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Investment by oil firms positively affects the futures basis and negatively predicts excess returns on crude oil futures. I build an equilibrium model of drilling, exploration, and storage to understand these facts. Firms’ capital stock lowers extraction costs as firms drill in increasingly expensive fields. Drilled wells produce the resource at a geometrically declining rate; however, by specifying consumers’ habit level equaling production from old wells, the futures basis and risk premium are only related to drilling, investment, and inventory. Investment leads to a more elastic drilling response by firms and dampens oil price increases from demand shocks, thus lowering the risk premium.

States burdened with conflict have been considered to be undesirable destinations for foreign direct investment (FDI) due to, inter alia, political instability, regulatory unpredictability, and expropriation risk. However, we develop an alternative view based on corporate governance and real option theories. We analyze a dataset of FDI location decisions made in the Oil and Gas sector by 250 US firms across 44 countries between 2007 and 2013. After controlling for energy reserves, the results show counter-intuitively, that civil war and terrorism risks, and terrorist events are positively associated with US investment in Oil and Gas. US subsidiaries also show high levels of ownership commitment. It is tempting to conclude that US Oil and Gas is a wholly unique, resource-bound case, but we argue that this disconnect may have occurred for two reasons. First, a threat of conflict and violence can make MNEs exercise their growth options and expand resource extraction sooner rather than later. Second, political instability does not necessarily lead to higher levels of FDI expropriation risk. On the contrary, instability can reduce the incentives for the state to seize assets from technologically superior MNEs, i.e. it may reduce expropriation risk. Just as the rule of law and 'good' governance can constrain a state from expropriation, there are theoretical reasons why 'bad' governance resulting from instability and incapacity may do so, too.

To meet the growing global demand for minerals and new energy sources, governments in the Global South advance policy interventions to improve the unequal distribution of the cost and benefits of resource extraction. This paper explains the politics behind the implementation of the Closing Development Gaps (CDG) Plan, a new redistributive plan on behalf of Amazonian Indigenous peoples near the oil circuit in the Loreto region of Peru. It emphasizes the long-lasting impact of mobilizing strategies of indigenous organizations, which relayed critical information to policymakers about the claims both old and new of Indigenous peoples neighboring the oil circuit. It also draws attention to the permeability of state institutions, which allowed newer state agencies with distinct policy streams to advance new solutions to old problems. While the CDG Plan seeks to improve resource governance by focusing on infrastructure gaps (e.g., water and sanitation, electrification), it excludes the “political gaps” and the most contentious claims related to the environment that have moved Amazonian Indigenous peoples into struggle in recent years.

Growing conventional wisdom suggests that authoritarian legislatures prevent oil nationalizations in party-based regimes. However, country scholars and media outlets remain skeptical. We develop a theory aligning with the skeptics. We argue that oil expropriations and legislative closures are endogenous to the process of the consolidation of party-based autocracies. New authoritarian parties close legislatures when they seize power and do not reopen them until they can ensure their dominance of the new legislature, a process abetted by oil expropriations. We test the argument using recently developed cross-case comparative Bayesian qualitative techniques. Evidence shows support for our theory. Our findings suggest that authoritarian legislatures are less constraining in terms of oil nationalizations than new conventional wisdom suggests. Additionally, our evidence points to a different interpretation of the role legislatures play in the evolution of authoritarian regimes.

Using a unique data set with detailed information on the derivative positions of upstream oil and gas firms during 1996–2008, we find that hedging intensity is positively related to factors that amplify chief executive officer (CEO) entrenchment and free cash flow agency costs. There is also robust evidence that hedging is motivated by the reduction of financial distress and borrowing costs, and that it is influenced by both intrinsic cash flow risk and temporary spikes in commodity price volatility. We present a comprehensive perspective on the determinants of corporate hedging, and the results are consistent with the predictions of the risk management and agency costs literatures.

