gürcan gülen october 8, 2009 · sudapet 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000...

Bureau of Economic Geology, The University of Texas at Austin

Gürcan Gülen October 8, 2009

NOC performance & hydrocarbon sector commercial frameworks

©CEE-UT, 2

Gürcan Gülen

USAEE Houston Chapter, October 8, 2009

The Particular Situation for NOCs

• NOCs control access to the majority of resources for future oil/gas production.

• NOCs increasingly responsible for the required future investments

• NOC model persists especially in times of “resource nationalism”

• Will they be able to deliver the oil/gas supplies demanded by a growing world market?

©CEE-UT, 3

Gürcan Gülen


IOCs 6%

NOCs’ exclusivecontrol 77%

Access to reservesthrough NOCs

11%

Russian companies

6%

Source: PFC Energy

Proven Oil and Gas Reserves

The Growing Importance of NOCs

©CEE-UT, 4

Gürcan Gülen


IOCs

• Commercial goals: maximize return on equity to shareholders

• CSR goals playing greater role since 1990s, but issues re execution capacity

NOCs

• Effective development of country’s hydrocarbon sector (commercial)

• Contribute to country social/economic development (non‐commercial)

IOC and NOC Objectives

©CEE-UT, 5

Gürcan Gülen


Key Observations: CEE/World Bank• Limited reporting and quality of reporting

– Best for NOCs with some public shares (domestic and/or international listings)

• NOCs with best value creation also score highest on governance, fiscal regimes, commercialization, etc.

• High cost structures for many• Large fiscal contribution to the state (effective tax rates,

dividends, etc.) – some NOCs must borrow– low attainments on reserve replacement and production – disincentive to commercialization

• Even more commercialized NOCs with some public shares carry large numbers of employees– Affects value creation results on per employee basis

©CEE-UT, 6

Gürcan Gülen


NOCs vary by:• Extent of government ownership (whole or in part)• Whether any shares are publicly traded under securities regulatory governance (e.g., SEC)

• Amount of (audited or auditable) financial and operating data provided

• International operations and outbound investment• Extent of competition in their “domestic” markets• Access to international credit markets

Not All NOCs Are the Same

©CEE-UT, 7

Gürcan Gülen


Average NOCPetroChina

CNOOCSinopec

PertaminaPetronas

PTTPetroVietnamSOCAR

GDFKazmunaigas

RosneftTransneft

GazpromStatoilHydro

UzbekneftegazBelarusneft

EnarsaYPFB

PETROBRASECOPETROL

PetroEcuadorPEMEXPetroPeruPDVSASonatrachEGPCNIOCKPCLNOC

PDOQPSaudi AramcoSPCETAPADNOCPetroBangla

ONGCOGDCL

SonangolSNHSHTSNPC

PetroCIGEPetrolGNPCENHNNPCPETROSASudapet

0 10 20 30 40 50 60

% Private Ownership

Average

East Asia and Pacific

Europe and Central Asia

Latin America and Caribbean

Middle East and North Africa

South Asia

Sub-Saharan Africa

Private Ownership

©CEE-UT, 8

Gürcan Gülen


Total taxes, royalties, dividends, sign. bonuses, direct social/eco. expend., estimated price subsidies as percentage of total revenue.

Large fiscal contribution to the state

©CEE-UT, 9

Gürcan Gülen


PetroChinaCNOOC

SinopecPertamina

PetronasPTT

PetroVietnamSOCAR

GDFKazmunaigas

RosneftTransneft

GazpromStatoilHydro

UzbekneftegazBelarusneft

EnarsaYPFB

PETROBRASECOPETROLPetroEcuador

PEMEXPetroPeru

PDVSASonatrach

EGPCNIOC

KPCLNOC

PDOQP

Saudi AramcoSPC

ETAPADNOC

PetroBanglaONGC

OGDCLSonangolSNHSHT

SNPCPetroCIGEPetrolGNPCENHNNPC

PETROSASudapet

0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000

Number of Employees





South Asia

Sub-Saharan Africa

Date labels in RED are NOCs with someprivate ownership

Large workforce

©CEE-UT, 10

Gürcan Gülen


Non‐Commercial PerformanceContributions by Type/Revenue (%)

24 316

23

58

‐4

31

16

22

‐4‐20

0

20

40

60

80

100

StatHydro Petrobras Sinopec Petrochina Pemex

Taxes, Roys., Bonuses Price SubsidiesDirect Social Expenses Excess Labor Cost

©CEE-UT, 11

Gürcan Gülen


PetroChinaCNOOC

SinopecPertaminaPetronasPTTPetroVietnam

SOCARGDFKazmunaigas

RosneftTransneftGazprom

StatoilHydroUzbekneftegaz

BelarusneftEnarsa

YPFBPETROBRAS

ECOPETROLPetroEcuador

PEMEXPetroPeruPDVSASonatrachEGPCNIOCKPC

LNOCPDO

QPSaudi AramcoSPC

ETAPADNOCPetroBanglaONGC

OGDCLSonangolSNHSHTSNPCPetroCIGEPetrolGNPCENHNNPCPETROSASudapet

$0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00

Avg Upstream Expenses (USD$/BOE)





