Development Dialogue on Oil and Gas Working Groups Report 1). Transparency and Accountability Working Group The lack of transparency in the mining sector should offer lessons for oil and gasthus, the starting point should be the oil and gas policy document. It should be shared with the public so that it can be absorbed and players can be held accountable when necessary. The EITI is a good framework but it is not sufficient for the oil sector. It should be extended to cover the actual oil contracts. The lack of transparency and culture of secrecy: The licensing process has to be transparent from the beginning, there should be transparency in contract procurement and also at all stages of the value chain. Insufficient information/no information on oil and gas. The oil and gas sector cannot be monitored without knowledge. How much knowledge is made available, and who determines what information is disseminated. Monitoring and Evaluation- Strengthening of relationships between government, Civil Society Organizations and International corporations. The government should demand transparency from the oil companies through regulatory institutions and the citizenry should demand transparency from the government. Conflict of Interest: Members of government and parliament should not be on the boards of these sectors. RECOMMENDATIONS: LEGAL FRAMEWORK Legal backing to the EITI Revenue Management Legislation 1
Need for right to information law Adopt and enforce laws that enhance accountability and disclosure, e.g. Whistle Blowers INSTITUTIONAL STRENGTHENING Courts Parliament Attorney General s Department Media Regulators- National Petroleum, EPA Traditional Authority CSOS: Coalition for Social Responsibility, Oil and Gas human rights coalition Local Government: District Assemblies GOVERNMENT COMMITMENT Commit to transparent and competitive bidding Commit parliament to adopting a presumption of full disclosure of oil contracts in the Freedom of Information law unless it is commercially sensitive information Full disclosure of oil contracts Strengthening government s communication capacity in order to communicate and implement the oil/gas policies/programs Improving/Strengthening sustainable environmental management practices ACCESS TO INFORMATION Parliament should pass a law that supports maximum disclosure Proactive Disclosure Repeal non disclosure clauses and laws 2
LOCAL GOVERNMENT Need to strengthen accountability structures. I.e. Assembly members Civic Groups: Government Accountability, Improved trust Traditional Authority 2). Revenue Legislation Working Group How will the oil revenue be split between the government, international oil companies and national oil companies ELEMENTS OF REVENUE Royalties Ownership Additional Interest Corporate Tax Additional profit tax Surface rentals, i.e. pay rental for land and space for production RECOMMENDATIONS: There should be an institution/body to monitor and verify daily production which will also collect the revenue The legislation should govern the destination of the revenue, how much should be spent and how much should be saved. The state should collect the revenue through the proposed national revenue authority The revenue should be placed in a special account at the bank of Ghana 3
MANAGEMENT OF FUND Ministry of Finance The Bank of Ghana A board of trustees Independent investment manager EXPENDITURE No earmarking Spending throughout budget No second budget Budget should be based on national priorities Savings TYPE OF FUNDS Stabilization fund to smooth spending of oil revenues Heritage fund for future generations Managed by rules and guidelines Minimize discretion Oversight for accountability and transparency 3). Regulatory Legislation Working Group How does Ghana maximize returns on Oil & Gas? Monitoring & Safeguarding of National Interests to ensure proper accounting Communication & Public Awareness creation for Transparency & Accountability 4
RECOMMENDATIONS: GNPC's role pre-licensing should be separate from GNPC's role postlicensing so that the same group is not involved in choosing the company and monitoring their operations. An independent inspectorate division should be set up to monitor production operations. Government Negotiating Teams should include EPA & Community Representatives Promulgate the relevant regulations under the Act Update and harmonize existing Sector Legislation Increase Technical Education and Awareness By Sector Agencies to improve their input into any future legislation Consultation to achieve clarity of roles of relevant agencies/stakeholders Sharpen Reporting & Enforcement Mechanisms 4). Local Content Issues Working Group Ensuring that there is access to information on opportunities in the oil industry The establishment of a local content committee Creating an enabling environment for local businesses to compete fairly 5
Disbursement of the development fund/will it be sufficient for capacity building in the value chain Technology Transfer Gender issues are unclear in the policy paper Increasing the number of Ghanaians involved in oil exploration and production RECOMMENDATIONS: Need to create a business environment to enable the locals to participate (e.g. macro-economic indicators - Interest rates, funding etc). Collaboration with other ministries for capacity development of local businesses The development fund should facilitate Ghanaians who want to start businesses relating to the oil industry the Retention percentages of profits for re-investments in Ghana to boost economy. Easy access to the business development fund Ministry of Energy to play lead role with other Ministries to build capacity of local businesses. Local Content Committee should be a permanent board, in order to ensure That it has powers to enforce regulation? This also begs the question of who appoints this board; it is usually the executive-possible conflict of interest if the regulator is chosen by the group it will regulate. Capacity building institutions to be accredited 6
Universities and research institutions should be involved in technology transfer Gender specific support programs to ensure equal opportunities in the oil industry/or have programs that specifically focus on integrating women into the oil industry. 5). Gas Policy Framework Working Group Management of Gas Resource Ownership of Resource Ownership of Infrastructure Security of supply Flaring (Absolutely NOT) Location of resource mainly offshore development Delivery point of Gas Clear delineation of Upstream, Midstream, Downstream Gas Master Plan - Best uses of gas Power Generation Agriculture Fertilizer (5 TCF) Liquefied Natural Gas (2 TCF) Export of Gas Petro-Chemical, etc Management of Revenue Ring fencing of Gas Project, Petroleum Agreement Fiscal regime Encourage landing of gas Pricing of gas Market Government intervention, subsidies to priority areas (Fertilizer) 7
Agriculture LNG Taxation Management of the Environment & Social issues Monetization of social and environmental externalities Ghana Environmental Protection Agency State Institution NGOs Local economy issues Project and Strategic level environmental and social assessment-baseline data EIA-comprehensive, hazardous waste Security & crime-stealing, immigration plus diseases, etc Date?2010 or... RECOMMENDATIONS: Local economy Gas master plan-policy Environmental and social mgt-project and strategic assessment security/crime/health issues pricing, quantity issues Gas uses Power generation, fertilizer, LNG etc Is the Infrastructure ready-2010 with no infrastructure-will flaring be allowed? Volumes of gas involved-aware of the quantities before - November 2010 jubilee fields gas can get to Effasu Working with stakeholders e.g. chiefs to acquire land etc to get the infrastructure ready 8
Gas to be processed on FPSO before taking it to land Bonwire to process and redistribute through many channels inc WAGP The chiefs have given the project land- US$250-300 m to get gas to Effasu 70% recovery-financing structure is going to determine how gas is going to be priced 200 bcf of gas free- when develop that infrastructure they will also use it Many other field as around who will use same pipelines-need for an aggregator to collect all gas and pass through the system Policy issues around whether it is upstream or mid stream Have u awarded any contract on gas-financing to Nigerian companies? Strategy-not to give contract to indigenous companies e.g. OANDO Consortium are they epc contractors Fertilizer-other VRA and Aboadze 120mst cubic per day so both can absorb jubilee Policy issues from ministry-divert some gas to fertilizer industry-need to subsidize gas for the fertilizer where does the subsidy come from? Possibly LPG Pricing-how do we price gas for foundation customers e.g. fertilizer industry, need $0.35/ Issue of financing-partners but...if government uses WAGP facility price will be higher and may not work GNPC knows they cannot do it alone because of technology involved GNPC team implementing the gas policy GNPC Ethylene-plastic industry big time-what gas for ethylene and domestic consumption e.g. Need for gas master plan-without policy how are we able to get the regulatory instruments 9