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I.C.T& Value Migration In Arab Oil

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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I.C.T& Value Migration In Arab Oil

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

  2. 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)

  3. 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)

  4. 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)

  5. 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)

  6. 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

  7. 3- Energy Replacement Market Behavior GAS Users Solar Energy Electricity Users Oil Users Major Transitions (7) Minor Transitions

  8. 4- Energy Market Share Analysis ** Cross Sectional Analysis ** ** Uses of Fuel in The industrial Sector ** (8)

  9. 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)

  10. 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

  11. 3.a Environmental Impact Of Energy Consumption Million Tons Per Year (11)

  12. 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)

  13. 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)

  14. 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)

  15. 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)

  16. From To Revenue Share of Market Product Power Technology Profit Share of Market Value Customer Power Business Design Oil Value Migration (16)

  17. 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)

  18. 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)

  19. (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

  20. 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)

  21. 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)

  22. (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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