South Asia

Sub-Saharan Africa

Date labels in RED are NOCs with someprivate ownership

Upstream costs vary widely

StatoilHydro international reserve replacement costs

>$56/BOE

©CEE-UT, 12

Gürcan Gülen


Fiscal Regime and Corporate Governance

ONGC

PetroBangla

Sonangol

Saudi Aramco

OGDCL

QP

KPC

Average NOC

PetroVietnam Uzbekneftegaz

Pertamina

SOCAR

GNPC

SNPC

SNH

SHT

PetroCI

Sudapet

ENH

NNPC

ADNOC

LNOC

NIOCSPC

GePetrol

Gazprom

ECOPETROL

StatoilHydroPTT

GDFETAP

PETROSA

Sonatrach

PDO

PETROBRAS

PetroPeru

PDVSA

PetroEcuador

EnarsaEGPCPEMEX

YPFB

BelarusNeft

Petronas

Sinopec

PetroChina

CNOOC

Transneft

Rosneft

Kazmunaigas

0

25

50

75

100

0 25 50 75 100Corporate Governance

Fisc

al R

egim

es

AverageEast Asia and PacificEurope and Central AsiaLatin America and CaribbeanMiddle East and North AfricaSouth AsiaSub-Saharan Africa

©CEE-UT, 13

Gürcan Gülen


Sector/Trade Openness and Corporate Governance

Kazmunaigas

Rosneft

Transneft

CNOOC

PetroChina

SinopecPetronas

BelarusNeft

YPFB

PEMEX

EGPC

Enarsa

PetroEcuador

PDVSA

PetroPeru

PETROBRAS

PDO

Sonatrach

PETROSA

ETAP

GDF

PTT

StatoilHydroECOPETROL

Gazprom

GePetrol

SPC

NIOC

LNOC

ADNOC

NNPC

ENH

Sudapet

PetroCI

SHTSNH

SNPC

GNPC

SOCAR

Pertamina

Uzbekneftegaz

PetroVietnam

Average NOC

KPC

QP

OGDCL

Saudi Aramco

Sonangol

PetroBangla

ONGC

0

25

50

75

100

0 25 50 75 100Corporate Governance

Sect

or a

nd T

rade

Ope

nnes

s


©CEE-UT, 14

Gürcan Gülen


ONGC

PetroBangla

OGDCL

QP KPC

Average NOC

Gazprom

ECOPETROL

StatoilHydro

PTT

GDF

Sonatrach

PETROBRAS

PDVSA

PEMEX

PetronasSinopec

PetroChina

CNOOC

Rosneft

Kazmun-aigas

-100%

-50%

0%

50%

100%

150%

200%

250%

300%

350%

400%

45 50 55 60 65 70 75 80 85 90

Average All Scores

Res

erve

Rep

lace

men

t Rat

e (B

OE,

%)


Improvements in NOCs’ reserve replacement rate are supported by improvements in governance, more effective and stable alliances between NOCs and IOCs, sound

competitive frameworks, and progressive fiscal regimes

Experiments with a smaller cluster of best reporting NOCs…

©CEE-UT, 15

Gürcan Gülen


ONGC

PetroBangla

OGDCL

QP

KPC

Average NOC

Gazprom

ECOPETROL StatoilHydro

PTT

GDF

Sonatrach

PETROBRAS

PDVSAPEMEX

Petronas

Sinopec PetroChinaCNOOC

RosneftKazmunaigas

-100%

0%

100%

200%

300%

400%

500%

-100% -50% 0% 50% 100% 150% 200% 250% 300% 350% 400%

Reserve Replacement Rate (%)

Effe

ctiv

e Ta

x R

ate

(%)


A more competitive fiscal structure for NOCs enables them to re‐invest in their core upstream businesses...


©CEE-UT, 16

Gürcan Gülen


ONGC

PetroBangla

OGDCL

QP

KPC

Average NOC

Gazprom

ECOPETROL

StatoilHydro

PTTGDF

Sonatrach

PETROBRASPDVSA

PEMEX

PetronasSinopec

PetroChinaCNOOC

Rosneft

Kazmunaigas

-100%

0%

100%

200%

300%

400%

500%

-50 0 50 100 150 200

Value Creation Indicator

Effe

ctiv

e Ta

x R

ate

(%)


…and enables them to create and optimize value from assets.


©CEE-UT, 17

Gürcan Gülen


Consolidated PerformanceAfter‐tax Income/Revenue and Return on Assets (%)

21%

13%

5%

‐2%

8%

‐5%

0%

5%

10%

15%

20%

25%

Petrochina Petrobras StatHydro Sinopec Pemex

‐5%

0%

5%

10%

15%

20%

AT Inc./Rev. Return on Assets

©CEE-UT, 18

Gürcan Gülen


Implications of NOC performance

• Tax and debt burdens threaten financial sustainability– Most NOCs are for exploitation rather than exploration

• Additional and/or new equity issuances by existing or new partially privatized NOCs– Key consideration: global credit and credit risk trends for new issues

• Impact of financial market turmoil plus falling commodity prices on NOC viability– Implications for FDI and global oil supply and deliverability

©CEE-UT, 19

Gürcan Gülen


Considerations going forward• NOC governance structures

– Organization of sovereign ownership and control– Balancing sovereign/shareholder investors for partial offerings (or

transition to public ownership)– Establishing and asserting “independent” regulatory oversight

• Management skills limited in addition to general HR constraints– More interest in training programs

• Lack of technology development/management• Shortage of experience in global competition

– The NOC‐SC, NOC‐NOC, NOC‐SC‐NOC models are not sufficient– NOC‐IOC partnerships are needed

©CEE-UT, 20

Gürcan Gülen


Research Team:

Michelle Michot Foss, Miranda Ferrell Wainberg, GürcanGülen, Dmitry Volkov, Ruzanna Makaryan, CEE‐UT

& Silvana Tordo, Oil, Gas and Mining Policy Division, The World Bank

For more information:

http://www.worldbank.org/noc

http://www.beg.utexas.edu/energyecon/nocs/

[email protected]

gürcan gülen october 8, 2009 · sudapet 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000...

Documents