Thursday, October 20, 2016

Oil and Gas Companies: Collaboration and Creation of Energy Infrastructure

By: Steven Goldbaum 

Proposal: I would like to do a network analysis of the major oil companies involved in building oil and gas pipelines in Europe and Asia. (I will not be taking the second half of the course this year but hope to take it next year.)

Background: Energy is essential for the functioning of a modern economy. However, energy resources (oil and natural gas) are not evenly distributed throughout the world. Thus a critical component of a nation’s foreign policy is securing enough energy for current consumption and future economic growth. Most of the world’s oil and natural gas is concentrated in an ellipsis stretching from the Persian Gulf to Northern Russia. While there is a massive networks of pipelines that distributes energy to Europe, there is far less infrastructure towards the rapidly industrializing nations in Asia, China and India the largest among them.

Research Questions:
Looking at existing and planned energy infrastructure projects in Eurasia, is there a reorientation in supply towards Asia (primarily China and India)?
Which oil majors/countries are the most influential in oil and gas infrastructure creation?
Are Asian countries beginning to collaborate more with other international firms and whom are they primarily collaborating with?
Within these collaborations do we see distinct camps being formed among certain groupings of companies and countries? 

There is a reorientation of pipelines towards Asia. However, it is in its early phase.
Western oil companies have a much higher rate of collaboration than Asian firms.
Distinct groups off collaboration will form along national lines with Asian led projects but that there will not be distinct camps of collaboration with European/American led projects.

Data collection will be the most difficult part of this project. While I have found databases on terrorist attacks on energy infrastructure, I have not been able to find business-oriented data on international oil and gas pipeline infrastructure. I would have to pull information from existing open source material. This is doable because I am only concerned with international pipelines and the oil and gas fields they connect. The first data point will be both the companies who own the international pipelines and the companies who are owners of the fields that supply the pipelines. The second data point will be the number of times these companies have collaborated together. The third data point will be the percentage of ownership on the project that they collaborated on.

Attribute Data:
Nation (incorporation of the company)
Role (pipeline consortium, extraction, both)
Project (which pipeline)
Project Direction (Asian market, or European market)

Analyzing the Network
To answer all of the research questions it may be necessary to create multiple network maps, one for collaborative projects that transport energy to Asia and another for energy going elsewhere. There are multiple options for measuring the strength of network ties. Ties between companies could be based on: 1.) The number of projects they collaborated on or 2.) Based on the combined percentage of ownership on the projects that they did collaborate on.

While analyzing the network, I will focus on the following:

Frequency of Collaboration: Looking at the number of ties between each company to determine which companies have the most collaborative projects. I will also determine the nature of the ties by looking at the values attached to those ties. Companies might have frequent collaborations but with a low ownership of the project, or they could have few collaborations but with more substantial ownership. I would also determine this by country as well to determine which country is influential through the actions if its energy companies.

Subgroups and Cliques: this measure will help determine if countries and companies tend to form groups and if they do how much collaboration across groups are there? If there are significant cliques forming, identifying companies that are part of multiple cliques could indicate higher collaboration and influence across regions.

Critical Nodes: In addition to which companies have the most collaboration, I would also look at the Eigenvector centrality measurement. This measurement would be especially important for smaller oil companies who do not operate globally but control ownership of regional oil and gas fields. The utility of this measure is to illustrate if there is a tendency of smaller firms to collaborate with other firms that are highly collaborative.

This research proposal encompasses one element of energy politics in the region. It is well known that due to the strategic nature of energy, oil and gas companies often work hand-in-hand with their governments to build relationships and drive outcomes that are advantageous to the security of their own country. If the findings of this network analysis are significant, tying it into the larger picture of the geopolitics of energy in Eurasia could prove an interesting next step. 

Sources: Image:

1 comment:

Christopher Tunnard said...

You could make some money off this if you managed to come up with predictive network effects. As you point out, the key to doing this (other than access to commercial data) is determining what the meaningful networks are, although collaborations on previous projects seems like a good starting point. Another thing I thought you'd mention is directionality; pipelines tend to send oil in one direction, and you could do some nice tricks with the directional tie strength between exporting and importing countries, perhaps overlaid with GDP or other meaningful economic data, since company-level data are hard to get.

Nice job.