Oil Titans; National Oil Companies in the Middle East, Washington: Brookings Institution & Chatham House, 2006. Contribution from John Mitchell.
The book tells the stories of Saudi Aramco, the Kuwait Petroleum Corporation, the National Iranian Oil Company, Sonatrach of Algeria, and the Abu Dhabi National Oil Company. I explain the complex bond between each state and its oil company, tracing evolution of the companies from the politically charged days of foreign concessions to today's world of profit-driven decision making. Drawing on over 120 interviews with company executives, middle managers, and oil ministry officials, the book identifies a number of surprising new trends in NOC strategy. I also try to paint a picture of their operating culture, capturing their nascent sense of corporate identity.
Emerging NOCs need to adjust their plans and ambitions to the new realities of price and competition for investment. The current environment offers an opportunity for governments to refocus their efforts on defining a mandate that supports their national vision and priorities. This requires an evaluation of the resource base, national capabilities (including those of the NOC) and possible revenue streams, so that the NOC can be tasked with a role it can execute and the state can afford. This paper, which was the most read publication on the Chatham House website in 2016 (41,000 downloads), gives some guidance on how ambitious an emerging NOC should get.
A common question for emerging oil and gas producers is whether they should create an NOC. This article for the Lebanese Center for Policy Studies addressed the question in the Lebanese context. At the time of writing, it was a country just in the licensing phase, but now in the exploration phase. Still, setting up an NOC is not yet warranted. But the article discusses what roles an NOC could usefully play in the future, in the event of commercial discoveries, and reviews governance risks which would need to be mitigated.
I also discussed this issue in the context of Timor-Leste a few years ago: ‘Creating a national oil company in East Timor: Building on the experience of other producers’, Dubai School of Government Working Paper 11-02, January 2011. Timor did establish an NOC: Timor Gap.
The service companies' critical support of operations & their handle on technology have enabled NOCs & independents to manage much more complex projects than would have otherwise. IOCs also more dependent on them. They are handling more risk than before - but with limited liability (as we saw with Macondo) and sometimes without the necessary risk management tools... Read the report to find out more about better partnerships to manage risk.
‘Guidelines for Good Governance in Emerging Oil and Gas Producers’, Chatham House, 2016
The aim of these Guidelines is to promote effective decisions about the structure and rules of the petroleum sector in a context of low institutional and sector capacity. They offer recommendations for emerging producers, drawn from the New Producers Group’s annual discussion group meetings that bring together new and established producers, as well as technical advisory groups active in these countries. The project's interactive presentation and training tool takes you through the policy objectives and recommendations of the Guidelines for Good Governance in Emerging Oil and Gas Producers. It’s available in English, French, Portuguese and Swahili.
A Local Content Decision Tree for Emerging Producers was co-authored with Roger Tissot, Ekpen Omonbude and Anthony Paul. The paper proposes a template for designing local content policy that is adapted to the resource base, anticipated petroleum activities, capacity levels available in country and guided by national development aspirations. It seeks to present policy-makers of emerging producer countries with a structured framework for considering the multiple factors that come into play in the development of a local content policy. The simple roadmap reviews key considerations for assessing the expected petroleum sector demand and existing national capabilities. Policy considerations are presented in a decision tree format, to highlight the sequencing of geological steps typical of emerging producers when they move from exploration to discovery and on to production.
The book tells the stories of Saudi Aramco, the Kuwait Petroleum Corporation, the National Iranian Oil Company, Sonatrach of Algeria, and the Abu Dhabi National Oil Company. I explain the complex bond between each state and its oil company, tracing evolution of the companies from the politically charged days of foreign concessions to today's world of profit-driven decision making. Drawing on over 120 interviews with company executives, middle managers, and oil ministry officials, the book identifies a number of surprising new trends in NOC strategy. I also try to paint a picture of their operating culture, capturing their nascent sense of corporate identity.
Emerging NOCs need to adjust their plans and ambitions to the new realities of price and competition for investment. The current environment offers an opportunity for governments to refocus their efforts on defining a mandate that supports their national vision and priorities. This requires an evaluation of the resource base, national capabilities (including those of the NOC) and possible revenue streams, so that the NOC can be tasked with a role it can execute and the state can afford. This paper, which was the most read publication on the Chatham House website in 2016 (41,000 downloads), gives some guidance on how ambitious an emerging NOC should get.
A common question for emerging oil and gas producers is whether they should create an NOC. This article for the Lebanese Center for Policy Studies addressed the question in the Lebanese context. At the time of writing, it was a country just in the licensing phase, but now in the exploration phase. Still, setting up an NOC is not yet warranted. But the article discusses what roles an NOC could usefully play in the future, in the event of commercial discoveries, and reviews governance risks which would need to be mitigated.
