REPORT ON GOOD GOVERNANCE OF THE NATIONAL PETROLEUM

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SECTOR

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Royal Institute of International Affairs

2007

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TABLE OF CONTENTS

INTRODUCTION 5

About the Good Governance of the National Petroleum Sector project . 5

Background 5

The process 6

Structure of this Report 7

PART ONE: WHAT ARE THE REQUIREMENTS OF GOOD GOVERNANCE IN THE NATIONAL

PETROLEUM SECTOR? 8

NATIONAL CONTEXT 8

THE PRINCIPLES OF GOOD GOVERNANCE. 9

1. Clarity of goals, roles and responsibility 9

2. Sustainable development for the benefit of future generations 11

3. Enablement to carry out the role assigned. 12

4. Accountability of decision-making & performance 13

5. Transparency and accuracy of information 14

KEY GOVERNANCE FUNCTIONS 15

1. Policy-making . 15

2. Strategy-making 15

3. Operational decision-making 15

4. Monitoring and regulation. 15

PART TWO: SETTING AND ACHIEVING OBJECTIVES FOR THE PETROLEUM SECTOR 17

1. DEFINING AUTHORITY AND RESPONSIBILITY FOR SETTING AND MEETING OBJECTIVES

19

Benchmarks for clarity of goals, roles and responsibilities 20

1.1 Relationship between government and NOC. 20

1.2 Executive government and wider society. 24

1.3 Degree of economy’s dependence on oil. 26

2. CHOOSING OBJECTIVES 29

Benchmarks for sustainable development . 29

The national mission . 29

2.1 NOC objectives: 31

2.2 Objectives for private oil companies 40

3. MEETING OBJECTIVES. 42

Benchmarks for enablement 42

3.1 Exclusively private sector . 43

3.2 Use of public sector . 44

3.3 Mixed use of public and private sectors. 48

4. ENSURING OBJECTIVES ARE BEING MET. 50

Benchmarks for accountability . 50

5. ENABLING GOOD DECISIONS 56

Benchmarks for transparency 56

Transparency in licensing, leasing, and exploration and production contracts including Production

Sharing Contracts (PSAs) . 56

Local content policy (and similar development policies) . 58

APPENDIX 1 - Relevant National Context Categories . 60

APPENDIX 2 – Composition of Governing Bodies in Selected Countries . 61

The Composition of the NOC Board of Directors in Selected Countries. 61

The Composition of the Supreme Petroleum Council (or equivalent) in Selected Countries.. 62