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Page added on February 26, 2009

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Oil nationalism diluted but far from dead

LONDON (Reuters) – Resource-rich countries hoping oil will rebound from a $100 crash will not relinquish overnight the power that came with record prices, but relations between international firms and state-run companies have begun to thaw.

The price weakness of the 1990s, which culminated in a drop to around $10 a barrel in 1998, provided the context for deals on ultimately untenable terms. They were torn up when rising prices shifted the balance of power back to state firms.

Oil at around $40 now, down from a record near $150 last July, is more likely to help build bridges between state companies and foreign firms than to spur bargain-basement deals.

“Nobody really thinks we’re going to stay low … We’ll only see a change in behavior when that expectation is not there,” said Andy Brogan, an oil and gas specialist at Ernst & Young.

Reuters



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