Competitive advantage in the oil industry

Despite the recent focus on technology the oil industry has still the greatest impact on our wealth. Sustained performance in the oil industry has therefore implications reaching far beyond the wellbeing of a firm. One issue which is of particular importance and has been at the centre of recent controversies is the ability of a firm to replace its proven reserves. Our analysis on the oil industry wants to identify the core resources that are directly linked to business performance (in our case a firm`s ability to increase its proven reserves). In addition we want to address the core capabilities that mediate between resources and performance. We will: - Develop and test a model which identifies the resources and capabilities necessary to achieve sustained process performance - Indicate how the best return on investment can be achieved - Explore in which way size affects outcome (with implications for joint-ventures) - Explore if there is a need for different models for majors, independents and national oil companies and if any of these groups is more likely to gain competitive advantage - Identify how the oil price and the overall economic environment affect the process In order to meet these objectives and gain a better understanding of competitive advantage we will base our analysis on the recent methodological approaches in this field: - Phase I: We will identify and classify oil majors, independents and national oil companies. For each of these companies we will gather basic data (i.e. ROACE). - Phase II: We will develop a basic understanding how companies in these three categories increase their resources. - Phase III: We will analyze sustained high and low performers in each category. In total we are planning to have 30 interviews. Based on these interviews we will develop a model which explains how companies gain competitive advantage in the resource replacement process. - In Phase IV: We will test the propositions and model developed in Phase III in a quantitative analysis (survey) and extensive research on the industry. In doing so we will be able to fully test our propositions and point at the main factors in driving competitive advantage. The analysis, which will be conducted in cooperation with Bocconi University, lasts 28 months.

Despite the recent focus on technology the oil industry has still the greatest impact on our wealth. Sustained performance in the oil industry has therefore implications reaching far beyond the wellbeing of a firm. One issue which is of particular importance and has been at the centre of recent controversies is the ability of a firm to replace its proven reserves. Our analysis on the oil industry wants to identify the core resources that are directly linked to business performance (in our case a firm`s ability to increase its proven reserves). In addition we want to address the core capabilities that mediate between resources and performance. We will: Develop and test a model which identifies the resources and capabilities necessary to achieve sustained process performance Indicate how the best return on investment can be achieved Explore in which way size affects outcome (with implications for joint-ventures) Explore if there is a need for different models for majors, independents and national oil companies and if any of these groups is more likely to gain competitive advantage Identify how the oil price and the overall economic environment affect the process In order to meet these objectives and gain a better understanding of competitive advantage we will base our analysis on the recent methodological approaches in this field: Phase I: We will identify and classify oil majors, independents and national oil companies. For each of these companies we will gather basic data (i.e. ROACE). Phase II: We will develop a basic understanding how companies in these three categories increase their resources. Phase III: We will analyze sustained high and low performers in each category. In total we are planning to have 30 interviews. Based on these interviews we will develop a model which explains how companies gain competitive advantage in the resource replacement process. In Phase IV: We will test the propositions and model developed in Phase III in a quantitative analysis (survey) and extensive research on the industry. In doing so we will be able to fully test our propositions and point at the main factors in driving competitive advantage. The analysis, which will be conducted in cooperation with Bocconi University, lasts 28 months.