Oil for Development – OfD www.norad.no/ofd Workshop; Amsterdam Thomas Eid/03.12.08 Januar 2008

Past & Present Norway has given petroleum assistance from the mid 1980s (VietnamMozambique) 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.

Norway has given petroleum assistance from the mid 1980s (VietnamMozambique)

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: Resource management Environmental protection Revenue management Principles of good governance, transparency and accountability are a fundamental part of the three themes

OfD is built around three integrated themes:

Resource management

Environmental protection

Revenue management

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”

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 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 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

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

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

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

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

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

÷ Economy

÷ Environment

÷ Sustainability