Case Study: Halliburton Corp. and the Issue of Politics
Case Study: Halliburton Corp. and the issue of politics.
This case study examines Halliburton Corp 's current strategy for expanding operations in the Libyan oil market in respect to choosing locations overseas, and integrating successfully with the local community. It highlights the importance of politics in international business. US based oil company Halliburton consists of two main divisions, Halliburton Energy Services and KBR, the engineering and construction arm of the group both of which are seeking contracts in the country.
The recent opening up of Libya 's oil markets has created exceptional opportunities for multinational oil companies, Halliburton being one of the pioneers and main players in this market. The current strategy of massive expansion and increased investment has become a major issue in Tripoli and Benzaghi with hotel rooms overbooked due to the vast amounts of US oilmen seeking contracts in the country. Some elements in the Libyan community have already voiced concern of a US-led commercial invasion.
The issue is one of balancing the need to realise profits on investment with the need to be aware of local community and reaction to American values.
The reason for these actions of market entry are, the drive to be the first to exploit the new opportunities arising in the market. The importance of gaining early market share is highlighted by the fact that Libya currently produces 1.5m bpd and production is set to rise to around 3m by March of next year. The country also has some 36 billion of proven oil reserves, and is located close to the European market, creating massive prospects for the future. Another factor is that the oil variation is a special type of sweet high quality oil that needs very little refining in comparison with other variations of crude.
Other factors leading to the current interest in the market include a high price of oil which has enabled major oil companies such as Halliburton to use more cash reserves
This case study examines Halliburton Corp 's current strategy for expanding operations in the Libyan oil market in respect to choosing locations overseas, and integrating successfully with the local community. It highlights the importance of politics in international business. US based oil company Halliburton consists of two main divisions, Halliburton Energy Services and KBR, the engineering and construction arm of the group both of which are seeking contracts in the country.
The recent opening up of Libya 's oil markets has created exceptional opportunities for multinational oil companies, Halliburton being one of the pioneers and main players in this market. The current strategy of massive expansion and increased investment has become a major issue in Tripoli and Benzaghi with hotel rooms overbooked due to the vast amounts of US oilmen seeking contracts in the country. Some elements in the Libyan community have already voiced concern of a US-led commercial invasion.
The issue is one of balancing the need to realise profits on investment with the need to be aware of local community and reaction to American values.
The reason for these actions of market entry are, the drive to be the first to exploit the new opportunities arising in the market. The importance of gaining early market share is highlighted by the fact that Libya currently produces 1.5m bpd and production is set to rise to around 3m by March of next year. The country also has some 36 billion of proven oil reserves, and is located close to the European market, creating massive prospects for the future. Another factor is that the oil variation is a special type of sweet high quality oil that needs very little refining in comparison with other variations of crude.
Other factors leading to the current interest in the market include a high price of oil which has enabled major oil companies such as Halliburton to use more cash reserves
References: 1. www.halliburton.com 2. www.lloydslist.com 3. http://news.bbc.co.uk/1/hi/world/africa/default.stm 4. www.cia.gov/cia/publications/factbook/geos/ly.html 5. www.economist.com/countries 6. www.ft.com