The Main Prerequisites and Outcomes of Co-opetition between Oil Companies on International Market

- lobbying of interests within the branch; the abovementioned associations could be engaged in lobbying of interests of the branch players in the executive and legislative authorities;

- providing the joint services to the common buyers; it is understood as a situation, when the company can't independently execute the order (provide with the goods or services) and transfers the received order in whole or partly to be executed by the competitor;

- conducting fair practices of competition.

The private purposes are:

- counteraction to the competitors seeking to entice the customers;

- increasing in a market share;

- increase in volume of sales.

Other scholars penetrate the list of motives in the narrow sense. For example, Ritala (2012) provided the short list of three motives of coopetitive interaction: (1) extension the market share or entering the new market by sharing the risks, both financial non-financial ones, with the partner; (2) strengthening the companies' competitive position on the market; (3) effective resource usage by exchange of complementary and rare resources via strategic alliances.

The listed prerequisites, including external circumstances and internal attitudes and motive, are, undoubtedly, abundant. However, it is necessary to remind that the main motive and the key goal of every cooperation is definitely to obtain certain benefits or get greater value of the existing benefits (Rusko, 2011). The certain goals differ from industry to industry, and the total number of the possible internal motives of coopetition is immense, mostly because of the fact that the companies performing in one industry have a lot of similar challenges and major problems and interest. Therefore, the rivals traditionally should have more common issues to deal with jointly, rather than companies from complementary or independent industries (Chen, 1996).

Summing up the described above, it is possible to define the list of the most frequent internal motives, which are mentioned by the theoreticians:

- the need to overcome certain challenges and barriers, especially those of foreign markets (Chen, 1996);

- joint lobbying;

- the avoidance of competitive pressure in order to struggle with a strong third party or a bigger company, as cooperative relations between competitors tend to occur, when they recognize incremental competitive threats from other enterprises (Yami et al., 2010);

- gaining the larger market share and increasing the market volume;

- joint resource exploration and/or rare and essential resource access, which is too expensive or difficult to be achieved individually, including knowledge, relationships and networking (Spence et al,. 2001);

- risks diversification on a larger number of organizations;

- scale economy that is impossible to obtain within a single company;

- costs sharing, capabilities sharing (Hawk, 2001).

Regarding the traditional coopetitive prerequisites for the international companies from the oil & gas sector, as it was mentioned in the first paragraph of the given chapter, there are no detailed theoretical papers on the prerequisites and outcomes of coopetitive strategies within the topic of interest. Therefore, we can set the proposition that the majority of the previously listed prerequisites (motives) can be applied to the oil & gas coopetitive interaction. However, it is necessary to define the list of prerequisites, common for the particular industry. The consequent task is to be dealt with in the case study part of the paper.

The outcomes of coopetition

Finally, the possible outcomes of coopetition have not so far received the wide survey in the literature and these effects have been examined from the limited perspective. Summing up the previously mentioned, the cooperation even among competitors provides for sharing (exchange or accumulation) of resources, services, experience etc., that results in creating certain competitive advantage. Thus, the main target component of strategic cooperation concept becomes a synergistic effect. Additionally, the possible outcomes of coopetition largely depends on the initial motives that led the rivals to the cooperation.

There is no shared vision among the researches concerning the effects of coopetition on companies' performance. Some explorers attribute a negative relationship between the coopetition strategy and firms' market performance (Ritala et al., 2008; Kim & Parkhe, 2009, and others) and often highlights the potential risks. In case of risks implementation, the coopetitive relations tend to fail. These negative circumstances can be the following: linkage of confidential information, lack of benefits received in return, the discrepancy of the parties' objectives and intentions, etc.

However, in recent years the tendency has changed and the major part of the theoreticians tend to find the coopetitive strategy as an efficient tool for improving companies' performance. The researches (Akdogan et al., 2015: 137-141) consider as well the ways of overcoming the mentioned risks (increasing the levels of parties' obligations and trust; improving the cultural adjustment between agents, which is essential; defining the principles of collaboration and areas of responsibility).

As a result, partnerships, alliances and other cooperative structures among competitors allow to get an access to the rare resources of other companies and this form of cooperation is widely applied by the oil & gas actors as well. In our case, these companies are competitors; therefore, these resources will promote the competitive advantages of every coopetitive party. This position can be proved up by the words of Sherer (2003), who argued that in order to gain a permanent competitive advantage over rivals it is necessary to mix competition and cooperation. The essence of this networking coopetition structure boils down to meeting the ambitions and desires of its' every party, in other words, to developing each firms' performance. This performance can be increased in different vectors depending on the initial goals and the motives of the competitive cooperation: innovation performance, market performance or financial performance (Czakon et al., 2014: 123-133).

So, at one hand, the main goal and the desired outcome of competitive collaboration is the promotion of company's market performance. At the other hand, some theoreticians consider the impact of coopetition from the managements' level perspective. The effects could be the following: (1) the market share growth; (2) the promotion of the business unit managers' performance; (3) the minimizing the risk of entry; (4) the profit growth for corporate level management (Hunt, 2007).

