BAKU, Azerbaijan, Nov.10
By Leman Zeynalova – Trend:
The long-term liabilities of national oil companies in the EBRD regions can be as high as 49 percent of GDP, Trend reports citing the Bank.
“National governments and state enterprises are major players in fossil fuel markets. A few years ago, it was estimated that governments and state entities owned roughly 70 per cent of global oil and gas production assets.
“National oil companies (NOCs) produce approximately 55 per cent of the world’s oil and gas and control up to 90 per cent of global oil and gas reserves. They manage multi-billion-dollar portfolios of public assets, account for large percentages of government revenue, employ tens or even hundreds of thousands of people and make large investments in infrastructure. A single NOC can account for more than 1 per cent of a country’s total employment. In some cases (such as SOCAR in Azerbaijan), their revenues even exceed the country’s GDP. Transfers from NOCs to national governments in the EBRD regions range from 2 to 18 per cent of total general government revenue.
“In some cases, NOCs are also tasked with achieving public policy objectives (with Ukraine’s Naftogaz, for example, providing subsidised energy to households). At the same time, some NOCs are highly indebted. Their long-term liabilities can be as high as 49 per cent of GDP in the EBRD regions.
“NOC debt can take various different forms, such as corporate bonds, loans from banks, oil-backed loans from other NOCs or traders (as in the case of KazMunayGas, Kazakhstan’s state-owned oil and gas company), or loans from a government entity. While their debts may not formally be guaranteed by the government, they are likely to be considered “too big to fail”.
“Indeed, several NOCs have received large government bailouts in recent years. The bailout of KazMunayGas in 2015 (which had a total value equivalent to 2.2 per cent of Kazakhstan’s GDP) had no bearing on the country’s credit rating, consistent with pre-existing market perceptions of implicit state support for national oil companies,” reads the EBRD report.
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