A new role for NOCs

To cope with an era of lower oil prices, state-owned firms must put value above volume and focus less on production, more on their commercial position

National oil companies (NOCs) are under tremendous pressure to transform. These companies were originally set up to maximise the realisation of their country's hydrocarbon resources and fund their government's budgets through taxes and dividends. Many NOCs have also been called on to be major employers and contribute to social-welfare programs. Changing circumstances have required all NOCs, including net importers, to refocus on capital allocation and costs. Now, due to the steep decline in oil prices by more than 60% from their peak, NOCs are struggling to remain profitable and continue fulfilling their commitment to their governments. As a result, governments that depend on oil and gas for