A New Guide for Good Governance in Emerging Oil Producers

On September 6, Chatham House released a set of guidelines developed by a group of researchers and public officials that seeks to provide policy-makers in new and emerging oil producers with targeted advice on how to embed good governance and sound management as they build up the petroleum industry. The Guidelines for Good Governance in Emerging Oil and Gas Producers addresses the specific challenges that face countries that are new to the petroleum business, offering seven core objectives to help steer strategic planning.

Revenue Watch was a core sponsor of the Guidelines, which emerged out of the broader Chatham House project on good governance in the national petroleum sector and from RWI's research on Institutional Design in Low-Capacity Oil Hotspots). The Guidelines emphasize a special set of considerations that new producers such as Ghana, Uganda and Timor Leste should take into account as they develop institutions, establish fiscal terms, award acreage and manage public expectations.

Many previous studies of petroleum governance had focused on the practices of large and sophisticated producers with decades of experience in the oil sector. While these experiences are valuable, the Guidelines were based on the premise that the decisions faced by new producers are most analogous to the experiences of other similarly-situated countries, including both fellow emerging petroleum markets and countries producing oil at a smaller scale. The Guidelines were developed by a team of experts from emerging and small producers—such as Southern Sudan, Kenya, Mozambique, Belize and Papua New Guinea—as well as from experienced oil producers like Brazil and Norway with historical perspective on the early days of oil there. These experts gathered at Chatham House in late 2012 and have developed the document collaboratively in the months to follow.

The Guidelines are organized around seven key objectives for emerging producers listed below. Within each of these objectives, they provide specific insights to help policymakers reflect on the specific needs associated with the early stages of exploration or production, when expertise and financial resources are limited.

Objective 1: Attract the most qualified investor for the long run
Objective 2: Maximize economic returns to the state through licensing
Objective 3: Earn and retain public trust and manage public expectations
Objective 4: Increase local content and benefits to broader economy
Objective 5: Ensure national oil company participation in the development of the resources
Objective 6: Gradually build capacity and enable actors to perform their role
Objective 7: Increase accountability

The publication of the Guidelines represents the most recent step in the evolution of the Emerging Producers Project. Chatham House, RWI and their partners will continue to organize opportunities for experts from new and small producers to share experiences and learn from each other's perspectives.

To learn more about the Emerging Producers Project, go to www.chathamhouse.org/research/eedp/current-projects/governance-challenges-emerging-oil-and-gas-producers.

To learn more about the Natural Resource Charter, go to www.naturalresourcecharter.org.

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