Most of the International Oil Companies have been started as national corporations operating only on the domestic market. In general, the history of the IOCs goes back to 1850s when domestic oil industry development was marked by significant growth (Mohr, 1976), and many companies like Marathon Oil began to penetrate into other markets given a start to International Oil Corporations (Marathon Oil corporation History, 2005).
The international expansion of International Oil Companies began at the beginning of the XX century when substantial oil fields were discovered in Asia. For instance, explorations of oil in India had been started in 1875, and after that time some International Oil companies sterted their activity in the Assam region. According to the historical data production of oil was about 0.30 million tones at the end of the XIX century.
The main problem of national oil industry of many less developed countries was that the oil fields discovered by the public sector were literally gifted to the private sector without recovering the direct costs, let alone the sunk costs, written off over the years, for futile exploration activities in other parts of the country and abroad. The oil reserves were underestimated by design or ignorance about the speculative nature of oil reserves estimation. It is well known that oil reserves generally increase with time, as more and more data is made available during production from these fields.
The private sector was given the international prices, which had been denied to the public sector for exploitation of these fields discovered by the public sector oil companies. Some minor explorations by national companies took place in Asia, but as experts suppose "production from these fields was uneconomical as the administered price given to the two national oil companies was very low as compared to international crude oil price" (Yeomans, 2004).
National companies addressed their governments for international crude oil price for economic exploitation of these discoveries but neither of them got any response. So, it is evident that during the fist stage of global expansion IOCs received greater possibilities and opportunities than national companies in less developed countries, and for this reason the first successful steps on the international arena resulted in rapid growth of IOCs.
The next stage of IOCs development was closely connected with political and legislation changes. At the beginning of the XX century the "landlord was able to lease his land with its mineral rights to a lessee who gained rights in petroleum Exploration and Production" (Mohr, 1976). So, the system of leasing supported the start and development of International Oil business. During this period of time most IOCs were represented by joint-ventures, like Anglo-Persian Oil which in 1938 was developing oil fields in Iran, and Kuwait (Kuwait: Oil Fields, Gas Fields, 1993). During this period there were a variety of arrangements for joint developments and alliances. Some were very formalised inter-organisational relationships; at the other extreme there were very loose arrangements of co-operation between organisations, with no shareholding or
International Oil industry is the main and one of the most important industries in the world. The history of its development goes back to the previous century when the first International Corporation emerged. The history of development of various corporations, as a rule, testifies, that the level of profit is a result of successful political strategy provided by the counties…
The author says that Libya and Iran are two oil-rich countries where nationalization of international oil companies have taken place with various legal problems where the International Court of Justice (ICJ) have intervened and have declared various decisions. The large multinational oil companies have attained efficiency.
Argentina is reported to have found itself in this unfortunate situation following the privatization of one of its largest oil and gas companies, YPF Oil and Gas Company, in the 1990s (Minder 2012). YPF was later on sold off to the Spanish company Repsol.
On the other side, fossil fuel accounts for the major portion of the world’s total energy consumption. The abundance of oil has created both opportunities and troubles for many nations, especially those in the Middle East for the past several decades. An oil-rich region today has the potential to influence the international politics and economic conditions of the entire globe.
So put together, the word will be read as rock oil, which is an apt reference. This paper will focus on the importance of oil in the Middle East. The oil industry is by far the biggest industry in the world. So it is clear that oil is a precious commodity and those countries who have been blessed with it will value it highly.
The market for the oil is very unusual. In the short-term, both the supply and demand are highly inelastic. This is because it is not easy to adjust the use of oil and it's by product. The oil users are shocked by the high prices but due to their habits and commitments that determine their use of energy, they take time to adjust.
This has led to a tremendously increased demand for oil in the world, which is supposed to be met by the same oil producing and exporting countries. The impact of this rising demand for oil combined with declining reserves of world oil can be seen on the price at which oil is being sold and purchased in the international markets.
Also, maximum production is not attained due to inefficiencies in the economy. Also, the fate of the oil industry is often directly related with the political turmoil and wars which raged in Iraq during the past 25 years (Middle East Economic Survey 2004).
Typically, the entire oil business is divided into three main parts which are the upstream, midstream, and downstream sector. The upstream sector is concerned with the location and extraction of oil from various parts of the world while the midstream is concerned with the processing of extracted oil to marketable products as well as the transportation of such products.
Oil prices will keep soaring which will ultimately stimulate discovery of oil reserves.
Both viewpoints are important and debatable but the most important concern is how organizations should be given the incentives to incorporate strategies to
It also plays a crucial part of the American economy. The U.S is among the leading producers of oil globally (Vassiliou 70). As of 2011, the sector accounted for 12.2 percent of the gross domestic product. As production and
2 pages (500 words)Essay
Got a tricky question? Receive an answer from students like you!Try us!
Let us find you another Essay on topic The IOCs in the oil industry for FREE!