National oil companies with $ 3.1 billion in assets are dangerously under-examined – Report

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A new report indicates that state-owned oil companies and their impact on economies are poorly understood and merit further consideration.

Using the NRGI's new open database on national oil companies, researchers have shown that many state-owned enterprises fail to disclose essential information for public revenue monitoring.

National oil companies produce the majority of the world's oil and gas. The companies in the database hold combined badets of more than $ 3.1 billion.

The ten largest companies, including Saudi Aramco and Mexico's Pemex, together have more badets than the top ten international oil companies, including ExxonMobil and BP.

"The huge amount of national wealth concentrated in these companies can help to give the impression that they are" too big to fail, "said Patrick Heller, NRGI advisor. "The combination of mbadive economic influence and weak oversight can result in huge economic risks in many countries."

Beyond the problem of transparency, some national oil companies have huge debts that weigh heavily on their national economies. Some have debts in excess of 10% of their country's GDP. PDVSA, the Venezuelan state oil company in difficulty, has a debt above 20% of GDP.

Many NOCs have demanded multi-billion dollar bailouts from the government in recent years, resulting in a costly drain on public finances.

The NRGI report reveals that at least 25 countries are "dependent on domestic oil companies", which means that the NOC alone collects revenues equal to more than 20% of the total revenue of the government.

TThe financial health of many countries and the ability of their governments to use oil revenues for development depend heavily on the quality of the NOC's management, the amount of revenue it transfers to the state, and the quality of its revenues. spending.

"In dozens of resource-rich countries, national oil companies are at the center of the quality of governance of their macroeconomics and natural resources, which belong to the people," said Daniel Kaufmann, President and Chief Executive Officer. from NRGI. "In these countries, improving governance is a generation's development challenge, as insufficient governance of their national resources perpetuates poverty and inequality.

"SOEs can influence a country or contribute to its development. It is crucial that their governance is correct, "said Kaufmann.

In many countries, NOCs are not sufficiently held accountable, either because they do not disclose enough information, or because official control exercised by the government or informally by civil society and the media is inconsistent. Undermined companies may have poor performance or become bribes. Increased transparency is an essential lever to empower corporate leaders and encourage strong public investment returns.

"This new database should help demonstrate the power of information on domestic oil companies," said Heller. "This can be a valuable tool for NOCs, governments and their citizens to understand how these companies manage public badets and liabilities and insist that they behave well."