Oil, Gas, and Mining

Page 149

their oil governance regimes, a Stanford University research team noted that efforts to establish independent regulatory agencies in Algeria and Nigeria had not only failed but had not even helped to promote the idea that regulatory reform could bring valuable benefits (Thurber, Hults, and Heller 2011). If the wider environment is not conducive to reform, or the political will is lacking, or both, the chances of such a structure being successfully transplanted and leading to greater accountability are very small. São Tomé and Príncipe is another example of a country in which the establishment of a tripartite structure has failed to generate significant improvements in accountability (Heller and Marcel 2012, 31). The Stanford University team also noted the existence of a group of countries that had never seriously attempted to separate commercial from regulatory and policy functions but which had nevertheless had oil sectors that appeared to

run “reasonably well” (Thurber, Hults, and Heller 2011, 14). Angola is one such example where there is no independent regulatory institution and where in practice the national oil company is sector manager, regulator, and operator all rolled into one. From a transparency point of view this is far from optimal, but it has led to a productive and stable petroleum sector in a country that had the destabilizing effects of a civil war from 1975 to 2002. If a conclusion may be drawn it is that the political economy of the country concerned is of paramount importance to the establishment of a successful regime of governance and that reform plans need to take this into account if they are to be effective. In recent years, Latin America has taken a number of different approaches to reform in both hydrocarbons and mining (Zamora 2014). In hydrocarbons, Colombia is a leading example (see box 5.5), following on from earlier

Box 5.5 Petroleum Reform in Colombia After 30 years of resource administration by the Colombian National Oil Company, Ecopetrol, which had been created in 1951 to operate the assets of the De Mares concession after its contractual ending, an institutional reform was adopted by the government using special powers granted by congress in 2003. Similar to Brazil, the reform separated the administration of the petroleum resources from Ecopetrol and created the National Hydrocarbons Agency (ANH) to undertake this role. The ANH was given sufficient powers to design the most appropriate contractual vehicle(s) to allow the operations of Ecopetrol or any other qualified third parties in exploration and production under equal access. In December of 2006, Ecopetrol was further transformed into a publicly owned and listed corporation with direct participation of financial investors in its ownership and decision making, with a limit of 20 percent of its shares. The scope of the resource administration of the ANH is limited to the upstream end of the value chain. The midstream activities continue to be regulated by the Ministry of Mines and Energy, while, since December 2012, the regulation of downstream activities passed from the ministry to the already existing independent regulatory commission for electricity and gas. The ANH adopted a new contractual vehicle in 2014. It can be described in modern terms as a tax and royalty license with additional state participations at

variable shares of production. The royalty established by the law is variable (5–25 percent) on a sliding scale according to average monthly production volumes by field. The additional contract-based shares of production are two tiered: one that is based on a sliding-scale function of international prices (calculated as a 30–50 percent share of excess price over a base price) and another that is established as a bidding parameter in competitive bidding rounds (x factor) as a percentage of the net production of the operator after royalties and price-based production shares. The new contract could be described as a hybrid between concession and production sharing. Such a design allows for a variable capture of economic rent, as is the case with PSAs but without the complications of a joint administration. The state owns the resource in the ground and transfers title of the operator’s share at the wellhead, while retaining the state’s share through to the point of sale, which can be anywhere from the wellhead onward. While reaffirming the sovereignty of the state over its resources, the contract allows for a flexible and progressive capture of rent and a clean and simple administration that avoids potential conflicts of interpretation or cumbersome administrative procedures. Ecopetrol, on the other hand, operates as a fully integrated petroleum company, listed in the Bogotá, New York, and Toronto stock exchanges, with strict and transparent governance and reporting systems.

CHAPTER 5: SECTOR ORGANIZATION AND REGULATORY INSTITUTIONS

129


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10.1 Environmental and Social Institutional Arrangements

