On Whose Terms? Understanding the Global Expansion of National Oil Companies

Andrew Cheon

National oil companies (NOCs) have evolved beyond vestiges of an era of resource nationalism and assumed an international presence. Given that NOCs are generally inefficient entities, why do some governments, more than others, allow their national oil companies to make expensive and often risky investments abroad? Instead of directly refuting neorealism or liberalism, I seek to shift the debate towards problems of governance in the energy sector. While agreeing that geopolitical rationales matter, I posit that they serve as political cover for NOCs pursuing their own expansion. While sharing the liberal emphasis on institutional checks, I anticipate how they may be overcome by strategic NOCs determined to secure support for their investments. I argue that the willingness of governments to restrain NOC investments depends on the presence of veto players, whereas their ability to do so...