Obviously, the question concerning the effects coopetition strategy delivers to the companies stays opened, although more and more researches point out the positive effect of the coopetition strategies implemented by the rivals Unfortunately, their researches are either too broad and cover general aspects of coopetitive strategies and their impact on companies' performance in whole, or very specific and relate to certain cases.

The reasons for the limited number of theoretical researches and articles concerning both the prerequisites and the outcomes of coopetition may lie in the novelty of the phenomena itself and in its' extreme complexity. We should always keep in mind that coopetition is a paradoxical phenomena as it combines in its' nature two opposite strategies - cooperation and competition. That is why the reasons and the effects of coopetition may sometimes be unclear.

Regarding the outcomes of coopetition among international oil & gas companies, the profoundness of theoretical study of this issue is even smaller than that of the prerequisites. Nevertheless, the success of alliances and partnerships of oil & gas companies was never under the question. The mentioned hypothesis will be covered in the analytical part of the given paper as well. Moreover, as it was previously said, the particular outcomes in major part depends on the main motives of entering into the competitive alliances and partnerships. Therefore, on the following chapter we will make an attempt to highlight the possible motives (goals) of cooperation among the actors of the oil & gas market and discover, whether these goals tend to be achieved while cooperating.

2. The tendency of coopetitive relations among international oil & gas companies: the prerequisites and outcomes

The chapter 2 of the given paper is related to the relations among actors from oil & gas industry and their tendency to cooperate on the international markets. In order to understand better the prerequisites and motives of cooperation within this industry, it is inevitable to look at the oil & gas market in whole. So, the first paragraph of the following chapter is fully dedicated to the market overview of the industry concerned, exploring both the state policies and concrete companies' behavior. The second part of the present chapter is addressed towards the major oil & gas market players' behavior in the recent years and analysis of the coopetitive tendency of the industry. It shows that not only the major companies tend to cooperate with each other, but also developing oil & gas actors started to share this innovative vision and became more open to their opponents. The specific cases are covered in the last paragraph, which deals with the coopetitive strategies of particular majors of the market: the strategies of OJSC “Rosneft” and British Petroleum were taken into account.

2.1 The overview of the global oil & gas market and its' key players

The main characteristics of the global oil & gas market

The oil & gas sector is a main part of the fuel industry, included in the fuel and energy complex that has relatively differentiated structure presents in the Figure 2 below.

As we can see from the picture, the fuel industry could be split into three sectors: oil, gas and coal. The oil industry includes the enterprises (1) for exploration, extraction and production of oil, (2) oil refining (refinery plants), (3) oil and petroleum products transportation systems (pipelines, railroads, tankers or vehicles) and (4) the organization of its sales whether wholesales for both oil and petroleum products, or retail trade for petroleum products to the direct consumers. The gas industry consists of the companies, which are engaged in prospecting works, drilling of wells, detection of gas storages. The coal industry includes the organizations, which are responsible for coal mining in mines and pits.

Figure 2. The FEC structure

Source: Васильев П. Экономика и ТЭК сегодня // Россия и СНГ в новейших европейских интеграционных процессах. 2009. №11. С. 24.

The leading role in provision of energy needed in all available branches of economy is assigned to fuel resources, in other words, to oil & gas products. The global market for oil is a strategic commodity market due to its leading position in the fuel and energy balance of the world, large scale of international trade in hydrocarbons and the desire of states to maintain the global energy security. Therefore, the oil & gas industry is closely connected practically with all sectors of the industry in every country.

Traditionally, we operate with a common concept of "the world oil & gas market", but in-depth study shows that the market is heterogeneous, and has its regional characteristics. For example, the regions of Asia-Pacific, North America, Europe and CIS and are the main consumers of oil. The key worlds' oil importers are presented on the Chart 1 below.

Chart 1. Top 10 oil-importing countries, 2014.

Electronic source: http://planetenergynews.com/2015/11/16/dollars-drama-oil-trading-from-world-war-ii-to-today-and-whats-next/ (access date: 10.04.2016)

In terms of supply volumes of oil & gas and petroleum products, the number-one supplier of oil to the world market in the regional sense is Saudi Arabia, the Middle East (see Appendix, Table 5), in the organizational - OPEC, which includes the majority of the oil-producing countries of the Middle East region. Regarding the methods of global oil market pricing, the market itself is divided into three sectors: the domestic market of oil-producing countries, export and import of oil & gas through the pipeline systems and "oil-on-sea", i.e. import and export by oil-tankers. Total delivery of oil-producing countries on their domestic markets accounts for 1.6 billion tons of oil per year. Domestic prices in these markets are very different from the world market price and does not affect them: they are often regulated by the government of the particular country (either directly or by means of taxes and customary duties) in order to ensure a full load of refinery plants and stimulate the development of their economies. The largest pipeline systems in the world are owned by the Russian oil pipeline company Transneft, connecting Russia and CIS countries and Europe, and pipelines connecting Canada with the United States.

