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I.C.T& Value Migration In Arab Oil. By. Fareed R. ELNaggar; Ph. D. Professor & Consultant . 24 April 2005. (1). I.C.T& Value Migration In Arab Oil. By. Fareed R. ELNaggar, Ph. D. An Abstract.

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slide1

I.C.T& Value Migration In Arab Oil

By

Fareed R. ELNaggar; Ph. D.

Professor & Consultant

24 April 2005

(1)

slide2

I.C.T& Value Migration In Arab Oil

By

Fareed R. ELNaggar, Ph. D.

An Abstract

Arab oil value added had been migrating to other countries (1939-1973). The 10th of Ramadan war has switched the oil equation when Arab States to redirect value creation of oil to Arab. Economies. Since then (1973), Multinational oil companies started to change directions of oil value added from Arab countries to foreign countries through : (a) Mergers (b) Acquisitions (c) higher salaries of spatriated (d) training budgets (e) consultancy fees (f) Oil & Gaz exploration (g) Pressures on oil prices & production levels and (h) Oil Wars.

This paper is exploring energy models and proposing V.M.O modeling for future strategy and planning.

(2)

slide3

List of Contents

  • Typical energy issues in the 21th century.

2. Some Oil Models in Action :

  • Oil Demand Forecasting.
  • Oil Market Share Analysis.
  • Energy Replacement Market Behavior.
  • Oil & gas Supply – Economic Methodology.

3.a. Environmental Impact of Energy consumption.

b. Environmental Control Cycle.

4. TERA Model.

5. V.M.O. Percentages.

6. The Process of Oil Value Migration.

7. The Mechanism of Oil Value Migration.

8. New Oil sources of Economic Discontinuity.

9. Reengineering of Arab Oil Companies.

(3)

slide4

1- Typical Energy Policy Issues in the 21th century

  • Wellhead Price Controls.
  • Off – Shore Leasing Policies.
  • Depletion allowances.
  • Power plant sitting.
  • Thermal pollution.
  • Air pollution controls.
  • Rate of return Regulations.
  • Export regulations.
  • End use controls.
  • Strip mining.
  • Off-shore oil spills.
  • Oil wars.
  • Oil games.
  • Oil negotiation (OAPEC/ OPEC-OIC).

(4)

slide5

2- Some Oil Models

Model (1) Demand Forecasting

E = F ( P , I , Q1 , Q2 )

Where :

E = Energy consumption.

P = Index of energy prices.

I = Vector Defining factors affecting energy consumption.

Q1 = Function defining policy constraints

Q2 = Function defining supply constraints.

(5)

slide6

Model (2) Market Share Analysis

Ui

MSi =

j Uj

Where :

Ui = Utility of fuel i

Msi = Market share of fuel i

Example :

Ui = 0 + 1 P1 + I I + 

Where :

Pi = cost of fuel i to user

 = rector of other factors affecting fuel choice

 ,  = derived constraints

 = elasticity of the market share with prices of

individual fuels

Conversion

to heat

Pollution

Cost

Mart

Share

Per

Fuel

Fuel “utility”

Total utility

Utility of

each fuel

MKT

Share

Prices of Oil

Cost Per

=

(6)

Technology

slide7

3- Energy Replacement Market Behavior

GAS

Users

Solar

Energy

Electricity

Users

Oil

Users

Major Transitions

(7)

Minor Transitions

slide8

4- Energy Market Share Analysis

** Cross Sectional Analysis **

** Uses of Fuel in The industrial Sector **

(8)

slide9

Selection of Specific Fuel Uses

Industry

Growth

Forecast

Market

Share

Model

Database

Trend

Analysis

Industry

Growth

Forecast

Technological

Changes

Industry

Demand By

Fuel Type

(9)

slide10

Oil Supply

Economics

Finding Rate

Bard / Foot

Feed Drilled

Oil

  • Net fixed Assets.
  • Investment Royalties.
  • ROI

x

Secondary &

Tertiary

Reserve Adds

Oil

Reserve

Additions

% Reserves

Produced

Annually

Oil

Reserves

Existing Oil

Reserves

Oil

Production

Revenue

Required

x

Gas Supply

% Reserves

Produced

Annually

Gas

Reserves

Existing Gas

Reserves

Gas

Production

x

AverageOilPrice

Gas

Reserve Additions

AverageGasPrice

Finding Rate

Per Food

Feed Drilled

(Gas)

x

(10)

