Download Covering Oil: A Reporter's Guide to Energy and Development by Svetlana Tsalik, Professor Anya Schiffrin PDF

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By Svetlana Tsalik, Professor Anya Schiffrin

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Additional info for Covering Oil: A Reporter's Guide to Energy and Development (Lifting the Resource Curse, 2)

Example text

Brazil’s Petrobras also came in among the highest. Production-sharing Agreements Often national oil companies have exclusive rights to make concessions in the form of legally binding contracts with foreign oil companies to explore for and develop portions of the country’s reserves. These contracts fall under many descriptions, including production-sharing agreements (PSAs) and production-sharing contracts (PSCs). Governments usually award oil blocks to independent companies through a competitive bidding process, though often they are negotiated on a one-to-one basis.

Since the 1973 Arab oil embargo, the idea that oil producers might use oil as a political weapon has naturally remained a subject of considerable interest. Several recent trends have profoundly altered the situation. First, the producer states themselves (with the exception of Abu Dhabi, which has never exhibited radical tendencies) 42 COVERING OIL have seen once-considerable financial reserves shrink so low that they would only cover routine government expenditures for a few months. Second, their own populations have grown considerably, so that more cash is needed to pay for basic services and extensive government payrolls.

Many Venezuelans fondly recall the boom years of the 1970s and early 1980s, when OPEC succeeded in pushing world oil prices more than twice the current price, when inflation is taken into account. A recent nationwide poll found that 80 percent of the population believes the country is among the richest in the world, although at least two-thirds live in poverty. It thus follows, in the minds of millions, that the primary task of government is to redistribute existing wealth rather than to create it.

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