Comprehensive Report: Occidental Petroleum Corporation in Oman

This report provides a comprehensive analysis of Occidental Petroleum Corporation in Oman, examining its market position within the oligopolistic oil and gas industry. It explores the company's profile, including its subsidiary status of Occidental Petroleum Corporation, its operations in Oman, and its competitive landscape, highlighting key competitors like Petroleum Development Oman (PDO). The report delves into the market structure, barriers to entry, and factors influencing both the supply and demand for Occidental Oman's products. It also discusses the impact of government expenditure and tourism on demand. Furthermore, the report identifies the company's goals and use of advanced technology as supply factors. The analysis concludes with strategic recommendations, such as competitive pricing and the adoption of modern technology to maintain a competitive edge. The report underscores the importance of understanding market dynamics for sustained profitability in a globalized business environment.

A REPORT ON OCCIDENTAL PETROLEUM CORPORATION: OMAN i
A REPORT ON OCCIDENTAL PETROLEUM CORPORATION: OMAN
Student Name
Institutional Affiliation
Facilitator
Course
Date

A REPORT ON OCCIDENTAL PETROLEUM CORPORATION: OMAN ii
Table of Contents
Introduction....................................................................................................................................................1
Occidental Oman Profile................................................................................................................................2
Oman Oil and Gas Industry Market Structure...............................................................................................3
Barriers to entry in the Oil and Gas Industry in Oman..................................................................................4
Factors affecting the demand for oil and gas for Occidental Oman..............................................................5
Factors affecting the supply for occidental Oman.........................................................................................6
Recommendations..........................................................................................................................................7
Conclusion.....................................................................................................................................................7
References......................................................................................................................................................9

A REPORT ON OCCIDENTAL PETROLEUM CORPORATION: OMAN 1
Introduction
Globalization is taking over today’s world of business at a fast pace (Docquier and Rapoport
2012, p.681). Many businesses are maneuvering ways to compete favorably in their various
industries both domestically and internationally. The nature of the market structure and the
intensity of competition within the market structure in which an organization operates highly
determine its profitability. There are four major types of market structures namely the monopoly,
monopolistic competition, perfect competition and oligopoly competition (Song, Wei and Wang
2015, p.319). Businesses which operate in monopoly and oligopoly market structures are highly
profitable as barriers to entry exist which means that only a few firms operate in the market and
hence set prices together to maximize their profits (Stucke 2013, p.162). Businesses operating in
monopolistic competition market structures face stiff competition as new firms continue to enter
the market due to low barriers to entry and hence end up making only the economic profit and
may even be competed out of the market (Feenstra 2010, p.1).
In this report, Occidental Oman has been analyzed based on the various learning outcomes.
These include the business environment structure within which it operates, its industry’s barriers
to entry, factors determining its supply and demand and a description of its various competitors
and the overall level of competition in the industry. Recommendations have also been suggested
to help the company to remain competitive in its industry. Analysis of an organization’s industry
enables it to identify various ways to utilize in order to cope up with stiff competition in the
industry and hence remain competitive. It is therefore very crucial for any organization to
analyze its industry for its continued success in the industry.

A REPORT ON OCCIDENTAL PETROLEUM CORPORATION: OMAN 2
Occidental Oman Profile
Occidental Oman is a subsidiary company of Occidental Petroleum Corporation which was
established during the year 1920 in Houston Texas in the United States of America. Occidental
Oman established its operations in Oman in 1979 and thus it has been operating in Oman for the
last 30 years (Anon, Oman). The company deals with oil and gas production activities as well as
chemicals production. Its productivity is based on production agreements sharing together with
Qatar and the United Arab Emirates subsidiaries which are both in the Middle East region.
During the year 2018, the Middle East region posted productivity of 286000 oil barrels and this
accounted for 43 percent of the world oil production. The region holds the company’s reserves
worth 28 percent. Occidental Oman is the second largest oil producing company in Oman after
the Petroleum Development Oman (PDO) which is owned by the government with 60 percent
shares and other international companies with 40 percent (Andrew Figgins, James Lansdell and
Yasser Taqi 2018, p.2). The international companies contributing to the 40 percent ownership
include Shell, Total and Partex with ownership percentages of 34 percent, 4 percent, and 2
percent respectively. Occidental Oman operations are mainly concentrated in the Oman Central
region at Mukhaizna Field and Oman Northern region at the field of Safah and Block 62.
Occidental Oman has doubled its Oman land to 6 million acres after an award of three blocks of
exploration near the existing operations by the Oman Ministry of Oil and Gas during the year
2018. This has enabled the company to greatly expand its operations and hence better results are
anticipated in the future.
Oman Oil and Gas Industry Market Structure
Occidental Oman is categorized in the Oman Oil and Gas Industry (Chazen 2012, p.6). The
industry is oligopolistic in nature due to its high market concentration. The industry is dominated

