Improving extractive industries governance:Updates from Oil for Developmentand the EITI International Secretariat<br />5 O...
Oil for Development’s work on a framework for assessing governance in the petroleum sectorPetter Nore, Director of Oil for...
Oil for Development’s work on a check-list for petroleum-related governance<br />By Petter Nore, Director<br />
Side/Page<br />5<br />06.10.2009<br />Thedebateongoodgovernance<br /><ul><li>OfD is working towards improving petroleum se...
Civil society and media often have a narrow definition which mainly emphasizes transparency
OfD’s assistance reflects a broader perception of petroleum-related governance
Transparency is important, but so are other dimensions such as “enablement to carry out the role assigned”</li></li></ul><...
Sustainable development and risk management as overarching goals for the sector
Enablement to carry out the role assigned
Accountability of decision-making and performance
Transparency and accuracy of information</li></li></ul><li>Side/Page<br />7<br />06.10.2009<br />
Side/Page<br />8<br />06.10.2009<br />Howthegovernancecheck-listwill be used<br /><ul><li>To assess petroleum related gove...
As a tool for providing input for revisions as part of larger program reviews
As a pool of indicators that can be further developed and used for assessing results</li></li></ul><li>Side/Page<br />9<br...
EITI – on its way to become a global standard?”<br />Jonas Moberg, Head of the EITI Secretariat<br />5 October 2009<br />
December 1999<br />
1997<br />
Petrol is the best <br />vector of corruption<br />
Africa&apos;s Oil DreamsTHURSDAY, MAY. 31, 2007 By ALEX PERRYPetrol sellers in Lagos, Nigeria. <br />www.eitransparency.or...
Governance failure<br />Pressure/attention<br />Investigative reporting<br />Code/standard<br />Implementation<br />Facili...
There is hope <br />Oct 9th 2008<br />From The Economist print edition<br />Another promising new mechanism is the Extract...
TRANSPARENCY<br />
ACCOUNTABILITY<br />
Companies Disclose Payments<br />Government Discloses Receipt of Payments<br />Government Spending<br />Independent Verifi...
EITI in 2009<br /><ul><li>30 Implementing Countries across Africa, Asia, Latin America, Middle East and Central Asia
42 major international oil, gas, and mining companies
80 institutional investors with collective assets of over $16 trillion
100s of civil society groups and networks – e.g. Publish What You Pay, Open Society/Revenue Watch Institute, Transparency ...
Supporting Countries, including Australia, Canada, France, Germany, the Netherlands, Norway, the UK and the US</li></li></...
EITI Other Publications<br />...and video.<br />
Ellen Johnson SirleafPresident of Liberia<br />“The Liberia EITI is one of the institutional pillars of integrity anchorin...
The EITI has been politically endorsed by many Governments and in many forums<br />
The AU, EU, UN, G8, G20,..<br />
Lessons/challenges<br /><ul><li>It can be a platform for long-term reform
From transparency to accountability
To fight corruption – maybe
To build trust and confidence - definetely
It takes time, although it doesnt have to</li></li></ul><li>Lessons/challenges<br /><ul><li> The EITI is a start, only
 Deepening, validation and beyond
 Widening, Jakarta and beyond</li></ul>www.eiti.org<br />
More at:<br />...and video.<br />www.eiti.org<br />Jonas Moberg, Head of the EITI Secretariat<br />Jmoberg@eiti.org<br />
Update about Norwegian EITI implementation<br />Gro Anundskås, Assistant Director General, Norwegian Ministry of Petroleum...
 Update about Norwegian EITI implementation5.october 2009<br />Gro Anundskaas, <br />Assistant Director General, Norwegian...
EITI - Norwegian implementation<br />First meeting with an interim MSG 22.10.08<br />Became a Candidate Country 15. Februa...
EITI – Norwegian implementation<br />Interim MSG; <br /><ul><li>OLF, The Norwegian Oil Industry Association
The Norwegian Confederation of Trade Unions (LO)
Ministry of Petroleum and Energy (lead)
Ministry of Finance
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EITI briefing held in Oslo 5 Oct 2009

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  • OfD provides assistance within three main thematic areasPrinciples of good governance are embedded throughout this assistance
  • Thesefiveprinciplesare part of acheck-list for assessing petroleum relatedgovernancedeveloped by OfDThecheck-listdrawsheavilyuponworkdone by ChathamHouseonthetopic
  • Thecheck-list has 5 principles, 33 indicators, and a range of more measurable specific indicators.
