Corporate Consolidation in The U.S. Oil and Gas Sector: Implications for the Global Oil Market

DOI: 10.20542/0131-2227-2024-68-6-18-28
I. Kopytin,
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO), 23, Profsoyuznaya Str., Moscow, 117997, Russian Federation.

Received 15.03.2024. Revised 27.03.2024. Accepted 01.04.2024.

Abstract. The U. S. oil and gas sector is experiencing a new wave of mergers and acquisitions. The world’s largest private vertically integrated oil and gas companies are adding the best assets from the tight oil and deepwater shelf sectors to their production portfolios. At the same time, the consolidation of so-called independent producers is taking place. The consolidation of U.S. oil companies will have a significant impact on the global oil market through several channels. First, the concentration of tight oil production in the hands of a small number of large companies will make it more resistant to price shocks, both to a decrease and an increase in oil prices. Second, the anticipated increase in oil prices will open up opportunities for OPEC countries in the second half of the current decade to increase oil production while simultaneously receiving sufficient revenue from its export to support the required budget expenditures. Third, the redistribution of the domestic oil market in the United States in favor of American oil companies will continue, as oil imports are reduced in favor of domestic production. Fourth, the concentration of American oil production in the hands of a limited number of companies will lead to an even greater increase in the export of crude oil and petroleum products from the United States. Fifth, the consolidation will push faster growth in oil production in the Western Hemisphere – the USA, Canada, Guyana and Brazil. Sixth, the consolidation of American oil companies will encourage scaling up of business by national state oil companies in OPEC countries.

Keywords: merges and acquisitions, vertically integrated oil and gas company, supermajors, tight oil, costs, risks of oil demand, world oil market


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For citation:
Kopytin I. Corporate Consolidation in The U.S. Oil and Gas Sector: Implications for the Global Oil Market. World Eonomy and International Relations, 2024, vol. 68, no. 6, pp. 18-28. EDN: JBKXJW

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