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Does Ownership Matter? The Performance and Efficiency of State Oil vs. Private Oil (1987-2006)

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  • Wolf, C
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    Abstract

    This paper investigates whether there are systematic performance and efficiency differentials between National Oil Companies (NOCs) and privately-owned oil companies. The dataset is based on a survey published by Energy Intelligence and covers 1,001 firm observation years in the period 1987 to 2006. After summarising the main trends emerging from the data and discussing some key issues of comparing ‘State Oil’ and ‘Private Oil’, I find that non-OPEC NOCs underperform their private sector counterparts in terms of labour and capital efficiency, revenue generation and profitability. I also find that much of these differences could be bridged through a change in ownership. OPEC producers show higher efficiency metrics than the private sector, which might be related to exogenous asset quality. All NOCs produce a significantly lower annual percentage of their upstream reserves. This paper complements the time-series analysis of oil privatisations in Wolf and Pollitt (2008) and suggests that a political preference for State Oil usually comes at an economic cost.

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    Bibliographic Info

    Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0828.

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    Length: 24
    Date of creation: Jun 2008
    Date of revision:
    Handle: RePEc:cam:camdae:0828

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    Web page: http://www.econ.cam.ac.uk/index.htm

    Related research

    Keywords: Ownership; performance; efficiency; NOC; IOC; OPEC;

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    1. Greene, David L. & Hopson, Janet L. & Li, Jia, 2006. "Have we run out of oil yet? Oil peaking analysis from an optimist's perspective," Energy Policy, Elsevier, vol. 34(5), pages 515-531, March.
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    4. Wolf, C. & Pollitt, M.G., 2008. "Privatising national oil companies: Assessing the impact on firm performance," Cambridge Working Papers in Economics 0811, Faculty of Economics, University of Cambridge.
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    15. Julia Campos & Neil R. Ericsson & David F. Hendry, 2005. "General-to-specific modeling: an overview and selected bibliography," International Finance Discussion Papers 838, Board of Governors of the Federal Reserve System (U.S.).
    16. Vining, Aidan R & Boardman, Anthony E, 1992. " Ownership versus Competition: Efficiency in Public Enterprise," Public Choice, Springer, vol. 73(2), pages 205-39, March.
    17. Villalonga, Belen, 2000. "Privatization and efficiency: differentiating ownership effects from political, organizational, and dynamic effects," Journal of Economic Behavior & Organization, Elsevier, vol. 42(1), pages 43-74, May.
    18. Paul Stevens, 2005. "Oil Markets," Oxford Review of Economic Policy, Oxford University Press, vol. 21(1), pages 19-42, Spring.
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