3min
page 316

10.6 Response 3: Accountability—Stakeholder Consultation and Participation

3min
page 315

10.5 Response 2: Effective Implementation, Monitoring, and Enforcement

3min
page 314

10.4 Response 1: Appropriate and Adequate Rules

3min
page 313

Notes

6min
pages 303-304

9.11 Goal Setting and Community Participation

11min
pages 298-300

9.7 Summary and Recommendations

7min
pages 301-302

9.10 Social Impacts: Special Issues

3min
page 297

9.9 Essentials of a Good Environmental Protection Regime

19min
pages 292-296

9.8 Challenges Associated with Artisanal and Small-Scale Mining (ASM

3min
page 291

9.6 The Responses

7min
pages 289-290

9.7 Decommissioning and Environmental Protection Plans

3min
page 288

9.5 Tools: Legal and Regulatory

30min
pages 280-287

9.6 Potential Opportunities Generated by ASM

3min
page 279

9.5 Reframing the ASM Debate: Integrating It into the EI Value Chain

3min
page 278

9.3 The Deepwater Horizon Oil Spill

11min
pages 273-275

Areas and Critical Ecosystems (PACE

7min
pages 276-277

9.4 Challenge 2: Environmental and Social Impacts

4min
page 272

9.2 Objectives of the Parties to an Infrastructure Project

2min
page 271

9.1 Liberia: Open Access Regime in Mineral Development Agreements

11min
pages 268-270

Investments Create Positive and Sustainable Impacts

23min
pages 262-267

9.2 Two Key Challenges

3min
page 261

8.4 Civil Society–Led Initiatives

3min
page 252

8.5 Private Sector–Led Initiatives

3min
page 253

8.6 Emerging Global Norms and Standards

3min
page 251

8.3 The Seven Requirements of the EITI Standard

5min
pages 249-250

8.5 Transparency Initiatives

3min
page 248

8.2 EIs and Social Accountability

2min
page 247

8.4 Challenges and Special Issues

3min
page 244

8.1 Balancing Transparency Interests: Opposing Dodd-Frank

7min
pages 245-246

Other Resources

1min
pages 238-240

8.2 Definition and Scope

3min
page 242

8.3 The Benefits of Transparency

3min
page 243

Notes

8min
pages 232-233

7.4 Examples of Revenue-Sharing Formulas

17min
pages 226-230

7.9 Revenue Allocation and Subnational Issues

3min
page 225

7.8 Spending Choices and Use of Government Revenues

16min
pages 221-224

7.7 Alternative Means of Addressing Volatility

4min
page 220

7.6 Addressing Volatility: Stabilization Funds

3min
page 218

7.3 Stabilization Funds: The Experience of Chile

3min
page 219

7.5 Alternative Means of Addressing Fiscal Sustainability

7min
pages 216-217

7.2 Savings Funds: Four Examples

6min
pages 214-215

7.3 Consume or Save?

10min
pages 205-207

6.5 What a Well-Designed Fiscal Regime Must Do

3min
page 197

7.1 Botswana and Chile: Experiences with Fiscal Rules

3min
page 208

7.2 Why Revenue Management is Difficult

3min
page 204

6.4 Routine Tax Administration: Challenges

7min
pages 194-195

6.7 Summary and Recommendations

3min
page 196

6.6 EI Fiscal Administration

3min
page 193

6.5 Special EI Fiscal Topics and Provisions

27min
pages 186-192

6.3 Elements for Action on Taxation of Transfer of EI Interest

3min
page 185

6.4 Main Fiscal Instruments under a Fiscal Regime

20min
pages 175-179

6.1 Forms of State Participation

13min
pages 180-183

6.2 Key Fiscal Objectives

13min
pages 170-173

6.3 The Main Types of EI Fiscal Systems

3min
page 174

5.4 Summary and Recommendations

3min
page 164

5.8 Unitization in Maritime Waters

32min
pages 156-163

5.6 Petroleum Sector Reform in Brazil

3min
page 150

5.5 Petroleum Reform in Colombia

3min
page 149

5.1 Institutional Structure: The Ministry and the Regulatory Agency

22min
pages 138-143

5.2 Mining Participation

3min
page 144

5.2 Organization in the Public Interest

5min
pages 136-137

5.3 NRC Success Stories

11min
pages 145-147

5.4 Petroleum Technical Assistance to South Sudan

3min
page 148

Notes

12min
pages 128-130

4.13 Taking Action: Recommendations and Tools

4min
page 127

4.12 Summary

4min
page 126

4.11 Disputes: Anticipating and Managing Them

8min
pages 122-123

4.11 Claims under Bilateral Investment Treaties (BITs

7min
pages 124-125

4.10 Contract Negotiations

3min
page 121

4.10 The Four Main Forms of Stabilization Clause

3min
page 120

4.9 Investment Guarantees: Stabilization

4min
page 119

4.8 Why Regulations Are Necessary

7min
pages 117-118

4.9 Geodata

23min
pages 111-116

4.7 The Award of Contracts and Licenses

3min
page 110

4.6 Contractual Provisions for Natural Gas

16min
pages 104-107

4.7 Model Mining and Development Agreement

3min
page 108

4.5 Local Benefit: The Kazakhstani Experience

7min
pages 102-103

4.4 Local Benefit

3min
page 101

4.8 Practices to Avoid

3min
page 109

4.6 Contracts and Licenses

31min
pages 93-100

4.5 Hydrocarbons and Mining Laws

27min
pages 86-92

4.3 Deep-Sea Mining

3min
page 85

4.2 Licensing across Shifting International Borders

3min
page 84

4.4 Policy Priorities

11min
pages 81-83

4.3 Eight Key Challenges

3min
page 80

4.1 Sovereignty over Natural Resources

3min
page 79

4.2 Getting Started: Facts of EI Life

3min
page 78

Other Resources

4min
pages 73-76

3.4 Convergence of Mining and Hydrocarbons?

16min
pages 67-70

3.3 Key Differences of the Industries

7min
pages 62-63

3.2 Features Specific to the Oil and Gas Sectors

2min
page 65

3.1 Key Differences between the Petroleum and Mining Sectors

3min
page 64

3.2 Common Features of the Industries

7min
pages 60-61

References

13min
pages 53-56

Other Resources

1min
pages 57-58

Notes

8min
pages 51-52

2.6 Conclusions

4min
page 50

1.2 The EI Value Chain

11min
pages 31-33

1.5 Our Approach

3min
page 34

1.4 Bridging the Knowledge Gap

3min
page 30

2.2 The Opportunities Arising from Resource Abundance

8min
pages 40-41

2.1 Changing Perspectives: Reframing the ASM Debate

3min
page 42

1.2 The Demand for Knowledge

4min
page 24

2.4 Understanding the Challenges: Changing Perspectives

8min
pages 47-48

2.5 Applying New Insights

4min
page 49
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