A global wave of energy industry privatization is generating cross-border flows of billions of dollars in investments. The privatization of the Australian and British electric power industries, for example, has attracted major foreign investment, especially from U.S. utilities. Privatization of the petroleum industry in the Former Soviet Union has enticed foreign investors to make substantial commitments to develop the region's oil and gas resources. The end of European coal industry subsidies has encouraged European companies to invest in coal operations overseas.

These examples, from the Energy Information Administration's new report Privatization and the Globalization of Energy Markets, illustrate the sweeping changes overtaking energy markets worldwide. The changes are part of a larger trend that saw roughly 2,700 state-owned businesses in 95 countries sold to private individuals between 1988 and 1993. The privatization of energy resources and industries is carried out in several ways (see below) and is related to the increasing multinationalism and integration of energy companies.

The report discusses the economics of privatization in general, petroleum privatization in Latin America and Organization for Economic Cooperation and Development member nations, oil and gas privatization in current and formerly socialist countries, and global privatization developments in electric power and coal. An appendix details privatization-motivated investments by company and country grouping.

Governments have used various means to shift state control of energy enterprises to the private sector, including:

• Public sale of company -- Argentina, Chile, New Zealand, and the United Kingdom are among those countries that have auctioned off entire energy companies to the public.

• Partial public sale -- Many governments have gradually reduced their shares in domestic energy resources, either giving up all ownership or retaining enough shares to afford a degree of continued control.

• Sale to other companies or consortiums -- Bolivia, for example, split its state electricity monopoly in three parts and sold them to foreign utility companies.

• Deregulation -- As shown by the loosening of Federal control of natural gas transportation and electric power generation and transmission, deregulation has been the primary tool of energy privatization in the United States.

• Removal of subsidies -- Termination of subsidies to energy companies reduces government involvement and control and thus makes companies more purely private.

• Voucher schemes -- In some cases, ownership of national energy industries has been given piecemeal to the public through the distribution of tradeable vouchers.

For more information about this report, contact Kevin Lillis, Office of Energy Markets and End Use, Energy Information Administration, at 202-586-1395 or via internet e-mail at klillis@eia.doe.gov. For general information about energy, contact the National Energy Information Center at 202-586-8800 or via internet e-mail infoctr@eia.doe.gov.