Oil for Development – OfD Stanford March 13, 2009 Petter Nore \ofd Januar 2008.
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Transcript of Oil for Development – OfD Stanford March 13, 2009 Petter Nore \ofd Januar 2008.
Oil for Development – OfD
StanfordMarch 13, 2009
Petter Norewww.norad.no\ofd
Januar 2008
Overview
• Description ”Oil for Development”• Lessons learnt from the program• Issues for further discussion :
• Security of supply and OfD
Introduction• Norway with petroleum assistance from mid 1980s
• Vietnam\Mozambique\Angola• Oil for Development (OfD) founded in 2005. Aim to
strengthen environmental, governance and financial aspects of assistance
• Operates in 10 core countries plus regional programs and 15 ”light” assistance countries.
• Close links with ”Clean Energy for Development” (A new Norwegian program promoting clean energy solutions in cooperating countries)
OfD – main objectives
• Help cooperating countries to• Generate sustainable
eonomic growth • Promote the welfare of the
whole population • Be environmentally benign
• Combat the ”resource curse”
Core countries
How we work
• Along the integrated petroleum chain • Limited downstream activities
• Demand driven• No export of the ”Norwegian model”;
• Share experiences• Enter where ”we can make a difference” and
where there is a clear demand
OfD – who we cooperate with
• National governments• Civil Society (both Norwegian and international)• World Bank\ African Dev. Bank\ IMF\ UNDP\ EITI
• Norwegian ministries• Norwegian and international oil and service
companies; where appropriate
OfD and civil society
• Civil society (incl. media) plays a crucial role in preventing the resource curse
• OfD cooperates with Norwegian and international NGOs Aim is to build capacity among civil society
organisations in the South• 6 Norwegian NGOs and one international NGO have
received funding for 2008 (20 mill NOK)
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
Resource management
• 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
Environmental management• 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
Revenue management• Design, management and
control of tax regime for the extraction of oil and gas (Government take)
• Transparency and accountability around payments by oil companies (EITI)
• Planning and execution of government budgets
• Management of the financial savings (oil fund)
Transparency, anti-corruption
• Open bid and tendering processes• Transparency about licenses and contracts• Transparancy about payments by oil companies
• Extractive Industries Transparency Initiative (EITI)• IMFs Guide on Resource Revenue Transparency
Ofd activities, NOK million (1USD=5NOK)
Core activities, percent
Afghanistan; a case-study
• OfD engaged in a number of complicated states (Sudan\Iraq\Palestine\Afghanistan)
• Afghanistan a case study of what is feasable in such situations\what are the key uncertainties
Afghanistan • OfD has worked in Afghanistan for two years
• A combination of anti-poverty\development and foreign policy considerations
• Has helped to create a legal petroleum framework• A new Petroleum Law enacted• Draft regulations accepted by the government
Afghanistan (2)
• Has given advice to Afghan authorities how to organize first concession round for three blocks in Northern Afghanistan
• OfD is helping in capacity building for government• Data management and environmental issues
Afghanistan (3)
• Uncertainty 1: The market for gas• Gas for power\export; Who will guarantee the
demand?• Uncertainty 2: Which companies to bid in today’s
financial situation?• Uncertainty 3: The actual implementation of the legal
and regulatory system
Lessons learnt from OfD program
Ten Lessons Learnt1. Heavy demand for the program
-Rapid growth in environmental and financial advice-Less demand for governance\ anti corruption; but
increasing2. Presents options; not solutions
-Can’t force countries to implement policies3. Ensure independence of advice from commercial sector
-But part of Norwegian foreign policy agenda 4. Keep a Long run (5-10 year) perspective
Capacity building\Institution building takes time
Ten Lessons Learnt
5. Keep a short term capacity to react6. Civil society and transparency; necessary but not sufficient
factors for success7. Concentrate number of countries\programs
-25 countries and regional program far too many8. Anchoring in the South
-Too many experts from the North fly in\out-South\South cooperation\ capacity building must be strenghtened
9. Better coordination between donors a must
Ten Lessons Learnt
10. Norway; a relatively easy ”brand” to sell• Reasonably successful resource rich country• Non-imperialist past
• OfD part of Norwegian foreign policy• A balance between interests of state and companies• But; Norwegian society\politics\economy differs
fundamentally from situation in other commodity rich countries
Security of Supply and OfD
Security of Supply
There are suffient physical hydrocarbons in the world Problem is political: To produce and deliver resources. We have seen the end of cheap oil NOT of oil itself
Top of the international agenda Europe\Ntl gas imports from Russia US: Crude imports\energy independence
Security of SupplyHistory
Churchill WWI\Persia\English navy 1973 oil embargo Ukraine cutoffs of Russian gas Two Gulf Wars
Two aspects of Security of Supply with limited relevance for OfD
Physical cut-off of energy Temporary damage?
The producers need to sell their products in the end
Security of Demand Key concept in the gas business used especially
by Russia
Third factor; OfD can play a role in encouraging long run supplies
Foster increased willingness to invest by IOCs Higher risk means less investment. Risk premiums
in excess of 10% pluss do not encourage investments (e.g. Sudan)
IOCs don’t want weak petro states IOCs want stable legal and regulatory frameworks ;
political predictability and stability These are also the aims of OfD
World supply less than potential
”Resource nationalism” due to unbalanced historical record. Little spinoffs\limited transfer of technology\weak capacity building ?Bolivia, Iran, Russia?
Weak state capacity ?Iraq, Afghanistan? Consequences of the ”resource curse” (weak
bureaucracy\internal strife) holds back further expansion ?Nigeria, Sudan?
OfD can encourage”win\win” situations between resource states and Western technology
Summary Security of Supply
Link between ”resource curse” and security of supply OfD can encourage”win\win” situations between
resource states and Western technology OfD can foster increased willingness to invest by
IOCs