Unocal Case Study
UNACOL CORPORATION Unocal Corporation seems an unlikely candidate for a. high-risk global rampage. Consumers everywhere recognize the ubiquitous 76 logo of this quintessential California oil company. They know it as the nation's 11th largest petroleum retailer, with a prestigious downtown headquarters and important role as a Los Angeles civic booster. Casting aside its reputation as a conservative company with tightly defined domestic markets and focused petroleum interests in California, Unocal has rapidly transformed itself into an international company with major investments in some of the world's least-developed economies. It has also become a prominent topic among political activists, human-rights groups, and President Clinton's foreign policy team. Some observers say that Unocal will become a casualty of its high-risk policies. Immediately after becoming chairman of Unocal in 1995., Roger Beach began to sell off domestic retail assets and eliminate exploration and refining activities in the United States. Resources shifted to unlikely places where few other major oil producers had risked operations-places such as Myanmar (more commonly known as Burma), Turkmenistan, Uzbekistan, and the strife-ridden Balkans. Beach turned up the heat on company investments in Indonesian oil fields, launched full-service energy subsidiaries through government alliances in Thailand, broadened holdings in Malaysia, and began negotiations for an integrated refining/ retailing enterprise in Pakistan. Nearly 40 percent of Unocal's exploration and extraction budget was thrown into these emerging markets, much of it pinpointed for very high risk locations in the former Soviet republics and the Persian subcontinent. Why take these risks? Beach answers that Unocal was unable to compete head-to-head with the oil industry giants for capital markets and decided to create an extremely attractive strategic package of full-service energy production in countries grasping to develop