I also discussed this issue in the context of Timor-Leste a few years ago: ‘Creating a national oil company in East Timor: Building on the experience of other producers’, Dubai School of Government Working Paper 11-02, January 2011. Timor did establish an NOC: Timor Gap.
The service companies' critical support of operations & their handle on technology have enabled NOCs & independents to manage much more complex projects than would have otherwise. IOCs also more dependent on them. They are handling more risk than before - but with limited liability (as we saw with Macondo) and sometimes without the necessary risk management tools... Read the report to find out more about better partnerships to manage risk.
‘Guidelines for Good Governance in Emerging Oil and Gas Producers’, Chatham House, 2016
The aim of these Guidelines is to promote effective decisions about the structure and rules of the petroleum sector in a context of low institutional and sector capacity. They offer recommendations for emerging producers, drawn from the New Producers Group’s annual discussion group meetings that bring together new and established producers, as well as technical advisory groups active in these countries. The project's interactive presentation and training tool takes you through the policy objectives and recommendations of the Guidelines for Good Governance in Emerging Oil and Gas Producers. It’s available in English, French, Portuguese and Swahili.
A Local Content Decision Tree for Emerging Producers was co-authored with Roger Tissot, Ekpen Omonbude and Anthony Paul. The paper proposes a template for designing local content policy that is adapted to the resource base, anticipated petroleum activities, capacity levels available in country and guided by national development aspirations. It seeks to present policy-makers of emerging producer countries with a structured framework for considering the multiple factors that come into play in the development of a local content policy. The simple roadmap reviews key considerations for assessing the expected petroleum sector demand and existing national capabilities. Policy considerations are presented in a decision tree format, to highlight the sequencing of geological steps typical of emerging producers when they move from exploration to discovery and on to production.
"Will national oil companies be the champions of the energy transition?"
in "national oil companies of the future", Annales des mines, july 2019
Because NOCs are designed to produce and sell fossil fuels, their potential contribution in the area of renewables, cleaner energy and energy efficiency standards is often underappreciated. In this article I review NOC incentives to invest in the clean energy space and ask whether they are the right vehicles to lead the energy transition in their countries.
‘Prospects for good governance in Lebanon’s nascent petroleum sector’, Energy Strategy Reviews (2013)
There is increased interest in oil and gas exploration offshore Lebanon, but the country lags behind its neighbours in developing its resources. The institutional and legal frame- work necessary to this process has been slow to emerge as a result of political infighting. However, thanks to relatively high state administrative capacity and support from foreign technical advisors, an adequate framework for investment has been created. Future governance challenges relate to less satisfactory standards in terms of transparency and the risks of corruption.
What Next For The Oil And Gas Industry?, Chatham House, Programme Report, by John Mitchell with Valérie Marcel and Beth Mitchell, October 2012
I contributed a chapter focused on Finding the Right Partners for National Oil Companies.
Key conclusions:
- The competitive landscape for oil companies has changed: the oil majors are surrounded by many new types of companies, both in the areas opened by new technology and in the traditional areas where there are opportunities in partnership with state companies.
- Matching technological capacity between the investor and the national operator is the key to traditional areas. Innovation is key to frontier opportunities.
- NOCs also expect private-sector companies to contribute to the national development objectives to which the state companies are committed.
- Partnerships with foreign companies differ from country to country. International foreign companies can no longer impose their own norms on these arrangements.
Institutional Design in Low-Capacity Oil Hotspots, with Patrick R.P. Heller, Revenue Watch Institute, 31 August 2012
Research on NOC governance has focused almost exclusively on large, well-established oil producers such as Saudi Arabia and Norway.The context is substantially different in most new or prospective producers, where administrative, human and oil-sector capacity are generally low. These governments face daunting challenges in light of their capacity constraints. Which body do they task with licensing, regulatory and monitoring responsibilities: the NOC, the ministry of oil or a separate regulatory agency? In cases of weak capacity, governments face the dilemma of either concentrating responsibilities and resources in order to build capacity quickly within a single institution, or separating functions to build the foundations for good governance. We offer five research propositions on the connections between country capacity and effective oil-sector institutional design to allow governments to more effectively structure their decisions about how to manage petroleum resources.
'Good Governance of the National Petroleum Sector; The Chatham House Document', April 2007
This Document introduces the results of a two-year project that I led at Chatham House. The project aimed to find out what constitutes good governance of the petroleum sector from a national perspective. The Chatham House Document condenses recommendations from the more detailed Report on Good Governance of the National Petroleum Sector into a set of 40 governance benchmarks. These are uniquely based on a dialogue in which decision-makers from 23 oil- and gas- producing countries who shared their experience and worked towards common principles and guidelines.