Shrouded in secrecy, totally unaccountable, yet more important than ever… since Wirecutter hasn’t reviewed state owned oil monopolies yet, I decided to give it a shot.
Who this guide is for.
Thinking about buying a state-owned oil company? If you’re Warren Buffett or an investor who could actually buy an oil company: stop reading now, this is a spoof. But if you just want to learn a little about state oil monopolies, read on.
Why you should trust us.
We spent a couple hours researching this online. We also read Daniel Yergin’s classic oil history ‘The Prize’ a long time ago, but don’t really remember it.
How we tested.
For each company, we read the Wikipedia entry. And we did a Google news search. That’s about it.
Our Pick: Indian Oil
While not the biggest or best known, we believe Indian Oil Corporation (IOCL) is the best national oil monopoly for most billionaires. Or at least it’s the hardest to criticize and make fun of. It’s also affordable and packed with features like relative political stability and a great logo that could stand for anything if you remove the word oil.
India is fast adopting renewables like solar, but that won’t slow Indian Oil’s momentum or massive political influence one little bit. It has dominant oil refinery and pipeline assets, billions in annual profits, and over 31,000 employees, more than half of whom are executives!
Moreover, Indian Oil is is at the forefront of greenwashing – having finally launched its first electric car charger – and has diversified into areas like cryogenics and explosives in case the hydrocarbon thing doesn’t work out. Cryogenics!
Also Great: Brazil’s Petrobras
If you have limited countertop space, or think Western Hemisphere state monopolies suck less than Asian ones, Brazil’s Petrobras is a strong choice.
Established in 1953 to exploit Brazilian oilfields and build refineries, the company’s original slogan was ‘The Oil Is Ours.’ Petrobras has subsequently successfully diversified into Argentina, Bolivia, Peru, Ecuador, Chile and Africa, deep-water offshore exploration capabilities, and even biofuels and ethanol. And it’s been a greenwashing pioneer, with its staunch support for Humpback Whales in northeast Brazil.
It’s not perfect; they’ve had two dozen major oil spills in recent decades, plus a money-laundering scandal called ‘Operation Car Wash.’ But if you prefer South American to Asian politics, or just like saying ‘The Oil is Ours’ in Portuguese, consider buying Petrobras.
Upgrade Pick: Malaysia’s Petronas
If you’re willing to spend a little more (around $90 Billion), check out Malaysia’s Petronas oil monopoly. In addition to oil and gas operations in 35 countries, Petronas boasts businesses like plastics, shipping, and automotive engineering. You also get the famous Petronas twin towers in Kuala Lumpur, which were the tallest buildings in the world from 1998 to 2004, and have attracted BASE jumpers from around the world.
Malaysia nationalized the assets of colonial overlords Royal Dutch Shell and Esso in 1974. Then they doubled down, cutting deals with neighbors Thailand and Vietnam for offshore exploration and building pipelines to transport natural gas around Asia. Today Petronas is a huge exporter of liquified natural gas (LNG), no doubt mostly to China.
Inconveniently, Petronas was accused of war crimes and crimes against humanity in South Sudan, from 1997-2003. 160,000 people were violently displaced from their homes, and the reported crimes include the worst imaginable atrocities. The company has never publicly responded to these allegations.
But if you’re willing to look the other way on that, Petronas is highly diversified, and based in a relatively stable country whose GDP has been growing over six percent a year for fifty years.
Budget Pick: Petroleos De Venezuela (PDVSA)
If you’re looking for ‘cheap and cheerful,’ consider PDVSA, the Venezuelan state-owned company. Yes, Venezuela’s been through hell, poverty, despair and U.S. sanctions over the past decade. But now that the west wants to boycott Russian oil, the prospects for Petroleos De Venezuela (PDVSA) are looking up.
Formed in the ’70s to exploit Venezuela’s huge reserves, PDVSA has chronically been used as piggy bank for government political projects, while going through cycles of expansion with foreign partners like Chevron, and then deterioration, incompetence and corruption as those partners pulled out. It’s been losing workers since 2002, when Hugo Chavez fired 19,000 of them. Then when Chavez died in 2013, Nicolas Maduro fired PDVSA’s management and put the military in charge. And in 2019, foreign sanctions all but closed PDVSA’s oil export spigot.
