Joint ventures within the energy sector - Essay Example

A combined force of Shell and Aramco strengthens the venture’s competitiveness. For instance, Saudi owns oil reserves, but lacks the ability to exploit them (Johnson, 2011). Therefore, this influences the government of Saudi to strike a deal with Shell. The state of Saudi has efficiently exploited the oil resource, while the investor gains some profit. The energy sector takes different forms, this report will primarily focus on oil and gas as sources of energy. Apart from that, market factors in the petroleum sector contribute significantly to the well-being of an economy.

Therefore, key stakeholders in this micro-economy continue to effect and affect the industry (Johnson, 2011). The primary players include National Oil Companies, International Oil Companies, and petroleum organizations. Therefore, when these parties’ work in harmony, petroleum players realize an increase in the efficiency of oil production. However, economic factors such as demand, supply, and industrial regulations influence the pricing and distribution of petroleum products. Consequently, competition among stakeholders increases since oil is a rare commodity.

Motive enterprise is a joint venture between Shell (an IOC) and Saudi Aramco (an NOC). Both of the shareholders own equal shares of the company. The company has its headquarters in Houston Texas. In 2004, the company posted a fiscal net profit of 24 billion dollars. Motiva owns and operates three oil refineries in the United States. Important to say, the expansion of Port Arthur refinery increased its capacity to 600000 meters cubic per day (Stevenson, 2011). Subsequently, Port Arthur refinery became the largest in North America and the fifth largest in the globe.

Motiva produces diesel, petrol and petroleum liquid gasses and other crude oil products. United states are the fundamental customers of the company’s products. Joint ventures between national and international firms can be realized through