Multinational Oil Companies and Energy Security in The Emerging Economies
Yayan Satyakti, Universitas Padjadjaran, Indonesia, Phone +628122046007, E-mail:
Overview
The majority of the increase in global demand for energy comes from The Emerging Economies. At this moment, India and China are contributed about 30% of energy demand while Middle East over 20%. Majority of the energy consumption in The Emerging Economies still rely on traditional energy consumption such as fossil fuels. The needs of energy demand to fueling their economies sources from gas and oil, although renewables will play important rule in the future. However, in energy market the contribution of oil supply and sustainable production of fossil fuels have been contributed by oil companies (both nationals and multinationals). In fact the multinational companies such as ExxonMobil, Chevron, BP, Royal Dutch/Shell, Conoco Phillips, Saudi Aramco, Petrobras, CNOOC (China National Offshore Oil Corporation) are multinational companies which critically significant in energy market to retain energy security. In this paper I investigates the behavior both of national and multinational oil companies to secure the availability of their energy security interest.
To this date, the study of national and multinational oil companies as anecdotal, writings without rigorous empirical study. I conducted analysis by reconciling both micro behavior (national and multinational firms) such as risk measurement and macroeconomics indicators as decision factor to enter into domestic market or trade in international market to meet energy security issue. I distinguished the energy security by market and political energy security issues. Whether the oil companies prefer to responds investment countries or home country issue to operate their activity.
Methods
I conducted the analysis with Spatial Probit methods as a cooperative games approaches to identified the influence the decision variable to participate in energy security. I employed various database such as Wood Mackenzie Oil and Gas Database to investigates of each block of oil and gas revenue around the world. Trade data from various database such as COMTRADE, Global Trade Analysis Project (GTAP), BP Statistics, and World Bank Indicators.
Results
The spatial probit method is presented to address cooperative games of decision factors of multinational oil companies to participate of political and market energy security. The results show that multinational companies prefer to accommodate and participate in their home country rather than investment country. Increasing of risk in investment country affected on energy security, therefore managing proper policy for oil and gas revenue is necessary for the emerging economies to sustain their home energy security.
Conclusions
Multinational oil companies are affected by their home country, while the investment country should concern for developing strong domestic energy market to support domestic energy security. The emerging economies has to be accompanied with efficient national oil companies to ensure their energy security.
References
J.C. Murdoch, T. Sandler, W.P. Vijverberg, The participation decision versus the level of participation in an environmental treaty: a spatial probit analysis, Journal of Public Economics 87 (2003) 337–362.
Pilipovic, D. 1997. Energy Risk: Valuing and Managing Energy Derivatives. Columbus, OH: McGraw-Hill.