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Index

Abacha, Sani, 708 Al Falih, Khalid, 196 , 198 Abdullah Admah Badawi, 829 Al Naimi, Ali, 190 , 205 , 220 Abdullah of Saudi Arabia, 188 , 189 , Al Otaiba, Mana Saeed, 500–501 190 Albacora oil fi eld, 533 Abdullah Salleh, 814 , 824–814 Algeria Abramovich, Roman, 693 2005 Hydrocarbons Law, 576 , Abu Dhabi 577–583 gas, 488–489 expropriations, 52–53 major projects with international history, 6 , 7 , 560–561 involvement, 507 nationalization, 181 Dolphin Gas Project, 507–509 natural resources, 564–566 Shah gas fi eld, 509–510 gas, 566–567 oil sector history, 482–483 oil, 567–568 See also ADGAS ; ADNOC ; organization of hydrocarbons sec- GASCO ; UAE tor, 568–571 ADGAS (Abu Dhabi Gas Liquefaction overview, 557–560 , 589–595 Company Limited), 489 state capacity, 575–577 ADNOC (Abu Dhabi National Oil state goals, 569–575 Company) See also Sonatrach centralized state authority over, 77 Al-Khalifa, Ali, 354–357 , 377 monitoring-heavy state oversight Amoco, Montrose oil fi eld discovery, of, 81 151 operations and management, Angola 486–490 geology, 849–852 overview, 478–482 , 510–512 NOC negotiating on behalf of gov- performance, 12 , 492–494 ernment, 70–72 ranking, 935 See also Sonangol private sector involvement, 8 Angolagate scandal, 869 relationship with state, 499–506 Argentina strategy, 490–492 , 494–499 See YPF Aghazadeh, Gholam Reza, 266 Asian premium, 227 AGIP (Azienda Generale Italiana associated gas, 331 Petroli) ADNOC, 489 establishment of, 5 Angola, 863–864 Ahmadinejad, Mahmoud, 255–256 , Gazprom, 656 262 KPC, 351 AIOC (Anglo-Iranian Oil Company), Nigeria, 710–711 240–241 , 339 PDVSA, 440 See also BP Pemex, 308 Aiyar, Mani Shankar, 787–788 Saudi Arabia, 207

1000

© in this web service Cambridge University Press www.cambridge.org Cambridge University Press 978-1-107-43896-5 - Oil and Governance: State-Owned Enterprises and the World Energy Supply David G. Victor, David R. Hults and Mark C. Thurber Index More information

Index 1001

Austria, establishment of NOC, 5 Campos Basin, 516 , 528–531 , 546 , Azizan Zainul Abidin, 821–822 550 Cantarell oil fi eld, 287 , 293 , 300 , Bab oil fi eld, 482 313–314 , 321–323 backward linkages, 213 Cá rdenas, L ázaro, 285–287 Bandar Abbas refi nery project, 277 Cardoso, Henrique, 535 Bank Bumiputra bailout, 826–827 carried interest, 152 Barbosa, Horta, 521 , 553 CASOC (California Arabian Standard Beckett, Angus, 646 Oil Company), 175–176 benchmarking for performance See also Saudi Aramco assessment, 192 CFP (Compagnie Fran çaise del Benjedid, Chadli, 561–563 Pé troles) Berezovsky, Boris, 693 capacity to take on exploration big contract model (China), 389 risks during 1970s, 146 BNOC (British National Oil establishment of, 5 Corporation) Chá vez, Hugo, 54 , 431–435 , 442 formation, 152–153 fear of the political opposition, 88 privatization, 153 gap between prouncements and pol- Bolivia, 1937 nationalization, 145 icy reality, 421 Bombay High fi eld, 807 purge of PVDSA, 418 , 419–420 , See also Mumbai High fi eld 434 , 456–457 Bonny LNG terminal, 712 use of PDVSA to provide social bonyads , Iran, 253 , 256 functions, 3 , 434 Boumediene, Belkacem, 575–576 , 581 Chernomyrdin, Viktor, 661 , 662 , Boumedi ène, Houari, 52–53 , 561 663–658 , 664 , 693 Boutefl ika, Abdelaziz, 559 , 563–564 , Chevron, capacity to take on explor- 579 , 588–589 , 590–591 ation risks during 1970s, 146 BP Chicontepec oil fi eld, 316 , 323 , 333 capacity to take on exploration China risks during 1970s, 146 Company Law, 394–396 Forties Field discovery, 129–151 energy demand and consumption, See also AIOC ; British Petroleum 385–386 Brazil oil industry aversion to private sector involve- history, 386–388 ment, 8 overview, 382–384 early focus on indigenous technical stock market listings of NOCs, 71 , capability, 146 394 goals for oil sector, 516 , 523 , 525 use of competition between NOCs, government control over NOCs, 70–71 74 See also CNPC stock market listings of NOCs, 71 Ciavaldini, Hector, 432 See also Petrobras CNOOC (China National Offshore Brent oil fi eld, 151 Oil Corporation), 382–383 , British Petroleum, 27 384 See also BP CNPC (China National Petroleum Bu Hasa oil fi eld, 482 Corporation) bunkering, 712–713 disasters, 398 gas, 385 CABGOC (Cabinda Gulf Oil history, 387–392 Company), 845 , 850 internationalization, 141 , 894

