SPE Member
This paper examines the dynamic international political economic environment In which petroleum exploration and production companies must operate when considering investments in the economically transitional nations of the former Soviet Union or developing nations In this period of critical global changes low oil prices is only one factor with which petroleum companies must be concerned in their investment decisions. Other factors include the transition from a bipolar world to a multi polar world of free trade zones. The general malaise of the international economy. public and political recognition That nations and industries can no longer practice environmental "beggar-thy-neighbor" policies. and the rejection of aggregate national economic growth policies for sustainable economic development policies in both the developed and developing world. This paper focuses on actions which investing petroleum exploration and production companies can take in order to gain a leadership role in the sustainable petroleum economic development business, to work with host countries' regulations, and to develop a cooperative environment with host countries so that both the investing company and the host country can progress, not just survive.
II.
When an international petroleum exploration and production company is making the decision of whether to invest in an economically transitional nation of the former Soviet Union or a developing nation, the investing company must consider the larger international economical and political environment in which it has to operate whIle maintaining its long term investment duration in the host country. Oil prices, costs of production. and the level of sophistication of extraction methods can no longer be the only considerations. The global political economy on the brink of the Twenty-First Century has been and is expected to continue to be in a general malady of high unemployment. low interest rates, and volatile regional and ethnic politics threatening national economies. Increasing recognition of indigenous peoples' property rights are challenging investing petroleum and mining companies' tenure in host nations. The collapse of the Soviet Union and the Warsaw Pact has suddenly thrust the global political economic structure from a bipolar to a multi polar one Although the transition to a multIpolar world is yet incomplete, it is most likely to be a world of emerging free trade zones The European Council is fully operational The North American Free Trade Agreement (NAFTA) passed last year has created a tree trade zone of Canada, the United States, and Mexico.
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