The Globalization of Oil week 8

The Globalization of Oil week 8 - 1. The Globalization of...

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1. The Globalization of Oil Post world war Trying to control both supply markets in late 20’s, forming cartel and dividing markets between, Mesopotamian oil, 5/7 sister’s broke down in 1930’s because of east Texas. WWII drew to chaos, companies tried to exert to control supply Worldwide. Two countries that are important to understand to control supply/shape. Iran and Saudi Arabia are the two key suppliers after world war II and til today. Saudi Arabia 1930’s were looking for other sources, saw in Iraq there were some oil and colonized in other countries to look for concessions. That is how oil companies used to do business overseas with governments. Oil resources in US are different than other parts of the world, can be privately owned in this country. In other countries it is owned by governments. Asserted rights to oil (governments) arrangements they came to was a concession. Saudi: Chevron and Q: Why did American oil companies Chevron and Texaco gain the oil concession in Saudi Arabia as opposed to the other major oil companies? (I answered 4) 1) Offered big bribes 2) They were not party to the red line agreement which prevented other companies from exploring alone in Saudi Arabia. – companies that were not part of red line agreement, could go alone over there inside the red line. 3) The other companies thought developing in Saudi Arabia would cost too much 4) King Ibn Saud wanted to import American cultural customs into his new nation -60 year concession granted to Socal (chevron) not party to red line agreement. The whole peninsula -Texaco and Chevron merged because chevron did not have enough capital to go throughout the whole peninsula. Texaco = 50% -Everette degolyer mission : most famous oil geologist ever. Geophysical services GSI (incorporated) did geographical services with siteing graph surveys, Texas Instrument. -If US pledged to provide security to Saudi, than America could come in and do whatever. -Steel shipments from oil fields at the Persian gulf to northern Saudi. Required so much risk and capital to go through Saudi, needed Exxon mobile to invest into this. Red line agreement dissolved to participate in desert oil country. Paid off mr. 5% and Iraq and …. -Ghawar: 60-65% of oil is produced from there. The Jewel in modern oil society. Max simmons wrote a book (may want to read) technical information about development. Aramco Oil seemed to be so valuable, government tried to take it over and control this market. Did not come off, a sort of arrangement came in hand, Saudi and America came to a very diplomatic strong bond. The vast prize (Saudi Arabia) host governments started to demand more and renegotiate early concessions. First was Venezuela. Before was 10-20% and the companies would keep 80%, but Venezuela did not agree to this. Too valuable, so Venezuela renegotiated (gulf Exxon and shell)
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Oil minister Alfonso (learned the oil industry in US) and successfully negotiated a 50-50 split . Ibn Saud found out and wanted to do this. He renegotiated concession. Aramco partners had no
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This note was uploaded on 08/10/2010 for the course INTB 3351 taught by Professor Priest during the Spring '08 term at University of Houston.

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The Globalization of Oil week 8 - 1. The Globalization of...

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