The region-based structure of the global oil production is presented on the Figure 3 (for top gas producing countries see Appendix, Chart 5).

Figure 3. The global oil production - the leading countries (2014-2015)

Source: Доля десяти крупнейших нефтедобывающих стран мира в мировой добыче 2014-2015гг. по данным BP. Electronic source: http://geo-politica.info/ (access date: 10.04.2016)

As we can observe from the picture, the leading position is kept by Saudi Arabia, the second state-producer of oil and petroleum products is Russian Federation (along with Saudi Arabia, Russia is holding its' leading positions since 1960s).

Additionally, the whole oil & gas market has its' subdivisions depending on the certain product in demand. It could be: (1) crude oil market, proposing the unrefined oil for the consumers, who are usually governments or other big oil & gas companies; (2) petroleum products market that proposes different fossil fuels and other refined-oil product that are popular both among entities and individuals; (3) chemicals market, where various oil-consisting products are sold (e.g. synthetic rubber, synthetic fibers, synthetic resins, etc.), and (4) gas market. In substance, every major oil & gas company acts at the same time on each market and is interested in developing every sphere of its' activity.

The industry explored occupied the determinant position in the major number of state economies, both exporting and importing crude oil, gas, and petroleum products. The bright example of such dependency can be provided with the Russian economy. It is more than enough to mention, that in recent years the oil & gas industry involves more than 20% of governmental funds, requires the support of 10% of products of machine-building complexes and 12% - of metallurgy. More than a half of export of the Russian Federation is organized by means of the oil & gas industry that can be validated with its' second place in the world's oil & gas export rating (equals to 4 720 thousand barrels of oil per day).

In addition, the welfare of citizens of the Russian Federation is in close relation with the oil & gas industry. The oil & gas enterprises solve such problems as unemployment and inflation: more than 200 large organizations provide with workplaces about 2 million people. According to the Forbes and RBC lists of the most reliable employers in Russia, three leading positions are occupied by the Russian oil & gas companies. They are Gazprom, Lukoil and Rosneft, which covers the first, the second and the third positions in the rating respectively. Electronic sources: http://www.forbes.com/forbes/welcome/; http://www.rbc.ru/rbc500/ (access date: 04.05.2016)

Worldwide oil & gas industry supports a lot the state and vice versa, as all the oil & gas companies are considered as the largest taxpayers in the country and every company has huge and miscellaneous social and sponsorship programs. As a result, these oil giants actively promote sport, cultural and social mentoring of the citizens of our country.

With regard to the exceptional position of the oil & gas sector in the world economy in whole and in the internal economic development of every country in particular, the state coordination of the industry's relations is more than reasonable. In every country there are (1) special oil & gas legislation providing with the regulations intended to stabilize the corresponding relations (subsoil legislation, specific tax laws, etc.), (2) higher executive authorities responsible for the fuel and energy sector (for example, Ministry of Energy in Russia, Ministry of Oil and Natural gas in India and the same body of Iran, etc.). Furthermore, almost every key oil & gas enterprise is or historically was a state-owned company. The relative examples are provided hereinafter.

Already from the middle of the last century, the mentioned states as main oil & gas producers, recognizing the significant importance of stability preservation on the energy resources market, have come to a conclusion about the need for cooperation and collaboration. This intention was reflected in the creation of global inter-governmental organizations, the main example of which is Organization of Petroleum-Exporting Countries (OPEC), established in 1960 by the heads of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Nowadays OPEC covers 13 key members, other oil & gas producing states remain in a role of observers.

OPEC declares as its' main functions the following: (1) the coordination of crude oil processing and sales of petroleum products around the world, (2) the development of the mutual general policy for oil & gas production among its' state members, (3) the maintenance of stable oil prices, ensuring sustainable supply of oil & gas to consumers, etc. Electronic source: www.opec.org (access date: 04.05.2016) Therefore, cooperation within oil & gas industry originates from the inter-state relations.

Summing up the above mentioned, it is necessary to highlight several forecast figures concerning the future development of the industry of the topic. According to the forecast report of the OJSC “Rosneft”, constructed on the basis of the WoodMackenzie analytical research, the world's primary energy consumption, including the consumption of refined oil products and gas, will increase by 30% to 17.7 billion tons of oil equivalent by 2030, by 58% to 21.5 billion tons of oil equivalent by 2045 (in comparison with the figure for 2014). Meanwhile, the major increase in consumption in 2015-2045 years will be provided by China (up to 30% of the global growth) and India (15% respectively). It is important to note that the consumption growth will be observed both in the sphere of liquid hydrocarbons and natural gas (Grushevenko, 2012).