  • EITI briefing held in Oslo 5 Oct 2009

    1. 1. Improving extractive industries governance:Updates from Oil for Developmentand the EITI International Secretariat<br />5 October 2009<br />
    2. 2. Oil for Development’s work on a framework for assessing governance in the petroleum sectorPetter Nore, Director of Oil for Development<br />5 October 2009<br />
    3. 3. Oil for Development’s work on a check-list for petroleum-related governance<br />By Petter Nore, Director<br />
    4. 4.
    5. 5. Side/Page<br />5<br />06.10.2009<br />Thedebateongoodgovernance<br /><ul><li>OfD is working towards improving petroleum sector governance in our cooperating countries
    6. 6. Civil society and media often have a narrow definition which mainly emphasizes transparency
    7. 7. OfD’s assistance reflects a broader perception of petroleum-related governance
    8. 8. Transparency is important, but so are other dimensions such as “enablement to carry out the role assigned”</li></li></ul><li>Side/Page<br />6<br />06.10.2009<br />OfD’sfiveprinciples of goodgovernance:<br /><ul><li>Clarity of goals, roles and responsibilities
    9. 9. Sustainable development and risk management as overarching goals for the sector
    10. 10. Enablement to carry out the role assigned
    11. 11. Accountability of decision-making and performance
    12. 12. Transparency and accuracy of information</li></li></ul><li>Side/Page<br />7<br />06.10.2009<br />
    13. 13. Side/Page<br />8<br />06.10.2009<br />Howthegovernancecheck-listwill be used<br /><ul><li>To assess petroleum related governance needs in countries applying for broad based petroleum assistance
    14. 14. As a tool for providing input for revisions as part of larger program reviews
    15. 15. As a pool of indicators that can be further developed and used for assessing results</li></li></ul><li>Side/Page<br />9<br />06.10.2009<br />Youcandownloadthechecklist from www.norad.no<br />
    16. 16. EITI – on its way to become a global standard?”<br />Jonas Moberg, Head of the EITI Secretariat<br />5 October 2009<br />
    17. 17. December 1999<br />
    18. 18. 1997<br />
    19. 19. Petrol is the best <br />vector of corruption<br />
    20. 20. Africa&apos;s Oil DreamsTHURSDAY, MAY. 31, 2007 By ALEX PERRYPetrol sellers in Lagos, Nigeria. <br />www.eitransparency.org<br />
    21. 21. Governance failure<br />Pressure/attention<br />Investigative reporting<br />Code/standard<br />Implementation<br />Facilitation <br />Quality assurance<br />Business case for action<br />Negotiation<br />www.eiti.org<br />
    22. 22. There is hope <br />Oct 9th 2008<br />From The Economist print edition<br />Another promising new mechanism is the Extractive Industries Transparency Initiative, a voluntary code that a score of African countries have adopted, with governments and foreign firms accounting openly for their dealings...&quot;<br />
    23. 23. TRANSPARENCY<br />
    24. 24. ACCOUNTABILITY<br />
    25. 25. Companies Disclose Payments<br />Government Discloses Receipt of Payments<br />Government Spending<br />Independent Verification of Tax & Royalty Payments<br />Award of licenses<br />&<br />contracts<br />Regulation<br />&<br />monitoring of operations<br />Revenue<br />Distribution <br />& Management<br />Implementation of Sustainable Development olicies<br />How the EITI works<br />Oversight by aMulti-Stakeholder Group<br />The EITI provides a Forum for dialogue and a Platform for broader reforms<br />
    26. 26. EITI in 2009<br /><ul><li>30 Implementing Countries across Africa, Asia, Latin America, Middle East and Central Asia
    27. 27. 42 major international oil, gas, and mining companies
    28. 28. 80 institutional investors with collective assets of over $16 trillion
    29. 29. 100s of civil society groups and networks – e.g. Publish What You Pay, Open Society/Revenue Watch Institute, Transparency International
    30. 30. Supporting Countries, including Australia, Canada, France, Germany, the Netherlands, Norway, the UK and the US</li></li></ul><li>Implementing Countries<br />
    31. 31.
    32. 32.
