Information about mergers and acquisitions (M&A) among international companies continues to be confined to news stories here or there, without a clear and comprehensive picture of the scope of these operations emerging, or indeed of their reasons and implications. The media has been carrying news of major deals taking place, such as the 41 billion dollar acquisition by the giant ExxonMobil of XTO Energy, an American company focused on the exploration and production of nonconventional natural gas (shale gas). Nonetheless, this deal is but one example of hundreds of other deals being closed each year. In 2009, these deals were worth 2.3 trillion dollars. But one striking detail about the ExxonMobil deal is the amount of money that was paid to acquire an American company specialized in the production of shale gas. The Arab Petroleum Investments Corporation (APICORP) has taken to studying this trend, its significance and its consequences, especially with regard to the global oil industry in general and the Arab oil industry in particular. So what do such M&A mean for the conventional oil and gas industries, and what are their repercussions for the Arab oil industry? First of all, APICORP's study stresses that global M&A occur for different reasons. On the one hand, M&A help companies achieve growth in their field of specialization by investing in infrastructure and productive capacity, and expanding their scope of work by entering into similar businesses or ones that complement their main activity. The main reason a company may turn into M&A differs, from one company to another and one deal to another. Hence, some companies try to increase their market shares, or enter new markets that they hitherto had no access to. Other companies increase their market shares by acquiring other companies, while some businesses seek through such operations to directly acquire new technologies. This is the case with what Indian and Chinese companies are currently doing, on a large scale basis, in purchasing small companies active in the production of shale oil and gas in North America. However, what is the magnitude of global companies' M&A operations? According to APICORP's study, M&A were worth 2.9 trillion dollars in 2005, almost 4.6 trillion dollars in 2007, and about 2.3 trillion dollars in 2009. Further, these operations appear to increase or decrease in tandem with the state of the local or the world economy. The success of small companies in the exploration and production of shale oil and gas in North America has been an important incentive for major oil companies to acquire those small companies that have achieved remarkable successes in this new ground of the oil industry. However, these acquisitions have raised two important questions: First: Do the acquisitions concluded recently point to a major shift in the oil industry, and to a strategy that marks a departure from the conventional oil industry? It is a known fact that the wave of recent acquisitions of companies operating in the shale gas sector is not the first of its kind in the oil industry. The APICORP report mentions that the oil industry had seen a wave of acquisitions in the past when major oil companies were acquired by other giant companies, such as Exxon's acquisition of Mobil in 1999, Total's acquisition of Petrofina and Elf in 1999, BP's acquisition of Amoco in 2000, Chevron's acquisition of Texaco in 2001, Conoco's acquisition of Philips in 2002 and Chevron's acquisition of Unocal in 2005. There were many motivations for acquisitions among major oil companies, including the fact that executives in the companies that were acquired received big financial rewards. But there was also a belief that the acquisitions would strengthen the position of the acquiring companies, by broadening their oil reserves. However, the increase in oil reserves did not help these companies much in strengthening their competitive position with other companies. In this regard, APICORP's report suggests that the extent, at which the position of the companies acquiring shale gas companies would improve, as a result of M&A, is not yet clear. Although shale gas represented around a quarter of the supply of natural gas in the United States in the past decade, the following basic question remains on the table: Does the shale gas industry really compete with the natural gas industry? Experts indicate that the cost of shale gas extraction has soared. As a result, the costs of this industry can barely compete with the costs of the natural gas industry, especially if gas prices in the United States are to remain more or less around their current levels. Why then, all this focus afforded to shale gas? The reason is that it involves a new technology for gas discovery, and the fact that gas could now be supplied locally, without the need for importing it. This would virtually create large streams of revenues for the countries concerned, and contribute to boosting ‘energy security' programs. Moreover, it is available in many countries. Second: Does this interest in unconventional oil mean ceasing to focus on the oil industry in the Middle East? APICORP's study indicates that the oil industry in oil exporting countries is led and owned by national oil companies, and that these companies, by virtue of their makeup and ownership, do not welcome the acquisition of their stakes in oil and gas fields by private companies, be they domestic or foreign. What happens instead is that national oil companies enter into partnerships with international companies in the midstream and downstream phases of operations, such as with refineries both locally or abroad, and in the various aspects of the LNG and petrochemical industries. National oil companies also award concessions to international companies for exploration and production in their territories, which means that there is ongoing and significant interest in this industry, owing to the abundance of petroleum reserves and lower costs for the extraction of oil and gas there, compared to other countries or deep offshore areas. APICORP's study concludes, with regard to M&A operations in the global oil industry, that first of all, there are limited opportunities for international oil companies for acquisitions of oil companies in countries with low cost conventional hydrocarbons. Second, M&A in Arab oil-producing countries remain limited because of the nature and structure of the oil industry there, where oil reserves are owned by the state through the national oil companies. *. Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)