Document Type

Article

Publication Date

Summer 2009

Abstract

National Oil Companies (NOCs) collectively own approximately 90 percent of the world’s oil reserves, with the Middle East and North Africa region accounting for about 67 percent. Yet the nature of their state ownership endows NOCs with a dual mandate: to profitably extract the country’s oil reserves while also promoting economic and social development for the domestic population. This paper focuses on how the dual mandate affects the management, operations, investment and efficiency of NOCs. I argue that the prevailing culture and norms of Middle Eastern NOCs – embodied in their dual missions of profitability and social development – are an entrenched component of their identity and will continue to be a major driver of management and investment decisions. This reality presents substantial challenges for governments and their NOCs in the current era of depressed oil prices and global recession. Thus, I conclude by exploring how circumstances in both the global economy and domestic political economy of oil exporters will affect the extent to which Middle Eastern NOCs can evolve to meet new challenges.



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