Explaining divergence in transition strategies between National Oil Companies

In this paper, we examine how the global oil industry, as one of the main historical contributors to anthropogenic climate change, reacts to and strategises in the face of an ongoing global Energy System Transformation (EST). We focus on National Oil Companies (NOCs) in particular, because of their central role in the global energy system. Even though NOCs hold 2/3 of global oil reserves and account for 58 percent of global oil production, the energy transitions literature has so far predominantly focused its analytical lens on NOCs’ publicly-traded counterparts, so-called International Oil Companies. Climate change is among the largest crises facing humanity, governments and institutions globally are largely failing to engage NOCs in their transition strategies. Our study deals with this governance gap by analyzing the factors explaining the differences and similarities in transition strategies among 13 NOCs across several and countries and continents. Building on theoretical insights from international political economy, international business, and strategy literature, we develop an analytical framework that positions NOCs across a ‘Transition Strategy Continuum’ and formulate a set of hypotheses that we test through a fuzzy set Qualitative Comparative Analysis (QCA). This study and its findings contribute to and expand the scholarly debate on the EST by highlighting how state-connected business actors react to and strategise in the face of the climate crisis. In doing so, we argue that NOCs should not be treated as a monolithic bloc, rather they should be viewed as diverse group of business actors with varied energy strategies that respond and adjust to the global environment populated by other state and non-state actors.