This paper develops empirical models for average oil production costs that represent the structural field-level and country-level determinants most characteristic for the new era beyond easy oil. These models lend themselves as a tool for forecasting the floor of structural cost trends related to the shift into more cost intensive fields that are increasingly producing heavy and extra-heavy crudes and that are located offshore and in countries fraught with high levels of political and environmental risks. Given the extremely limited availability of reliable, non-proprietary cost data, this model deliberately relies on high level factors for which data is publicly available for hundreds of fields from all oil producing states. This model specification offers the important advantage of enabling us to lever insights gained from this study in powerful out-of-sample estimations for the dominant scenario where data is available on field characteristics but not on costs.

This study, which is part of a larger research project on state-controlled hydrocarbon resources, looks at the strategy, evolution and performance of Gazprom, Russia's largest state company. It explores the critical role that Gazprom plays in the Russian economy, as well as its growing and evolving role as an instrument of state.

Section 1 provides an overview of the Russian oil and gas sectors, with special attention to the history of gas as a Soviet ministry's the period when nearly all of Gazprom's legacy assets in gas fields and pipelines were developed.

Section II focuses on Gazprom as an organization, including its structure, revenues, and its activities within Russia, Western Europe and overseas. As the study makes clear, Gazprom is far more than the world's largest gas company. It is a monopoly controlled by the Kremlin, serving both economic and political agendas, as well as a multidimensional investment enterprise seeking a larger role on the world stage.

Section III looks at the "yin and yang" of Gazprom and the state, and the reasons for early privatization efforts following the demise of the Soviet Union, as well as the current "re-nationalization" of the oil and gas sectors as world prices have risen.

The developing LNG trade does not have symmetric participants. LNG buyers in continental European and Japan tend to be monopoly gas and electricity companies with incentive and financial ability to sign long-term contracts. In contrast, prospective LNG buyers in the US and the UK participate in competitive wholesale markets and regulatory oversight with disincentives for volume commitments. As a result, integrated LNG sellers use US and UK as "markets of last resort" with implications for variability in actual LNG deliveries and for the division of rents in the growing LNG trade.

This text is a working paper version of Chapter 5 in Mark Hayes' doctoral dissertation to be published in 2007 by Stanford University Press.

Growing LNG imports will impact the value of gas storage and regional price spreads. In this chapter the author describes a model that incorporates seasonal gas demand, and relevant supply chain costs that will drive month-scale LNG flows. This text is a working paper version of Chapter 3 in Mark Hayes' doctoral dissertation to be published in 2007 by Stanford University Press.

Random (stochastic) variability in gas demand and prices creates significant option value for LNG suppliers with destination flexibility. In this chapter the author describes an analytical model to value the option of cargo diversion and to draw insights about the potential for future regional price convergence. This text is a working paper version of Chapter 4 in Mark Hayes' doctoral dissertation to be published in 2007 by Stanford University Press.