This report provides an assessment
of foreign ownership of energy assets in the United States. Section 657, Subpart
8 of the U.S. Department of Energy Organization Act (Public Law 95-91) requires
an annual report to Congress which presents: “a summary of activities in the
United States by companies which are foreign owned or controlled and which own
or control United States energy sources and supplies ….” The Energy Information
Administration intends the information in this report for use by the U.S. Congress,
U.S. Government
agencies, industry analysts, and the general public.
Findings
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Natural gas production and, especially, crude oil and natural gas liquids production in the United States by FDI-affiliate companies declined in 2005, in part because production in the Gulf of Mexico by the two largest FDI-affiliate producers suffered from the effects of two particularly destructive hurricanes.
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U.S. crude oil distillation capacity owned by FDI affiliates increased in 2005, largely because two FDI affiliates each acquired a refinery for the first time, and one completed a substantial addition to capacity. In addition, one FDI-affiliate’s refinery was sold.
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The volume of gasoline sold by and, in particular, the number of branded retail outlets associated with FDI affiliates in the United States fell in 2005, with two of the three largest FDI-affiliate retail networks shedding a large number of stations.
§
The electric power generation capacity owned by FDI affiliates rose, especially at five FDI affiliates that either completed construction or acquired notable amounts of U.S. generating capacity in 2005.
§
Net capital flows from foreign direct investors into the petroleum and natural gas sector of the U.S. energy industry increased markedly in 2005, while flows to the electric power generation sector remained small.
Background and Definitions
Foreign
direct investment in the United States is defined as the ownership or
control, directly or indirectly, by one foreign investor of 10 percent or more
of the voting securities of an incorporated U.S. business enterprise or the
equivalent interest in an unincorporated U.S. business enterprise (or asset).
Ownership or control of less than 10 percent of the voting securities of a
business is not considered to be direct investment. In this report, an
FDI-affiliate company or FDI affiliate is a U.S. business in which there is
foreign direct investment.
All of the information in this report is from publicly available sources. This
report describes the role of direct foreign ownership of U.S. energy
enterprises with respect to their energy operations, capital investments, and
net foreign investment flows (including net loans). For a discussion of
acquisitions and divestitures of U.S. energy assets by foreign
investors in 2005, see “Acquisitions and Divestitures by Foreign Direct
Investors in U.S. Energy 2005.”
FDI
is one measure of the continuing influence or control of foreign companies or
individuals over the management and disposition of U.S. assets of production.
However, determining influence or control of a company is often a complex and
subjective process in which many factors other than the percentage of voting
rights or ownership must be considered. While holding 10 percent or more of a
company’s voting rights suggests control of that company, it does not guarantee
it.