independent courses, and strengthen their state-owned oil companies.
A result is strong and large state-owned oil companies, which have jumped beyond production operations to move aggressively downstream at home and overseas.
The significant role of the state-owned companies in the oil world has prompted the journal and its editors to take a close look at their structures and organization. The focus in this issue is on those owned by the prolific oil producing countries of the Middle East and of two Western Hemisphere giants. These countries account for roughly one third of world oil production.
Following are the Journal editors responsible for the articles in this report:
L.R. Aalund, Houston - Saudi Arabia
Bob Tippee, Houston - Iran and Abu Dhabi
Bob Williams, Tulsa - Mexico
Alan Petzet, Tulsa - Venezuela
David Knott, London - Kuwait
Guntis Moritis, Houston - Indonesia
Copyright 1993 Oil & Gas Journal. All Rights Reserved.