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Xerox University Microfilms 300 North Z eab Road Ann Arbor, Michigan 48106 74-21,995 STURGEON, James Ivan, 1945- jo m r VENIURES IN THE INTERN/VTIONAL PETROLEUM INDUSTRY; EXPLORATION AND DRILLING. Tlie IMiversity of Oklahoma, Ph.D., 1974 Economics, general University Microfilms, A XEROX Company, Ann Arbor, Michigan © 1974 JAMES IVAN STURGEON ALL RIGHTS RESERVED THIS DISSERTATION HAS BEEN MICROFILMED EXACTLY AS RECEIVED. THE UNIVERSITY OF OKLAHOMA GRADUATE COLLEGE JOINT VENTURES IN THE INTERNATIONAL PETROLEUM INDUSTRY; EXPLORATION AND DRILLING A DISSERTATION SUBMITTED TO THE GRADUATE FACULTY in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY BY JAMES I. STURGEON Norman, Oklahoma 1974 JOINT VENTURES IN THE INTERNATIONAL PETROLEUM INDUSTRY; EXPLORATION AND DRILLING APPROVED BY DISSERTATION COMMITTEE ACKNOWLEDGEMENTS This study is submitted with appreciative acknowledgements; To Dr. W. Nelson Peach, George Lynn Cross Research Professor of Economics, for supervision of the study; To other committee members. Dr. Jim E. Reese, David Ross Boyd Professor of Economics, Dr. Alexander J. Kondonassis, David Ross Boyd Professor of Economics, Dr. Thomas D. Curtis, Associate Professor of Economics, and Dr. David R. Morgan, Associate Professor of Political Science, for their advice and suggestions. To Maribeth Sturgeon for her assistance in editing the manuscript. IV TABLE OF CONTENTS Page ACKNOWLEDGEMENTS .................... iv LIST OF TABLES ............................................... vil LIST OF FIGURES .............................................. xi Chapter I. INTRODUCTION ......................................... 1 ^ Framework and Scope Sources Procedure II. SURVEY OF THE LITERATURE .............................. 14 Industrial Organization Literature Petroleum Industry Literature The View of Industry The Antitrust View Jll. MAGNITUDE, PARTICIPATION AND CONTROL OF JOINT VENTURES ....................................... 39 Joint Activity Characteristics Joint Exploration Activities Joint Concession Activities Joint Drilling Activities Joint Discoveries Magnitude Participation International Majors International Minors Local Private Capital Local Governments Non-Host Governments "Others" Individual Company Participation V Chapter Page Control International Majors International Minors "Mis cellaneous" Summary IV. JOINT VENTURE PARTICIPATION PATTERNS .................... 94 International Majors Majors and Local Private Capital Majors and Governments International Minors Minors and Local Private Capital and Governments International Majors and Minors Consistent Partnerships Joint Venture Evolution V. JOINT OWNERSHIP OF THE MEANS OF PRODUCTION IN THE INTERNATIONALPETROLEUM INDUSTRY ...................... 154 Joint Venture Magnitude International Majors International Minors International Majors and Minors Order and Organization VI. SUMMARY ANDCONCLUSIONS .............................. 190 APPENDIX ..................................................... 196 BIBLIOGRAPHY .................................................. 451 Vi LIST OF TABLES Table Page 1. Number and Size of Joint Concessions in Ten Geographic Areas, 1957-1971 ................................. 53 2. Exploration and Drilling Joint Ventures, by Type of Activity and Area, 1957-1971 .......................... 59 3. Participation in Joint Activities, Ten Areas, 1957- 1971 ...................................... 60 4. Joint Ventures and Joint Activities by Geographic Area, by Type of Activity, and by Participant, 1957-1971 ..... 66 5. Joint Venture Participation by Company and by Geogra phic Area, 1957-1971 .................................. 77 6. Control of Joint Ventures and Joint Activities, by Participant Group and Geographic Area, 1957-1971 ....... 83 7. Joint Venture Concessions by Area and Participant Control, 1957-1971 .................................... 86 8. Joint Venture Control, by Group Participant and Area, 1957-1971 ....................................... 88 9. Joint Ventures by Type of Participant and by Type of Activity, Ten Areas, 1957-1971 ..................... 96 10. Illustrative Joint Ventures Involving Two International Majors, 1957-1971 ..................................... 98 11. Illustrative Joint Ventures Involving Three or Four International Majors, 1957-1971 ....................... 100 12. Average Number of Participants In Joint Ventures For the International Majors and International Minors, Ten Geographic Areas, 1957-1971 ....................... 102 13. Participants in Iranian Oil Exploration and Producing Company, 1971 ......................................... 103 vli Table Page 14. Joint Interlocking Ownership Arrangements Among the International Majors in Which the Majors Own Controlling Interest, Ten Geographic Areas, 1957-1971 ............................................. 106 15. Illustrative Joint Ventures Between the International Majors and Local Private Capital, 1957-1971 ............ m 16. Joint Interlocking Ownership Arrangements Among the International Majors and Local Private Capital, Local Governments, and Non-host Governments, Ten Geographic Areas, 1957-1971 ........................... 115 17. Illustrative Joint Ventures Between the International Minors, 1957-1971 ....................... 118 18. Joint Interlocking Ownership Arrangements Among the International Minors, Ten Geographic Areas, 1957-1971 ...................................... 122 19. Illustrative Joint Ventures Between the International Minors and Local Private Capital, Local Governments, and Non-host Governments, 1957-1971 ................... 127 20. Joint Interlocking Ownership Arrangements Between the International Minors and Local Private Capital, Local Governments, and Non-host Governments, Ten Geographic Areas, 1957-1971 ........................... 129 21. Illustrative Joint Ventures Between the International Majors and the International Minors, 1957-1971 ......... 132 22. Joint Interlocking Ownership Arrangements Between the International Majors and the International Minors, Ten Geographic Areas, 1957-1971 ....................... 135 23. Joint Interlocking Ownership Arrangements Among the International Majors and Minors, Ten Geographic Areas, 1957-1971 ...................................... 140 24. Joint Interlocking Ownership Arrangements by Participant and Geographic Area, 1957-1971 ............. 141 25. Illustrative Consistent Partnerships in Joint Ventures for Selected Participants, 1957-1971 .................. 146 26. Ownership Changes in Dansk Underground Consortium and Arabian American Oil Company, by Participant and Company, 1933-1965 .................................... 149 viii Table Page 27. Joint Petroleum Concessions, Production, Pipelines, and Refining Capacity, Ten Geographic Areas, 1971 ...... 158 28. Number of Joint Interlocking Ownership Arrangements in Exploration and Drilling, Producing Operations, Pipeline Systems, and Refining Operations, Ten Geographic Areas, 1957-1971 ........................... 159 29. Amount of Joint Petroleum Concessions, Production, Pipelines, and Refining Capacity Controlled by the International Majors, Ten GeographicAreas, 1971 .......... 163 30. Amount of One-owner Petroleum Production, Pipelines, and Refining Capacity, Controlled by the Inter national Majors, Ten Geographic Areas, 1971 ............ 164 31. Number of Joint Interlocking Ownership Arrangements in Exploration and Drilling, Producing Operations, Pipeline Systems, and Refining Operations, Inter national Majors, Ten Geographic Areas,1957-1971 ........ 166 32. Amount of One-owner Petroleum Production, Pipelines, and Refining Capacity Controlled