National Oil Companies (NOCs)


3. Resource rich NOC vs resource poor NOC

Enthusiasm for NOCs has waxed and waned over the years, as experience with them has varied greatly. However, they have proved durable, particularly in resource-rich developing states. They are usually a powerful influence on policy-making in developing countries.

In resource-rich countries with sufficient technical expertise and funding, NOCs dominate the oil and gas sector, as is the case with the members of OPEC.

Resource-rich developing countries with limited technical capacity, funds and production capacity, often seek to attract foreign direct investments, through entry into petroleum contracts (such as PSCs) where a NOC is a counter party. Balancing the fair share of resources between the parties is an important question.

Different approaches to NOCs

Resource-poor countries or high-risk countries with little or no known reserves are more focused on attracting FDI for exploration, and most often do not have a NOC. If they do, the NOC is more focused on petroleum importation, and also on gaining technical know-how from the foreign investor, or having a reserved participating interest under a PSC. For instance, in Kenya, National Oil was formed in 1984 as a response to the supply disruptions and price hikes experienced in the 1970s oil crisis. It was initially formed for exploration activities, but in 1988, started participating in downstream activities for the importation and sale of petroleum products. Uganda only recently in June 2015 incorporated a NOC, the Uganda National Oil Company, a few years after Tullow Oil discovered commercially viable reserves in the country. Guyana does not have a NOC. The country does not currently produce oil, but Exxon and its joint venture partner Hess Corp, announced a find of 1.4 Billion Barrels of recoverable oil reserves in June 2016 in the Liza-2 field. As with many other aspiring oil and gas producers with institutions at an infancy, Guyana’s development will be interesting to watch.

Some resource-rich countries have more than one NOC: Russia has Rosneft (oil), and Gazprom (gas); China has China National Offsore Oil Corporation (CNOOC), Petrochina and China National Petroleum Corporation (CNPC); and Trinidad and Tobago has NGC (gas) and NPC (oil).