The main actors of the global oil & gas market

Therefore, the mentioned market conditions proved an extreme importance of the current management strategies of global oil & gas companies that should be directed towards the coordinated consecutive development for meeting the increasing needs of consumers and the requirements of the global market. In order to open the floor for the case study questions it is essential to identify the major market players of the industry examined and emphasize their main characteristic features.

At the end of the 20th century the largest share in the world's oil production and oil refining was occupied by the following list of multinational companies:

· ExxonMobil (the USA),

· Royal Dutch Shell (the Netherlands, the United Kingdom),

· British Petroleum (the United Kingdom),

· Conoco Phillips (the USA),

· Chevron Texaco (the USA),

· Total (France).

Nowadays these companies still on the top of the world's oil & gas companies' rating. The considered enterprises carry out their operational activity more than in 90 countries all around the world and form more than 15% of world extraction of hydrocarbons.

However, at the beginning of the 21st century one of the main tendencies turned out to be the shift of a ratio of market forces in favor of the large national companies of the developing oil-producing countries such as Saudi Aramco (Saudi Arabia), Petroleos de Venezuela S.A. (Venezuela), PetroChina (China), Petrobras (Brazil). In these conditions, the strategic goals of the previous major players include: (1) rational integration in the international system of petro-supplying, (2) achievement of the high international competitive advantages that allows to feel confidently in the rigid competitive environment which is characterized by remaining leading role of oil multinational corporations and rapid growth of the state companies of the OPEC countries and China.

Table 6 below provides the ranking of top oil & gas companies according to the Forbes global statistics (www.forbes.com) based on the WoodMackenzie data.

Table 6. Top 10 global oil & gas producing companies (2015)

Electronic source: Forbes global statistics. URL: www.forbes.com (access date: 01.05.2016)

More detailed rankings that takes into account market value, total income and revenue are presented in the Appendix to the given paper. With respect to the data presented above and in the Charts 2-4, Figures 3,5 from the Appendix, we can conclude that the top 10 oil & gas enterprises remains more or less the same disregarding the classification criteria. Therefore, the industry is treated as the stable one with the high barrier of entry because of enormous expenditures.

Following up upon the state-governed factor of the oil & gas industry, the extreme importance of which was highlighted in the theoretical part of the paper, it is essential to notice that the major part of the identified international companies are fully or partly state-owned. For example, 100 per cent of share capital of such enterprises as Saudi Aramco, PetroChina, Petroleos de Venezuela S.A. and some others fully belong to the corresponding state. The other companies mostly have the states among their major shareholder (e.x. the Russian Rosneft and Gazprom are for 75,2 and 50 per cent state-owned respectively, the Brazil Petrobras has 28,7 per cent of shares pertaining to the government). Electronic resource. https://kapital.kz/world/23532/50-krupnejshih-neftyanyh-kompanij-mira.html (access date: 01.05.2016)

Additional industry's attribute, that acknowledges the fact of overriding concern of the states and governments, is the existence of numerous intergovernmental agreements. The Russian Federation as an oil & gas producing country is a frequent party of such formal documents. These agreements are of great importance as they state both the main principles of intra-state cooperation in the examined field and concrete vectors of cooperation covering the certain joint oil & gas projects and the companies involved. Using the legal database consultant-plus, we can search for particular examples:

1. as an example of the first category of agreements, we can mention the Russian-French agreement on the inter-state cooperation in the fuel and energy sector, signed in Moscow on February, 15 1996; the agreement captures the overall principles of the states' relationships, the main idea is to use the French technic and legislative basis for the development of the Russian fuel and energy complex and to establish common entities and projects in the mentioned sphere;

2. as an example of the second variant of agreements, we can look at the several bilateral Russian-Chinese intergovernmental agreements that cover the projects between Russian oil & gas producer Rosneft and Chinese CNPC (of March, 22 2013) and Russian pipeline owner Transneft and the same Chinese state-owned company (of April, 21 2009); the mentioned agreements stand for particular project management (the oil supply for Rosneft and the pipeline construction for Transneft) with the schedules and concrete events to be held by the parties.

The above stated permit us to make a conclusion that cooperative relations within oil & gas sector of economy trace its' roots to the intergovernmental level. The initial imitative for establishing the partners relations among oil & gas competitors comes from the oil & gas producing states and enables the market actors to behave more active and decisive with the governmental support.

One more important feature that is common for the oil & gas companies is their structure in terms of value chain production. All the top petroleum enterprises are vertically integrated. That means that these companies carry out every activity from the exploration and extraction of oil & gas to its' transporting and selling to the direct customers on their own. Therefore, they are not in need of any suppliers and are responsible for all the production cycle. On one hand, this fact puts under the question the sense of partnerships and alliances with the competitors, as oil & gas companies seem to be independent and self-sufficient. On the other hand, it creates an opportunity to cooperate on different point of the value chain, combining them in dependence of the particular needs and motives of the partners.

The competition among the oil & gas companies: the mixture of competitive and cooperative relations

In order to create a clear and authentic image of the global oil & gas market, the perception of the competitiveness level is of great importance.

