Lower oil prices: an opportunity for oil and gas companies

As oil prices rose in the early 2000s more than 30 countries revised their petroleum tax systems (photo:dpa)
As oil prices rose in the early 2000s more than 30 countries revised their petroleum tax systems (photo:dpa)

The global drop in oil prices has analysts mulling over the shrinking profitability of the oil industry. But it is not all doom and gloom. On the contrary, companies may be in a stronger position today to negotiate better deals with host governments, compared with when prices were high.

<i>Oil prices are the most obvious drivers of change in the relationship between the two key players: host governments - the owners of resources; and companies - the holders of capital and technology. The price level significantly determines the degree of bargaining power each party has at the negotiating table. Typically, when the oil price is high, the government has the upper hand; when the p...

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