Nationalization of energy resources
Cui ming-ming Student ID : S06106 Law School
Research Paper Suoerviosr : Dr. Sekou Conde
Minzhu University of China
2006-2007 Academic Year
In recent years, many countries claim that they will control their energy resources by themselves. That means many foreign companies in these countries have to transfer their right to these countries’ government or companies which controlled by them. Nationalization of energy resources will be a trend and spread in worldwide. In this text, I will introduce something like??/span> the storm of nationalization is coming; the voices about this event; the reason of nationalization of energy resources; the impact of the storm. At last, we can see that what china will do to deal with this event.
The storm of nationalization of energy resources is coming:
1??/span>Recent news
May 1, 2006. The government of Bolivia suddenly announced that it will make its oil and gas resources to engage in "nationalization". That caused the world oil price shocks, in international market the price of crude oil futures approaching 74 dollars per barrel, a new high-record in history.1
Before Morales (President of Bolivia) announced the nationalization of energy, he met with the Cuban leader Fidel Castro, Venezuelan President Hugo Chavez and signed an economic integration agreement in Havana. In the view Western media, it was interpreted as the establishment of the three countries in the Latin American and "anti-U.S. alliances." These international comments believe that Morales is following the nationalization of Venezuela engage resources. That shows a new trend: the wave of Latin American’s left-wing anti-American is escalating
With another Latin American countries --- Bolivia, the government has recently successfully completed the nationalization of the energy reform, People may notice, nationalism that occurred in the 1970s now returned. In the age of 1970 the price of oil was very high.
2??/span>Global spread
In fact, the wave of nationalization of energy stocks is spreading in global now.
The first wave of energy nationalization scratches in Russia which is the world's second largest oil exporter. May 2005, Moscow makes Yukos Oil Company to transfer its main assets to state-owned. Subsequently, allowing the Russian natural gas company which is the state-owned energy enterprise, to acquisit the Siberian oil company. Some foreign oil companies because of the pressure of the Kremlin and had to give up some mining projects in the Russian oilfields. For example, the Shell oil company is under the strong pressure which comes from the Kremlin Palace. The company will be forced to abandon the project in Sakhalin. For the part of shares it will be free of charge transferred to the Russian government and the Sakhalin local governments. Moreover, the French oil company, involving in the project of the Russian Khariaga in oil field, has encountered serious difficulties. Because Gazprom Company, which is a Russia's state-controlled company, has claim that they will explore this astonishing reserves of oil and gas fields by it self, and the original agreement signed before will face with the risk of failure.
In Latin America which has rich petroleum resources, the energy nationalization movement has also become a trend. April 1, 2006, the world's fifth largest exporter of crude oil, Venezuela announced that they will drastically increase the tax and royalties, for foreign oil companies in Venezuela. To fully control the country's oil resources, Venezuela also asked all the foreign investment in the oil enterprises to sign some new contacts with the National Petroleum Company. Venezuelan President, who be called Anti-U.S. fighters, Chavez swooped oil as a weapon which struggle with American. With his influence, some South American countries which have some discontent with the United States, such as Bolivia have joined the "energy nationalization" camp. Mid-April 2006, another major oil-producing country of South America Ecuador also promulgated the oil reform law, Ecuador provides foreign oil companies to reinvest their 50% profits, and re-negotiate oil contracts with their companies. Then, the Bolivian government also promulgated the nationalization of oil and natural gas resources Act...
In addition, Nigeria in Africa and Kazakhstan in Central Asia, The government has also given state-owned energy enterprises a priority in the energy development. Middle East oil power, Iran has announced that they will reduce Japanese companies’ shareholding in the country's oilfields in mining projects
The voices about this event??/span>
Nationalization of energy resources is a dangerous road for Latin America to go down, the International Energy Agency warned in Madrid on May 4, saying that nationalization of gas reserves by Bolivia had alarmed investors. The deputy director of the IEA, William Ramsay, told the Spanish economic newspaper Expansion that Bolivian President Evo Morales "knows that he needs the financial and technical abilities of the (oil) companies, and they need Bolivian gas". Ramsay urged Bolivia not to take the road towards nationalization followed by Venezuela. He said: "If there is not a balance between the interests of the companies and those of the country, the loser in the end is the country.”One has only to look at Venezuela's production capacity, which has slumped dramatically. That is the price that is paid.” Bolivia was making a mistake if it was trying to reduce the role of oil companies to one of being merely providers of services, he said. He said that "Brazil and Argentina should be worried" because in the short term, the biggest danger concerned supplies to the Latin American region. However, Ramsay also said: "I don't believe that Bolivia has any interest in endangering its relations with its (regional) partners." 2
The member of U.S. energy risk management company Fimat , Alf analyst that: "Venezuela, Bolivia to undertake the implementation of the new law. Latin America will take the wave of nationalization. Bill was widespread popular support, but not clears whether it is feasible. "
Energy industry on behalf of the United States of the American oil, spokesman for the association, Connally said: "This means that the world energy market hard to predict and become one of the elements to prompted the United States to increase domestic energy production.”
Although this did not affect the global energy supply, but the Middle East Economic Survey (MEES) Deputy Editor Fallon-Price said: "The implementation of stringent policies for the protection of national energy or the introduction of energy nationalization, the action will be postponed high oil prices."
French Oil Institute Olivier App Ertürk said: "This trend change the world energy market pattern, multinational oil companies’ balance of power has been broken.”He said:" Originally, the multinational oil giant has been hit hard. While the local oil companies, which local governments support to, will have come to the fore. "
Paris - Dauphine University Energy Center for Political Studies Director Jean-Marie Chevalier said: "Energy nationalization trend has spread in worldwide." He said: “the act of many countries, it is look like robbery."
In the last century, the world energy market has been basically monopolized by the seven major oil companies, which have been called "seven sisters oil". This seven oil companies control the global oil production and pricing. However, the era is gone forever.
The reason of nationalization of energy resources:
1??/span>The international situation in the oil market and the principle of operation are changing
Geopolitical risks are rise after 911 and the Iraq war. Emerging market countries and regions are in the rapid expansion in oil consumption and oil storage. Oil mining, transport and even the inadequate reserves can’t meet the request. So that the world oil market supply-demand relationship changed in nature. The world oil pricing mechanism was reversed. From the oil market economy principles, when oil supply capacity close to the demand, Petroleum Pricing Right will transfer from the demand side to the supply side. According to the International Energy Agency forecasts that the world's oil supply while remaining supply cushion. However, between the new relations of Asian oil demand and the growth of world oil supply rate, the world's oil supply-demand relationship will demonstrate serious short supply. To this end, whoever controls the supply source can control the future of the oil Pricing Right. Clearly, Latin America "nationalization" is to regain control of its own oil supply, and then recapture Pricing Right.
2??/span>The influence of nationalism
American scholars S • Tansai in its book "Latin America's economic nationalism," said that :those who have not yet obtained a "modernization" or "advanced" status, were increasingly vigilant for control of the country's natural resources and economic. This phenomenon is characteristic of the "economic nationalism", it is directly reflected by these countries often complain that the kind of phenomenon: Despite their political sovereignty and independence, but the economy is still a colony. So-called nationalism, referring to the oil-producing countries become more importance to the oil resources of the profit from, hope that they can gain more distribution of wealth, and not to let Western earned more from it.
3??/span>Actor of economic and politic
International energy prices contributed to the soaring energy nationalized all the rage. These require the government to share foreign oil company’s super profit, which gained from the high prices of crude oil. The political demand is another important reason of nationalization, "guys like Chavez” have realized that they possess [...]
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