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

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Author Info
Wolf, C
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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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
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Handle: RePEc:cam:camdae:0828

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

Other versions of this item:

Find related papers by JEL classification:
C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics
Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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References listed on IDEAS
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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. [Downloadable!] (restricted)
  2. Christopher F Baum, 2006. "An Introduction to Modern Econometrics using Stata," Stata Press books, StataCorp LP, number imeus, November-. [Downloadable!]
  3. Richard Bozec & Mohamed Dia & Gaétan Breton, 2006. "Ownership-efficiency relationship and the measurement selection bias," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 46(5), pages 733-754. [Downloadable!] (restricted)
  4. Boardman, Anthony E & Vining, Aidan R, 1989. "Ownership and Performance in Competitive Environments: A Comparison of the Performance of Private, Mixed, and State-Owned Enterprises," Journal of Law & Economics, University of Chicago Press, vol. 32(1), pages 1-33, April.
  5. Caves, Douglas W & Christensen, Laurits R, 1980. "The Relative Efficiency of Public and Private Firms in a Competitive Environment: The Case of Canadian Railroads," Journal of Political Economy, University of Chicago Press, vol. 88(5), pages 958-76, October. [Downloadable!] (restricted)
  6. Paul Stevens, 2005. "Oil Markets," Oxford Review of Economic Policy, Oxford University Press, vol. 21(1), pages 19-42, Spring.
  7. Vining, Aidan R & Boardman, Anthony E, 1992. " Ownership versus Competition: Efficiency in Public Enterprise," Public Choice, Springer, vol. 73(2), pages 205-39, March.
  8. 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. [Downloadable!]
  9. Thomas Gochenour, D., 1992. "The coming capacity shortfall : The constraints on OPEC's investment in spare capacity expansion," Energy Policy, Elsevier, vol. 20(10), pages 973-982, October. [Downloadable!] (restricted)
  10. Watkins, G.C., 2006. "Oil scarcity: What have the past three decades revealed?," Energy Policy, Elsevier, vol. 34(5), pages 508-514, March. [Downloadable!] (restricted)
  11. 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. [Downloadable!] (restricted)
  12. Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W., 1994. "Voucher privatization," Journal of Financial Economics, Elsevier, vol. 35(2), pages 249-266, April. [Downloadable!] (restricted)
    Other versions:
  13. Al-Mazeedi, Wael, 1992. "Privatizing national oil companies in the Gulf," Energy Policy, Elsevier, vol. 20(10), pages 983-994, October. [Downloadable!] (restricted)
  14. William L. Megginson & Jeffry M. Netter, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June. [Downloadable!] (restricted)
  15. Benedict J. Clements & Kevin Fletcher & Sanjeev Gupta & Gabriela Inchauste, 2002. "Issues in Domestic Petroleum Pricing in Oil-Producing Countries," IMF Working Papers 02/140, International Monetary Fund. [Downloadable!]
  16. 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.). [Downloadable!]
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