GRM 2010 GRM 2011

Abstract Details

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Title of Paper:
The Race for Technology
Paper Proposal Text :
The purpose of this paper is to discuss the role of technology in both creating and resolving the current global oil crisis, along with the consequences on the Gulf Cooperation Countries (GCC) in particular.
The price of crude oil is down to nearly 30 percent of its high level in the third quarter of 2013.
Oil profits are lower than they have been in a long time, oil companies are suffering, and many oil-producing countries, who rely heavily on oil prices to maintain their economies, are equally suffering, in terms of both revenues and lost capital.
Technological advances in oil and gas developments and refining seem to be a major reason behind this crisis. Since last decade, the oil industry has aggressively adopted new technologies to maximize production and processing of oil and gas. This has resulted in an increased productivity that has arguably led to higher supply and falling prices.
Innovative technologies has created new production opportunities, particularly in fracking and deep water drilling. It has also allowed the development and creation of new competitive producers around the globe, but with a very high production cost.
Meanwhile, traditional producers like GCC countries have used technology to become more efficient at extracting oil at a lower cost.
This has encouraged many OPEC members to keep their high levels of production with a comfortable mark up, even though with less revenues.
The tactic by some OPEC members following this crisis has been to keep the price of oil low in order to put the higher cost oil producers out of business, hoping that this allows them to preserve their strategic importance through regaining control over the oil industry in a more effective way.
By early 2016, this tactic seems to be quite successful. Shale oil producers in the US in particular are reportedly producing less and are facing financial troubles. Latest reports indicate that the US federal government is interfering with the lenders to look for special financial arrangements to support small .and medium size oil producers. The number of new rigs seem to be decreasing. Cutting costs and Layoffs are taking place throughout the industry around the world.
However, since the beginning of the crisis major non-OPEC oil producers are concentrating efforts on innovative ways to cut costs. The only way that they will be able to stay in business is through technology, despite the success of other managerial and organizational measures.
The paper will discuss some of the technologies and measures that oil and gas producers are adopting to reach lower cost and efficient production.
Finally, the paper will try to answer the hypothetical question: what if those efforts to introduce new production techniques and technologies were successful in lowering the cost of production particularly in unconventional energy. What would the economic and geopolitical impacts be particularly on the GCC countries?
The methodology of the research depends mainly on published an unpublished reports and views of experts, and the personal analysis of the writer.