The Oil for Development

How Norway contributes to improved petroleum
management in developing countries
Tunis/AfDB, 4 October 2006
Jon Lomøy and Leiv Lunde, MfA/Norad; Oil for
Development, Norway
   The Norwegian Oil for Development Initiative – main goal

• The overall vision of OfD is to support oil-rich developing countries in
  their efforts to exploit and manage petroleum resources in a
  sustainable manner, by building competence and capacity, by
  encouraging that revenues are managed transparently and
  contribute to poverty reduction, and that environmental impacts of
  petroleum activities are minimised.

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    Why an important Norwegian priority?

• Growing economic and geopolitical salience
• Increasing number of countries join the petroleum bandwagon
• US, China, EU, India – depend on stable deliveries of oil/gas
• Key problem: resource curse threatens to undermine security
• Norwegian contribution: enhance energy security through
  strengthened OfD action – strong interest in US, UK ++++
• Strong/increasing interest in Norwegian competence/experience
• Also solid self interest: Norway an important global oil player
• Branding and self-respect – a responsible global player (Memo)

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Our response: The Oil for Development Initiative
• An initiative by the Norwegian government to make Norwegian
  competence available to developing countries
  The new petroleum initiative shall:
• be based on requests – countries must actively approach Norway
  for assistance.
• focus on competence and capacity building on management of
  petroleum resources, finance administration and environment.
• focus on areas where Norway has relevant expertise.
• have a broad perspective: emphasize good governance, anti-
  corruption, transparency and environment as important
• have a bilateral focus and an important multilateral dimension

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  Why is the Norwegian experiences requested abroad?

• National governance – framework conditions:
   – Development of legal system
   – Marketing of potential
   – Licensing and incentives
   – Capacity building measures – education sector
   – Development of national industry
   – Safety and inspection activities
   – Environment – competing industries, ex. fisheries (EIA)
• Administration of finance – synchronized with petroleum revenues
• Government take and petroleum fund
• Transparency in all areas and phases – anti corruption.

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What we offer
A little for as many as possible:
• An easy access to Norwegian competence through visits, seminars
• Available to all developing countries: limited in time and costs
• Increasing cooperation with multilaterals, including AfDB

More for the chosen few:
• Longer term more comprehensive cooperation with a limited
  number of countries
• Tailored to the countries needs: Extensive training and institutional
• Draw on national institutions for the long term cooperation
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Network and Partners in Norway
•   Ministry of Petroleum and Energy
•   Ministry of Finance
•   Ministry of Environment
•   Petroleum Directorate
•   Petroleum Safety Authority
•   Petrad
•   Intsok (The Norwegian Oil and Gas Partners)
•   Rogaland Course and Competence Centre
•   The State Pollution Control Authority
•   The Coastal Administration
•   Consultants (including legal advisors)
•   Universities (NTNU, University of Stavanger)
•   Research Institutes (Sintef, Rogaland Research, CMI etc)
•   The Central Bank
•   Commercial companies and enterprises
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•   Nigeria
•   Angola
•   South Africa
•   Mozambique
•   Tanzania
•   Madagascar
•   Uganda
•   Sudan
New/emerging countries
•   Mauritania
•   Kenya
•   Sao Tome & Principe
•   Somalia/Somaliland

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•   Timor Leste
•   Vietnam
•   Iraq
•   Cambodia
•   Bangladesh
•   Indonesia
•   Sri Lanka

• Regional ASIA
Coordinating Committee for Geoscience
Programmes in East and South East Asia

Extractive Industries Initiative (EITI)
The Gas Flaring Initiative

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Good Governance and Resource Management
• A legal framework to govern petroleum exploration and production
• Effective administration and monitoring mechanisms
• Clear understanding of roles and responsibilites for involved
  ministries and institutions
• Transparency about identified and potential resources
• Resource databases for optimal planning and extraction of
  petroleum resources
• Open bid and tendering processes, evaluation, awarding etc.
• Transparency about licenses and contracts
• Transparency about produced amount and prices
• Marketing of potential, to atract investors
• Stimulate development of local petroleum industry

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Environmental Challenges

• Defining the areas to be developed –petroleum free areas?
• Framework for rules and regulations covering environmental issues
• Challenging the industry to evaluate the possibilities, and use
    protection of the environment as one of the main criteria when
    choosing a line of action
•   Minimizing discharges into the sea
•   Risk reduction measures, and action plans to reduce accidental
•   The operators must carry out their activities in the best possible
    manner documented by evaluating reports and audits
•   Conflicts with other resources ex. oil – fish must be addressed

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Good Governance from Wellhead to State Budget to
Public Expenditure
• Efficient and transparent taxation system and sound public financial
• Democratic control of resources (national accountability institutions)
• Conflict handling mechanisms and conflict sensitivity
• A functioning justice sector – ability to handle contractual disputes,
  prosecute abuse of power and corruption
• Respect for human rights – (labour rights, rights of affected
  population, conflicting interests e.g. fisheries vs petroleum)

  Good management of national resources should ultimately lead to
  poverty reduction

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Example of institutional cooperation: Norway/the World Bank

•   Extractive Industries Transparency Initiative (EITI)
•   Gas Flaring Reduction Partnership (GGFR)
•   National Oil Companies (NOCs)
•   Community and Sustainable Development Facility ( Use of
    petroleum revenues for Community Development)
•   Petroleum fund /Revenue Management
•   Local content
•   More flexible Host Government Agreements/Intern-Government
•   Use of Norwegian competence and capacity
•   Regulations related to discharges to sea during drilling and
    production activities
•   Disposal of decommissioned offshore platforms
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   Oil for Development – key thematic areas

• The three main pillars:
   – resource-, revenue/economic- and environmental management
• Overarching focus on:
   – transparency, accountability and good governance
• Supporting local content strategies
• Education and vocational training
• CSR / community development approaches
• Oil and the prevention/management of violent conflict
• How to interface with international companies

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   Example: Vocational training and education – key priority issue I

• Key explanation of Norwegian success
   – invested heavily in education – all main levels
• Important cause of shortcomings in developing countries
   – little focus on build-up of local competence/work force
   – international companies have dominated the scene
• Developing countries now realise that this has to change
   – bargaining power tilted towards national governments
   – Western countries/companies realise salience of investing in
     sustainable local talen
   – what is the role of Asian players in this equation

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   Example: Vocational training and education – key priority issue II

• The Norwegian Oil for Development Initiative
   – training and education important cross-cutting issue
• Comprehensive approach to education:
   – vocational training/education, higher education, training of
     government and corporate personnel
• We want to explore partner governments’ ambitions in this area
   – what do you want to manage and run fully yourself?
   – how do you structure new interfaces with international
• The local content / vocational training and education equation

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