    33. 33. EITI Other Publications<br />...and video.<br />
    34. 34. Ellen Johnson SirleafPresident of Liberia<br />“The Liberia EITI is one of the institutional pillars of integrity anchoring and sustaining the reform agenda of Liberia.”<br />“By promoting better management and use of public resources and discouraging corruption, LEITI … is critical to poverty reduction and social development in Liberia.”<br />July 2009, when signing the new LEITI law<br />
    35. 35. The EITI has been politically endorsed by many Governments and in many forums<br />
    36. 36. The AU, EU, UN, G8, G20,..<br />
    37. 37. Lessons/challenges<br /><ul><li>It can be a platform for long-term reform
    38. 38. From transparency to accountability
    39. 39. To fight corruption – maybe
    40. 40. To build trust and confidence - definetely
    41. 41. It takes time, although it doesnt have to</li></li></ul><li>Lessons/challenges<br /><ul><li> The EITI is a start, only
    42. 42. Deepening, validation and beyond
    43. 43. Widening, Jakarta and beyond</li></ul>www.eiti.org<br />
    44. 44. More at:<br />...and video.<br />www.eiti.org<br />Jonas Moberg, Head of the EITI Secretariat<br />Jmoberg@eiti.org<br />
    45. 45. Update about Norwegian EITI implementation<br />Gro Anundskås, Assistant Director General, Norwegian Ministry of Petroleum and Energy<br />5 October 2009<br />
    46. 46. Update about Norwegian EITI implementation5.october 2009<br />Gro Anundskaas, <br />Assistant Director General, Norwegian Ministry of Petroleum and Energy<br />
    47. 47. EITI - Norwegian implementation<br />First meeting with an interim MSG 22.10.08<br />Became a Candidate Country 15. February 2009<br />Regulation implemented 26.06.09 <br />MSG appointed 26.06.09<br />Administrator/reconcillator – bidding process. Contract signed with DeLoitte 17.juli 2009. Draft report received today.<br />Draft report will be sent to MSG soon and discussed end October<br />Next step; bidding process to choose Validator <br />
    48. 48. EITI – Norwegian implementation<br />Interim MSG; <br /><ul><li>OLF, The Norwegian Oil Industry Association
    49. 49. The Norwegian Confederation of Trade Unions (LO)
    50. 50. Ministry of Petroleum and Energy (lead)
    51. 51. Ministry of Finance
    52. 52. Independent lawyer
    53. 53. Independent economist
    54. 54. Center for corporate responsibility(Norwegian School of Management)
    55. 55. Det Norske Veritas (DNV) (Corporate Responsibility Division)
    56. 56. Transparency International (TI)
    57. 57. Publish What You Pay (PWYP)
    58. 58. Willy Olsen</li></li></ul><li>MSG<br />Industry:<br />Oluf Bjørndal, OLF, The Norwegian Oil Industry Association <br />Frode Bøhm (deputy))<br />Håkon Nordang, StatoilHydro ASA, <br />Siv Helen Rygh Torstensen, StatoilHydro ASA, (deputy)<br />Aksel Luhr, ENI Norge AS<br />Karl B. Myhre, Norske Shell (deputy)<br />Jon Jerre, Det Norske Veritas<br />Goverment<br />Lars Erik Aamot, Ministry of Petroleum and Energy (internationalcoordinator)<br />Gro Anundskaas (deputy)<br />Beate Bentzen, Ministryof Finance<br />Stig Sollund (deputy)<br />Willy Olsen, <br />Civil Society<br />Gro Skaren-Fystro, Transparency International<br />Mona Thowsen, Publish What you Pay<br />Per Bondevik, Kirkens Nødhjelp (deputy)<br />Ola Mestad, UiO, <br />Atle Midttun, BI, Senter for samfunnsansvar (deputy)<br />Amalie Tofte, Industri Energi<br />Liv Undheim, (deputy)<br />Fanny Voldnes, (LO) <br />Camilla Houeland (deputy) <br />
    59. 59. EITI- Norwegian implementation<br />Focus on the petroleum sector<br />Disaggregated data/company level<br />Actual payments – (ref State Account tab 3.2); <br /> - Ordinary Tax<br /> - Special Tax<br /> - Area Fee<br /> - Environmental taxes (CO2 and NOX) <br /> - Net cash flow SDFI<br />
    60. 60. Corruption in the petroleum sector. Can the damage to development be reduced?<br />Farouk al-Kasim, President of Petroteam AS<br />5 October 2009<br />
    61. 61. Petroteam a.s<br /> REFLECTIONS ON GLOBAL EFFORTS TO ENSURE THAT OIL LEADS TO DEVELOPMENT<br />By <br />Farouk Al-Kasim<br />
