THE INSITUTITIONAL REORIENTATION IN MIDDLE EAST OIL: POLITICAL AND ECONOMIC DETERMINANTS

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THE INSITUTITIONAL RE-ORIENTATION IN MIDDLE EAST
OIL POLITICAL AND ECONOMIC DETERMINANTS

• Professor Paul Stevens
• Centre for Energy, Petroleum and Mineral Law and
  Policy
• University of Dundee, Scotland
• IFE Conference Middle East Oil and Globalization
• Paris 2nd October 2000

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PRESENTATION OUTLINE

• THE CASE STUDIES
• THE FORM OF THE RE-ORIENTATION
• THE DRIVERS
• THE BARRIERS
• THE QUESTIONS

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THE CASE STUDIES

• IRAN
• KUWAIT
• SAUDI ARABIA

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IRAN

• 1977-8 OSCOS SECONDARY RECOVERY PLAN
• REVOLUTION/IRAQ WAR DELAYS
• PROBLEMS OF GAS FOR INJECTION
• EARLY 1990S DECISION TAKEN TO OPEN
• - CAPITAL/TECHNOLOGY AND CAPACITY
  PROBLEMS
• - REDUCE ISOLATION
• 1997-98 PUSHES BUY-BACKS (INTRODUCED 1990)
• BUT VERY SLOW PROGRESS
• - IRANS UNREALISTIC EXPECTATIONS
• - 1996 EXECUTIVE ORDERS AND ILSA(?)
• - NEED FOR SPECIFIC NEGOTIATION
• 1999 NIOC RE-STRUCTURING FRAGMENTATION
• NEW MAJLIS May 2000 - PSC CAMPAIGN FURTHER DELAY?

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KUWAIT

• LIBERATION AND FOREIGN COMPANY ASSISTANCE
• 1993 PROJECT KUWAIT DISCUSSION BEGINS
• - LOCK-IN ALLIED SUPPORT
• - NEED TECHNICAL ASSISTANCE
• MINISTERIAL DECISION 17 1994 COMMITTEE TO STUDY
  OPENING OPTIONS LINKED TO CAPACITY EXPANSION
• 1995 OPPOSITION FROM NATIONAL ASSEMBLY AND
  SUPREME PETROLEUM COUNCIL
• AUGUST 1998 KPC MAJOR RESTRUCTURING KOC KNPC AS
  DIVISIONS PICAND KOTC FOR PRIVATIZATION
• 1998-99 PROJECT KUWAIT DETAILS DEVELOPING AUGUST
  1999 QUESTIONNAIRE TO COMPANIES NEW COMMITTEES.
• NOVEMBER 1999 THE GREAT DEBATE!
• DEBATE CONTINUES IN NATIONAL ASSEMBLY
  (EVENTUALLY) IN FEBRUARY 2000 AND A NEW LAW PUT
  TO ASSEMBLY
• REJECTED FOR LACK OF DETAIL NEW LAW DEBATE
  STARTS END OF YEAR? VICTIM OF ASSEMBLY VERSUS
  FAMILY DEBATE?

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SAUDI ARABIA

• JANUARY 1997 SULTAN TO WASHINGTON SLEEPLESS IN
  SEATTLE
• MID 1997 POSITION PAPER FROM SAUD AL FAISAL TO
  ABDALLAH
• OCTOBER 1997 ALI NAIMI NO TO GAS ACCESS FOR
  OTHERS
• SEPTEMBER 1998 ABDALLAH TO WASHINGTON - MAKE ME
  AN OFFER!
• DECEMBER 1998 THE OFFERS BEGIN SPECIAL COMMITTEE
  CREATED SEPTEMBER 1999
• COMMITTEE STALLS UNTIL SAUD AL FAISAL RETURNS
• JANUARY 2000 SUPREME PETROLEUM COUNCIL REVIVED
• DECISION TAKEN TO ALLOW GAS ACCESS
• APRIL BIDS EVALUATED
• MEANWHILE SAUDI ARAMCO UNHAPPY AND CONSIDERING
  STRATEGIC REVIEWS
• SUMMER BIDS BEING EVALUATED AND DISCUSSED

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THE FORM OF RE-ORIENTATION

• RESTRUCTURING NATIONAL OIL COMPANIES
• OPENING ACCESS TO FOREIGN COMPANIES
• TALK OF DEREGULATION/PRIVATIZATION

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THE DRIVERS

• THE COMMON
• -IDEOLOGICAL
• -NEED FOR CAPACITY(?)
• THE SPECIFIC
• -LOCK-IN POLITICAL SUPPORT
• -ACCESS TO CAPITAL/TECHNOLOGY (?)

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THE BARRIERS

• CONSTITUTIONAL LIMITATIONS
• DOMESTIC POLITICAL OPPOSITION - THE SEVEN SISTERS
• CONFUSION WITH OTHER ISSUES
• RESERVATIONS ABOUT THE EFFECTIVENESS OF REFORM
• NATIONAL OIL COMPANY OPPOSITION (?)
• ATTEMPTS TO REFORM FROM WITHIN

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THE QUESTIONS

• THE SPEED OF CHANGE?
• RHETORIC VERSUS REALITY?
• IMPACT OF THE CHANGES?
• -OIL MARKETS
• -OIL COMPANIES
• -PRODUCER-CONSUMER RELATIONS