Does Ownership Matter? The Performance and Efficiency of State Oil vs. Private Oil (1987-2006)
AbstractThis 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 InfoPaper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0828.
Date of creation: Jun 2008
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Ownership; performance; efficiency; NOC; IOC; OPEC;
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; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-09-05 (All new papers)
- NEP-CFN-2008-09-05 (Corporate Finance)
- NEP-CWA-2008-09-05 (Central & Western Asia)
- NEP-EFF-2008-09-05 (Efficiency & Productivity)
- NEP-ENE-2008-09-05 (Energy Economics)
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University of Chicago - George G. Stigler Center for Study of Economy and State
85, Chicago - Center for Study of Economy and State.
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