Oil nationalism cycle reflects the difficulties encountered by oil states, international oil companies (IOCs) and national oil companies (NOCs) in establishing order over and above the conflicts in upstream oil transaction. By drawing on transaction cost theory, this article identifies the coordination problems and contractual hazards resulting from transaction and contributes to a better understanding of the different roles of an NOC in the governance of transaction. An NOC can complement or replace coordination through contractual arrangements. We therefore propose and discuss the hypothesis that the functional effectiveness of an oil governance structure depends on the consistency between the role of the NOC in this structure and the state's capacity to ensure effective regulation through contracts.