1002 Index

CNPC (cont.) Das Island, 489 oil production and reserves, Deepwater Horizon disaster, 27 384–385 Den Norske Stats Oljeselskap AS overview, 379–382 , 413 See Statoil performance, 380–381 dependent variables, of this study, fi nancial indicators, 406–412 15–17 ranking, 935–936 depletion rate policies, 15 privatization, 56 and oil price, 943–944 relationship with PetroChina, depletion rate, as measure of per- 380–403 formance, 900–902 , 932 , relationship with state, 392 940–941 , 944 Communist Party of China diwaniya , Kuwait, 375 (CPC), 393 Dolphin Gas Project, 507–509 corporate governance and control over senior managers, Eduardo dos Santos, José , 847 393–401 Ekofi sk oil fi eld, 151 , 605–607 overseas activities, 405–406 Enchova oil fi eld, 530 subsidies, 405–406 Evensen, Jens, 605 CNRIP (National Commission for EXPEC (Exploration and Petroleum the Restructuring of the Engineering Center), Petroleum Sector, Angola), 199–196 845–847 exploration risk, 127 common agency (organizational the- management of, 135 ory), 117 expropriation competition constraints on, 39 and NOC performance, 90 disincentives for, 38–39 between NOCs in China, 70–71 effect of political checks and bal- KPC, 364–367 ances, 41–42 , 56–57 ONGC, 778–784 case studies, 52–54 complex agency chain (organizational control variables, 46–47 theory), 117 dependent variables, 43–45 concessions explanatory variables, 45–46 Saudi Arabia, details “secret” yet research design, 43 published, 219 research fi ndings, 48–50 to manage risk, 147 research methods, 47 corruption events, 35 and Algeria, 559 , 575–576 incentives for, 37–38 and Nigeria, 707 , 708 , 717 literature, 37–39 and Pemex, 298 , 309 , 310 overview, 35–37 and Saudi Aramco, 193–194 Exxon and Statoil, 627 capacity to take on exploration and Venezuela, 441 , 442 risks during 1970s, 146 counter-governance by NOC, 67–68 part-ownership of Aramco, 176 creation of reserves, 132 Crist ó bal Coló n project, 440 Fahd of Saudi Arabia, 183 CVP (Corporaci ón Venezolana del Falcon Oil, 864 Petr óleo), 27 fi eld development risk, 127 , 130–132 management of, 136–137 Daqing oil fi elds, 384, 385 , 389 fi eld redevelopment, 130–132 D’Arcy, William Knox, 240 Fjell, Olav, 602 , 609 , 627

Index 1003

FLEC (Frente de Liberta ç ão do Estado overview, 655–657 , 668–674 , de Cabinda), 837–838 691–692 FNLA (Frente Nacional para a part-privatization, 55 Liberta ç ão de Angola), 843 performance, 655–656 Forties Field, 151 ranking, 936 forward linkages, 212 political functions, 405–406 France producing gas rather than oil, 4 See CFP regulatory capture, 657 , 665 Freudenthal, Percy, 845–846 , 871 relationship with state, 655 frontier exploration state within a state, 67–68 , 662 future frontiers, 166 strategy, 656 , 685–686 risks, 128–129 major projects, 686–691 See also exploration risk See also Russia Futungo elite, Angola, 841 , 848 , 849 Gazprom-Media Holding, 684 Geisel, Ernesto, 30, 525–527 , Gaidar, Yegor, 662 528–529 , 554 GALSI (Algeria-Sardinia gas pipeline) General Agreement on Participation project, 567 (New York, October 1972), gas 180–181 , 340–341 as harder to produce than oil, 19 geological context, 19–20 See also associated gas and NOC creation, 892–894 gas fl aring and NOC performance, ADNOC, 492 , 505 904–905 KPC, 335–336 , 351 geological plays, 129 Kuwait, 373 geological provinces, 129 Norway, 642 geopolitics, 925–926 ONGC, 766 Ghawar oil fi eld, 209 Saudi Arabia, 207 Giusti, Luis, 430 GASCO (Abu Dhabi Gas Industries GME (Maghreb-Europe) gas pipeline, Limited), 489 566–567 Gassco, 624 golden quadrant idea, Saudi Arabia, Gazprom 184 centralized state authority over, 77 Good Governance of the National corporate governance, 656 Petroleum Sector (Chatham corporate structure, 675–677 House Document), 195–196 domestic holdings, 680–681 Gosplan (State Committee for establishment of, 7 Planning), 693 fi nances, 677–680 Government Petroleum Fund, Norway future, 657 , 671–672 , 692 (Government Pension Fund – history Global, the Fund), 615–616 1989–2000 privatization, Gowon, Yakubu, 706 661–663 Groningen gas fi eld, 150 2000–present re-nationalization, Grupo Gema, 864 663–657 Gulf Oil Corporation, capacity to pre-1989 foundations in the take on exploration risks Soviet state, 658–660 during 1970s, 146 informal state governance of, 86 Gullfaks oil fi eld, 608 , 637 interactions with government, Gulnes, Nils, 646 7–10 international activities, 681–683 Hacienda (Mexican fi nance ministry), non-core activities, 683–685 296–297

