Competition and Collaboration

A Comparison of U.S. and Chinese Energy Outward Direct Investment

by Chaoling Feng

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The U.S. and China are the world's largest energy importing countries. In 2011, both countries imported approximately half of their total oil supplies from overseas. Due to this great reliance on foreign energy supplies, energy companies from both countries continue to pursue energy outward direct investments (EODIs) as an approach to increase their access to global energy reserves. In this context, my study will compare and contrast the characteristics, current positions, and future trends of both the U.S. and Chinese EODIs — specifically their exploration and development investments. Based on the analysis of current U.S. and Chinese EODI positions, the study goes further to analyze their objectives and determinants, explaining both the similar and different aspects of EODI characteristics, positions and historical trends. By integrating the positions, objectives, and determinants of U.S. and Chinese EODIs into an interactive and dynamic mechanism, the study designs a partial equilibrium model system, in order to predict the future operational outcomes (production, sales, exploration, and profitability) and the competitive positions of U.S. and Chinese EODIs. However, the study's conclusions should be interpreted with caution, since the analysis is based on data and trends up to 2011, and in some cases up to 2008, 2009, and 2011. The major technological breakthroughs in the field, especially in hydraulic fracturing and horizontal drilling technologies, may affect future demand, lifting costs, and geographic locations of energy reserves, and thus may affect the prospects of EODIs in significant ways.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Data and Methodology

  • Chapter Three

    Current Positions: China and the U.S. EODI status and historical trends

  • Chapter Four

    Determinants and Goals: Similarities and Differences between U.S. and Chinese EODIs

  • Chapter Five

    Competition in Perspective: A Partial Equilibrium Model of U.S.-Chinese EODI operations

  • Chapter Six

    Conclusions

Research conducted by

This document was submitted as a dissertation in October 2014 in partial fulfillment of the requirements of the doctoral degree in public policy analysis at the Pardee RAND Graduate School. The faculty committee that supervised and approved the dissertation consisted of Charles Wolf, Jr. (Chair), Debra Knopman, and Constantine Samaras.

This report is part of the RAND Corporation dissertation series. Pardee RAND dissertations are produced by graduate fellows of the Pardee RAND Graduate School, the world's leading producer of Ph.D.'s in policy analysis. The dissertations are supervised, reviewed, and approved by a Pardee RAND faculty committee overseeing each dissertation.

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