Strategic oil company decision-making in the North Sea.
This study seeks to understand strategic oil company decision-making in the North
Sea, focusing on company decisions to produce oil in the United Kingdom's
Continental Shelf. The production of oil in the North Sea was extremely complex,
with comparatively greater risk attached to key decisions than in other global areas
of production. Arguably, like other businesses, oil companies wanted to minimise
risks in order to maximise their returns. This thesis is a case study of this basic
notion in action: how did oil companies make decisions faced with the complex
business environment in the North Sea?
The study's conceptual framework is developed from scholarly work on decisionmaking
and strategy formulation, using three models: rational, incremental and
interpretative to help in the understanding of North Sea decision-making. Part One
of the study analyses the North Sea environment, including the legal and fiscal
regimes, physical constraints and climatic conditions, identifying the roles played
by these outside influences in the decision-making process. Part Two of the study
tests this 'theoretical' view of the North Sea environment and company-decision-making
discussed in Part One, exploring practical company experience further in
a semi-structured interview survey of oil company decision-makers. The study
concludes with a discussion of decision-making in light of the conceptual models.
Analysis of the sirategic oil company decision-making reveals a pattern and
sequence in the decision-making process at an industry level, made within the dual
framework of (i) consortiums and (ii) the UK (iQvernment's licensing and fiscal regimes. The consortium was the formal decision-making body, with decisions
characterised by a iterative process of negotiation between companies, the
consortium committee and the Government. Risk minimisation in order to
maximise rewards is identified as one of the main driving forces behind decisionmaking.