1004 Index

Hassan Marican, 820 , 822 , 830–831 refi ning capacity, 239 , 258–259 Hassi Messaoud oil fi eld, 567 resource curse, 234–235 Hauge, Jens Christian, 607–608 , 619 state budgetary control over NOC, heavy oil 72 CNPC investment in exploitation See also NIOC techniques, 410 Iraq, nationalization, 181 geological risk, 167 Italy Iran, 237–238 See AGIP Kuwait, 345 , 362 Pemex, 323 Jaffe, Amy Myers, 12 Venezuela, 420–438 , 452 Johnsen, Arve, 602 , 607–608 , 609 , Hertog, Steffen, 11 618–619 , 646 joint ventures, to manage risk, 147 Imperial Energy, 797 Jubail Refi nery, 227 independent variables, of this study, Jum’ah, Abdullah, 198–182 17–21 Jung, Najeeb, 788 India ability to tolerate risks of frontier KAFCO (Kuwait Aviation Fuelling activities, 164 Company), 372 demand for oil, 768–769 K å rstø gas processing terminal, 624 stock market listings of NOC, 71 Khelil, Chakib, 564 , 571 , 578 , 579 , See also ONGC 589 innovation incentives, to reduce risk, See also Algeria, 2005 137 Hydrocarbons Law internationalization, 894 Khodorkovsky, Mikhail, 693 CNPC, 141 , 894 Khursaniyah fi eld development, ONGC, 141 , 894 211–212 PDVSA, 427–429 KISR (Kuwait Institute for Scientifi c Petrobras, 4 Research), 354 Petronas, 141 , 894 Knight, Frank, Risk, Uncertainty, Statoil, 4 and Profi t , 125 INTEVEP, 428 , 456 Knightian uncertainty, 168 investment risk, 127 , 134–135 KNPC (Kuwait National Petroleum IOCs (International Oil Companies) Company), 339–341 future, 25–26 , 165–167 , 919–926 KOTC (Kuwait Oil Tanker Company), risk management capacity, 138–124 356–357 , 372 Iran KPC (Kuwait Petroleum Corporation) 1951 nationalization, 179 , 257 founding law, 341–342 market availability risk prevent- fragmented state governance of, 79 , ing de facto control, 148 334 , 337 buyback scheme, 236–237 , history, 341–345 267–268 Iraq–Kuwait War, 342–343 constitution, 247 organization, 345–347 expropriations, 53–54 overview, 334–339 , 368–370 gas, 239 , 275 performance, 12 , 335 , 344–345 , geology, 243 347 history of oil and gas, 237–244 fi scal system and, 347–349 Islamic Revolution, 243 gas, 351–352 pipeline infrastructure, 238–239 labor-relations, 347 , 350–351 , political system, 245–254 374