    62. 62. Petroteam a.s<br />ENERGY CHALLENES IN THE 21st CENTURY<br />Growth has been sustained by easy access to energy.<br />Negative growth means a troubled world.<br />Oil will continue to be important. <br />Before long, oil supplies will fall short of demand.<br />Development of alternative sources must be accelerated.<br />Environmental protection is a serious global challenge. <br />The remaining energy resources will have a higher cost.<br />In any case: Global Good Governance is a pre-requisite.<br />Access to energy is the No.1 geopolitical issue.<br />Will the oil business be strictly commercial? Or will it be more geopolitical?<br />
    63. 63. Petroteam a.s<br />PETROLEUM AND THE DEVELOPING COUNTRIES <br />The gap between the “haves” and “have-nots” is widening.<br />Producing countries will be pressurized to accelerate exploration and development to meet rising demands.<br />For most developing countries petroleum is the LAST HOPE for eliminating poverty and securing a better future. <br />But development hinges upon the country’s ability to convert petroleum into lasting benefits to its citizens.<br />This means defeating corruption and the oil curse, i.e.<br />GOOD GOVERNANCE<br />
    64. 64. Petroteam a.s<br /> GOOD GOVERNANCE STANDS ON 3 LEGS<br />.<br />GOOD<br />GOVERNANCE<br />PUBLIC <br />MONITORING<br />LEGISLATION<br />INSTITUTIONS<br />
    65. 65. Petroteam a.s<br /> PRE-REQUISITES FOR GOOD GOVERNANCE IN THE PETROLEUM SECTOR: LEGISLATION<br />Aid programmes must fortify the pre-requisites for GOOD GOVERNANCE in the recipient countries. This may take time.<br />Efficient system of government. <br />Fair and reliable system of justice. <br />Consensus (at least broad agreement) on the fundamental aspects of a petroleum policy.<br />Adequate and timely legislation.<br />A Petroleum and Fiscal Laws.<br />Regulations, guidelines, instructions etc.<br />WHAT CAN AID PROGRAMMES<br />ACHIEVE IN THESE FIELDS??<br />
    66. 66. Petroteam a.s<br /> PRE-REQUISITES FOR GOOD GOVERNANCE IN THE PETROLEUM SECTOR: INSTITUTIONS<br />Clear contractual terms that are subordinate to the legislation. Model Contract(s).<br />Clearly documented processes for decision- making.<br />Government institutions with clearly defined delegation of powers and responsibilities.<br />Accountability throughout the government’s own administration. <br />Effective privateinstitutionswith social responsibility and full accountability.<br />
    67. 67. Petroteam a.s<br />PRE-REQUISITES FOR GOOD GOVERNANCE IN THE PETROLEUM SECTOR:PUBLIC MONITORING<br />Effective public monitoring and supervision of petroleum activities. <br />Transparency.<br />Freedom of expression.<br />Active and responsible NGO organisations.<br />Active academia with research capabilities.<br />Active press and media.<br />Effective and timely flow of relevant data.<br />
    68. 68. Petroteam a.s<br />THE NECESSARY BALANCE OF INTERESTS<br />COMPANY FOCUSGOVERNMENT FOCUS<br />HIGH EARLY PRODUCTION<br />HIGH RECOVERY<br />PROJECT <br />PROFITABILITY<br />REVENUE. COMPETENCE.<br />EMPLOYMENT. WELFARE<br />PROFIT TO <br />SHAREHOLDERS<br />LONG TERM BENEFIT<br /> TO THE PEOPLE<br />OPENNESS<br />FAIRNESS<br />PROFESSIONALISM<br />
    69. 69. Petroteam a.s<br />OPTIMISING RESERVES<br />HOST-COUNTRY PREFERENCE<br /><ul><li>FOCUS ON LONG TERM BENEFITS TO SOCIETY.
    70. 70. LOW DISCOUNT RATE ENCOURAGES HIGHER RECOVERY</li></ul>OIL COMPANIES PREFERENCE<br /><ul><li>HIGH DISCOUNT RATE TENDS TO MAXIMISE UPFRONT PRODUCTION.
    71. 71. THIS LEADS IN MOST CASES TO LOWER RECOVERY.</li></li></ul><li>Petroteam a.s<br />CORRUPTION IN THE VARIOUS PHASES OF OPERATIONS<br />PRE-<br />LICENSING<br />EXPLORATION<br />DEVELOPMENT<br />PRODUCTION<br />TAIL END<br />DECOM<br />MISSIONING<br />Gets rights <br />easily and <br />cheaply<br />Exaggerated <br />cost<br />Reduce Government’s <br />Share of Profit<br />Early <br />abandonment<br />Lower <br />investment<br />Minimise <br />cost<br />.<br />MOST VULNERABLE<br />PROJECT CASH FLOW<br />INCOME<br />+VE<br /> GOVERNMENT<br /> REVENUE<br />PDO and<br />Development<br />LICENSING<br />Time<br />COSTS<br />- VE<br />IOC’s GAIN<br /> FROM <br />CORRUPTION<br />
    72. 72. Petroteam a.s<br />CONCLUSION<br />OIL FOR DEVELOPMENT <br />IS DEPENDENT UPON <br />PROMOTING GOOD GOVERNANCE<br />
    73. 73. Petroteam a.s<br />THANK YOU <br />FOR YOUR ATTENTION<br />Petroteam a.s<br />
    74. 74. Comments by<br />Willy Olsen, Special Adviser INTSOK<br />5 October 2009<br />
    75. 75. Discussion<br />5 October 2009<br />
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