Traditionally, the examined market was characterized with an extreme spirit of competitive struggle. In 1980s, the high oil prices on the global market dominated and the market forces, intended for the achievement of the market equilibrium, began to work by means of the replacement of energy resources and energy savings, investment into development of oil deposits in the countries, which were not the OPEC-members, and some other.

The crash of oil prices in autumn, 1998 has shown that within certain limits market mechanisms were still able to continue working, at least, in the short-term period, without any external interference (from major oil companies or OPEC). Such mechanism acted similarly on the neighbor markets of other raw materials. However, on the opposite side, a year later a cartel agreement to set the limits on the oil extraction caused a significant price increase. Participation in the competition, even very rigid, apparently is quite comparable to the development of partnerships, joint ventures, alliances and branches and subsidiaries of the companies.

Other industries, such as automotive industry, aircraft industry, for a number of years have been using similar forms of relationship between competitors, while the oil sector only starts switching to such an innovative form of competitive cooperation. For the purpose of risks diversification the considerable number of capital-intensive projects is carried out in the associations uniting several oil & gas enterprises and sometimes companies from the substitute industries (for example, transport companies or pipeline-constructors). As an example, we could mention the participants of the projects in the Gulf of Guinea and the Kara Sea, who are carrying out the off-shore works.

It should be pointed out, that numerous recent agreements include the enterprises of various countries: the BP company from Great Britain and the American Amoco (BP-Amoco subsequently have transformed in the Arco company), the French Total, the Belgian Fina, the Spanish Repsol, the Argentina YPF, the Brazilian Petrobras, the Venezuelan PVDSA. In consequence of such common works, the territory of their activity have much more extended.

Thus, we can state, that the relations of simultaneous competition and partnership are peculiar for the actors of oil & gas market. However, as this strategy is new enough for this market, it is still under the question whether all the countries and all the companies have already shifted to it. So, in order to find it out we should look through the behavior of oil & gas companies in particular regions of their activities and via data analysis identify the set of prerequisites for and outcomes of such managerial strategy.

2.2 The recent tendency of global oil & gas companies' market behavior

The overlook of the global market coopetitive tendency

Continuing the previously mentioned and taking into account the increasing globalization and internationalization processes, it is obvious, that the same tendencies are common for the oil & gas industry. Both national and multinational companies turned towards cooperative interaction. The reason and motives for such behavior can differ depending on the particular countries of the companies' residence, on the relevant governmental policies etc. However, recently the cooperation within oil & gas sector have rapidly expanded mainly due to the strong governmental support (Tian Yu-Ying et al., 2013: 3204-3211).

Many national companies for various reasons started developing the activity abroad. During the first decade of the 21st century for the purposes of controlling the crude oil sales the Kuwait and Libyan oil companies have acquired the shares of the refining and distributive oil & gas companies in Europe, the Saudi Arabian and Venezuelan companies - in Europe and the USA, on the Philippines and in Korea, and the Malaysian company - in South Africa.

For the purpose of diversification of resources, the YPF Company is at the moment carrying out its' activity in Brazil, Bolivia, Ecuador, Colombia, Indonesia and the USA. The Russian company "Lukoil" intensively puts investments in Kazakhstan, Azerbaijan and Iraq, the Russian “Rosneft” is actively developing its' relations with European and Asian companies. The Chinese national company CNPC is present in various countries, in particular in Kazakhstan, Peru, Sudan where it successfully acts as an operator, in Venezuela where it actively participates in biddings on marginal oil fields. It has also signed the important contract with the government of Kazakhstan republic and with the Agip Company for works in Central Asia and the Middle East.

At the end of the 20th century new opportunities occurred in front of the multinational oil & gas major companies as many previously closed countries (such as those of the Latin America and Asia and some African countries) opened their borders for the foreign investments. Oil producing countries started to attract the capital mainly in the upstream sector of the industry. For example, many oil & gas vertically integrated multinational companies were attracted with the high potential of the Caspian region, at the beginning of the 21st century (in 2004) it was first time for Brazil to handle the biddings on providing licenses for exploration for the foreign companies. All these inevitably facilitated the process on inter-firm international cooperation within the industry.

These new unexplored territories were of great interest for the developing and already well-developed companies. Consequently, it is easier to analyze the tendency of international cooperation within the oil & gas industry taking into consideration the inter-firm activity on these newly opened markets. It also goes without saying that in terms of oil & gas coopetition (as it was defined in the first chapter of the work like, among other things, an exchange of resources) the regional and state aspects are of great importance, because it is a state, who owns all the mineral deposits in its' soil either onshore or offshore.

The overall data analysis on coopetition among the oil & gas companies

With the object of overall analysis of possible motives and outcomes of coopetitive strategy chosen by the oil & gas companies on international markets, it is essential to define the most interesting and mostly covered in theory and media foreign markets from this perspective. For this purpose, it is rational to analyze the total investments in the sector explored for the recent years (Chart 2 below).