Oil & Gas Supply – Economic Methodology

slide12

Increasing

Energy

Demand

Fuel Use

Patterns

1

2

3

4

5

Pollution

Level

Increasing

Energy

Demand

Fuel Use

Patterns

3.b Environmental Control Cycle

(12)

slide13

Demand

Forecasting

Energy

Market Share

Supply

Demand

Interaction

Tera

Database

Regulations

& Policies

Price

Structure

Supply

Forecasting

Gas Industry

Models

Evaluation

Of Outputs

4. TERA Model

( The Total Energy Resource Analysis )

(13)

slide14

100%

75%

100%

العمليات التحويلية

التصنيع

البتروكيماويات

الإنتاج

صناعة

التكرير

التنقيب

90%

التسويق

80%

اللوجستيات

النقل/المناولة/التخزين

50%

التوزيع

75%

إدارة سلاسل

التوريد SCM

الإستهلاك

النهائى

60%

الإستهلاك الوسيط

الصيانة

الإحلال

الاعتمادية

70%

مراقبة التلوث

80%

السلامة

المهنية

75%

التدريـــب

5. V.M.O. Percentages in Arab countries

(14)

slide15

6. The Phase of Oil Value Migration

1- Value Outflow :

Foreign oil companies started to absorb value

from Arab oil companies.

2- Competitiveness :

Foreign oil companies started to create values out

Of designs, technologies and competitive

Advantages.

3- Value Switching :

Values started to more away from local oil companies

To foreign companies via acquisition and mergers.

(15)

slide16

From

To

Revenue

Share of Market

Product Power

Technology

Profit

Share of Market

Value

Customer Power

Business Design

Oil Value Migration

(16)

slide17

Wealth

Profit Migration

Global

Oil

Companies

Strategies

New

Priorities

Changing

Arab Oil

Positions

  • Lowering Prices.
  • Maximizing Output.
  • Increasing Cost.
  • Technologies.
  • High Dependence.

Concept Of

Absorbing

Capacities

Controlling

Designs,

R & D

And Technologies

Oil Value Migration driven by

Technology or by new Designs.

Lack of economic Power.

7. The Mechanism of Oil Value Migration (MOVM)

(17)

slide18

8. New Oil Sources Of Economic Discontinuity

1- Inferior Logistics & Execution.

2- Inferior IT & Telecom.

3- High Cost Production.

4- High – cost distribution.

5- Lock of SCM.

6- Slow Product Development.

7- Lack of People Satisfaction

(Internal & External Clients).

All Call for Value Migration

(18)

slide19

(19)

From

To

Modern

Oil companies

Traditional

Oil companies

1- Product – Focused

2- rigid System

3- Backward integration

4- Scale Derive Value

5- The is Only one way

to do business

6- Monopoly

7- quality control

8- Traditional Oil

Company

9- Trial & Error

10- Loosing Values

Customer – Focused

Flexible

Specialization

Design Create Value

Invocative Improvement

Is Possible

Time competition

TQM

Digital Oil Company

Optimal Model

Value Recapture

9. Reengineering of Arab Oil companies

slide20

L.E.

Stable Market

Share &

Stable Margins

High Growth High Profitalaility

Talent, Resources

Leare at an

Accelerating

Rate

Oil

Value

Inflow

Stability

Oil

Value

Outflow

Time

Oil Value Creation Distribution

(20)

slide21

Arab Oil Design Process

Economics

Changing Strategy

Technology

What are the new assumptions & economics

What is Important to Arab States

How Can Value be Created

What dimensions matter the most

What are the future choices

Which ones are the best ?

Are the best choices integrated ?

What is the best oil design ?

How lone will the design be valid ?

How can we prepare for future designs

(21)

slide22

(22)

المراجع

  • M. Coult, (2003), Energy Conservation Through The Use of Gas Technology, Shell Centre, London, UK.
  • B. Indyk & R. Wiolson, (2003) , Energy Saving by New Concepts in the Design of Equipment, Univ. Of Strathclyde Glasgow, UK.
  • J. Broder, (2002), Energy consumption & Efficiency in the USA, University of Georgia, Athens, GA, USA.
  • D. Limaya, (2001), Advanced Energy Technologies; Synergetic Resources Inc., Philadelphice, Pennsylvania.
  • فريد النجار (المحرر) ، (2004) ، إدارة شركات البترول والطاقة ، بيت الإدارة ، القاهرة0
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