Oil & Gas Specifics

full all chapter5 chapter6 chapter7 chapter8 chapter9

chapter4 chapter5 chapter6 chapter7 chapter8 chapter9

Transparency and Accountability

Policy, Legal and Contractual Framework

Sector Organization and Institutions

Fiscal Design and Administration

Revenue Management and Distribution

Sustainable Development

  • The stated responsibilities of an NOC are usually commercial operations and the development of a shared national capacity in the oil sector.

 

  • With few exceptions, the NOC participates in an unincorporated joint venture for operational reasons and because multiple investor interests are common.

 

  • NOCs have tended to be the focal point for accomplishing a broad range of national, economic, social and political objectives such as job creation, development of local capacity and the provision of social and physical infrastructure.

 

  • NOCs have also had a key role in income redistribution through the supply of products at subsidized prices.

 

  • Meeting commercial objectives ha often proved difficult and with a few exceptions, NOCs have scored poorly in this respect.

 

  • Where NOCs have to be given regulatory roles, these can be ring-fenced within the NOC for operational and accounting purposes and reported in the national budget and accounts. Transfer of regulatory functions out of the NOC may be the desired long-term goal, but in the short-term internal ring-fencing may be preferable until credible capacity and assurances of good governance can be established in an external agency. Serious commitment to commercialisation is essential.

 

  • NOCs should be established as legal entities under the corporate law of the country rather than as government departments. This helps to provide a clear profit motive and avoids productive enterprises being used for predominantly social or political purposes. In practice, this is rare however.

 

  • Good governance of NOCs requires attention to the role of sector or financial ministries in exercising the shareholder role on behalf of the country. A misguided or corrupt shareholder role, combined with inadequate or corrupt management and large non-commercial roles can lead to serious inefficiencies.

 

  • For oil producing countries where government oil sector income can derive from a variety of different and often unrelated sources as well as income taxes, all oil sector payments to government should ideally flow into a single treasury account at the central bank.

 

  • In marketing of oil and gas separate units for each are recommended.
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