Governance Challenges for Emerging Oil and Gas Producers

This paper presents key questions of concern to emerging oil and gas producers and lays out possible policy options. These producers face a particular set of governance challenges because they are often faced with capacity constraints and have limited information on their resource base. There is a wide variety of national circumstances that affect which policy and investment options are available to them, such as the size of the resource base, state administrative capabilities and oil and gas experience. The paper focuses on two sets of policy challenges. One relates to designing the licensing terms and sector legislation in a manner that attracts the most qualified investors under terms that are beneficial to the country in the long-term. The second is to set up capable institutions to oversee and monitor resource development. This challenge is compounded in a context of uncertainty about the size and lifespan of reserves and, therefore, also about future revenues.

The paper is available to download at the link below.

Guidelines for Good Governance in Emerging Oil and Gas Producers

Guidelines for Good Governance in Emerging Oil and Gas Producers 

Over the last few years significant new oil and natural gas reserves have been discovered in East and West Africa, as well as in the Eastern Mediterranean, the Caribbean and the Asia-Pacific region. These recent discoveries have very quickly added several new countries to the ranks of the world’s oil- and gas-producing nations, and these emerging oil and gas producers have shown a strong interest in receiving advice on governance. They are keen to avoid the mistakes that have led to accountability failures in other more established producers, and which have prevented some producers from reaping the full economic benefits of their resources. The purpose of these Guidelines is to help emerging producers and the groups that advise them to think critically about the policy options that are available, and that would be most effective during the first stages of exploration and development, or during a restructuring of the country’s oil and gas sector. The goal is not to produce a complete guide to governance of the petroleum sector, but rather to offer guidance on making effective decisions about the structure and rules of the sector in an imperfect context.

Guidelines for Good Governance in Emerging Oil and Gas Producers – French

Au cours des dernières années, d’importantes réserves de pétrole et de gaz naturel ont été découvertes en Afrique de l’Est et de l’Ouest, ainsi qu’à l’est du Bassin méditerranéen, dans les Caraïbes et dans la région Asie-Pacifique. Ces découvertes récentes ont vu très rapidement plusieurs pays rejoindre les rangs des nations productrices de pétrole et de gaz, et ces producteurs pétroliers et gaziers émergents ont manifesté un intérêt considérable à recevoir des conseils en matière de gouvernance. Ils ont particulièrement à cœur de comprendre les erreurs qui ont mené à un manque de responsabilisation chez d’autres producteurs plus expérimentés, et qui en ont empêché certains de récolter tous les avantages économiques de leurs ressources. L’objectif de ces Directives consiste à aider les producteurs émergents ainsi que les groupes qui les conseillent à porter un regard critique sur les options de politiques susceptibles de s’avérer plus efficaces dans le cadre des premières phases d’exploitation et de développement, ou en cas de restructuration du secteur pétrolier et gazier d’un pays. L’objectif n’est pas de produire un guide complet sur la gouvernance du secteur pétrolier, mais plutôt de proposer des conseils visant à une prise de décision efficace quant à la structure et aux règles appliquées dans un contexte imparfait.

Guidelines for Good Governance in Emerging Oil and Gas Producers – Portuguese

Durante os últimos anos, foram descobertas novas reservas de petróleo e gás natural na África Oriental e Ocidental, assim como na zona Ocidental do Mediterrâneo, Caraíbas e Ásia-Pacífico. Estas recentes descobertas adicionaram muito rapidamente vários novos países às listas mundiais de nações produtoras de petróleo e gás, sendo que estes produtores de petróleo e gás emergentes demonstraram forte interesse para receberem aconselhamento sobre gestão. Pretende evitar os erros que conduziram a falhas de responsabilidade por parte de outros produtores mais estabelecidos e que impediram que alguns produtores colhessem as vantagens económicas plenas dos seus recursos. O objetivo destas Diretrizes consiste em ajudar os produtores emergentes e os grupos que os aconselham a pensar de forma crítica acerca das opções de políticas mais eficazes durante as primeiras fases de exploração e desenvolvimento, ou durante a restruturação do setor nacional de petróleo e gás. O objetivo não consiste em produzir um guia completo sobre a gestão do setor petrolífero; em vez disso, pretende-se oferecer orientações sobre como tomar decisões eficazes acerca da estrutura e das regras do setor num contexto imperfeito.

