Petroleum sector governance. Institutional cooperation Norway Mozambique

1. NOT AN OFFICIAL UNCTAD RECORD Petroleum sector governance.Institutional cooperation Norway Mozambique 9th Africa Oil & Gas, Trade & Finance Conference Maputo 03.06.2005 Øystein Kristiansen, Norwegian Petroleum Directorate

2. Petroleum sector governance - Institutional cooperation Norway Mozambique Outline • Norwegian Policy for development assistance • Governance assistance for the Petroleum sector; Objectives • Institutional cooperation with Mozambique and other countries • Summary

3. Norwegian Policy for development assistance

4. Norwegian Policy for development assistance • Focus on poverty alleviation • Focus on Africa • Among the priority areas: • Good Governance • Sustainable development • Industry development and trade • Training and education

5. Recent change in policy Poverty alleviation Macro-economy/ Good Governance Sustainable development Energy Industrial development and trade • More focus on energy

6. Energy: Norway has relevant experience; particularly regarding Petroleum and Hydro Petroleum Sector management – legal framework • Resource management • Health, Environment and Safety • Transparency • Local competence – industry development – R&D • Petroleum Fund • Strong Government, Industry, labour cooperation

7. Governance assistance For the Petroleum sector Objectives

8. Objectives for petroleum sector assistance. Contribute to: • The host country getting a fair share of the resource rent (Paradox of Plenty) • Efficient exploitation of depletable natural resources • Low negative impacts on society (high HS&E standards) – High local content • An attractive business environment based on a level playing field • Good governance and transparency ⇒ Improved prosperity and growth

9. Different objectives at industry and society level – alignment needed Industry focus Society - focus Short-term profits Business Unit / company / licence Internal effects High NPV-requirements (materiality / limited capacity) Private information Post-tax Long-term resource management Focus across licences External effects Positive NPV / marginal projects Sharing information Pre-tax

10. Twinning – Used by MFA/NORAD. A tool for improved governance • Twinning – establish a close relationship between two institutions with similar governance functions • Work shops • On the job training • Personal contacts - e-mail / phone • Provide external consultancy support • Finance formal training • Equipment / Software support • Contact with other institutions as required

11. Institutional cooperation with Mozambique and other countries

12. INP and ENH in Mozambique MINPET in Angola DPR in Nigeria DME in South Africa TPDC in Tanzania INE in Nicaragua EMD in Timor Leste CCOP in South East Asia PetroVietnam HCU in Bangladesh MoF in Sri Lanka Current NPD /PSA cooperation partners

13. NPD – ENH – INP (DNCH) cooperation started in the late 70s • Technical assistance to ENH in mapping the resource potential • Assistance to DNCH from1996 – the current programme ends this year – may be extended • Parallel assistance maintained for ENH in late 90s regarding resource assessment and data management • Some support from Norway to ENH last five years in the conversion process to a commercial company

14. Mozambique – The Petroleum Sector • Legal Framework • Petroleum Law • Petroleum Regulations • A new model Concession Contract • A Gas Trade Treaty with South Africa • Institutions with clear roles • INP the regulator and manager of the acreage • ENH with CNH/CNG: Commercial companies • Modern Petroleum Data Repository • Capacity to perform own resource assessment • Supply data to the industry

15. Mozambique – The Petroleum Sector • Efficient handling of the PDO for the Pande / Temane Gas project, establishing a new regional market for natural gas and a basis for local gas market development • A much more attractive country for further licensing and exploration • Supervisory capacity • HS&E auditing • Metering auditing

16. South Africa – Petroleum Sector Policy and Capacity Building Project For upstream petroleum, assistance regarding: • Gas Policy Development • Input to upstream legislation (Minerals Development Act) • Gas Pipeline Act • Analysis of institutional organisation issues • Upstream regulator? National Oil Company? Etc. • HE&S • General Training • Training of Inspectors

17. Other Priority Areas for support • Border issues (sovereignty) • Joint Development Zones • UNLOS – Continental Shelf Extension into the deep sea • Unitization of resources • Health, safety and Environment • Safety / Supervisory System • Reduced gas flaring (WBGFRI - CDM) • Regional Harmonisation • Contingency Planning

18. Other priority areas for support 2 • Use of local gods and services • Petroleum Fund • Extractive Industries Transparency Initiative • Training and education • Petrad 8 week courses and short seminars • Formal training support – master programmes • Vocational training – train the trainers – RKK • Good Governance

19. Regional and cross sector cooperation is important • The petroleum sector has many regional aspects. • The petroleum sector has also important interactions with other sectors • Finance • Environment • Fisheries • Trade and industries • Regional networking and cross sector cooperation is important for a sustainable development

20. Summary

21. Summary • The ”Paradox of Plenty” is possible to break through good governance of the petroleum sector! • A well designed legal and contractual framework fosters transparency and creates a level playing field for the industry. • It takes time and commitment to develop capacity and competence to undertake all roles of governance. Other institutions have experience. Focus on the most urgent issues! • An active dialogue with industry, and other stakeholders is important for good solutions.

22. Thanks for your attention! For further information: www.npd.no