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8 J. World Energy L. & Bus. 1 (2015)

handle is hein.journals/jlowdeylw8 and id is 1 raw text is: Journal of World Energy Law and Business, 2015, Vol. 8, No. 1 The changing competitive landscape of the global upstream petroleum industry Seyed Kamran Bagheri* and Alberto Di Minin** From the 1920s to the 1960s, seven major International Oil Companies (I(Os) were almost the only market players in the global pctroleum industry. Their share of oil and gas reserves, however, fell dramatically from about 85 per cent in 1970 to lcss than 10 per cent today. Changes in the competitive dynamics of the upstream petroleum in- dustry are, howeVCr, less studied areas in the literature. In this article, we conduct a rcvicw of prcvious studies to answcr the question: Is the traditional busincss model of IOCs still valid? We propose a theoretical framework and give a historical account of LOCs erosion and Global National Oil Companies ((NO( s) ascent to the top. Finally, we explore an array of possible future scenarios. We argue that IOCs are not in a position to regain the lost ground if they remain wedded to their traditional business model. 1. Introduction From the 1920s to the 1960s, seven major International Oil Companies (IOCs) were almost the only market players of the global petroleum industry. The IOCs' share of oil and gas reserves, however, fell from about 85 per cent in 1970 to less than 10 per cent today.' Now there are legitimate concerns over the business model of IOCs and its sustainability.2 Therefore, it is important to ask: Is the traditional business model of IOCs still valid? To address this question, one needs to know the fundamental premises on which this business model is built. Then it would be possible to see if these sources of power are still present and work in favour of IOCs and their business model. The IOCs' significant loss of access to the world's oil and gas resource base indicates that the global upstream petroleum industry has undergone a continuous, yet silent, change in its competitive landscape. This change has grave consequences in terms of countries' energy security and strategic influence. Surprisingly, there are a limited number of studies on the competitive dynamics of this industry, none of which give a definite answer to the above question. PhD candidate of Management at Scuola Superiore Sant'Anna, Pisa, Italy. E-mail: s.bagheri@sssup.it; kambagheri@yahoo.com ** Assistant Professor of Management at Scuola Superiore Sant'Anna, Pisa, Italy. A Inkpen and MH Moffett, The Global Oil & Gas Industry: Management, Strategy and Finance (PennWell Corporation 2011). 2 PR Dutto, R Guzmin and S Suresh, New Business Models for the International Oil Company (2010) Arthur D Little report, 50-63. I Bozon, S Hall and S Oygard, 'What's Next for Big Oil?' (2005) 2 The McKinsey Quarterly, 95-105. © The Authors 2015. Published by Oxford University Press on behalf of the AIPN. All rights reserved. doi:10.1093/jwelb/jwu036 Advance Access publication 12 January 2015 1

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