Index 1005

non-core obligations and, Manjoon oil fi eld, 833 352–353 Manshaus, Karl-Edwin, 646 operational costs, 349 Marcel, Valérie, 12 , 119 ranking, 936 Oil Titans: National Oil technical capabilities, 353 Companies in the Middle procedure-heavy state oversight East , 558 of, 80 Marcellus shale gas project, 625 , relationship with government, 634–635 358–361 market availability risk, 127–128 Project Kuwait, 336 , 361–364 , precluding nationalization in 1950s, 376 148 regulation and competition, market supply risk, 128 364–367 Marlim oil fi eld, 533 Strategic Management Mattei, Enrico, 242 Model, 344 mature provinces, 130 strategy, 354–358 Mbakassi, Antonio Mosquito, 864 See also KNPC ; Kuwait Oil MEDGAZ project, 567 Company Medvedev, Dmitry, 30 KUFPEC (Kuwait Foreign Petroleum Medvezhye gas fi eld, 669–670 Exploration Company), 355 Mercury Telecom, 864 Ku-Maloob-Zaap oil fi eld, 322 Mexico Kupolokun, Funsho, 728 1938 nationalization, 145, 285 , 325 Kuwait geology, 283 nationalization, 181 , 340–341 regulatory control of NOCs, 72 See also KPC ; Kuwait Oil Company state budgetary control over NOC, Kuwait Oil Company 72 establishment of, 6 , 339 See also Pemex Meziane, Mohamed, 575–576 Lameda, Guaicaipuro, 432 , 433 Miller, Aleksei, 664 Larsen, Rø ed, 616–617 Mirmoezi, Seyed Mehdi, 255 Libya, nationalization, 181 Mobil Link, Walter, 524–525 capacity to take on exploration Lukoil, 661 , 662 , 673 risks during 1970s, 146 Lund, Helge, 602 , 609 , 626 part-ownership of Aramco, 176 Mongstad refi nery upgrade, 638 , 639 , Magna Reserva project, 454 647 Mahathir Mohamad, 816–817 , 820 , Montrose fi eld, 151 827–829 Mosaddegh, Mohammad, 180 , 241 Malaviya, K. D., 760 MPLA (Movimento Popular de Malaysia Liberta ç ão de Angola), oil sector structure, 821–811 837–838 , 843 , 844 , 845 , See also Petronas 847–849 Malaysian Indonesia Shipping Corp., Mumbai High fi eld, 762–765 827–828 Muñ oz, Raul, 312 Managing Instability in Algeria: Elites and Political Nabucco pipeline, 673 Change since 1995 Najib Abdul Razak, 822 , 829–831 (Werenfels), 558 Nasser, Amin, 200 Mandela, Nelson, 829 nationalization, 60 , 892 Mandini, Robert, 431–432 1938 Mexico, 145 , 285 , 325

1006 Index

nationalization (cont.) and sanctions, 235 , 236 , 237 , 263 , 1951 Iran, 179 , 257 264 market availability risk establishment of, 5 preventing de facto control, fragmented state governance of, 79 148 Iran–Iraq war, 235 , 263–264 1976 Saudi Arabia, 180–181 organizational structure, 243 , 1976 Venezuela, 423–426 244–245 after Six-Day War, June 1967, overview, 234–237 , 269–271 180–181 performance, 259–261 death sentence of Dr. Mosaddegh, external factors, 261–264 180 internal factors, 265–269 General Agreement on Participation ranking, 936 (New York, October 1972), relationship with Iranian State, 68 , 180–181 , 340–341 254–259 Kuwait, 181 , 340–341 NIORDC (National Iranian Oil risk and state’s choice of agent in Refi ning and Distribution early 1970s, 145–149 Company), 243 UAE (United Arab Emirates), NLNG (Nigeria LNG), 730 484–486 NNOC (Nigerian National Oil See also expropriation Company), 28 , 704 , 710 Nazer, Hisham, 182 , 183 , 184 NNPC (Nigerian National Petroleum NCS (Norwegian Continental Shelf), Corporation) 646 COMD (Crude Oil Marketing Neelam fi elds, 765 Division), 726 Nehru, Jawaharlal, 758 divisions and subsidiaries, 702–701 , Nejad-Hosseinian, Hadi, 251 727–731 NELP, India (New Exploration and Eleme Petrochemicals, 729 Licensing Policy), 756 , establishment of, 6 767–768 fragmented state governance of, 79 efforts to inject competition, informal state governance of, 86 782–784 interactions with IOCs, 720–723 Nemtsov, Boris, 663 interactions with state, 723–727 Neto, Agostinho, 847 limited capacity to operate as a Neutral Zone (Kuwait/Saudi Arabia), company, 4 339 , 372 NAPIMS (National Petroleum NIGC (National Iranian Gas Investment Management Company), 243 Services), 721–722 Nigeria NETCO (National Engineering corruption, 707 , 708 , 717 & Technical Company), history, 704 730–731 gas operations, 710–712 non-hydrocarbon responsibilities, oil operations, 708–710 , 712–715 903 institutional weakness, 715–718 overview, 701–704 political development and oil, patronage, 703–704 706–708 performance, 12 , 731 reform prospects, 737–743 delivering patronage, 736–737 security problems, 712–714 developing indigenous techno- state–IOC interactions, 718 logical capability, 733–736 See also NNPC maximizing government revenue NIOC (National Iranian Oil from hydrocarbons, 731–733 Company) ranking, 936–937