Basically, PDVSA doesn’t have much further to fall. And it still owns the valuable CITGO gas stations and oil refineries in the U.S. So if cash is tight and you must own a state oil monopoly, Petroleos De Venezuela may be worth a look.
The Competition
Saudi Arabia’s Saudi Aramco has been America’s favorite oil monopoly for decades, with their kindly ‘moderate’ princes, and willingness to pump more oil whenever we needed to keep prices low. Saudi Aramco’s pumping costs per gallon are the lowest on earth, with endless, easy to drill reserves. But lately they’ve been killing journalists, flirting with the Chinese, and refusing to take our phone calls despite 100% relying on us for military protection. And their production is increasingly vulnerable to disruption at Kharg Island from whatever small drone or missile might fly by and explode. So we can’t recommend Saudi Aramco this year.
Russia’s Rosneft, which in 1993 inherited all the oil assets of the old Soviet Union, had been on a global roll until a couple of weeks ago. Production was way up, big joint ventures were happening, new Arctic and Siberian fields were being explored, and the company even diversified its board of directors, adding former German Chancellor Gerhard Schroder. Now that Russia has invaded Ukraine however, that’s all off. So we can’t recommend Rosneft this year.
China’s Sinopec and China National Petroleum Corp. are behemoths among state oil companies, the biggest of the big. They do it all, all over the world. But… its China, so we can’t really recommend them, because we don’t really understand them, are kind of scared of them, and totally dependent on them.
Iran’s National Iranian Oil Company has gigantic oil reserves, but mostly sells oil under the table these days to avoid western sanctions. A lot of that oil may be going to Asia, but it’s hard to know. We can’t recommend NIOC because we just have no idea how terrible a company they are right now.
Kuwait’s KPC or Kuwait Petroleum Corporation, produces seven percent of the world’s crude oil. But we can’t recommend KPC, because Kuwait is simply unsustainable as the climate changes. Kuwait got so hot last summer (127 Fahrenheit) that birds dropped dead from the sky and asphalt melted on highways. Yet the country still burns oil for electricity, has no renewables investments, and lives super wastefully – citizens routinely leave air conditioners on during months-long vacations. This can’t end well.
Qatar’s QatarEnergy (formerly Qatar Petroleum) has the world’s third-largest oil and gas reserves, plus stakes in businesses as varied as pipelines, fertilizers, chemicals, and vinyl. Yes, vinyl. The company is also on a roll lately with its LNG exports, as Europe tries to cut its dependency on Russian gas. And they sell a lot of oil to Japan. But we can’t recommend QatarEnergy this year, because… well, we just don’t feel like it. Time to let someone else have a turn.
The Abu Dhabi National Oil Company is the UAE’s largest oil company, producing over four million barrels a day and with 100 billion barrels of proven reserves. It continues to increase its output, and is investing heavily in large scale hydrogen production. While mostly paying lip service to climate change, the company did build an ‘energy efficient’ headquarters building featuring LED exterior lighting and photovoltaic glazing.
Norway’s Equinor, unfortunately renamed from the much more evil-sounding Statoil, is the ninth largest oil company in the world. In addition to pumping its own offshore oil, Equinor has partnered promiscuously (and not always successfully) with most every other country and company named in this article. We can’t recommend Equinor this year, however, because they’re investing heavily in windmills… what are they thinking?
Nigeria’s NNPC, or Nigerian National Petroleum Company is apparently riven with corruption, and unable to contribute any money to the federal budget, even with oil at $110 a barrel. On the plus side, their headquarters in Abuja consists of four identical towers, which is obviously better than Malaysian competitor Petronas’ two identical towers.
Angola’s Sonangol has major reserves of its own, the rights to develop some oilfields in Iraq, and ambitious plans to become a leader in developing green hydrogen. However, we can’t recommend Sonangol because it chronically misplaces billions of dollars and is currently $27 billion in debt. Not to mention, the humanitarian situation of the Angolan people is dire, and Sonangol doesn’t seem to be doing much to help.
Ecuador’s Petroecuador is the smallest member of OPEC, looking to get back in the game and ramp up production, potentially in partnership with companies like Shell, after a long decline. But what it lacks in actual oil production in makes up for in oil spills, with one of the worst environmental and safety track records in the business (1,415 oil spills between 2000 and 2008 alone). Petroecuador is an up and comer… we’ll keep an eye on it for next year.