National oil companies (NOCs) have increased their share of global oil production through the downcycle, but remain encumbered by inefficiency and debt, BMI Research has said in a report.
GCC countries, the report said, are “poised to benefit due to the low production cost and an extensive conventional resource base.”
National oil companies (NOCs) and independent oil companies (IOCs) have reacted very differently to the fall in oil prices. Independent companies have become more nimble and innovative in tackling areas of their business where they can reduce costs and improve efficiencies. 
By contrast, NOCs have had less pressure to optimise their operations due to the already low production costs at vast conventional resource bases. Instead, NOCs have largely used legislative means to reform energy subsidies and encourage foreign investment to reduce the impact of lower oil prices on government budgets.
Due to the greater flexibility of IOCs, job losses, downsizing and restructuring has been more prevalent in the private sector, with a substantial amount of the global production losses coming from this sector. Since oil prices began falling in mid-2014, Opec’s share of global production has increased by approximately 2%. 
As the global oil market moves closer to rebalancing, it will become increasingly dependent on the ability of less flexible NOCs to meet demand in the short-term. In Latin America and Africa, the oil downturn has pushed many foreign investors out of low return NOC-dominated oil producing countries, encumbering state-run companies with a greater proportion of the upstream sector. 
Within this context, it will be particularly difficult to encourage development as significant debt loads restrict greater capital expenditure.
Most oil producing nations still require further cuts in domestic social spending or a strong oil price recovery in order to achieve a fiscal balance. Year to date, Brent crude has averaged $41.6/b, well below the fiscal breakeven of many key producing countries.
The first indications of this trend arose from the final investment decisions on the Tengiz and Tangguh projects, which both benefited from significant cost reductions, making their advancement more feasible at a lower oil price, it said.