BECOMING WORLD POWERS…

Study projects influence of national oil companies
Paula Dittrick, March 2, 2007 (Oil and Gas Journal)

- National oil companies, controlling 77% of global oil reserves, will gain geopolitical influence as their domination of worldwide production grows, says a study by Rice University's Baker Institute for Public Policy.
- The study said the top 10 reserve holders internationally are NOCs that allow no equity participation in production by foreign oil companies. Partially or fully privatized Russian oil companies control a further 6% of global reserves…
- Empirical analysis shows NOCs that are fully government-owned and sell oil products at subsidized prices—a group that includes NOCs of the Organization of Petroleum Exporting Countries—have lower operating efficiency than privately held companies…

- The Baker Institute, together with the Japan Petroleum Energy Center, released a lengthy study analyzing the strategies, objectives, and performance of… Saudi Aramco, Nigerian National Petroleum Corp., India's Oil & Natural Gas Corp., Russian's OAO Rosneft, Russia's privately held OAO Lukoil, Malaysia's Petronas, Indonesia's PT Pertamina, National Iranian Oil Co., Petroleos de Venezuela SA, China National Petroleum Corp., China Petroleum & Chemical Corp. (Sinopec), China National Offshore Oil Co., Norway's Statoil ASA, and Kazakhstan's KazMunaiGaz. Iraq's Oil Ministry also was a research subject…
- The study reports empirical evidence that at least partial privatization brings commercial benefits…The empirical exercise also demonstrated the importance of vertical integration..
- While individual NOCs vary in efficiency, on average the modeling shows that fully government-owned firms exhibit 60-65% the operating efficiency of a privately held international oil company (IOC)…
- NOCs might have more difficulty replacing reserves and expanding oil production than the industrialized West, which was responsible for 40% of increased worldwide oil production capacity in the past 30 years—with most of that investment coming from IOCs…
- NOCs' influence over global oil supply and demand will affect future oil prices and security trends. Consuming nations, like the US, might need to adjust national energy strategies to reduce vulnerability…

- The study's summary calls Saudi Aramco "the powerhouse of geopolitical NOCs"…
- An NOC's ability to meet its business strategies will be challenged by its obligations to support national interests…[such as] Oil wealth redistribution to society…Foreign and strategic policy and alliance-building…Energy security…Wealth creation… national-level politics…Industrialization and economic development.