Environmental Engineering Reference
In-Depth Information
to Gazprom). This involved reinforcing the state-controlled Rosneft oil
company, and passing legislation to prevent foreign oil companies taking
majority stakes in any “strategic” oil and gas fields. Putin took particular aim
at what he called the “colonial” nature of production-sharing agreements
(PSAs) that a few Western majors had negotiated in the 1990s.
PSAs, which allow an oil company to recover all its costs from oil
sales before it has to pay any tax or royalty, act as a kind of financial
ring-fencing to protect a project from arbitrary interference in countries
judged unstable. And as such they have frequently been used in develop-
ing countries - hence Putin's use of the word colonial. Two PSAs that were
signed in the 1990s concerned two huge gas projects at Sakhalin island on
Russia's Pacific coast, from one of which Shell was effectively pushed out
to make room for Gazprom.
These moves owe something to the individual temperaments of Chavez
and Putin. But they came against a background of an almost steadily
rising oil price from 1999 to 2008, which understandably whetted the
appetite of host governments for a bigger slice of oil revenue, regardless
of the niceties of contract with foreign partners. So, during the 2000s,
other governments revised contracts to get better terms from foreign oil
companies as the oil price went up, though none went as far as Venezuela's
across-the-board nationalization.
Ironically, if there was one oil-producing country that could not afford,
in terms of its own public opinion, to appear a soft touch for foreign oil
companies, it was Iraq. Aware of the widespread belief which was not
completely unfounded that the US invaded Iraq in 2003 for its oil, the
Iraqi government knew it had to take a tough negotiating stand. And so
it did, when in 2009 Baghdad started to auction oil leases to foreign com-
panies. Some countries are not as possessive of the exploitation of their
natural gas as they are of oil. Saudi Arabia, for instance, would not dream
of inviting foreign companies in to prospect, on their account, for oil, but
has been happy to let them look for gas.
NOCs - shaped by history
The individual character of NOCs is somewhat shaped by the nature of
their transformation from IOC operations. In the case of Saudi Arabia,
there was a smooth transition of Aramco (the Arabian American Oil
Company) into Saudi Aramco. The Saudis retained the expertise of the
US companies that made up the Aramco consortium until they the Saudis
felt able to take over. Today Saudi Aramco is rated as the top NOC, not