Index 1007

procedure-heavy state oversight of, dependent variables, 15–17 80–64 independent variables, 17–21 strategy, 731 non-associated gas, 331 NOC governance non-hydrocarbon responsibilities of and performance NOC, 902–904 competition, 90 Nord Stream pipeline, 688–689 fi ndings, 64–66 , 75–87 Norsk Hydro, 638–639 hypotheses, 64 , 75–77 Statoil merger, 602–603 , 609–610 , law-based mechanisms, 64 , 65 , 625–627 76–77 , 81–87 , 91 North Sea monitoring-heavy oversight sys- approach to risk management by tems, 64 , 65 , 75–76 , 79–81 , UK and Norway, 149–150 89–87 , 910–911 licensing during exploration stages, overview, 63–93 150–152 research methods, 73–74 nationalization during lower risk transparency, 90–91 stages, 152–153 unifi ed v fragmented control, Norvik, Harald, 602 , 609 , 618 , 64–65 , 75 , 77–79 , 87–89 , 621–623 907–910 Norway as corporate governance, 69–71 early focus on indigenous technical as public administration, 71–72 capability, 146 as regulation, 72 government control over NOCs, 74 overview, 62–66 history of natural resources devel- principal-agent model, 66–69 opment, 604–610 NOCs (National Oil Companies) North Sea exploration and develop- as misnomer, 3 , 4 ment, 149–153 dominance of, 3 , 35 regulatory control of NOCs, 72 future, 890–891 state goals, 610–617 history, 5–8 , 121 Ten Commandments for interactions with government, Norwegian oil sector, 10–11 , 20 , 890 642–643 internal factors, 20–21 stock market listings of NOCs, 71 , literature, 8–13 609 performance, 895–900 See also Statoil performance factors Norwegian Model, 91–92 , 600 , 601 , geology, 904–905 613 , 909–911 inhouse expertise, 913–914 Novatek, 696 management strategy, 912–913 NPC (National Petrochemical state goals, 900–904 Company, Iran), 243 state–NOC interaction, 905–900 NPD (Norwegian Petroleum reasons for endurance of, 9–10 Directorate), 613–614 , 619 reasons for forming, 8–9 , 889 , NPM (new public administration), 116 891–895 reasons for variance among, 11–13 , Oando PLC, 735 887 , 889–890 Obasanjo, Olusegun, 708 , 716 , risk management capacity, 139–142 717–718 strategy, 915–919 Odili, Peter, 714 study approach of this book, 13–15 , offshore oil development 23–27 Brazil, 527–535 case selection, 21–23 , 888–889 Norway, 149–153

1008 Index

oil company model (China), 389–390 history oil industry, future structure, 1947–1970 initial years, 5 , 754 , 165–167 , 919–921 757–762 oil price 1970–1990 discovery of Mumbai and depletion rate policies, High, 762–764 943–944 1991–1998 crisis and reforms, and nationalizations, 149 764–768 and NOC performance, 20 1999–2008 adapting to new and premium on risk minimization, rules, 768–777 133 internationalization, 141 , 894 and state policy, Algeria, 558 overview, 753–757 , 801–804 and state’s choice of agent for OVL (ONGC Videsh Limited), hydrocarbons extraction, 773–757 , 795–797 155 , 160–161 , 165 performance and strategy, 755 , future, 921–925 772–774 , 777–778 infl uencing without a cartel, 126 performance ranking, 937 manipulation to maintain petrol- production plateau, 769–772 eum’s dominance, 166–167 price controls, 790–791 oil supply curves, 26 concessions to oil marketing com- Oil Titans: National Oil Companies panies, 792–793 in the Middle East (Marcel), pricing of gas from the PMT 558 fi elds, 791–792 Omar Mustapha, 830–831 privatization, 55–56 ONGC (Oil and Natural Gas Russian assistance, 760 Corporation Limited) OPEC (Organization of the Petroleum competition, 778–784 Exporting Countries), 28 corporatization, 784–785 and nationalizations, 149 engagement with IOCs, 758–760 establishment of, 6 , 149 exploration, 761–762 , 771 , 772 increased proven reserve fi gures, overseas operations, 795–797 940 fi nances, 754–763 , 774 UAE (United Arab Emirates), 1991 crisis, 765–767 483–484 free cash fl ow, 793–795 Operation Bultiste, 180 project management, 774–777 Orinoco Belt, 428 , 429 , 434 , 437 , 454 fragmented state governance of, OSC (oil services companies) 68–79 as not in competition with private governance operating companies, 165 appointment of directors, defi nitions, 122 787–788 risk management capacity, 142–143 corporatization, 784–785 OSF (Oil Stabilization Fund), counterproductive monitoring 248–252 mechanisms, 797–801 OVL (ONGC Videsh Limited), government control and corpor- 773–774 , 786–795 atization, 785 hiring constraints, 788–789 PABs (Petroleum Administrative multiple vigilance and monitoring Bureaus, China), 387 , bodies, 786 389–391 , 394 social spending, 789–790 Parliamentary Report No. 25 governance of through law-based (1973–1974 Norway), 611 , mechanisms, 85 614 , 648

