Financial analysis of international oil companies and the effect of foreign direct investment in the northern region of Iraq

Öz

This paper investigates the impact of Foreign Direct Investment (FDI) on the economic development in the Northern Region of Iraq, with a focus on the financial performance of international oil companies (IOCs) operating within the region. The study analyzes nine key financial ratios for IOCs over the period from 2011 to 2019: Return on Assets (ROA), Return on Equity (ROE), Return on Invested Capital (ROIC), Interest Coverage Ratio, Debt/Equity Ratio, Gross Profit Margin (GPM), Current Ratio, Quick Ratio, and Working Capital. The results reveal that ExxonMobil consistently outperformed its peers in ROA, ROE, ROIC, Interest Coverage Ratio, and Debt/Equity Ratio, while Genel Energy showed superior performance in the Current and Quick ratios. Additionally, Rosneft and Gazprom exhibited leading performance in Gross Profit Margin and Working Capital, respectively.  A random effects panel estimation analysis was employed to explore the relationship between financial ratios and company revenues, uncovering a significant influence of crude oil prices on the financial outcomes of IOCs. The findings underscore the importance of optimizing financial management, diversifying revenue streams, establishing a strong policy framework to attract FDI, and investing in research and development. Strengthening partnerships with international oil companies emerges as a critical strategy for fostering sustainable economic growth and securing the long-term prosperity of the Northern Region of Iraq’s oil sector.

Anahtar Kelimeler

• International oil companies
• Financial analyses
• Foreign direct investment
• Economic development
• Iraq

Etik Beyan

For the research, ethics committee approval was obtained under decision number 2024_7, issued during the session of the Kahramanmaraş Sütçü İmam University Science and Engineering Sciences Ethics Committee on March 25, 2024.

Teşekkür

This study was produced from the first author’s (NMO) PhD thesis " Financial Analysis and Determinants of Foreign Direct Investment in The Oil Sector in the Northern Region of Iraq " accepted by Kahramanmaraş Sütçü İmam University, Graduate School of Natural and Applied Sciences.

Kaynakça

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