Guidelines for Good Governance in Emerging Oil and Gas Producers – Swahili

Katika miaka michache iliyopita kiasi kikubwa cha akiba mpya ya mafuta na gesi asilia kimegunduliwa katika Afrika Mashariki na Magharibi, kama vile katika Bahari ya Mashariki, Caribbean na kanda ya Asia-Pacific. Uvumbuzi huu wa hivi karibuni uliongezea kwa haraka sana nchi kadhaa mpya kwa safu ya mataifa ya kuzalisha gesi na mafuta duniani, na hawa wazalishaji wanaoibuka wa mafuta na gesi wameonyesha nia imara katika kupokea ushauri juu ya Usimamiaji bora. Wamekuwa makini kuepuka makosa ambayo yamepelekea kushindwa katika uwajibikaji miongoni mwa wazalishaji walio imara zaidi, na ambayo yamezuia wazalishaji wengine kuvuna faida kamili za kiuchumi kutoka kwa rasilmali zao. Madhumuni ya mwongozo huu ni kuwasaidia wazalishaji wanaoibuka na makundi ambayo huwashauri kufikiri kwa umakinifu kuhusu chaguo za sera ambazo zitakuwa na ufanisi zaidi katika hatua za kwanza za utafutaji na ukuzaji, au wakati wa kuunda upya sekta ya kitaifa ya mafuta na gesi. Lengo sio kutoa mwongozo kamili wa Usimamiaji wa sekta ya petroli, lakini badala yake ni kutoa mwongozo wa kufanya maamuzi ya ufanisi kuhusu muundo na sheria za sekta katika muktadha wa mazingira yasiyo kamili.

New Petroleum Producers Urged to Heed ‘Local Context’ in Policy Making

Emerging petroleum producing countries have been urged to carefully consider country context when forming local content policies – or risk long-term drawbacks to the development of the sector. This was one of the conclusions from a local content workshop held in Beirut over 21-23rd May which included representatives from Namibia, Guyana, Ghana and Uganda. During the workshop, delegates discussed key issues surrounding the design and implementation of local content policy with particular emphasis on better understanding the experiences of developing countries.

A summary of the event is available at the link below.

A Local Content Decision Tree for Emerging Producers

Over the decade of escalating oil prices leading to 2015, classic corporate social responsibility (CSR) programmes fell out of favour. Instead, in return for access to new sources of oil, governments (and communities) in producing countries expect jobs, capacity-building, meaningful local content and the maximization of in-country value. But in a context of low oil prices, emerging oil and gas producers face a complex array of questions and issues in designing local content policy. Indeed, assessing local capabilities in relation to the typical demand for labour as well as the goods and services of the sector, is not a straightforward process. This paper proposes a template for designing local content policy that is adapted to the resource base, anticipated petroleum activities, capacity levels available in country and guided by national development aspirations. It seeks to present policy-makers of emerging producer countries with a structured framework for considering the multiple factors that come into play in the development of a local content policy. The simple roadmap reviews key considerations for assessing the expected petroleum sector demand and existing national capabilities. Policy considerations are presented in a decision tree format, to highlight the sequencing of geological steps typical of emerging producers when they move from exploration to discovery and on to production.

The paper is available at the link below.

Impact of Covid and the oil price crash on the local content policies

The risks associated with global supply chains are more prominent as a result of the crisis. But there are also risks associated with local suppliers. Will international oil companies’ own commercial and strategic interests drive them to invest more in developing the capabilities of local suppliers? How can governments reduce the vulnerability of their national suppliers to pandemic risks? This meeting in the Fostering Resilience in Crisis series was under Chatham House Rule. The full recording is available on the members’ platform.

Highlights of the meeting

Local Content Policy Implementation

The New Producers Group organized a workshop in Beirut on 21–23 May 2018 on local content policy design and implementation in collaboration with the Lebanese Petroleum Administration (LPA) and the Norwegian Oil for Development programme. The workshop was held just a few months after Lebanon signed its first petroleum licences. There is keen interest in Lebanon in the economic opportunities this emerging sector will create. Lebanon’s local content policy was naturally a focus of discussions, but the workshop was equally concerned with exploring a diverse range of international experiences.

A summary of the workshop may be downloaded at the link below.