The impending demise of vertical integration amongst oil companies ?

An article in bloombergbusinessweek(14 nov, 2011) describes the conundrum faced by Marathon Oil, whose oilfields in Angola and Norway were not close to its refineries and transportation assets. The result, most of the oil the company refined was purchased from competitors, thus negating the benefits of vertical integration. The company’s decision to only focus on oil drilling, and sell off all its remaining assets, is described as a strategy bein considered by many of its competitors. Will the demise of vertical integration across oil companies unleash sector level efficiencies ? Will the contracting terms across a fragmented supply chain adjust to enable overall cost efficiencies ? Is this a robust strategy or a reaction to the current situation and thus potentially bad for the long run ?

About aviyer2010

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