National Oil Companies (NOCs) control the dominant share of worldwide hydrocarbon resource endowments, as actual producers, or as the “gatekeepers” for exploitation access by international energy companies. In addition, approximately 60 percent of the undiscovered reserves are estimated to lie in countries where NOCs have privileged access to reserves. Thus, future production is likely to come mainly from NOCs. Even the smallest NOCs are powerful organizations within their nation-states. They are charged with serving the public interest in a number of ways: supplying essential energy fuels and associated services; generating revenue streams that contribute to economic development; responsibly managing environmental and other risks; and performing well in many other regards.

Motivated by the relevance of NOCs to the economic performance of many of its member countries, the World Bank has recently launched a Study on NOCs and Value Creation. There is a long history of governments’ attempts to reorganize their NOCs in pursuit of efficiency, improved governance, greater control, and other political or economic objectives, with mixed results. The Study will analyze the outcomes from these different efforts, incorporate recent developments in the governance of state-owned enterprises, and suggest which approaches have the best prospects for success.

Study Objectives

• To inform governments' policies with respect to the creation and the effective and efficient management and oversight of an NOC.
• To provide the foundations for the World Bank's policy advice on the management and oversight of the petroleum sector.

Expected Results

• Improved understanding of the petroleum sector value chain and of the policy options that are best suited to maximize the benefits to the state at each link of the chain.
• Improved policy makers' awareness of the relative effectiveness and suitability of alternative policies for the management and oversight of the petroleum sector, with particular reference to role and functioning of NOCs.
• Consistency in the Bank's advice on petroleum sector governance and NOCs.

Background Papers

Draft Preface – The Most Salient Advances in the Research on National Oil Companies: An Overview
There is a vast literature on the basis for state intervention in the economy, and its comparative advantage vis-à-vis private ownership. A number of important papers on oil resource ownership were written in the 1980s and early 1990s. Thereafter, however, the industry received limited attention. It was not until the early 2000s that NOCs’ transparency, governance, and efficiency started to interest the research community and policy makers, and various issues started to mobilize the headlines worldwide: from peak oil to alternative sources of energy; from access to reserves to the relative ability of NOCs and privately owned oil companies to replace their reserves; from NOCs’ efficiency and its impact on supply-side constraints to security of supply and geopolitical risks. The paper contains an overview of existing literature on NOCs, and outlines areas for further analysis within the context of the Study on NOCs and Value Creation.

Draft Chapter 1 – The Petroleum Sector Value Chain
The oil and gas industry encompasses a range of different activities and processes, which jointly contribute to the transformation of underlying petroleum resources into useable end-products valued by industrial and private customers. These different activities are inherently linked with each other (conceptually, contractually and/or physically), and these linkages might occur within or across individual firms, and within or across national boundaries. Chapter 1 describes the key activities of the industry value chain, and presents some of the key policy decisions associated with the different stages of the value chain.

Draft Chapter 2 – Overview of the Political and Economic Arguments in Favor and Against the Establishment of a NOC 
Decisions regarding the creation and management of NOCs can be appreciated within the general context of government intervention in the economy. Its degree tends to change over time in response to exogenous (e.g. geopolitics, economy) and endogenous (e.g. state objectives) factors, affecting the existence and behavior of NOCs. This chapter presents the key arguments in favor of and against the creation of a NOC, taking into consideration their historical context.