A Comparison between PetroChina and Oman Oil Company

Document Type:Thesis

Subject Area:Business

Document 1

Being among nations considered to be fast developing, Oman has a significant advantage towards success. Sitting on the coast of the Gulf of the peninsula, the country lies on large barrels of oil. Despite its desert environment, it stands a higher chance of being one of the most developed countries in the world. Oman Oil Company is the country’s significant harvesting and production firm that is wholly owned by the government of Oman. It was proposed to aid in the exploration, extraction and production of oil and gas that had been discovered in 1992. PetroChina, on the other hand, is a Chinese petroleum company based in Beijing China. It is one of China's biggest oil producing companies and accounts for a significant amount of the country’s petroleum exports. By May 2007, it was found to be the most profitable company in Asia and accounted for a large sum of the country’s tax contributors (Chengzao,2). China in itself is an Asian country that is considered to be the most populated in the world. It is one of the world’s earliest civilized nations. PetroChina benefits from such location since population creates a window opportunity for specialized and abundantly available labor. The market of its petroleum product is also readily available and constantly demanding for more. The two companies share a label of productivity and therefore tend to compete for international markets in both developed and developing countries. Similar products from both companies are often received differently. It is therefore worth comparing the operations and output of the two firms.

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Both firms were developed by their respective governments to aid them in production and exploration of discovered oil barrels in their lands. Even though they share a common goal. Their objectives of productivity and aims differ. Oman oil company aims and objectives. Registered and incorporated in 1996, its primary aim was to invest in the energy sector for the sake of the Oman government. It also focuses on refining crude oil and petroleum products for its domestic population. It has a branch whose role is to transmit natural gas, refined products and sell them. The company is so large that it operates in segments. Having been incorporated in 1999, it is naturally achieving beyond its goals and are continually offering new competitions. Its major aims include: • To boost the china’s revenue • To meet the demand for national oil and gas in the most cost-effective manner • To be an internationally successful company with control of a significant international and domestic market • To maximize employment of the Chinese population and encourage investment within the country.

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Oman Oil Company, having been registered by sultanate by Oman as a joint stoke, it is tasked with producing and distributing petroleum products. Its accounts are listed in the company’s financial statements. On February 27th, 2018, Muscat daily staff writer reported that the Oman company had recorded a decline in profits made in 2017 as a result of the reduction in sales and increased domestic fuel prices compared to the previous year. The company recorded 8% increase in net profits from 2016. However, in 2017, the firm dropped in its profit by 38%. This accounts for 18. of the world population. Research conducted shows that about 68% of the population is educated and fit to grab employment within their country. petroChina is therefore located in the ideal region for quality and readily available labour. The company, through its employment records, shows that it has up to 303,032 workers as at March 2018.

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More than 6000 Omanis were employed by the firm by 2017. This illustrates the low level of productivity the company does in comparison to the PetroChina's. Though Oman Company has created branches to aid its course of production distribution and sale, it still lacks adequate labor. Despite the low number of employees, the company registered a considerable cost in employee salary. This shows that the labour is highly expensive. This provides a ready market for products of PetroChina. Having the challenge to meet the demand of a population of close to 3. billion, it is often coming up with new strategies, and this results in the realisation of the vast amount of profits. Oman’s population of about 4. million gives a limited market for the sale of their products. By 2017, the company reported that it was producing 4.

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million barrels of oil per day. It was listed as the 25th most producing oil and energy company. Another research showed that from 2010 to 2017, it had produced 887 million barrels of crude oil. PetroChina owns almost 1790 service stations and a wide range of refining facilities to increase production. Apart from production technologies, marketing technologies have opened new markets for the company’s products both abroad and domestic. One of these technologies included belt and road initiative. This is a Chinese project which involves the country funding billions of infrastructural aids to nations along Silk Road linking China to Europe. This ambitious project opened up 68 different countries as a market to Chinese oil products. Despite a 150 billion dollar spending a year on the project, PetroChina alone has realised huge net profits. The oil company considers this technology as a problem solver as half of Oman’s oil reserves constitute of heavy oil.

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This has resulted in only 2% of the reserves being extracted due to lack of technology. Another technology serving the Oman based company is called the smart mobile worker. The field engineers and technicians use this technology to access accurate data and monitor the operations and productions of oil wells. The company’s machines are being fitted with software and sensors to reply to digital commands. Another environmental threat attributed to the firm is gas reserves in Xinjiang. The argument behind this ambitious pipeline project is that in the event of a leakage, it may pose a danger to wildlife and the plants along the regions it goes through. The company has however demonstrated a change of course towards environmental protection. In 2007, it approved a $5. billion petrochemical plant whose net profits would be dedicated to environmental protection.

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Despite the fall of oil prices globally, the state budget still allocated $3 billion to infrastructure to open up foreign markets for the company’s products. The company’s net income is considered as the government’s income since the state owns it (Nusair, 2016, 256-267). The Chinese government owns all oil wells in the country. Government enterprises grant extraction rights to qualified companies. PetroChina is a product of the government’s decision to sponsor a company to compete with the private sector to maximise the oil sector profits. Technological advancements are significant in improving production and expanding markets, both local and foreign. Work cited Abed, Raeid MM, et al. Characterization of hydrocarbon-degrading bacteria isolated from oil-contaminated sediments in the Sultanate of Oman and evaluation of bioaugmentation and biostimulation approaches in microcosm experiments.

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International Biodeterioration & Biodegradation 89 (2014): 58-66. Arafa, Mohamed A. The effects of oil price shocks on the economies of the Gulf Co-operation Council countries: Nonlinear analysis. Energy Policy 91 (2016): 256-267. Song, Shumlin, JinSong Tan, and Yang Yi. IPO initial returns in China: Underpricing or overvaluation?. China Journal of Accounting Research 7. Violation of Law Number 32 of 2009 on the Environment from Activities of Waste Operating on PetroChina Gas Production in Tanjung Jabung Barat Jambi Indonesia. JL Pol'y & Globalization 44 (2015): 120.

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