Since its birth, the oil and gas Industry has been faced by sudden and brutal variations in its economics. The recent shock that occurred in the late 90's has forced the entire industry into major restructuring, including consolidations and mergers. The major initiative to define and implement new business relationships between oil and gas producers and service suppliers had already begun in the early nineties and had been driven by oil company strategic thinking in the relatively stable yet uncertain environment that prevailed earlier to that last shock. Moreover, deliberate restructuring has been taking place within many oil companies throughout the decade, and innovative technology was being introduced by the service industry at an unprecedented rate. Key developments such as 3D seismic, horizontal drilling, geosteering, coiled tubing applications, improved stimulation methods and advanced wireline logging technology have made many challenges of the past realities of the present. Additionally, the information technology revolution has created virtual teams by linking experts and data sources worldwide.
In reaction to restructuring, innovative technology, and the uncertain future of the market, there has been an increasing trend in the petroleum industry to establish strategic partnerships. Such partnerships represent a departure from the conventional oil company philosophy that relied on internal administrative controls. This paper investigates the benefits of partnerships to both oil and service companies. Industry perceptions of partnerships and past performance are discussed, the future of alliancing is explored, and a formula for successful partnering is proposed.