Index 1009

Parra-Luzardo, Gast ón, 433 strategy, 451 PDVSA (Petr ó leos de Venezuela, S.A.) seeking autonomy, 451–453 centralized state authority over, 77 switch to compliance, 453–455 history, 6 , 7 Pemex (Petr ó leos Mexicanos) 1958–1976 nationalization, board composition, 115 423–426 constraints on funding, 140 1976–1982 private business corporate structure, 306–307 under government control, employee relations, 309–311 426–427 fi nances, 299–300 1982–1989 internationalization, investment fi nancing, 302–306 427–429 investment priorities, 307–309 1990–1999 foreign investment, subsidies, 301 429–431 taxes, 300–301 1999–2003 fi rmer state control, fragmented state governance of, 79 431–433 gas, 308–309 , 314–315 2003–today partial governance of through law-based transformation, 434–435 mechanisms, 85 informal state governance of, history, 5 , 7 , 284–287 68–86 human capital, 316–318 management strategy, 912 interactions with government, negotiations with IMF on behalf of 10–11 , 292–293 Venezuelan government, 28 Bureaucracy, 295–299 overview, 418–421 , 460–462 Congress, 293–295 performance, 455 Executive, 293 1976–2002, 455–456 management dissatisfaction, 2003–present, 456–460 311–313 ranking, 937 nationalism and, 892 pre-Chá vez reputation for non-hydrocarbon responsibilities, technocratic excellence, 119 903 procedure-heavy state oversight of, 80 overview, 280–284 relationship with government performance, 12 , 288–292 extent of oil reserves and, ranking, 937–938 436–437 procedure-heavy state oversight of, extra-heavy crude and, 437–438 80 gas and, 439–440 reform prospects, 318–321 long investment cycles and, relationships with contractors and 438–439 IOCs, 313–316 natural resources and, 435–436 reserves, 321–323 oil price and, 450 performance social functions, 3 , 434 , 447–449 causal factors, 20–21 state goals, 444 state goals, 900 early Chá vez era transition, defi nitions, 4 446–447 measures, 15–16 , 895 later Ch ávez era expansion, ranking, 931–933 , 934–935 447–450 case study NOCs, 935–939 pre-Chá vez era stability, category defi nitions 444–446 high, 933–934 state within a state, 67–68 , 441 low, 934 effects on tax policy, 443–444 lower middle, 934 weak state institutions, 441–443 upper middle, 934

1010 Index

permanent sovereignty over natural monitoring-heavy state oversight of, resources, 178 68–81 Petoro, 623 negotiating on behalf of govern- Petrobras ment, 72 able to shoulder risks of operating overview, 809–811 , 834–835 in deep water, 158–159 performance, ranking, 938 establishment of, 5 , 6 relationship with state, 823–824 governance of through law-based Bank Bumiputra bailout, mechanisms, 80–69 826–827 history, 515–516 banker of pet projects, 827–829 1954–1973 organizing the down- early years, 824–825 stream, 522–527 Najib administration, 829–831 1974–1994 developing the off- under premier Mahathir shore, 527–535 Mohamad, 825–826 1995–2008 deregulation, reserves, 818 535–544 strategy, 831 pre-1954 state monopoly, domestic, 831–832 519–522 overseas, 832–834 international nature of, 4 See also Malaysia lobbying, 113 Petronas Carigali, 815–816 , 819 , 825 , monitoring-heavy oversight system, 831–832 81 Petrossal, 517 , 547 more aggressive taking risk because Phillips, Ekofi sk oil fi eld discovery, of state support, 164 151 overview, 515–518 , 551 PIC (Petrochemical Industries performance, 544–545 Company, Kuwait), 376 agent’s perspective, 548–551 Pidiregas projects, 302–306 meeting state goals, 533–535 PMT (Panna, Mukta, and Tapti) fi elds principal’s perspective, 545–548 joint venture, 781–782 ranking, 937 pricing of gas, 791–792 political pressures, 141 political considerations, and state’s privatization, 54–55 choice of agent for hydrocar- relationship with state, 517–518 , bons extraction, 163–165 523–524 political risk, 132 state within a state, 549 Prasad, N. B., 762 strategy, 517 , 518 , 543–544 predictive geological modeling, 134 PetroChina, 380–381 , 382 , 383–384 , pre-salt, defi nitions, 553 394 principal–agent problem, prompting board composition, 396 NOC formation, 9 relationship with CNPC, 402–403 privatization petroleum provinces, 129 and performance, 35 PETROMIN (General Organization and transition to democracy, 55 of Petroleum and Minerals), CNPC (China National Petroleum 28 , 182–184 , 204 Corporation), 56 Petronas (Petroliam Nasional Bhd) effect of political checks and bal- centralized state authority over, 77 ances, 42–43 , 57 challenges, 834 case studies, 54–56 exploration, 818–821 control variables, 46–47 history, 6 , 7 , 811–817 dependent variables, 43–45 internationalization, 141 , 894 explanatory variables, 45–46

