

How many Mexicans does it take to drill an oil well? - cwan
http://www.economist.com/world/americas/displaystory.cfm?story_id=14548839

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pmorici
I don't remember if I originally saw this,
[http://www.ft.com/cms/s/2/99680a04-92a0-11de-b63b-00144feabd...](http://www.ft.com/cms/s/2/99680a04-92a0-11de-b63b-00144feabdc0,dwp_uuid=a712eb94-dc2b-11da-890d-0000779e2340.html)
on here but its about Norway's very well run state owned oil company. It
unlike Mexico removes the direct control of politicians over the profits so
they are more wisely spent over time. As a result Norway is one of the leaders
in the world in deep water drilling technology.

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psranga
About 10 years ago, I would given some credence to such articles with
simplistic solutions (privatize and fire workers) to complex problems. Now I
recognize it as a potentially slanted article.

In particular foreign private oil companies have a long history of not paying
adequate royalties to the countries they operate in (which is the reason they
get nationalized after popular revolts). Even the US govt sued Exxon in
Alabama for systematically underpaying royalties (they lost, but whatever).

I remember a memorable article circa 2002 which said China was on the brink of
collapse due to bad loans held by it's state owned banks (yeah, right).
Another one chided China for not given a majority of board seats in partially-
privatized banks to foreign investors with small shareholdings.

~~~
hughprime
_In particular foreign private oil companies have a long history of not paying
adequate royalties to the countries they operate in (which is the reason they
get nationalized after popular revolts). Even the US govt sued Exxon in
Alabama for systematically underpaying royalties (they lost, but whatever)._

What do you think is a "fair" amount of royalties to pay?

In my opinion, whoever owns the land should get 100% of whatever income they
can derive from it. If Shell wants to buy some land, they should own whatever
oil they can suck up from under it.

~~~
psranga
Credit card companies charge 1-2% of revenues. VC and hedge funds also charge
management fees in that ballpark. I would say 1-2% of profits after deducting
all operating and capital expenses is a good royalty figure.

In most countries, all mineral rights lie with the govt (I agree with this
principle, btw). In the US, most mineral rights belong to the lucky owner of
the land.

AFAIK in the Exxon case, the state of Alabama owned the land whose mineral had
been leased to Exxon. It was proved that Exxon was systematically underpaying
the state for agreed-upon royalties.

