National oil companies are not so cool

AS The Economist noted last year, the international oil companies like Shell, BP, Chevron and Exxon are small next to the industry's true giants: the national oil companies (NOCs) owned or controlled by the governments of oil-rich countries, which manage over 90% of the world's oil.. Of the 20 biggest oil firms, in terms of reserves of oil and gas, 16 are NOCs. Saudi Aramco, the biggest, has more than ten times the reserves that Exxon does and could keep the world supplied for several decades. But it is only exploiting ten of its 80 or so fields so could pump at the present rate for about 70 years even if it never discovers another drop of oil. Aramco and other NOCs could find more oil if they looked. Only 2,000 wildcat wells have ever been sunk in the Arabian Gulf region compared with more than one million wells in the United States. The worry is not the amount of oil at state oil companies' disposal. It's how they manage it. Politicians meddle and that leads to inefficiencies: overstaffing, underinvestment and so on. In short National Oil companies produce less oil and more expensively. So, how come South Africa is rushing to exert even more control over the local oil industry? Rather than learning from the boondoggle that was the origin of Sasol and Mossgas, our new rulers seem intent on making the same mistake. The flavour of the month seems to be bio-fuels. Next it will be the new refinery the country needs. It all adds up to more bureaucracy and more inefficiency, with the poor bloody taxpayer and motorist at the receiving end, again. As it is, the price of petrol could fall by 30 per cent tomorrow, if the Government wanted to cease milking the petrol pumps for levies and taxes. No chance of that, alas. The much-maligned oil companies are still the best, most honest and most regular tax gatherers, in the world.