Index 1011

research design, 43 risk management, 125 research fi ndings, 50–52 company type and capacity, research methods, 47 137–138 events, 35 exploration, 135 rationales for, 39–40 fi eld development, 136–137 profi ts taxation, introduction by Saudi in petroleum industry, 133 Arabia, 177 International Oil Companies, Project Kuwait, 336 , 361–364 , 376 138–139 PROMOS (PROjet de MOdernisation National Oil Companies, 139–142 de Sonatrach), 563 Oil Service Companies, 142–143 Proton Cars, 828 risk taking, not implying risk manage- proven petroleum provinces, 130 ment, 141 Putin, Vladimir, 664–665 risk tolerance, 126 Putrajaya, 828 India, 164 Risk, Uncertainty, and Profi t Rabigh Refi nery, 227 (Knight), 125 Raha, Subir, 787–788 risk-weighting, 124 Raja Mohar Raja Badiozaman, Rosneft, 661 , 662 , 665 814–824 rule of law, 119 Ramí rez, Rafael, 434 , 453 and NOC performance, 91 Rastam Hadi, 814 , 824 See also NOC governance, and Razak, Abdul, 814 performance, law-based regulatory capture, Gazprom, 657 , mechanisms 665–688 Russia Reiten, Eivind, 626 government control over NOCs, 71 resource curse, 824 , 942 oil and gas sectors Iran, 234–235 proportion of GDP, 666–668 Malaysia, 405–406 state involvement, 658–657 Nigeria, 704–705 stock market listings of NOCs, 71 risk See also Gazprom and state’s choice of agent for hydrocarbons extraction, Sabriya gas fi eld, 351–352 121–124 , 143–144 , 161–163 Samarec, 405–406 for the North Sea, 123–153 SASAC (State-Owned Assets hypotheses, 154 Supervision and hypotheses testing, 144–145 , Administration Commission, 153–161 China), 395 in ADNOC, 502 Saud bin Faisal bin Abdul-Aziz, 190 in early 1970s nationalizations, Saudi Arabia 145–149 government–IOC relationships and infl uence of non-risk factors, NOC effi ciency, 11 163–165 rationale for nationalization, 38 , signifi cance of oil price expecta- 892 tions, 155 , 160–161 , 165 regulatory control of NOCs, 72 signifi cance of previous commer- See also Saudi Aramco cial discoveries, 156 , 160 Saudi Aramco signifi cance of water depth, attempted opening of the upstream, 154–155 , 158–159 189–191 defi nitions, 124–125 board composition, 115 in petroleum industry, 127–133 centralized state authority over, 77

1012 Index

Saudi Aramco (cont.) Shonekan, Ernest, 707–708 commercial-type operation, 3 Shtokman fi eld, 686–687 downstream Shuaiba refi nery, 340 abroad, 205–207 Simon, David, 621 domestic, 203–205 Sinochem, 382–383 establishment of, 6 Sinopec, 382 , 384 , 390 , 392 fi nancial transparency, 192–193 Sinopec Star Petroleum Co. Ltd., 382 future, 217–218 Slavneft, 665 gas, 207–208 SOCAL (Standard Oil of California), governance, 195–196 agreement with Saudi history, 175–184 Arabia, 175–176 human capital, 179 , 196–199 , social functions of an NOC, 7–8 214–215 PDVSA (Petr ó leos de Venezuela, low-motivated Saudi employees, S.A.), 3 , 434 , 447–449 197 , 224 SOE (state-owned enterprises), 114 oil marketing, 202–203 Sonair, 864 oil production, 201–202 Sonangol (Sociedade Nacional de oil production capacity, 200–201 Combust í veis de Angola) oil recovery rates and reserves, centralized state authority 200–201 over, 77 overview, 173–174 , 216–217 context performance, 3–13 , 208–215 civil war, 845–847 ranking, 938 confl ict and socio-ethnic identity, regulation of the oil sector, 187–194 843–844 relationship with government, 174 , evolution of company goals, 184–187 847–849 strategy, 199–200 geology, 849–852 Savimbi, Jonas, 844 , 845 , 848–849 quasi-sovereign responsibilities, SCPMA/SPC, Saudi Arabia (Supreme 865–870 Council on Petroleum and core duties, 836–838 Mineral Affairs/Supreme establishment of, 6 Petroleum Council), 184 , history, 842–843 187–193 informal state governance of, 86 secondary oil recovery, 130–132 information disclosure, 842 serial nationalizers, 126 overview, 836–842 , 874–877 Seven Sisters, 5 , 218 , 241 , 273 performance, 12 SFP (Mexican Ministry of Public ranking, 938–939 Administration), 297–298 performance factors, 870 SFPM (Service for Promotion of commitment to education and Mineral Production, Brazil), capacity development, 520–521 872–873 Shagari, Shehu, 710 independence on technical and Shah gas fi eld, 509–510 commercial decisions, Shamsul Azhar Abas, 831 871–872 Sharma, R. S., 788 pragmatic reliance on inter- Shell national partners, 873–874 Brent oil fi eld discovery, 151 state-company leadership solidar- capacity to take on exploration ity, 870–871 risks during 1970s, 146 role as regulator, 3 employing local talent, 464 strategy, 852