A REPORT ON OCCIDENTAL PETROLEUM CORPORATION: OMAN 3
by a few large significant companies especially those owned by the state such as Petroleum
Development Oman, Oman Oil Refineries and Petroleum Industries Company and Oman Gas
Company and independent companies such as Occidental Petroleum Corporation among others.
Small companies also operate in the industry. Petroleum Development Oman controls 70 percent
of oil production in Oman followed by Occidental Petroleum Corporation. Some of the
competing companies to Occidental Oman include Petroleum Development Oman, Hunt Oil
Company and BP Oman. The competitors' matrix has been developed based on the size occupied
by competitors which is an indication of the number of wells owned by the companies and hence
the size of productivity.
Name Occidental Oman
(Acres)
PDO (Acres) Hunt Oil (Acres) BP (Acres)
Size of land
occupied
6 million 22 million 5.5 million 976 thousand
Based on the size of land occupied, Occidental Oman faces stiff competition especially from
state-owned companies such as PDO. It is better placed since it is the second in terms of oil
production in Oman. The companies in the industry use competitive pricing whereby they have
to investigate the price of the competitors especially the state-owned companies which have their
prices set by the government. Bigger companies benefit than smaller ones as they enjoy larger
economies of scale and hence can offer oil and other goods at low prices and make more sales
which enable them to maximize their profits.
Barriers to entry in the Oil and Gas Industry in Oman
Barriers to entry refer to obstacles which hinder businesses from entering an industry
(Herrendorf and Teixeira 2011, p.573). Some barriers to entry are natural while others are fueled

A REPORT ON OCCIDENTAL PETROLEUM CORPORATION: OMAN 4
by the government. In Oman Oil and Gas Industry has various barriers to entry which have been
discussed below.
Big companies in oil exploration and production in Oman are owned by the state and hence
obtain financial support and power from the government. State-owned companies such as
Petroleum Development Oman, Oman Oil Refineries and Petroleum Industries Company, Oman
Gas Company and Oman Oil Company are major oil exploration and production companies in
Oman which are owned by the government and all of them have powers from the government to
operate in their field and hence it is difficult for other smaller companies to enter the industry as
they may be competed out automatically.
The existing companies enjoy larger economies of scale such as economies of large scale
production. This enables them to produce oil and offer other services at relatively cheaper prices.
This enables them to offer quality goods and services at cheaper prices which new entrants may
not be capable of offering and this bars them from entering the industry.
The existing large companies have the ability to adapt and use modern technology in oil
production such as Enhance Oil Recovery. New entrants may not be able to afford modern
technology in production and may end up producing low-quality oil and other products and
hence be competed out or be eliminated by the government if its unable to comply with their
required technology in production.
Factors affecting the demand for oil and gas for Occidental Oman
The demand for oil and gas and other chemical products offered by Occidental Oman is affected
by various factors some of which include the availability of close substitutes, cost of production,

A REPORT ON OCCIDENTAL PETROLEUM CORPORATION: OMAN 5
the price offered by competitors, development of Oman’s tourism sector and government
expenditure.
Currently, the oil and gas sector of Oman lacks close substitutes, especially for the hydrocarbon-
related goods and services. However, available renewable sources have been identified and some
companies like the PDO have started utilizing them. For instance, PDO uses solar energy in part
of its production. Therefore, Occidental Oman though not affected by close substitutes right now,
stands a chance to be affected by them in future which may lower the demand for its products
and hence necessary adjustment measures need to be undertaken in advance.
Occidental Oman has been able to reduce the costs of its production. This has been done through
the adoption of modern technology in production such as Enhance Oil Recovery. As a result, it
has been able to offer its products at competitive prices hence increasing and maintain the
demand for its products.
The ministry of tourism has continued to improve Oman’s tourism sector to encourage tourism
activity in the area. Estimates show that tourism activity is expected to rise to 12 million by 2020
(Feighery 2012, p.269). Increase in tourism increases the demand for local transport and
consequently the demand for fuel. This, therefore, means that Occidental’s demand in Oman has
been increasing with an increase in tourism and much improvement is anticipated in the future.
Government expenditure, especially in infrastructure, determines Occidental Oman demand.
Improvement in infrastructure and construction of new roads and railway increases the demand
for oil and gas as travel activities expand. As government expenditure on infrastructure increases
in Oman, Occidental is anticipated to record an increase in demand for its products.

