Highlights 2009

11.09.2010

In 2009 Oil for Development continued to be a high priority programme in Norwegian development cooperation. Budget spending was marginally higher than in 2008, and totalled NOK 207 million.

We continued to concentrate our main efforts on a limited number of countries and the largest part of OfD funding went to our nine countries of core cooperation. Their budget share increased from 42.5 percent in 2008 to 45.9 percent in 2009. At the same time, cooperation with some other countries was scaled down, and cooperation with South Africa, Kenya and Zambia was completed or is about to be phased out. Regional cooperation continued and the regional cooperation in West Africa was formally inaugurated in 2009.

In this report we present key achievements for each of the various cooperation countries. Some of these results can be directly linked to OfD’s programme activities, whereas OfD may have made only a relatively minor contribution towards others. In addition some effects are relatively easy to observe or measure, whereas others can only be identified as potential trends in a certain direction. Still, we believe that the report shows that OfD is making a real difference in some of our cooperating countries.

Oil for Development assistance has been important for the ability of a country like Ghana to improve petroleum resource management on its most important oil and gas field, and to better safeguard that the petroleum activities are conducted in an environmentally sustainable way. Competence building on Increased Oil Recovery (IOR), and negotiation training have helped to increase both the resource extraction potential and the revenue generation potential of a more mature oil producing country like Iraq.

Furthermore, Oil for Development has contributed to improving the legislative frameworks in several of our cooperating countries, including Afghanistan, Cambodia and Madagascar, although it will take time before we can assess to what extent the laws have been implemented. OfD’s strong focus on providing legal assistance reflects our belief that clear divisions of roles and firm legal mandates are prerequisites for good governance of the petroleum sector and for attracting serious investors.

A lot of our capacity building took place through seminars and more tailored workshops with a national or regional scope. We believe that some of these events have significantly increased awareness as well as the level of debate among government institutions and civil society. The oil production accounting workshop in Nigeria and the NOC workshop in Timor-Leste are particularly valid examples. Timor-Leste also addressed other petroleum sector governance issues with a focus on including civil society and by the end of 2009 had nearly fulfilled all criteria for becoming Extractive Industries Transparency Initiative (EITI ) compliant. It should be noted that OfD assistance only made a relatively small contribution to this process, which was very much nationally driven.

Petroleum related environmental issues were addressed at different levels and from different angles. A thorough environmental needs assessment was conducted for the petroleum sector in Ghana, and will provide the basis for future capacity building in this area. In Uganda, the first part of the Albertine Graben sensitivity atlas will provide an important input for the planned strategic environmental assessment (SEA) related to the petroleum sector. In Vietnam, Petrovietnam conducted a baseline study which found that steering documentation and guidelines for health, safety and environment had to a large extent been developed, and that implementation of the steering documentation had been 30 percent completed by end 2009.

In Uganda and Nigeria OfD cooperation programmes were completed in 2009. In Uganda a new agreement for a five-year programme was signed in July. In Nigeria, an evaluation of lessons learned will be conducted in 2010 in order to determine in what form OfD’s involvement in the country should continue.

The political situation in some of the cooperating countries has led to no or limited progress in the OfD programmes. In Madagascar, one of the core countries, cooperation was frozen in March 2009 and has not yet been resumed. In Mauritania cooperation was stopped in 2008 after the military coup, but was resumed in December 2009 after elections had been held. On the Palestinian Territory the programme continues, but no activities were carried out in 2009 due to the conflict with Israel.

In 2009, Oil for Development received a number of new requests for Norwegian assistance in petroleum sector management. There was not enough spare capacity within the programme to increase the number of bilateral cooperation countries, but we have done our best to meet the increased demand by stepping up our regional efforts, particularly in West Africa. We also continued to cooperate closely with the World Bank and the IMF, as well as with other multilateral institutions such as the Asian Development Bank and the UNDP.

The assistance provided to government institutions was supplemented by support of local civil society organizations through Norwegian and international non-governmental organizations. In 2009, seven Norwegian organizations, in addition to the international organizations Revenue Watch Institute and Global Witness, were granted funds for this purpose.

Thematically, Oil for Development continued the three-pronged approach to sound petroleum sector governance: resource management, environmental management and revenue management. These three areas constitute a thematic whole, and governance principles such as sustainability, transparency and accountability are cross-cutting. To make our perspective more operational, we developed an indicator based check-list for governance of the petroleum sector. This list will be an important tool for Oil for Development in planning new programmes and revising the existing ones.

The overarching goal of all Norwegian development assistance is to reduce poverty. Through Oil for Development, we aim to use Norway’s specialist expertise to assist developing countries in managing their petroleum resources in a way that generates economic growth and promotes the welfare of the whole population in an environmentally sustainable way. The direct assistance of Oil for Development covers, however, only a limited, albeit crucial, part of the results chain that ends with poverty reduction. There are a number of conditions beyond Oil for Development’s immediate control that need to be met for this ultimate goal to be achieved. It is therefore important that OfD’s programmes are complemented by broader national reform efforts and donor assistance in the cooperating countries, for instance in areas such as budgetary monitoring and execution, health and education.

Measuring and communicating the results of our efforts within this context is challenging. We have improved our tools for doing so in 2009 by seeking to enhance our programme specific goals and indicators.

Read more about Oil for Development on www.norad.no