CONOCOPHILLPS SPLIT: Vertical Integration on the Chopping blocks?

IHS Global Insight

A Supermajor Super No More?In an effort to build shareholder value, the US-based supermajor said yesterday it plans to break into separate companies—one for exploration and production (E&P), the other for refining and marketing (R&M)—in a rejection of the oil industry's model of vertical integration.

In a move that firmly rejects the notion that vertical integration is the best business model for the hydrocarbon industry, US-based ConocoPhillips announced yesterday that it plans to split itself into two companies, one focused on exploration and production (E&P), the other focused on refining and marketing (R&M).

Renegotiation Clauses in International Investment Contracts

By Liang Peng

The renegotiation clause is common in international investment contracts, especially in natural resources sector. Due to the long term nature of international investment contracts, unforeseen situations are likely to happen, breaking the economic equilibrium of the contracting parties, even destroying the contractual relationships between the parties. The renegotiation clause provides a legal mechanism for the parties to adjust the contract terms and restore the economic equilibrium set up when the contract signed. 

Yet, not all renegotiation goes smoothly, and often disputes over the negotiation process make the renegotiation between parties deadlock, or fail with the consequence of contract termination. Therefore, a third party solution is needed, i.e. arbitration. What is the role of the arbitrator in disputes over the renegotiation clause? How should the tribunal function to achieve the economic equilibrium of the contractual parties?

EVENT ANNOUNCEMENT: Q & A with Toyin Akinosho

The Lagos Oil Club Presents Q+A with Toyin Akinosho

"Winner of the CNN African Journalist of the Year, Toyin, a successful geologist, quit Chevron to pursue his passion in journalism and literature. When it comes to reaching a mass audience in the simplest yet captivating tone, Toyin gives rock solid advice."

The Q+A Session with Toyin Akinosho will be very interactive and topical issues such as:

DECOMMISSIONING: What do you know about it?

How does Decomissioning work?

By Jaime Kammerzell

Decommissioning oil and gas installations can cost operators an average of $4-$10 million in the shallow water Gulf of Mexico. Thus when the US Department of the Interior Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) Gulf of Mexico OCS Region issued a new decommissioning regulation in September 2010, operators knew they'd take a hit.

NTL 2010-G05 requires wells that have not been used for the last five years to be to be permanently abandoned, temporarily abandoned, or zonally isolated within 3 years after Oct. 15, 2010. If wells are zonally isolated, operators have 2 additional years to permanently or temporarily abandon the wellhead. Plus, platforms and supporting infrastructure that have been idle for five or more years must be removed within 5 years as of the Oct. 15, 2010 effective date.

PHOTO OF THE WEEK: Shape of things to Come.......!!!

By Joanna Rae

Reflections:

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Do you ever wonder?..

The next big Energy, Oil & Gas headline.. 

PEMEX: Antecedents of a Business Case

By Abiodun Musa

To provide an interdisciplinary frame work for strategic analysis of firms and markets in the oil and gas industry, I am interested in analysing the challenges of state owned oil companies using PEMEX as a case study. My focus will be on the background of the company, how it came into existence and identifying major problems faced by state owned oil companies (such as PEMEX[1]). In order to do this, I will also examine- in a 3-part series- the external context, regulations and conditions in which PEMEX operates its business, we will find out if the major stake holders in the company (Mexican people and its government) are really benefitting from their major resources (also the major source of income to the government). I will also analyse the market structure of PEMEX as a monopolistic company solely run by the Mexican state government- with a view to determining if that is good enough; if it has created any end product, etc. These are some of the questions that will be answered in this series. It will also be helpful to have an understanding of the performance of the company in the period under review, an understanding of its competitive advantage and thereafter I will make suggestions as are applicable. Come on

 this intellectually stimulating journey with me.

Policy Support Mechanisms for Renewables

By Zaheer A Shaikh

The high investment cost of renewable energy technology means it is clearly beyond the budgets of most governments to directly inject money in to renewables in order to fast track a competitive industry. This means the option of subsidy and direct financial rewards to the renewable energy generators would put a strain on government’s expenditure. In a monopoly market it is easier for the government to intervene in the market to promote renewables as the monopoly generator then would be compensated. However this becomes difficult in a completely liberalised market.

ARIN's CORNER--> PLANET MOON: Land for Sale

By Arinola Akinyemi

Plots of land available on planet Moon. Do not wonder what I am going on about here, all I am trying to say is the state of the earth is now getting to a very high alert level that I am getting worried if care is not taken; we may have to relocate from this planet to another, in this case the Moon (which is the only planet we have successfully explored as reported by NASA).

CORNFIELDS VS OILFIELDS: Take your pick

By Timothy Hurst

In light of recent remarks from Newt Gingrich in support of corn ethanol, as well as a new EPA report about the high environmental costs of corn ethanol, this infographic Online Schools approached us with couldn't be more timely.

NUTSHELL:

No Easy Answers for India Here

By Zaheer A Saikh

Further to our story on Iran – India Crude Oil Bill Payment issue (dated 18 April 2011 post found at http://www.themixoilandwater.com/2011/04/india-between-dollar-and-rupee.html) the impasse is not over yet. The National Iranian Oil Company (NIOC) through letters sent to Indian refineries has said that it will halt supplies to Indian refineries in August 2011 if the two countries do not find a solution to this impasse (Hindustan Times reports-http://www.hindustantimes.com/Iran-says-could-halt-oil-supplies-to-India-in-Aug-sources/H1-Article1-716106.aspx).