In 1950, 85% of the World’s known reserves were controlled by International Oil Companies (IOC’s) aka ‘the Good Guys’ (from a 'Western' viewpoint).

An International Oil Company is generally described as ‘majorly private owned’ (as opposed to owned by Governments) and most often answerable to public shareholders.

Readily recognizable IOC’s include ExxonMobil, Shell, BP, Total Fina Elf, Chevron and Conoco Philips. International Oil Companies are generally well managed, technologically strong, efficient, transparent, have long term horizons and are growth-orientated (when the opportunities exist).

By comparison, today, 85% of the World’s known reserves are controlled by National Oil Companies. A National Oil Company (NOC) is an oil company fully, or at least in the majority, owned by a national government.

The more important NOC’s include Aramco (Saudi Arabia), National Iranian OC, Kuwait Petroleum Corp, PDV (Venezuela), PetroChina and Sinopec (China), Iran NOC, Pemex (Mexico), Petrobras (Brazil) and Gazprom and Rosneft (Russia).

NOCs have priorities that incorporate national goals beyond the maximization of returns for shareholders.  

These goals may include the redistribution of wealth, fuel subsidisation, technology transfer and nearly always include rules on local content. Most have rules to ensure the availability of fuel for domestic consumption (mostly at aggressively subsidised prices).

NOCs also usually play a role in and are affected by the politics, both domestic and international, of their host country.  NOCs are often the tools of a country’s foreign and strategic policy, and in almost all cases the NOCs have to heed the foreign and strategic policies of their governments.

Many analysts suspect (us included) that the OPEC countries (predominantly NOC’s) which claim to hold over three-quarters of known reserves, have been exaggerating their size for decades. As a result, they too will soon reach the physical limits of production (see ‘The Supply of Oil’ section).

But even if they can raise their output, they may have little incentive do so.

Creating additional production capacity would cost them billions of dollars in infrastructure development, for which their reward would presumably be lower oil prices. That might not seem a strikingly attractive bargain from their point of view. On the other hand, if they simply do nothing, the oil price will stay higher for longer.

The International Energy Agency (IEA) states that unlike the last 30 years, which saw over 40 percent of all the oil produced, come from publicly traded companies within the OECD, 90 percent of production over the next 30 years will come from the developing world - that is, from NOC’s.

Not the ideal state of affairs if you rely on imports of oil for your well being in a world where the power blocs are changing rapidly.