The Changing Role of National Oil Companies in International Energy Markets

[Yoshie Furuhashi <critical.montages@xxxxxxxxx>]

Now, this is the real issue, and I'd love to see a leftist analysis of
it. -- Yoshie

<http://www.rice.edu/energy/research/nationaloil/index.html>
The Changing Role of National Oil Companies in International Energy Markets

The project proposes to explore the influence of emerging national oil
companies and partially privatized national oil companies on
international energy markets. Through out the 1990s and into the next
century, economic liberalization, market economy reforms and
Western-style corporatization management reorganizations have
characterized the oil and gas industries of major energy producing
countries such as Russia, Norway, Canada and Malaysia, as well as the
energy industries of major consuming countries in the developing world
such as China, Brazil, Japan and India. These emerging hybrid firms,
together with remaining traditional oil and gas state monopolies,
control the vast majority of proven resources remaining for
exploitation and development. The Western international oil majors now
control less than 10% of the world's oil and gas resource base.

Ranked on the basis of oil and gas reserve holdings, 14 of the top 20
upstream oil and gas companies in the world are national oil companies
or newly privatized national oil companies, according to the annual
survey of Petroleum Intelligence Weekly (PIW). State monopolies
represent the top 10 reserve holders internationally. By comparison,
ExxonMobil and the Royal Dutch Shell Group are ranked 12th and 13th
while BP and ChevronTexaco are ranked 16th and 19th respectively.

In terms of world oil production, however, only six of the top firms
are national oil companies, while ExxonMobil, Royal Dutch Shell, BP
and ChevronTexaco represent among the largest oil and gas producers
worldwide. These Western majors also have also achieved a dramatically
higher return on capital than national oil companies of similar size
and operations. Of the top 20 oil and gas producers worldwide, 14 are
national oil companies or newly privatized national oil companies,
according to PIW. PIW's ranking shows that Saudi Aramco, Gazprom,
NIOC, Pemex, Sonatrach, INOC (Iraq), PetroChina, KPC, Petrobras,
Petronas, Yukos, Lukoil, PDV (Venezuela) and NNPC are among the most
important oil and gas companies in the world. PIW's ranking on all
measures ranks Saudi Aramco, PDV, NIOC, Pemex and PetroChina in the
top 10 oil companies in the world.

The influence of national oil companies on the industry structure and
pace of resource development has not been comprehensively studied and
therefore is not well understood either by industry leaders or the
energy policy community. These national oil companies are in the
process of reevaluating and changing business strategies, with
substantial consequences for international oil and gas markets. It is
a time of great change inside the leadership of these national oil
companies, and goals and priorities will be different than those of
the Western international majors, with potentially serious
consequences for market stability and oil geopolitics. The Western
international majors are interested in strengthening ties with
emerging national oil companies to diversify their operations and
enhance supply security but strategic alliances have been difficult to
form.

The gap between the high ranking of national oil companies' resource
holdings and the ranking of the world's largest oil and gas production
operating companies highlights a potential source of supply
instability in world energy markets. The fate of emerging national oil
companies, their strategies and policies, will have a substantial,
long term impact on the pace of resource development in the coming
years.

Asian and Russia national oil companies have increasingly begun to
compete for strategic resources in the Middle East and Eurasia, in
some cases knocking the Western majors out of important resource
development plays. Firms such as India's ONGC and IOC; China's
Sinopec, CNPC, and Malaysia's Petronas have been successful in Africa
and Iran, with eyes now on investments in Saudi Arabia, Kuwait and
Iraq. Russia's Lukoil is also becoming a major international player in
key regions such as the Middle East and Caspian Basin. Wood Mackenzie
Consultants notes that producing countries are getting more
preferential financial arrangements from these firms who do not use
rate of return criteria to guide their operations (see Energy Compass
March 12, 2004 "Corporate Majors Under Threat"). Many of these
emerging national oil companies are bankrolled or have operations
subsidized by their national governments, with geopolitical and
strategic aims factored into investments rather than purely commercial
considerations.

Strategic investment and trade alliances for emerging national oil
companies are also being sought on the basis of geopolitics rather
than economic considerations. CNPC, for example, is studying forming
investment alliances with Petronas and continues to desire a strategic
investment in a Russian oil company. Russia, on the other hand, has
shown reluctance for its oil companies to connect with Western or
Chinese firms but has announced interest in forming alliances with
Saudi companies.

The interplay between emerging national oil companies, major oil
producing countries and Western consumer countries will have a large
impact on the question of energy security and stability of oil and gas
markets, raising many questions.

<http://www.rice.edu/energy/publications/nocs.html>
The Changing Role of National Oil Companies (NOCs)
in International Energy Markets

To view the webcast of the Houston NOC conference, please click here.
Coming Soon!

