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The Welfare Implications of Oil Privatisation: A Cost-Benefit Analysis of Norway’s Statoil

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  • Wolf, C.
  • Pollitt, M.G.

Abstract

The oil industry is of great economic significance to many countries, and privatisations of National Oil Companies (NOCs) have often been controversial, as have been the benefits from privatisation more generally. We conduct a social cost-benefit analysis of the partial privatisation of Norway’s Statoil and estimate net present welfare improvements of at least NOK 166 billion (US$18.4 billion) in 2001 money, which amounts to 11% of Norway’s GDP in that year. Savings on investment costs are the most important source of efficiency improvements, and two thirds of the overall benefits accrue at fellow stakeholders in Statoil-led operations. The state manages to capture 66% of the total welfare gain, with the remainder going to private shareholders and no changes to consumer surplus. It is shown that benefits from partial privatisation can be substantial, particularly if ownership change is supported by additional restructuring measures, and that privatisation can be structured with state involvement at several levels, aiming to maximise the public share of benefits.

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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 0912.

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Date of creation: 11 Mar 2009
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Handle: RePEc:cam:camdae:0912

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

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Keywords: Privatisation; Cost-Benefit; Welfare; Oil and Gas; Norway;

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References

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Cited by:
  1. Pollitt, M. G., 2012. "The role of policy in energy transitions: lessons from the energy liberalisation era," Cambridge Working Papers in Economics 1216, Faculty of Economics, University of Cambridge.

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