Source: D. Stockman. Now Comes the Great Unwind---How Evaporating Commodity Wealth Will Slam The Casino. Jay Tailor Media. 2015. URL: http://jaytaylormedia.com/ (access date: 12.05.2016)

As we can see from the statistics, the overall trend of global investments in the oil & gas sector has an upward direction, except for two periods (2009 and 2015) with the negative statistics explained with the world crisis of 2008 and 2014. Therefore, the interest in the projects of the industry is still growing, although the attention of foreign investors is not equally spread all over the world.

Chart 2. World upstream total investments

In order to identify the most attractive fields for the oil & gas activity, we should consult the relevant data and experts' opinion (for example, that of Deloitte concerning the rapid and growing development of oil industry in China, or that of Oil & Gas Financial Journal on the attractiveness of Latin America oil fields). Oil & Gas Financial Journal. Vol. 11. 2014. Electronic source. http://www.ogfj.com/ (access data: 12.05.2016), Greater China Oil & Gas M&A and greenfield FDI investment spotlight. Deloitte. 2013 ed. P. 35. Electronic source. http://www2.deloitte.com/cn/en/pages/energy-and-resources/articles/ (access data: 12.05.2016) As for the forecast data, the most attractive developing regions are presented in the Table below. According to it, the major regions are (1) Asia and Middle East, with the large volume of investments inflows to China, (2) Latin America with the leader represented by Brazil, (3) Eurasia, where the Russian Federation turns out to be the most popular region in terms of investments. Moreover, the development of the Russian oil & gas sector is of special interest nowadays, because of the Western sanctions in force that had a negative effect on the coopetitive interaction within the industry.

Table 7. The volume of investments on the growing oil & gas markets: forecast 2014-2035 (bln $)

Source: composed by the author based on the electronic Journal Crude Oil Peak data. URL: http://crudeoilpeak.info/category/crude-oil-analysis (access date: 12.05.2016)

Taking into account the activity of foreign companies on the growing markets, we propose to explore the tendency of the oil & gas industry development with respect to international coopetition in the following countries and regions:

1. The Asia Pacific region.

2. The Russian Federation.

3. Latin America.

The Asia Pacific region

The Asia Pacific region concentrates the considerable part of the population of the globe (for more detailed information see Appendix, Figure 6) and industrial production. More than a third of the world demand for energy resources accrues for this region (that could be indeed explained by population density of the Asian countries). From all the Asia-Pacific countries, the most inhabited country with the highest potential of economic development is China that is confirmed by world statistics on industrial outputs, and on the above-stated forecasts concerning the increase in demand and in consumption of energy resources, including oil and petroleum products.

Chart 3. Global industrial production as of December, 2015 (YoY % by country)

Electronic source: http://www.businessinsider.com.au/global-industrial-production-grew-at-the-slowest-pace-since-the-gfc-last-year-2016-2 (access date: 01.05.2016)

Moreover, China is a country that relatively not so long ago has opened its' borders for the foreign oil & gas players. This country in 1993 has started to import oil for its' internal needs and nowadays is extremely interested in developing its' fuel and energy industry as it is the main strategic sector (Tian Yu-Ying et al., 2013: 3204-3211). Nowadays the relationships between China and other oil & gas producing countries are developing very intensively. Almost each European country has set a political dialogue with the Chinese oil & gas entities, there are several annual political and economic events, related to the inter-state oil & gas industry (for example, the annual Chinese-British conference on the fuel and energy inter-state cooperation, etc.). КННК и Британская нефтегазовая компания BP подписали соглашение о стратегическом сотрудничестве, 23.10.2015 // CNPC official site. Electronic source. http://www.cnpc.com.cn/ (access date: 01.05.2016)

China has several key oil & gas actors: CNPC (China National Petroleum Corporation), Sinopec, Petro China (the 100 per cent subsidiary of CNPC). The mentioned companies are the largest state-owned ones. These companies have already entered in the international oil & gas market. For example, CNPC takes the third place among 50 largest oil & gas companies of the world and is the complex international energy company conducting oil & gas investment operations in more than 38 countries of the world. Ibid. (access date: 01.05.2016)

However, the leading Chinese companies cannot still operate with the efficiency similar to the Western ones (such as Exxon Mobile, British Petroleum and the others). Therefore, the multinational oil companies that entered into Chinese oil & gas sector of economy was more than welcome. The reason for that was the advantages of the foreign technologies and innovations, well-known brands and up-to-date management skills. As it was mentioned by several researches, there is a huge gap between the national and foreign oil & gas industry from the technical side. At the beginning of the 21st century, the level of development if the studied sector of Chines economy was corresponding to that of the European companies of 1990s (Tian Yu-Ying et al., 2013: 3204-3211). These Western ”resources” could help China to explore its' reserves more effectively and to gain more experience on the international market.

