A Glance of China’s National Oil Companies’ Strategies through Game Theory: CNPC, CNOOC, and Sinopec

Abstract

As a matter of fact, game theory is a field of study that focuses on addressing how people or organizations interact in an attempt to achieve their goals. As mentioned by experts, this theory can be better called as the theory of conflict and cooperation since if there is conflict, a solution is necessary to deal with it and the possible result would always be according to the interest of the parties involved, either having higher payoffs or not. In this regard, oil and gas resources are highly valued assets, which can lead to conflicts due to varying interests among nations, governments, and companies involved in their exploration. Thus, this study utilized a few strategies of game theory to explore its effectiveness in China’s energy sectors, particularly with its largest state-owned oil companies (i.e., CNCP, CNOOC, and Sinopec). It is discovered that through prisoners’ dilemma or producers’ dilemma, and stag hunt games, these three companies created partnership and joint developments to achieve their goals and maximize their payoffs.