The Politics of International Oil
- Gov 365P/MES 322K: Class 13
The news -
-
From last time:
- The Middle East: What is to be done with
the "Global Balkans"?
- Brzezinski: "The combination of oil and
volatility gives the US no choice...an awesome challenge in
helping to sustain some degree of stability among precarious
states inhabited by increasingly politically restless, socially
aroused, and religiously inflamed people" (The Choice, p. 60)
Turkey as key
NATO ally? Kurdistan. Israel? but Palestine issue
- cf. Mearsheimer
and Walt - Israel an ally or embarrasment? Lebanon summer
2006.
- India? but
Pakistan and Afghanistan....
- EU and Japan
common interests and strategies with USA?
- China: threat or partner?
- partner re North Korea? - and Iran a rising
source of oil (but not exactly displacing Japan just yet!) - with
big investments that might trigger US ILSA (Iran Libya
Sanctions Act of 1996, due to expire 2001 but renewed until
2006) sanctions??
- CNOOC and UNOCAL - 2005 failed acquisition
(Chevron got Unocal with a lower bid)
- Saudi
Arabia - downstream integration with
oil refineries - and Sinopec's "political" 2004 nonasociated
gas deal to get a foot in the upstream door.
- Sudan
- Helsinki style (Organization for Security
and Cooperation in Europe - OSCE)
security arrangement for the region?
- What is the future of Iraqi
oil?
- China: threat or partner?
- partner re North Korea? - and Iran a rising
source of oil (but not exactly displacing Japan just yet!) - with
big investments that might trigger US ILSA (Iran Libya
Sanctions Act of 1996, due to expire 2001 but renewed until
2006) sanctions??
- CNOOC and UNOCAL - 2005 failed acquisition
(Chevron got Unocal with a lower bid)
- Saudi
Arabia - downstream integration with
oil refineries - and Sinopec's "political" 2004 nonasociated
gas deal to get a foot in the upstream door.
- Sudan
- Helsinki style (Organization for Security
and Cooperation in Europe - OSCE)
security arrangement for the region?
- What is the future of Iraqi
oil? Are product sharing agreements
(PSAs) rip-offs against the host country as Muttitt argues? - see our online
readings for further details.
The International Oil Companies
- Post oligopoly: the end of the Seven Sisters -
no more Texaco, Gulf, or Mobil
- no more full vertical integration
- the new "giantism" to seek upstream oil and
gas
Upstream Exploration and Development
- Concessions: IOC takes all after royalties and
taxes
- Product Sharing Agreements (PSAs) - your
Nigeria/Sao
Tome&Principe template example (you may copy and
paste!):
- signature bonus to host country
- production bonus (if oil actually
discovered and produced)
- scope: time and territorial area to be
explored
- minimum financial commitment of the IOC:
performance bonds
- management committee
- recovery of costs if oil is dicovered
["cost oil"<80% of (Gross production minus royalty)]
- tax oil
- profit oil to IOC declines in this example
from 80-20 to 25-75 as IOC recovers its costs
- train the locals
- force majeure (Clause 20)
- conciliation and arbitration
- renegotiation of contract and fiscal terms
(Clause 26)
-
Main
page
Oct. 17, 2006
- Department
of Government, University of
Texas at Austin.
- Questions, Comments, and Suggestions to
chenry@mail.utexas.edu
