Changing fiscal landscape

Abstract

Oil company and government relationships at the turn of this century are under intense pressure. These relationships are always in a state-of-flux but higher drama now exists in the heat of the current price shock. Just as the aftermath of the 1973 embargo has undergone nearly constant re-examination over the years, the dynamics of today’s industry will be reviewed and studied for generations. This is true for a number of reasons but particularly because governments are reconsidering their position with respect to their oil industry partners and many are taking action. Sometimes sorting out cause and effect is like chasing one’s tail. The dynamics are complex and fundamentals do not always provide the answers. The changing landscape is due to a number of things aside from this price shock, but the focus here is the future of the relationships between oil companies and governments. What was once the exclusive domain of the major international oil companies (majors) has become intensely competitive. Independent oil companies (independents), national oil companies (NOCs) and service companies are all encroaching upon the traditional domains of the majors. The major oil companies still have an edge in deepwater and frontier regions and with mega-projects, but even these areas are no longer exclusively theirs.

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