[mmasters]

Most countries have oil nationalized anyway but could further nationalization take place with countries cutting out future contracts or allocated reserves away from exporting with an increasing global peak oil awareness? If so which countries are possible candidates to do this sort of thing?

[rockdoc123]

depends on what you mean by "nationalized". Most countries have legislation that says they are the only ones who can own the oil but most also have contractual arrangements in place where foreign companies can produce and earn a share of the production for which they pay heavy royalties etc. There are less companies that are truly nationalized (i.e. no foreign participation allowed at all). Mexico was like that until recently and then decided they had to enter into service contracts with foreign companies. It may seem like semantics but it really isn't about who owns the oil but rather who is allowed to produce it and be paid for doing so.

That being said it comes down to what you can afford to do in your own country. Saudi has managed a nationalized environment quite well because they have a relatively low population (up until recently) that they had to support and immense resource. Oil and gas E&P is a capital intensive business which is something missed by most people. It requires heavy investment to get returns that aren't really that great on a percentage basis versus many other industries. For countries like Saudi Arabia who do not have a huge population (comparatively) there is no problem in putting a lot of the profit from production back into the fields in order to maintain or increase production. For countries like Venezuela where the despot in charge needs support from the masses the money from hydrocarbon production ends up going mainly into social programs, which seems nice in theory but is bad in business as it means the oil fields aren't getting the reinvestment required to maintain or increase production resulting in a precipitous downward spiral in production . To my mind this is why a nationalized industry can't work for very long. Countries need to take their oil and gas profits and invest them in works and social programs. They should not have to be funding continued oil and gas investment...do that with someone elses money and there are lots of companies who will step up to the plate if the deal is reasonable.

[radon]

One of the important drivers behind Russian oil privatizations in 1990s was the need for cost reductions necessitated by the low oil prices at that time. Particularly, the government could not politically afford slashing the social spending borne by the oil producers (schools), and delegated this "dirty" work of "business-optimization" to the new owners, along with the equity stakes.

In the environment of high oil-prices the cost controls are not that critical. Nevertheless, in the challenging climatic conditions and vast distances in which the Russian oil majors operate, it is important for them to have competent bosses, probably awarded with equity-linked remuneration. It would be difficult, even though not impossible, to manage them from a single ministry or state company office.

[mmasters]

depends on what you mean by "nationalized". Most countries have legislation that says they are the only ones who can own the oil but most also have contractual arrangements in place where foreign companies can produce and earn a share of the production for which they pay heavy royalties etc. There are less companies that are truly nationalized (i.e. no foreign participation allowed at all). Mexico was like that until recently and then decided they had to enter into service contracts with foreign companies. It may seem like semantics but it really isn't about who owns the oil but rather who is allowed to produce it and be paid for doing so.

That being said it comes down to what you can afford to do in your own country. Saudi has managed a nationalized environment quite well because they have a relatively low population (up until recently) that they had to support and immense resource. Oil and gas E&P is a capital intensive business which is something missed by most people. It requires heavy investment to get returns that aren't really that great on a percentage basis versus many other industries. For countries like Saudi Arabia who do not have a huge population (comparatively) there is no problem in putting a lot of the profit from production back into the fields in order to maintain or increase production. For countries like Venezuela where the despot in charge needs support from the masses the money from hydrocarbon production ends up going mainly into social programs, which seems nice in theory but is bad in business as it means the oil fields aren't getting the reinvestment required to maintain or increase production resulting in a precipitous downward spiral in production . To my mind this is why a nationalized industry can't work for very long. Countries need to take their oil and gas profits and invest them in works and social programs. They should not have to be funding continued oil and gas investment...do that with someone elses money and there are lots of companies who will step up to the plate if the deal is reasonable.

The question then becomes in the wake of oncoming PO awareness will countries decide to break/modify their contractual arrangements to allocate and secure (hoard) more future oil for themselves? Surely it can be done, probably not without threats of war/sanctions or some such but I'm curious if anybody is likely to do such a thing or join a trend in this direction.

If a third world country gets their imports shut down in a supply/demand crisis they may decide to hoard all their oil for thier own useage/energy security.

[Pops]

There are two types of countries, those that import oil and those that export.

Doc is thinking about production nationalization and of course that's important with regard to export volumes but more important in a depleting energy world is inter-nationalization of consumption.

It's what the US has been doing via gunboat since forever, what China's been doing for 20 years anyway - lately with US Dollars. It's what every country now understands is required whether they talk about it or not. Even bankrupt Italy understands, it's government controlled ENI did a deal with Lybia's rebels just last september to lock up oil production.

This is what declining Net Available Exports is all about, countries with guns making deals with countries with oil.

[rockdoc123]

If a third world country gets their imports shut down in a supply/demand crisis they may decide to hoard all their oil for thier own useage/energy security.

They might as long as they had everything else they needed to survive (i.e. food, clothing, shelter) and did not count on using the oil as trading capital. But then there comes the question of where that country is going to get the money to invest in their own oil and gas E&P business? What about services? Once a country is nationalized the hopes of getting the Schlumbergers and Halliburtons of the world to line up to do business without secured funds is a lot smaller.

Could it happen? Yes especially if countries didn't think it through or be bothered to learn from history. One only need look at examples where countries have nationalized such as Venezuela and Mexico and the result (they had to back track and re-open their industry simply because of the lack of investment in fields).

[SeaGypsy]

I think the assumption towards nationalism is a natural kneejerk reaction, which ultimately won't happen for the reasons alluded to already. ELM is already looking more like a divisive force for exporters, necessitating the end of the American Dream' for the vast majority of their citizens. Result: chaos, civil war/ continued exports.

[Pops]

Here's a thread I started a while back about nationalizations

nationalizing-oil-t59508.html?hilit=nationalize