Oil and Gas Essay Example | Topics and Well Written Essays - 1750 words

Oil and Gas - Essay Example This could be described by a comparative analysis between a China, a developing economy and Russia, a developed economy. Diamond Theory The management of the global completions by the oil capitals can be explained with the management theory and the international competitiveness of Countries also called the ‘Diamond Theory’. The Diamond theory was advanced by Porter in 1990 to explain the competitive advantages of nations (Woolsey and Korin, 2008). The main focus of the theory was to find why some countries are more successful in particular industries than others. Four classes of country attributes were identified by Porter, which were called the National Diamond. These attributes provide the conditions underlying for the determination of the nation competitive advantage of a nation. These are the company strategy, structure and rivalry, related and support industries, demand conditions and factor conditions. Government policy and chance are two other factors that donâ₠¬â„¢t create lasting competitive advantages but support and complement the system of national competitiveness (Aberdeen City Council and Aberdeen shire Council, 2001). The role of government as a stakeholder seeks to strengthen local capabilities for innovation in China and Russia using the Diamond Theory- The success of government in the Oil and Gas industry in Russia and China can be explained by Diamond Theory. Four classes of country attributes providing the conditions underlying for the determination of the nation competitive advantage of a nation were identified by Porter, also called the National Diamond are: 1. The company strategy-The Chinese government took the decision to restructure the petroleum and petrochemical industry in 1998 using the upstream and downstream principles of integration. As a result Foundation of CNPC and Sinopec took place. The merger of CNOOC Limited with CNOOC, PetroChina Company Limited with CNPC, China Petroleum & Chemical Corporation to Sinopec, were successfully founded. A crucial role is played by the Oil and gas industry in the political and economic development of Russia. Russia’s energy sector accounts for approximately 66% of its exports. The GDP contribution of the oil and gas sector is 30% of its GDP and 50% of the revenue generated from Federal Budgets. (Feng, Lianyong and et al. 2013) 2. The structure and rivalry- On the basis of launch of four exploration fields including, marine, overseas, eastern and western regions, oil reserves and output steadily increased in China. A high level annual increase of 100 million tons was seen from proven Chinese oil geological reserves. In the beginning of the 21st century, a major challenge was presented to the Russian Government due to the dramatic increase in the value of oil and gas resources of Russia, greater state intervention in the economy and increased budgetary revenues were followed by the increased prices of the resources. With the increased dependency on t he energy sector in Russia as a result of the economic crisis of 2008-2009, the state-capitalist model was developed. (Sharples, 2012) 3. The