Responsible Change: How Governments Can Address Environmental, Social and Governance Challenges When Petroleum Assets Change Hands

• As the world moves toward a future beyond oil and gas, petroleum assets will change hands, with different kinds of companies replacing others.

• Since 2014, around USD 88 billion in assets have moved from publicly listed to private companies. The roles of sub-Saharan African and Latin American companies in their home countries have expanded.

• Globally, the role of national oil companies (NOCs) is growing. NOCs have acquired around $24 billion in assets from non-NOCs since 2014.

• The growing role of private and local companies and NOCs potentially gives producer countries greater control over their petroleum sectors, including the pace of an eventual phaseout.

• However, these companies often have less capacity and fewer transparency, environmental, social and governance commitments than publicly listed international companies. This increases the risk that these companies’ operations will negatively impact the environment and communities, and that they will be unable to pay for decommissioning when production ends.

• Many assets that sub-Saharan African and Latin American NOCs have acquired appear vulnerable to energy transition risks.

• Governments should exercise approval rights over asset transfers to ensure buyers have requisite capacity to operate with high standards. They should ensure transparency to allow host communities and the public to better understand transfer impacts and how the government and/or companies will manage them, and strengthen regulations to address key issues arising from transfers including emissions management and reporting, and decommissioning funding.
• Governments should require NOCs to make adequate disclosures about their acquisitions to ensure NOCs manage risks to the public purse.

As the world journeys towards a future beyond oil and gas, oil and gas assets will continue to change hands, with different kinds of companies filling the gap left behind by others. 

There is growing concern that, as international oil companies (IOCs) face pressure to reduce emissions, they are selling upstream petroleum assets, in part, to shift emissions off their books and ostensibly achieve their decarbonization goals. On balance and at a global level, assets are moving from publicly listed to private companies and from companies with higher environmental commitments to those with weaker commitments. The result, according to some evidence, is that these sales do not simply transfer emissions to new parties but may increase them.

At the same time, some national oil companies (NOCs) seek to acquire assets left behind by the departure of IOCs to avoid production decline and ensure domestic energy supply.

This briefing shows how asset transfer trends may differ by region and country, and therefore present different risks and raise different policy considerations for producer country governments. It focuses on the Global South countries and regions in which the Natural Resource Governance Institute (NRGI) works.

NRGI analyzed upstream petroleum asset transfers from 2014 to the first half of 2023, using Rystad data to identify trends globally, at the sub-Saharan African and Latin American regional level, and in NRGI’s countries of focus.

This analysis shows that petroleum assets worldwide have moved primarily from publicly listed to private companies during the period studied. Since the start of 2014, around USD 88 billion in assets have moved from publicly listed to private companies. Both sub-Saharan Africa and Latin America have seen net divestment by publicly listed companies. In sub-Saharan Africa, there has been a transfer of around $23 billion in assets from publicly listed to private companies since the start of 2014, while in Latin America, around $11 billion in assets has moved from publicly listed to private companies.