The prevailing prerequisite for multinational coopetition on the Chinese oil & gas market is the governmental attitude and the preconditions, established by bilateral and multilateral inter-governmental agreements (for example, the mentioned Russian-Chinese ones concerning the activity of the major Russian companies on the Chinese territory). It could be explained with the specific political regime of China and the role of those in power in this country.

Moreover, based on the latest events (the ongoing Western sanctions towards mainly the oil & gas activities), the Russian companies are in a greater degree interested in developing their relations with the Asian companies, including China. The main tasks for the Russian oil & gas producers are the creation of the extra consumer market for exporting oil & gas and cooperation in terms of new projects development (to replace the initial Western partners, which recently became afraid of possible negative sanctions outcome).

Taking into account the prerequisites, mentioned in the paragraph above, we can cite an example of the long-term coopetitive interplay between the Chines CNPC and the Russian leading oil & gas company Rosneft (the information is taken from the official web-site of OJSC “Rosneft”, www.rosneft.ru, and the official web-site of CNPC, www.cnpc.com). This cooperation mainly took the form of the long-term oil-supply contracts, where the supplier is the Russian party, while the Chinese one is a buyer. The first contract was signed in February, 2009 by the heads of the two companies. In this context, it is extremely important to mention, that the precondition of the contract was the mentioned bilateral intergovernmental agreements on the cooperation in the oil & gas sector, signed by the Russian and Chinese governments in March-April, 2009.

According to the mentioned long-term contract, the Russian party was to supply certain amount of oil to the Chinese party annually during 20 years, starting from the year of 2011. This contract is not the only one agreement in force, conducted between the two international companies. Such stable and long-term coopetitive relations between both the countries and the companies allow the parties to gain useful advantages, and the outcomes of these relations are beneficial for both parties, therefore, the received benefits are mutual.

Furthermore, in order to facilitate and cut the logistics costs, it was agreed (under the same inter-governmental agreements) to construct on a joint basis a pipeline system from the Russian oil-production enterprises to the CNPC's refinery plants (with the help of both Rosneft and Transneft companies). This joint project also aimed for reducing the financial risks and for dividing all the expenses into several parts.

For the Russian company it as a way to successfully execute its' main activity - the sales of oil in order to receive profits, and an opportunity to get a good alternative customer, which is of great importance in the Western sanctions circumstances. For the Chinese company it is an opportunity to diversify the supply risks (China buys oil from different countries and that makes the oil & gas market in the country more competitive and stabilize the retail oil prices) and to acquire the sufficient amounts of energy resources from the most logistically convenient supplier in order to meet the increasing energy consumption in the country.

As an extra outcome of mass entering of global oil & gas enterprises into Chinese fuel and energy sector of economy increased the competition within the national oil & gas companies, which had to struggle at the same time against and together with the newcomers. Therefore, it gave a boost for the prompt development of the domestic oil & gas companies, including the intra-state coopetition (Tian Yu-Ying et al., 2013: 3204-3211).

On the other hand, Chinese oil & gas companies have started their activity abroad. The reasons for it could be similar to those of Western companies when investing in China's oil & gas sector. For example, the highest capital flow to the USA from Chinese companies comes to oil & gas sector (see the Figure __ in the Appendixes). That can be illustrated with the several Memorandum of cooperation entered into between CNPC and Exxon Mobile. Additionally, CNPC is actively performing upstream projects in Venezuela (drilling works at the field called “Intercampo” since December. 2014, the license on which it owns), in the Aral Sea in Uzbekistan together with the Russian Lukoil (since 2007), etc. Certain scientific research projects are carried simultaneously by Chinese and Western companies (for example, CNPC-PetroChina-Royal Dutch Shell Join Center for Research of shale oil, established in Autumn, 2013), and many others. Ibid. (access date: 01.05.2016)

The other large Chinese company Sinopec is heavy developing it's international cooperative relations with the European oil & gas giant British Petroleum. Recently (in the middle of 2015) the parties have established the parity joint venture in Singapore. The joint venture will be the center of oil refinery facilities for marine fuels production. Sinopec official site. Electronic source. http://www.sinopecgroup.com/ (access date: 01.05.2016) This action became one more step in the stable and long-term coopetitive relations between these two oil & gas producers both in China and on the foreign territories.

All in all, we could state that the coopetitive strategies of oil & gas companies are able to solve certain questions that appeared in front of the Chinese fuel and energy sector of economy and at the same time meet certain commercial interests of the international majors.

The Russian Federation

Russia with its' enormous energy resources (oil & gas deposits, both onshore and offshore) was always an attractive field for foreign oil & gas companies, which are greatly motivated to look for new opportunities in terms of access to the resources. The possibility to gain an access to resources is a prerequisite to success of every company's performance as oil & gas refer to deplete resource and every deposit will inevitably come to its' end.

