A study on the operational and competitive efficiency of National Oil Companies using two-stage network DEA model

Government-owned National Oil Companies (NOCs) play a critical role in the current oil and gas industry. There is a common perception that NOCs tend to exhibit lower efficiency when compared to privately owned International Oil Companies (IOCs) because NOCs should pursue non-commercial objectives concurrently with commercial ones, whereas IOCs prioritize profits without such constraints. Previous studies typically assessed the efficiency of NOCs using a traditional one-stage DEA model, either incorporating multiple output variables simultaneously or focusing on one aspect. However, given the unique characteristics of NOCs, a different approach is required for evaluating their efficiency. Thus, this study investigated the operational and competitive efficiency of 27 NOCs using a two-stage network DEA model, where oil and gas production, and revenue are sequentially employed as outputs. Subsequently, the investigation assessed whether these two efficiencies exhibited independent distributions and analyzed the variations in the computed DEA scores concerning region, business type, and ownership structure. The results indicate that operational and competitive efficiency follow independent distributions. It is also revealed that NOCs’ operational and competitive efficiency vary according to regional locations, business type, and ownership structure. These findings offer valuable insights for practitioners and policymakers seeking ways to enhance NOCs’ performance from diverse perspectives.