Index 1013

as nexus of ancillary oil economy, governance of through law-based 860–862 , 863–865 mechanisms, 85 stewardship of oil sector, international nature of, 4 856–860 monitoring-heavy oversight by to be predictable partner for state, 81 IOCs, 852–856 Norsk Hydro merger, 602–603 , subsidiaries, 862 , 863–864 609–610 , 625–627 Sonangol P&P (Sonangol Pesquisa e overview, 599–604 Produ ç ão), 858 , 863 performance, ranking, 939 Sonatrach political pressures, 141 , 627 , 628 gas, 566–560 privatization, 55 history, 6 , 7 , 561–564 relationship with state, 602–603 , performance, 583–587 612–613 , 618–628 ranking, 939 strategy and performance, 628–640 relationship with state, 568 See also Norway structure, 569–571 Statoil–BP Alliance, 621–622 strategy, 587–589 stock market listings of NOCs See also Algeria Angola, 841 South Pars fi eld, 239 , 272 Brazil, 71 South Stream pipeline, 689–690 China, 71 , 394 SPC India, 71 See SCPMA/SPC, Saudi Arabia ; Norway, 71 , 609 SPC, Kuwait Russia, 71 SPC, Kuwait (Supreme Petroleum Stoltenberg, Jens, 626 Council), 335 , 344 , 358 strategy, defi nitions, 4 Spitsbergen mining accident, 612–613 structured case studies, descriptions, Star Enterprise, 206 13–14 “state within a state” Sultan, Nader, 343 , 346–347 , Gazprom, 67–68 , 662 349–350 , 362 PDVSA (Petr óleos de Venezuela, supply trap, 924–925 S.A.), 67–68 , 441 Supreme Economic Council (Saudi effects on tax policy, 443–444 Arabia), 188 weak state institutions, 441–443 Surgutneftegaz, 661 , 665 Petrobras, 549 swing producer, Saudi Aramco, Sonangol, 865–870 210–211 states goals, 17–18 Tariki, Abdullah, 178 and NOC performance, 900–904 tertiary oil recovery, 132 motivations, 125–126 Texaco risk tolerance, 126 , 164 capacity to take on exploration Statoil (Den Norske Stats Oljeselskap risks during 1970s, 146 AS) CASOC joint venture with SOCAL, able to shoulder risks of operating 176 in deep water, 158–159 part-ownership of Aramco, 176 board composition, 114–115 TME (Trans-Mediterranean) gas pipe- centralized state authority over, 77 line, 566–567 commercial-type operation, 3 TNK-BP, 665 , 673 establishment of, 6 , 152 , 153–145 , Troll fi eld, 624 607 TSGP (Trans-Sahara/Trans-Saharan future direction, 640–642 Gas Pipeline), 567 , 712

1014 Index

UN Resolution, 178 Vision 2020 (Kuwait), 357–358 , 361 UAE (United Arab Emirates) Vyakhirev, Rem, 664 formation, 480–481 , 485 nationalization, 484–486 WAGP (West African Gas Pipeline), OPEC membership, 483–484 712 See also Abu Dhabi ; ADNOC wasta , Kuwait, 375 UK Werenfels, Isabelle, 592–593 , 594 BNOC Managing Instability in Algeria: formation, 152–153 Elites and Political Change privatization, 153 since 1995 , 558 North Sea exploration and develop- West Sole gas fi eld, 151 ment, 149–153 Willoch, Kå re, 620 Umm Niga gas fi eld, 351–352 Wolf, Christian, 15 Umm Shaif oil fi eld, 482–483 UNITA (Uniã o Nacional para a Yamal fi elds, 687–688 Independ ê ncia Total de Yamani, Ahmed Zaki, 178 , 180–181 , Angola), 843 , 844 , 845 , 340 848–838 , 849 , 852 Yamburgskoye gas fi eld, 669–670 Urengoyskoye gas fi eld, 669–670 Yanbu Refi nery, 227 US, import controls prompting cre- Yeltsin, Boris, 661–662 , 663 ation of crude oil trading YPF (Yacimientos Petrol í feros market, 148 Fiscales) Ú slar Pietri, Arturo, 423 history, 5 , 7 , 27–28 Yukos, 661 , 665 velayat-e-faqih system, 245–246 Yuznno-Karsky fi eld, 694 Venezuela expropriations, 54 ZADCO (Zakum Development government control over NOCs, 71 Company), 487–488 , 493 oil sector, pre-PDVSA, 422–423 Zanganeh, Bijan, 255 , 258 , private sector involvement, 8 266–267 See also PDVSA Zapolyarnoye gas fi eld, 670–671 vertical integration, to manage risk, Zayed bin Sultan Al Nahyan, 147 485–486 , 490 , 500–501 Vicente, Manuel, 871 Zenasni, Benamar, 575–576 Victor, David G., 15 Zeroual, Liamine, 563