The Oxford Energy Institute: A Successful Experiment in Producer-Consumer Dialog

The international petroleum industry underwent a fundamental change in 1973 with the rise in crude oil prices from around $1-2 a barrel to around $11 a barrel in the initial stage. Instead of concessions for drilling and production, which were granted to giant oil firms for 99 years and covered entire states, as well as crude oil purchase and sales contracts limited to no more than 10 giant western companies, members of OAPEC (the Organization of Arab Petroleum Exporting Countries) began to change this economic situation, which had remained in place for the first six decades of the 20th century. The oil exporting countries began to play a direct and vital role in setting petroleum policies by adopting production policies, which directly affected crude oil prices and changed the foundations of what set price levels.
At the time, these bold decisions and policies led to a comprehensive change in the industry, trade and price of one of the most important and widespread strategic material that is internationally circulated. They were also accompanied by important national decisions at the state level, which led to the rise of national oil companies that were owned by producing and exporting states, which granted concessions for exploration, drilling and production in these states.

These young companies, which were managed by citizens of the exporting countries themselves, took responsibility for marketing their countries’ oil, after this had been limited to the big foreign firms.

As a result of these changes, new and unfamiliar arrangements and operations became prominent in the petroleum industry, such as the rise in the number and diversity of participants in taking petroleum-related decisions, the appearance of new contracts for exploration and production, such as participatory contracts, in addition to the rise of a spot and futures market to buy and sell crude oil, instead of the long-term, price- and quantity-specific contracts.

Dar Al Hayat