CHANGES IN THE OPERATIONAL EFFICIENCY OF NATIONAL OIL COMPANIES by

Using data on 61 oil companies from 2001-09, we examine the evolution of revenue efficiency of National Oil Companies (NOCs) and shareholder-owned oil companies (SOCs). We find that NOCs generally are less efficient than SOCs, but their efficiency increased faster over the last decade. We also find evidence that partial privatizations increase operational efficiency, and (weaker) evidence that mergers and acquisitions during the decade tended to increase the efficiency of the merging firms. Finally, we find evidence that much of the inefficiency of NOCs is consistent with the hypothesis that government ownership leads to different firm objectives.  The authors thank James D. Coan (Research Associate & Assistant to the Director, Baker Institute Energy Forum), Sara El Hakim (Graduate Student, Department of Economics), Jane Kliakhandler (Program Coordinator Baker Institute Energy Forum) and Likeleli Seitlheko (Graduate Student, Department of Economics) for very valuable research assistance. We also thank participants in the 4 International Workshop on Empirical Methods in Energy Economics (EMEE) held in Dallas in July, 2011 and especially the discussant of an earlier version of this paper, Clifton Jones from Stephen F. Austin University, for valuable comments.