Oil and gas exploration and development in oil importing developing countries
The rapid rise in oil prices and supply shortfalls during the 1970s did not bring a concomitant increase in oil and gas exploration and development to the oil importing developing countries (OIDCs). To be sure, total exploratory activity in the OIDCs, as measured by the number of seismic party-months and the number of exploratory wells drilled, did in fact increase in the 1970s, but relative to the rest of the world exploratory activity actually declined. The consensus among many investigators indicates that exploration and development in OIDCs was inhibited by a combination of factors. First, the geologic prospects for oil and gas were not conductive to exploration. The high cost, small-sized fields that are characteristic of OIDCs limit profit potential, increases risk, and provides for limited prospects of exportable surpluses, which are necessary to supply downstream operations. Second, the lack of infrastructure in many nonpetroleum producing OIDCs deterred oil and gas exploration. Third, restrictive contracts provided for an insufficient amount of risk sharing to attract foreign capital. Fourth, host government taxation policies discriminated against high cost, small-sized fields. Fifth, political risk and government instability did not encourage foreign investment, considering the usual 10- to 15-year petroleum exploration and development period. Finally, US taxation policies following the oil embargo were designed to encourage domestic exploration and development. The 1980s have seen a substantial decline in real prices for petroleum, high interest rates, a developing country debt crisis, and a worldwide economic recession. These conditions are likely to cause an absolute decline in exploratory activity in OIDCs that are considered high risk, and where the probability of finding oil and gas is low. This trend is already evident in the recent exploratory and development data. 15 refs., 10 figs., 3 tabs.
- Research Organization:
- Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States)
- DOE Contract Number:
- AC05-84OR21400
- OSTI ID:
- 6413467
- Report Number(s):
- ORNL/TM-9769; ON: DE86004655
- Resource Relation:
- Other Information: Portions of this document are illegible in microfiche products. Original copy available until stock is exhausted
- Country of Publication:
- United States
- Language:
- English
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