Oil for Development – OfD

www.norad.no/ofdWorkshop; AmsterdamThomas Eid/03.12.08

Januar 2008

Past & Present Norway has given petroleum assistance from the mid

1980s (Vietnam\Mozambique) A special program (Oil for Development) started in

2005. Strengthened environmental and financial aspects of the assistance

Budget : USD 35 mill. Operates in 25 countries plus regional programs.

OfD – our foundation

OfD is built around three integrated themes:

1. Resource management2. Environmental protection3. Revenue management

Principles of good governance, transparency and accountability are a fundamental part of the three themes

OfD – main objective

• Help cooperating countries to manage their petroleum resources in a way that generates sustainable economic growth, promotes the welfare of the whole population and is environmentally benign

• Combats the ”resource curse”

Core countries

Flaring and Resource Management

Flaring of associated gas is a massive resource waste Flaring in Africa 40 bcm – enough to generate 250

TWh/year of electricity Twice the electricity consumed in Sub Sahara Africa

(excluding South Africa) Bringing flared gas to markets diversifies energy supplies

and reduces energy import dependence Better to re-inject (and save for future generations) than

to flare gas

Flaring and Environmental Protection Flaring a major source of greenhouse gas emissions

Some 400 MT CO2e emitted annually from gas flaring 2 times EUs Kyoto Compliance Gap per annum

So far no sign of downward trend it flaring, but a mixed picture Some countries are successful in flare reduction efforts But new flares emerge in regions with poor market outlets

Climate change concerns require swift action to reduce flaring Companies must become more pro-active Governments must impose adequate and effective policies The Kyoto Mechanisms (CDM;JI) must play a role

Flare reduction projects grossly underrepresented in CDM and JI

Flaring and Revenue Management Flare elimination – revenue potential for the state

Corporate taxes and royalty from gas sales

State-owned oil companies Revenues from carbon

credits

Flaring and Local Benefits Flaring elimination has positive effects for local communities

Local air pollution Health impacts Less pressure on natural environment

End to continuous light and noise from flares

Flare elimination can provide access to modern and clean fuels LPG can be processed from previously flared gas and be

distributed locally Offers an attractive alternative to unsustainable use of

tradition fuels traditional fuels often result in land degradation and

serious health problems

OfD – WHO are stakeholders?

• National governments• Norwegian ministries; The Norwegian Petroleum

Directorate, Petrad, the Norwegian Pollution Control Authority, consultancies and research institutions

• The Extractive Industries Transparency Initiative (EITI)

• Norwegian and international oil and service companies; where appropriate

• NGOs• World Bank, African Dev. Bank, IMF, UNDP

HOW do we work? - Resource mgt.

• Strengthening of local institutions (ministries & directorates)

• Development/assessment of petroleum legal frameworks

• Framework for exploration and production of petroleum

• Resource databases • Strategies for transparent licensing and tendering

processes• Policies to stimulate technology development and the

involvement of local industry

HOW do we work? - Environmental mgt• Build environmental management capacity within the

sector• Basic legislation, rules and regulations covering

environmental dimensions of the petroleum sector• Minimise discharges from activities• Environmental impact assessments • Manage gas flaring and other national/global climate

challenges that are directly related to the petroleum industry

OfD Gas flaring

÷ Economy

÷ Environment

÷ Sustainability