Reasons for Choosing International Joint Venture in the Process of Internationalization by Oil and Gas Companies in Developing Countries Exemplified by Chevron and Shell in Nigeria and Venezuela

At the stage of internationalization, companies need to make the right choice between strategies. Sometimes, in the process of internationalization they decide to change their initial strategy to another one, in this particular work the strategy of international joint venture is researched. Oil and gas projects are research- and capital-intensive, companies need to minimize risks as much as possible before starting a new project, especially in a foreign, not well-known region. Because of this fact many companies choose international joint ventures in order to share risks and high costs of the projects with the local partner (Stewart and Maughn 2011). The topic of joint ventures is widely researched, however, the exact reasons for choosing IJV at the certain stage of the internationalization process in developing countries in detailed comparison with other entry strategies is not enough discussed in academic literature. This work is aimed to fill this gap and is focused on the research of the oil and gas companies in the developing countries and the identification of the reasons why companies should change their strategies to joint venture in the process of internationalization. This topic is highly relevant, because many international oil and gas companies tend to expand their operations abroad for the long-term opportunities, the choice of the right internationalization strategy is crucial for them. With the help of the analysis companies can examine if their case is right for choosing IJV or it is better for them to select another internationalization strategy. The goal of the research is to identify the reasons why oil and gas companies choose international joint venture over other strategies during the process of internationalization in developing countries. The research question is: what are the reasons for choosing international joint venture in the process of internationalization by oil and gas companies in developing countries? In the work are used qualitative and quantitative research. In the first chapter is indicated the previous research on the process of internationalization strategies: their advantages, disadvantages and the reasons to choose in the process of internationalization on particular steps. Then the process of internationalization of oil and gas companies is analyzed, its peculiarities and the reasons to choose each of the strategies. The second chapter consists of the oil and gas market overview, main trends and tendencies. Moreover, the second chapter contains industry analysis, which includes the research of 60 cases of companies choosing international joint venture in the process of internationalization and the reasons for that. Further research is focused on the case studies of Royal Dutch Shell and Chevron internationalization to Nigeria and Venezuela. The reasons of their choice of joint venture as an internationalization strategy is observed and analyzed. In the third chapter are discussed accumulated research findings and the recommendations for oil and gas companies in choosing strategy in the process of internationalization. Moreover, limitations of this work and the recommendations for further research on the topic are considered.