State intervention in the Norwegian Continental Shelf started with the establishment of Statoil as the medium of state ownership over the found petroleum and as a tool to monitor oil companies' procurement behaviour. This paper tests the extent to which the state intervention created inefficiencies in the Norwegian Continental Shelf (NCS) activities, as measured by data envelopment analysis, stochastic frontier analysis, Malmquist Indices, and standard regression analysis. Our results confirm such inefficiencies. Accordingly, the results provide an important insight into NCS production techniques and, more generally, into governments' abilities to influence private sector behaviour through contracts and tendering. (c) 2004 Elsevier Ltd. All rights reserved.