Selling the Citizens' Oil

The sale of crude oil by national oil companies (NOCs) generates a large share of government revenue in oil-producing countries. NOC export sales bring in more than two-thirds of total government income in countries such as Angola, Azerbaijan, Congo-Brazzaville, Iraq, Saudi Arabia and Yemen. Even in Mexico and Norway—both oil countries with diversified economies—export sales equal around 15 percent of the national budget. At this scale, inefficient operations, manipulations of process or the unauthorized retention of funds by an NOC can reduce the resources available for public goods and services.

Revenue Watch researched how 11 countries sell the portion of oil produced that belongs to the government. The results are detailed in four policy briefs that recommend transparency, identify good sale practices and explain how oil sales and global oil prices work.

Many NOCs excel at their sale functions. However, as high oil prices further raise the stakes, presenting the opportunity for windfalls that could stimulate development in producing countries, now is the time to institute checks and balances that ensure transparency and good practices. Especially for developing countries with weak institutions, transparency and governance reforms can help ensure that NOC oil sales advance the long-term public interest.

This research was published simultaneously with the English edition of Commodities: Switzerland’s Most Dangerous Business, by the Berne Declaration. To learn more about the book and download a copy, go to www.evb.ch/en/commodities.

 

Illustration by Designlounge