Different behaviors in natural gas production between national and private oil companies: Economics-driven or environment-driven?

• Published in: Energy policy Vol. 114; pp. 145 - 152
• Main Author: Gong, Binlei
• Format: Journal Article
• Language: English
• Published: Kidlington Elsevier Ltd 01.03.2018; Elsevier Science Ltd
• Subjects: Clean energy; Companies; Crude oil prices; D24; Economics; Efficiency; Efficiency analysis; Emissions control; Employment; Energy; Energy conservation; Energy efficiency; Energy policy; Energy prices; Environmental objective; Gas production; L33; L71; Natural gas; Natural gas ratio; O44; Oil; Oil and gas companies; Ownership; Ownership structure; Petroleum industry; Prices; Pricing; Production; Stochastic frontier; Stochasticity; Subsidies; Q5; Ownership structure; Natural gas ratio; L71; D24; Stochastic frontier; Oil and gas companies; L33; O44; Efficiency analysis
• ISSN: 0301-4215; 1873-6777
• DOI: 10.1016/j.enpol.2017.12.004

This paper investigates firm-level efficiency in the petroleum industry during the period 2009–2015. A Jackknife model averaging method and two stochastic frontier models are utilized to estimate the input-output relation more accurately. The derived efficiency is then decomposed to predict the effect of various efficiency determinants with an emphasis on gas ratio and ownership. A significantly negative effect of natural gas ratio (in production portfolio) on efficiency is found for both National Oil Companies (NOCs) and privately-owned International Oil Companies (IOCs). This finding implies that the decline in natural gas ratio for IOCs is economics-driven, and the incline in gas ratio for NOCs is environment-driven. Therefore, the environmental objective is the NOCs’ third non-commercial objective, alongside subsidizing below-market energy prices and offering excessive employment, as found in the literature. Governments may consider the transfer of subsidies from low energy prices to clean energy promotion, which leads to energy saving and emissions reduction. •National oil companies (NOCs) are less efficient than privately-owned ones (IOCs).•Decline in natural gas ratio in production portfolio for IOCs is economics-driven.•Incline in natural gas ratio in production portfolio for NOCs is environment-driven.•Environment is a third non-commercial objective for NOCs besides price and employment.•Governments may replace price subsidy with clean energy promotion to reduce emissions.