1. Executive Summary

Key Findings Box

Study Presentation: Key Findings
Amy Myers Jaffe
March 1, 2007

2. Chinese NOCs' Overseas Strategies: Background, Comparison and Remarks
Xiaojie Xu, Director
Institute for Overseas Investment, CNPC Research Academy of Economics
and Technology

Key Findings Box

Study Presentation: Chinese NOCs Coming Soon!
Xiaojie Xu
March 12, 2007

3. Petronas: A National Oil Company with an International Vision
Fred R. von der Mehden, Professor Emeritus of Political Science
Rice University
Al Troner, President
Asia Pacific Energy Consulting

Key Findings Box

Study Presentation: Petronas Coming Soon!
Fred R. von der Mehden
March 2, 2007

4. Lukoil: Russia's Largest Oil Company
Isabel Gorst, Correspondent
Financial Times of London

Key Findings Box

Study Presentation: Lukoil Coming Soon!
Isabel Gorst
March 2, 2007

5. A Model of the Operation and Development of a National Oil Company
Peter Hartley, Professor of Economics
Rice University
Kenneth B. Medlock III, Research Fellow in Energy Studies
James A. Baker III Institute for Public Policy

6. Empirical Evidence on the Operational Efficiency of National Oil Companies
Peter Hartley, Professor of Economics
Rice University
Kenneth B. Medlock III, Research Fellow in Energy Studies
James A. Baker III Institute for Public Policy
Stacy L. Eller, Graduate Researcher in Energy Studies
James A. Baker III Institute for Public Policy

Study Presentation:
IOC/NOC Economic Issues: Efficiency, Priorities and Comparisons
Peter Hartley
March 1, 2007

7. Lord of the Rigs: Rosneft as a Mirror of Russia's Evolution
Nina Poussenkova, Senior Research Fellow
Russian Academy of the Sciences

Study Presentation: Rosneft Coming Soon!
Nina Poussenkova
March 1, 2007

8. The Nigerian National Petroleum Corporation and the Development of
the Nigerian Oil and Gas Industry: History, Strategies, and Current
Directions
G. Ugo Nwokeji, Assistant Professor of African American Studies
University of California, Berkeley

Key Findings Box

Study Presentation: NNPC Coming Soon!
G. Ugo Nwokeji
March 2, 2007

9. The ONGC: Charting a New Course?
Sumit Ganguly, Rabindranath Tagore Professor of Indian Cultures and
Civilizations
Indiana University, Bloomington

Study Presentation: ONGC
Sumit Ganguly
March 1, 2007

10. Iraq's Oil Sector: Past, Present and Future
Amy Myers Jaffe, Wallace S. Wilson Fellow in Energy Studies
James A. Baker III Institute for Public Policy

Key Findings Box

Study Presentation: INOC Iraq
Amy Myers Jaffe
March 2, 2007

11. Saudi Aramco: National Flagship with Global Responsibilities
Amy Myers Jaffe, Wallace S. Wilson Fellow in Energy Studies
James A. Baker III Institute for Public Policy
Jareer Elass, Energy Consultant and Editor
James A. Baker III Institute for Public Policy

Key Findings Box

Study Presentation: Saudi Aramco
Amy Myers Jaffe
March 2, 2007

12. The National Iranian Oil Company in Iranian Politics
Daniel Brumberg, Associate Professor of Government
Georgetown University
Ariel I. Ahram, Graduate Fellow
Center for Democracy and Civil Society, Georgetown University

Study Presentation: NIOC
Daniel Brumberg and Ariel I. Ahram
March 1, 2007

13. Pertamina, Indonesia's State-Owned Oil Company
Donald I. Hertzmark, Consultant

Study Presentation: Pertamina
Donald I. Hertzmark
March 2, 2007

14. Venezuela's PDVSA and World Energy Markets: Corporate Strategies
and Political Factors Determining its Behavior and Influence
David R. Mares, Professor of Political Science
University of California, San Diego
Nelson Altamirano, Visiting Scholar, Center for Iberian and Latin
American Studies
University of California, San Diego

Study Presentation: PDVSA
David R. Mares and Nelson Altamirano
March 1, 2007

15. Chinese NOCs and World Energy Markets: CNPC, Sinopec and CNOOC
Steven W. Lewis, Research Fellow in Asian Studies and Economics
James A. Baker III Institute for Public Policy

Study Presentation: China's NOCs Coming Soon!
Steven W. Lewis
March 1, 2007

16. KAZMUNAIGAZ: Kazakhstan's National Oil and Gas Company
Martha Brill Olcott, Senior Associate
Carnegie Endowment for International Peace

Study Presentation: Kazmunaigaz
Martha Brill Olcott
March 2, 2007

17. Statoil: A Study in Political Entrepreneurship
Richard Gordon, President and CEO
Gordon Energy Solutions
Thomas Stenvoll, Market Analyst
Hess Energy Trading Company

Study Presentation: Statoil
Richard Gordon
March 12, 2007

18. National Oil Companies and Corporate Citizenship: A Survey of
Transnational Policy and Practice
Matthew E. Chen, Energy Research Assistant
James A. Baker III Institute for Public Policy

Study Presentation:
NOCs, IOCs/ Human Rights and Sustainability Practices
Matthew Chen
March 2, 2007

19. NOCs and U.S. Foreign Policy
Joe Barnes, Research Fellow
James A. Baker III Institute for Public Policy

20. Market Structure and the Investment Behavior of International Oil
Companies Coming Soon!
Ronald Soligo , Professor of Economics
Rice University

Study Presentation: IOCs: Investment and Industry Structure
Ronald Soligo
March 2, 2007
--
Yoshie
<http://montages.blogspot.com/>
<http://mrzine.org>
<http://monthlyreview.org/>