Purpose - This paper aims to identify the pertinent factors for tacit knowledge transfer within a major state-owned Brazilian oil company - Petrobras.Design methodology approach - The research analyses the literature concerning tacit knowledge transfer within organisations and, using a quantitative approach based on exploratory factorial analysis, seeks to collect facts in order to identify relevant factors for tacit knowledge transfer within the organisation in question.Findings - It is seen that idiosyncratic factors, the knowledge management strategy adopted by the company, and its organisational structure are relevant elements for the success of tacit knowledge transfer within the organisation.Research limitations implications - The study was conducted just in the Sales and Marketing division of Petrobras. Therefore, its external validity cannot be tested and any attempt to make a statistical generalisation would be flawed. Another limitation is related to the acuity of perception of the employees involved in relation to tacit knowledge transfer. These limitations are related to the possibility of many varied interpretations of reality given by the respondents, in their attempt - not necessarily conscious - to paint a good picture of the company, to limitations of information available while they answer the questionnaire, to the epistemological model of the respondent, and to the very fact that they work in a state-owned, rather than in a public oil company.Originality value - Three propositions arising from the results obtained are consolidated and presented in order that they may be tested in a future explanatory study.

This article evaluates the potential of the current Corporate Social Responsibility (CSR) agenda for addressing issues related to societal governance. The investigation focuses on the experience of the oil and gas sector, which has been among the leading industry sectors in championing CSR. In particular, the article analyses the issue of revenue transparency, which has been the principal governance challenge addressed by multinational oil and gas companies. The article suggests that (1) tackling governance challenges is crucial to addressing the impact of corporate activities; (2) current CSR and policy initiatives are entirely insufficient in addressing governance challenges and (3) corporate activities may be contributing to governance failures.

In this article, we study nationalizations in the oil industry around the world during 1960–2006. We show, both theoretically and empirically, that governments are more likely to nationalize when oil prices are high and when political institutions are weak. We consider a simple dynamic model of the interaction between a government and a foreign-owned oil company. Even though nationalization is inefficient, it does occur in equilibrium when oil prices are high. The model's predictions are consistent with the analysis of panel data on nationalizations in the oil industry around the world since 1960. Nationalization is more likely to happen when oil prices are high and the quality of institutions is low, even controlling for country fixed effects.

Few issues in international affairs and energy security animate thinkers more than the classic topic of hegemony, and the case of the Persian Gulf presents particularly fertile ground for considering this concept. Since the 1970s, the region has undergone tumultuous changes, with dramatic shifts in the diplomatic, military, and economic roles of the United States, China, and Russia. In this book, Steve A. Yetiv and Katerina Oskarsson offer a panoramic study of hegemony and foreign powers in the Persian Gulf, offering the most comprehensive, data-driven portrait to date of their evolving relations.The authors argue that the United States has become hegemonic in the Persian Gulf, ultimately protecting oil security for the entire global economy. Through an analysis of official and unofficial diplomatic relations, trade statistics, military records, and more, they provide a detailed account of how U.S. hegemony and oil security have grown in tandem, as, simultaneously, China and Russia have increased their political and economic presence. The book sheds light on hegemony's complexities, and challenges and reveals how local variations in power will continue to shape the Persian Gulf in the future.

Purpose - The purpose of this paper is to investigate empirically the effects of quality management practices on operational and business performance.Design methodology approach - A reliable and valid survey instrument was used for data gathering from managers in the petroleum industry. A multiple regression analysis was conducted to determine the effect of quality management practices on operational and business performance.Findings - The results indicate that top management support, employee training, and employee involvement are significant variables explaining the variability of operational performance. Furthermore, a multiple regression analysis on business performance indicated the significance of top management support on business performance. The study also shows that customer orientation is not a significant predictor of business performance in the petroleum industry. In addition, focus on practices associated with human resource management (employee training and employee involvement) is critical in improving operational performance.Research limitations implications - Managers in the oil and gas industry need to emphasize practices associated with human resource management. Future studies should replicate this study with a larger sample size.Originality value - The study contributes to theory validation and development in quality management by investigating the effects of quality management practices on operational and business performance. The paper adds to the body of knowledge in quality management in the international context, specifically in the Middle East. In addition, it advances the literature on the practice of quality management in process industries, such as the petroleum industry.