A REPORT ON OCCIDENTAL PETROLEUM CORPORATION: OMAN 6
Factors affecting the supply for occidental Oman
Various factors which affect the supply for Occidental include the company’s goals, the price
offered by competitors, use of advanced technology and the cost of production.
Occidental Oman’s goal is to achieve excellence in its industry as the leader and generate its
stakeholders’ future value. This has highly driven Occidental Oman towards increasing and
maintaining its market supply in order to remain competitive and profitable.
Occidental is the second largest oil producer in Oman and hence has been able to minimize its
costs of production. This has enabled it to increase and maintain the supply of its products at
relatively cheap prices as compared to those offered by the competitors.
Occidental Oman offers its goods and services at competitive prices as compared to those offered
by its competitors. As a result, it has been able to win a relatively large market share and this has
enabled it to increase and maintain its supply.
The company uses advanced technology in production especially the Enhance Oil Recovery
which enables it to produce quality products cheaply. This has enabled the company to lower its
production costs and hence supply much of its products at relatively cheap prices.
Recommendations
The goal of every business organization is to make more profit and remain competitive
throughout its operations (Wilburn and Wilburn 2014, p.11). For Occidental Oman to remain
competitive in the future, it should adopt various strategies as discussed.
The company should adopt competitive pricing mechanism. This enables a company to set its
prices competitively after researching the price range for its competitors (Chen, Zenou and Zhou

A REPORT ON OCCIDENTAL PETROLEUM CORPORATION: OMAN 7
2018, p.672). This will enable the company to win a larger market share and hence improve its
profitability.
The company should adopt modern technology in production. Occidental Oman should consider
improving its production with every newly invented production method. This will enable it to
produce cheap quality products enabling it to offer its products cheaply and hence win a larger
market share and make more profit.
Conclusion
Today’s business world has been highly globalized and many businesses are maneuvering ways
to compete favorably both in the domestic and international markets. The market structure within
which an organization operates highly determines its profitability. The four common types of
market structures include monopoly, monopolistic, perfect and oligopolistic competition.
Oligopolistic and monopoly markets tend to be more profitable compared to other market
structures but are associated with allocative and productive inefficiencies which negatively
impact the final consumer through low quality high priced products. In this report, Occidental
Oman has been analyzed. The company is in the Oil and Gas Industry in Oman which is
oligopolistic in nature. The company is the second largest oil producer in Oman. Oil and Gas
industry in Oman is dominated by most state-owned companies some of which include PDO and
OOC among others. the industry is quite competitive and hence involves various barriers to entry
such as economies of scale and major companies’ state ownership among others. The major
challenge encountered in this report was the inability to find information on the number of wells
for all competitors established in Oman. In a nutshell, Occidental Oman stands a chance to
improve in the future as the demand and supply for its products is better placed in the oil and gas
industry in Oman.

A REPORT ON OCCIDENTAL PETROLEUM CORPORATION: OMAN 8

A REPORT ON OCCIDENTAL PETROLEUM CORPORATION: OMAN 9
References
Andrew Figgins, James Lansdell and Yasser Taqi, 2018. Oil and gas regulation in Oman:
overview . Practical Law Country Q&A 9-567-1725, pp.1–21.
Anon, Oman. Oman. Available at:
https://www.oxy.com/OurBusinesses/OilandGas/MiddleEast/Pages/Oman.aspx
Chazen, S.I., 2012. Occidental Petroleum Corporation. Credit Suisse, pp.6-7.
Chen, Y.J., Zenou, Y. and Zhou, J., 2018. Competitive pricing strategies in social networks. The
RAND Journal of Economics, 49(3), pp.672-705.
Docquier, F. and Rapoport, H., 2012. Globalization, brain drain, and development. Journal of
Economic Literature, 50(3), pp.681-730.
Feenstra, R.C., 2010. Measuring the gains from trade under monopolistic competition. Canadian
Journal of Economics/Revue canadienne d'économique, 43(1), pp.1-28.
Feighery, W.G., 2012. Tourism and self-Orientalism in Oman: a critical discourse
analysis. Critical Discourse Studies, 9(3), pp.269-284.
Herrendorf, B. and Teixeira, A., 2011. Barriers to entry and development. International
Economic Review, 52(2), pp.573-602.
Song, J., Wei, Y.S. and Wang, R., 2015. Market orientation and innovation performance: The
moderating roles of firm ownership structures. International Journal of Research in
Marketing, 32(3), pp.319-331.

A REPORT ON OCCIDENTAL PETROLEUM CORPORATION: OMAN 10
Stucke, M.E., 2013. Is competition always good?. Journal of antitrust Enforcement, 1(1),
pp.162-197.
Wilburn, K. and Wilburn, R., 2014. The double bottom line: Profit and social benefit. Business
Horizons, 57(1), pp.11-20.