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Strategic Alliance in Energy Sector & Implications for Economic Growth and Technical Efficiency: The Case of Petrobras and Galp

Author

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  • Jomar Patricia De Avila Arroyo

    (School of Accounting, Finance and Economics, Faculty of Business & Law, Leeds Beckett University, Leeds, UK)

  • Milton Yago

    (School of Accounting, Finance and Economics, Faculty of Business & Law, Leeds Beckett University, Leeds, UK)

  • Muhammad Ali Nasir

    (School of Accounting, Finance and Economics, Faculty of Business & Law, Leeds Beckett University, Leeds, UK)

  • Junjie Wu

    (School of Accounting, Finance and Economics, Faculty of Business & Law, Leeds Beckett University, Leeds, UK)

Abstract

This study stemmed from the lack of evidence and uncertainties regarding the economic and political effects of a strategic alliance between leading oil companies like Petrobras and Galp on their host economies. This paper investigates whether public and private corporations in the energy sector can influence the economic growth of their respective countries. A Panel data analysis was performed by employing quarterly data from (2006-2013). We also used Data Envelopment Analysis (DEA) approach to measure the technical efficiency (TE) effect of the alliance on the performance of both companies from 1999 to 2012. It was found the exploration and export of oil and gas do not play a significant role in output growth of the home economy and that exploration activities were inflationary, destabilising and inimical to growth, at least in the short-run. On another positive side, both companies showed increased technical efficiencies in the chosen time period. Petrobras enjoyed TE on average of 90% in the variables studied whereas Galp showed an average TE of 70%. These results reflect the corporate strategies of both firms, which focussed on achieving profitable and sustained growth and enhancing their efficiencies in their collective and individual activities. This study stemmed from the lack of evidence and uncertainties regarding the economic and political effects of a strategic alliance between leading oil companies like Petrobras and Galp on their host economies. This paper investigates whether public and private corporations in the energy sector can influence the economic growth of their respective countries. A Panel data analysis was performed by employing quarterly data from (2006-2013). We also used Data Envelopment Analysis (DEA) approach to measure the technical efficiency (TE) effect of the alliance on the performance of both companies from 1999 to 2012. It was found the exploration and export of oil and gas do not play a significant role in output growth of the home economy and that exploration activities were inflationary, destabilising and inimical to growth, at least in the short-run. On another positive side, both companies showed increased technical efficiencies in the chosen time period. Petrobras enjoyed TE on average of 90% in the variables studied whereas Galp showed an average TE of 70%. These results reflect the corporate strategies of both firms, which focussed on achieving profitable and sustained growth and enhancing their efficiencies in their collective and individual activities.

Suggested Citation

  • Jomar Patricia De Avila Arroyo & Milton Yago & Muhammad Ali Nasir & Junjie Wu, 2014. "Strategic Alliance in Energy Sector & Implications for Economic Growth and Technical Efficiency: The Case of Petrobras and Galp," International Journal of Energy Economics and Policy, Econjournals, vol. 4(4), pages 759-771.
    • Handle: RePEc:eco:journ2:2014-04-24
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    Cited by:

    1. Nnaemeka Vincent Emodi & Kyung-Jin Boo, 2015. "Decomposition Analysis of CO2 Emissions from Electricity Generation in Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 5(2), pages 565-573.
    2. Marin s Taffarel & Wesley Vieira da Silva & Ademir Clemente & Claudimar Pereira da Veiga & Jansen Maia Del Corso, 2015. "The Brazilian Electricity Energy Market: The Role of Regulatory Content Intensity and Its Impact on Capital Shares Risk," International Journal of Energy Economics and Policy, Econjournals, vol. 5(1), pages 288-304.
    3. Gennady Osipov & Svetlana Karepova & Elena Chizhevskaya & Maxim Gnatyuk & Alexander Semin & Oksana Mikhayluk, 2018. "Directions To Improve The Effectiveness Of Russia s Energy Export Policy," International Journal of Energy Economics and Policy, Econjournals, vol. 8(6), pages 227-239.

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    More about this item

    Keywords

    Economic Growth; Exploration; Oil and Gas; Technical Efficiency; Strategic Alliance;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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