In Russia there is a number of onshore fields (already explored by mostly Russian oil & gas companies such as Rosneft, Gazprom, Lukoil, Bashneft and others), but the offshore ones, despite all the technical difficulties in its' exploration and development, turned to be the most attractive for the foreign companies. The offshore deposits in Arctic region and in the Far East (Sakhalin island) are the main fields for international inter-firm coopetition. For example, in Sakhalin Russian Rosneft has already set a joint venture with a number of foreign oil & gas companies (Rosneft Neftegaz Limited with Exxon Mobile, ONGC, SODECO and Rosneft as participants) based on production share agreement. This entity has started its' exploratory works on the three huge oil deposits: Chaivo, Odoptu, Arkutun-Dagi.

However, Arctic region remains the most unexplored and the most attractive part of the Russian Federation. In support of the given position we could provide the data of the Services of geology, geodesy and cartography of the USA, which has come to a conclusion that in the nearest future the Arctic region can become the world largest oil & gas province with the total approximate amount of unexplored oil and gas reserves about 413 billion barrels of an oil equivalent (Zuyevskaya, 2015).

Russia has about 70% of total amount of unexplored oil & gas deposits in this region (offshore reserves are mainly in the southern part of the Kara Sea and in east part of the Barents Sea). Circum. Arctic Resource Appraisal: Estimates of Undiscovered Oil and Gas North of the Arctic Circle // Electronic source: http://pubs.usgs.gov/fs/2008/3049/fs2008-­?3049.pdf (access date: 01.05.2016) The significance importance of the examined region is highlighted with the specific regulation, created in order to formalize the inter-state relations concerning the cooperation around the resources-access in Arctic: the Kirkenes Declaration, signed by 4 states in the city of Kirkenes, Norway in 1993, under which the Counsel of the Barents Euro-Arctic region was established. The Russian Federation is a party to this agreement along with such countries as Norway, Finland and Sweden.

Therefore, the Arctic region, being one of the most attractive and promising unexplored fields in the world, is attracting the foreign investors from the oil & gas industry. Contrariwise, as all the reserves in this region are the offshore ones and require enormous investments, innovative technical equipment, qualified drilling teams and explorers, and are characterized with the long-term pay-back period, the owning party (in this case the Russian Federation) is interested in the foreign investments and resources in order to diversify the risks and to use extra forces in exploratory and drilling works.

At the meantime, there are several ongoing agreements, signed by Russian and foreign oil & gas companies, about the future projects on exploration, drilling and offshore oil & gas production in the Arctic region. For example, the American Exxon Mobile several years ago showed its' interest to the Arctic offshore fields and signed the Memorandum of cooperation with Rosneft concerning the future exploratory and drilling works in the Kara Sea. The similar agreement was signed with the Italian oil & gas leader ENI regarding the joint project in the in the Barents Sea.

The Agreement between Exxon Mobil and Rosneft was signed on the 21st of June, 2013, and stated for the establishment of several joint ventures (33, 33 per cent of the share capital owned by Exxon Mobile with the major part of the shares belonging to Rosneft). In 2013 through the joint ventures, the parties started their cooperative works on exploration of the Kara Sea offshore oil deposits. According to the agreement, the Russian party acted as a sole mineral owner, while the American party took part in the investment issues and the fields' geological exploration.

The second Agreement, executed between ENI and Rosneft in April, 2012, included several directions of cooperation: the first sphere was the joint development of the offshore deposits in the Russian Barents Sea, and the second issue provided the Russian party an opportunity to acquire a stake in the ENI's international refinery and extraction facilities. Under this binding Agreement, it was planned to launch the exploratory works in the Barents Sea in 2013 and to start drilling in 2020.

The cooperation within the two mentioned Agreements was reasonable for every intended party because of several reasons. For Rosneft the works on the projects were of the highest risks both technological and financial:

- severe Arctic climate, demands involvement of the best world practices,

- remoteness from the shore,

- sea depths from 320 to 600 meters, the powerful drifting ices,

- high costs of the deposits development,

- geological risk of not-proven deposits with the taken stocks, sufficient for economical profitability,

- limited experience in implementation of projects of similar complexity and scale.

For the Western parties, as it was already mentioned, it was a great opportunity to benefit from the increasing their resource base and expanding their market shares. Moreover, as the volume of mineral resources on the Earth is limited the developing of the resource base of every oil & gas company is an indispensable competitive advantage and the factor of excellent market performance. The more resources the company acquire the more chances it has to beat its' competitors and to increase its profits. In the provided example, the only way to get an access to the extra resources was via the cooperation with the state-owner's company (such as Rosneft). «Роснефть» и «ЭксонМобил» укрепляют cстратегическое сотрудничество. // Rosneft official site. Electronic source. http://www.rosneft.ru/news/pressrelease/ (access date: 01.05.2016), Роснефть и Eni подписали соглашение завершении сделок по nрем проектам на российском шельфе. // osneft official site. Electronic source. http://www.rosneft.ru/news/pressrelease/ (access date: 01.05.2016)