The Global Oil and Gas Industry-2010

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1. Oil is a commodity good which has no product differentiation. Thus the price is quite the same around the world. The supply of oil is abundant but many major oil-rich countries set up the group, OPEC, and act as monopoly. OPEC can set output and then play a vital role in world oil price. World demand of oil is increasing especially in non-oecd countries although there are alternative resources. Thus, as long as there is demand, the price will continue to go up. 2. The bases of competitive advantages are having oil resource and technology. Because exploration and production have to do at the countries who has oil, the countries has competitive advantage in holding resource. Besides, the relationship between foreign exploration or production companies with the resource owns countries are also important. However, some countries have a lot of oil reserve but don’t have technology to utilize it. They have to import oil from other countries. 3. One of the main factors which impact the structure and competitive dynamics of oil and gas industry is the stableness of oil and gas export governments. The unstableness of the oil export area will lead to the crude price fluctuation, and make the other stable, oil-export government gain their Competitiveness. Another factor is the size of the oil and gas company, the bigger it is, the more competitive, and the size is also include the vertical integration of the oil and gas company which make the resource of the raw material and the distribution channel more stable. 4. The earlier version of vertical integrations were out of cost-saving concern, like storage, design, refinery and other transaction costs, however, there’s still one major reason for vertical integration: the market share, to acquire enough market share, so as to ensure the survival in the industry, it’s vital to integrate vertically and horizontally. Due to the long product life cycle, it takes a long time to generate cash flow if the company participates...
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