Oil companies owned by national governments (“NOCs”) and oil companies with extensive international operations owned by diverse private investors (“IOCs”) constitute some of the largest and most important economic organizations on the planet. Individually and collectively, they command vast amounts of capital and have large potential impacts on macroeconomic conditions and global-level environmental policies. Security concerns, at the local, national and international levels, are tied more to their activities and assets than to those of other types of firms.
A number of authors have examined NOCs and IOCs as separate classes of entities and in individual case studies. This paper considers how and why NOCs and IOCs deal with one another, given their respective capabilities, constraints and ambitions. Written from the perspective of a contract lawyer with extensive experience working with both NOCs and IOCs, the paper concentrates on the possibility of structural and transactional alternatives to the current roles. In particular, it focuses on the potential for partial integration between NOCs and IOCs in the form of strategic alliances, taking advantage of the strengths of both while coping with the limitations of each. It then offers predictions of where the sweet spot for such alliances might be located.