Cross-cutting thematic efforts

03.09.2010
Oil for Development approaches petroleum sector management through three integrated thematic areas: resource management, environmental management and revenue management. Below, we summarize the results of our work in 2009 on two important topics that cut through these three thematic areas: good governance and the climate agenda.    

OfD’s check-list for governance of the petroleum sector


Principles of good governance are a common thread in the assistance provided within resource management, revenue management and environmental management. Key aspects include clear divisions of roles, long term perspectives, transparent policies and processes, authorities with sufficient expertise to monitor and report on oil companies, as well as a capable civil society that, together with existing political structures such as parliaments, can hold the government accountable for its actions.

OfD has developed a check-list for assessing the state of petroleumrelated governance in a given country, inspired by work on the topic done by Chatham House, a London based think-tank.

The mapping process is meant to be conducted in cooperation between OfD and any government applying for broad petroleum related assistance. It can also be relevant where an existing cooperation programme is about to be completed, and there are plans for a new programme phase.

The check-list, or parts of it, may also be used as a mapping tool in relation to larger programme reviews, in order to provide OfD and our cooperation partners with input for potential programme revisions.

The check-list can be downloaded from www.norad.no

 


 

The climate agenda and Oil for Development

 

In 2008, OfD produced a number of recommendations on how climate measures and the reduction of greenhouse gas emissions can be integrated into Norwegian development aid under the aegis of the Oil for Development programme (see OfD’s website at www.norad.no).

The purpose is to enable national authorities in the cooperating countries to introduce some policy instruments and measures that will stimulate the most cost-effective solutions for reducing emissions of greenhouse gases. Potential climate measures could be implemented either as an integrated part of petroleum activities or as a purely environmental measure. It should be underlined though, that it is not within the scope of the OfD initiative to provide general expertise in climate change issues.

Measures that have a positive environmental impact can also often improve the utilization of resources, and can therefore be justified also from an economical perspective.

While most of OfD assistance is provided within a bilateral setting, Norway also supports the efforts of the Global Gas Flaring Reduction Partnership (GGFR ) (www.worldbank.org/ggfr).

As the international community is examining ways of reducing greenhouse gas emissions and moving toward low-carbon economies, natural gas, as the cleanest burning fossil fuel, is becoming an increasingly attractive component of the energy mix in countries around the world. Yet billions of dollars in natural gas are burned or flared at oil fields across the world. It is estimated that about 140 billion cubic meters of natural gas are being flared and vented annually. This is equivalent to more than the total gas consumption of Central and South America combined. Reducing carbon dioxide emissions from flaring would be equivalent to taking some 160 million cars off the road. Natural gas is released when oil is produced, but is less profitable, especially in countries that lack sufficient regulations, infrastructure and markets for it. Solving the challenge of bringing this wasted gas to productive use is the mission of a unique partnership led by the World Bank Group.

Through the Global Gas Flaring reduction partnership major oil companies (including Statoil) and governments are now working together to minimize this waste by jointly overcoming the barriers that inhibit more gas utilization, as well as sharing global best practices and implementing country specific programs. Norway was one of the founders of the initiative in 2004 and has supported the programme since, with about USD 130 000 per year. However, the programme has a lot of challenges, as a variety of factors make it uneconomic or physically difficult for some resource holders to reduce gas flaring.

In 2009, OfD supported the GGFR’s efforts to evolve a methodology that would allow the Clean Development Mechanism (CDM) to be applied to the challenges of flaring. The CDM is an arrangement under the Kyoto Protocol allowing industrialised countries with a greenhouse gas reduction commitment to invest in ventures that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries.