Frank C. Alexander, Jr., 2000. "Caspian Petroleum Transportation and Contractual Challenges, 1991–1999", International Oil and Gas Ventures: A Business Perspective, George E. Kronman, Don B. Felio, Thomas E. O’Connor, Mindy S. Kronman
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The Caspian experience has taught us not to take the timely construction of export pipelines crossing international borders for granted, even if the economics look good.—Frank C. Alexander, Jr.
The Caspian region, with its bountiful petroleum resources, opened to foreign investment in 1991 with the collapse of the Soviet Union. The international oil companies (IOCs) rushed to sign host government contracts (HGCs) with host countries for the development of large Caspian oil fields discovered during the Soviet era. Although the geologic risk was comparatively low, the foreign investor IOCs did not attach sufficient significance to the marketing risk peculiar to the region.
The Caspian experience has broken the paradigm that market forces may be relied upon to cause the construction of export pipelines crossing international borders if the quantity (and corresponding value) of reserves is sufficient to warrant the construction of such pipelines. We have learned that international and regional politics can produce formidable obstacles to the construction of such export pipelines, even where the project economics are attractive.
There were also other problems, including the difficulty of melding the Soviet system-based petroleum regimes with the modus operandi of the foreign investor IOCs. One of the most difficult issues has involved the insistence of Kazakstán and Turkmenistan on the application, for some projects, of the complex and overly bureaucratic Soviet style joint venture format HGC.
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A “one-stop” business view on how to succeed in international exploration and production. Success in the international upstream arena requires more than the technical ability to find oil and gas. Relationships with governments and people, mutually beneficial contracts, workable strategies, and implementation plans are necessary to build strong, mutually beneficial, and profitable ventures. Key components that drive exploration and production in the global environment are examined. Specific topics include negotiating for success, contracts, the role of technology in international strategies, cross-cultural relationships, alliances, and international upstream financing. Authors from around the world, representing industry, governments, national oil companies, consultants, and academia, contributed their perspectives. Views are provided from both sides of the negotiating table, the corporate boardroom, the resident manager, the explorationist, the businessman, and the theoretician. Geoscientists, engineers, and negotiators, who are, or would like to be, involved in the global energy business will find this collection an important reference.