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Figure 17-4 shows first the life cycle of the asset under present technology, as indicated by the curve F 1. With present technology, the exploration phase covers 10 years (with negative cash flows), while the development and production period lasts for about 15 years, up to exhaustion at about year 27.

Prospects for these offshore deposits would be greatly improved by advances in drilling technology under the difficult conditions found in very deep water.

An advance in this technology, portrayed as curve F 2 , would extend the life cycle of the asset and vastly enhance financial returns: the exploration phase would be shorter, the development and production phases would be longer, and exhaustion of the deposit could be pushed out 5 years or more.

Of course, offshore drilling involved environmental risks that may cause host countries and foreign oil firms to have some second thoughts about undertaking very expensive and difficult-to-manage deepwater deposits. These risks become much in evidence after the May 2010 oil spill in waters off the Gulf of Mexico, involving British petroleum and several other firms.

Capturing benefits from energy endowments for emerging nations

As earlier noted no emerging nation, even those with large NOCs such as China’s CNooc or Brazil’s Petrobras has the technology to tap all available hydrocarbon sources, especially the relatively inaccessible and expensive newly diverse shale and pre-sal deposits and deposits lying under 10,000 feet of salt water.

For both types of deposits, there will be for some time need for foreign technology and capital to get hydrocarbons out of the shale, or out of deepwater deposits. That being the case, how can emerging nations best protect their interests in dealing with foreign firms such as Exxon, Chevron, Statoil, and Total.

One option would be to merely hire the firms to bring their exploration and drilling technology to the table and pay just for the technology? Ecuador attempted to do this in 1981. The State Oil Co. asked the author to advise them on whether or not they could just pay the foreign oil companies just to bring their technology capital, but with no share of any oil produced. It was clear that this would not work, for at least two reasons:

  1. Large oil companies are organized to be big oil companies. They do not see themselves of simply sellers of technology or suppliers of the billions of dollars of capital required for oil exploration and development. They seek a share of oil or gas produced. They are, after all, oil companies.
  2. For many emerging nations, such as Ecuador, Thailand, Colombia, the revenues of the oil companies are as big or usually even bigger than your EDP. That meant they are better able, or at least as able, to shoulder the major risks in all oil business:
    1. Market risk (what will be the price of oil internationally 2-5 years down the road, given volatile energy markets such as the world has experienced for decades).
    2. Technological risk – typical oil and gas projects today run into several billions of dollars. But there is no guarantee that commercial reserves will be found when this money is spent.

Questions & Answers

the diagram of the digestive system
Assiatu Reply
How does twins formed
William Reply
They formed in two ways first when one sperm and one egg are splited by mitosis or two sperm and two eggs join together
Oluwatobi
what is genetics
Josephine Reply
Genetics is the study of heredity
Misack
how does twins formed?
Misack
What is manual
Hassan Reply
discuss biological phenomenon and provide pieces of evidence to show that it was responsible for the formation of eukaryotic organelles
Joseph Reply
what is biology
Yousuf Reply
the study of living organisms and their interactions with one another and their environments
AI-Robot
the study of living organisms and their interactions with one another and their environment.
Wine
discuss the biological phenomenon and provide pieces of evidence to show that it was responsible for the formation of eukaryotic organelles in an essay form
Joseph Reply
what is the blood cells
Shaker Reply
list any five characteristics of the blood cells
Shaker
lack electricity and its more savely than electronic microscope because its naturally by using of light
Abdullahi Reply
advantage of electronic microscope is easily and clearly while disadvantage is dangerous because its electronic. advantage of light microscope is savely and naturally by sun while disadvantage is not easily,means its not sharp and not clear
Abdullahi
cell theory state that every organisms composed of one or more cell,cell is the basic unit of life
Abdullahi
is like gone fail us
DENG
cells is the basic structure and functions of all living things
Ramadan
What is classification
ISCONT Reply
is organisms that are similar into groups called tara
Yamosa
in what situation (s) would be the use of a scanning electron microscope be ideal and why?
Kenna Reply
A scanning electron microscope (SEM) is ideal for situations requiring high-resolution imaging of surfaces. It is commonly used in materials science, biology, and geology to examine the topography and composition of samples at a nanoscale level. SEM is particularly useful for studying fine details,
Hilary
cell is the building block of life.
Condoleezza Reply
what is cell divisoin?
Aron Reply
Diversity of living thing
ISCONT
what is cell division
Aron Reply
Cell division is the process by which a single cell divides into two or more daughter cells. It is a fundamental process in all living organisms and is essential for growth, development, and reproduction. Cell division can occur through either mitosis or meiosis.
AI-Robot
What is life?
Allison Reply
life is defined as any system capable of performing functions such as eating, metabolizing,excreting,breathing,moving,Growing,reproducing,and responding to external stimuli.
Mohamed
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Source:  OpenStax, Economic development for the 21st century. OpenStax CNX. Jun 05, 2015 Download for free at http://legacy.cnx.org/content/col11747/1.12
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