Transcript Oil Sector Management

Oil Sector Management
presented by
Decio Hamilton Barbosa
Luanda, Angola, May 2006
Topics
• International practice with respect to the
role of government ministries/agencies
and NOC in overseeing oil sector
operations
• Government/NOC fiduciary relationships
• Experience of Brazil
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World oil
• Government
– Practically everywhere in the world, petroleum
resources are owned by the state
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•
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In the underground
Until produced
Until exported
Throughout the value chain
– US onshore, parts of Canada excepted
– NOC sometimes acts in the role of owner for the state
• Private capital
– Takes most of the risk, makes most of the investment,
conducts most of operations, pays the taxes / shares
the production
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Host Government
• Owns
– Practically everywhere (US onshore major exception)
• Legislates
– Laws and agreements
– Various government instruments
• Manages
– Ministry, Agency, Regulator, NOC
• Invests
– NOC
• Takes
– Direct and indirect share of investments
– Direct and indirect taxes and fiscal levies
– Other requirements and obligations
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Role of the NOC
• Genesis
– Participation
– Nationalization
• Title holder of national (oil) resources
– Oil, natural gas
• Contract administrator
• Recipient (and seller) of state share of production
• Importer
– Price stabilizer
• Key component of national economy
– Employer / social security
– Foreign currency player whether as both exporter or importer
• Investor
– Indigenous
– International
• Not all of the items above apply in all cases, and are gradually evolving ...
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IOC and NOC search synergy
Production factors: Capital and Land
IOC
Capital
$
versus
NOC
$
Land
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NOC Types
Simplified, arguable, roles continue to evolve ...
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National Guardian / Monopolist
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National Guardian and Regulator
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BNOC (Britoil), YPF, Repsol, PetroCanada (as NOC)
Nouveaux Riches
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ENAP (Sipetrol), JNOC, KOC (Kufpec)
Extinct
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ENAP
Foreign Investment Champion
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Petrobras, Statoil, PTTEP, YPFB (P.Andina / P.Chaco), CNPC/CNOOC/Sinopec
Importing Nation Manager
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OGDC, ONGC, SDFI
National Wealth Participator
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Petronas, CNPC/CNOOC/Sinopec, PDVSA, NGC
Domestic Investor (100% state owned)
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Pertamina (pre-reform), PetroVietnam, Petronas, EGPC, NNPC, Sonatrach, Sonangol
National Guardian and Foreign Investment Champion
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Original title-holder: PEMEX
Post-nationalization: Saudi ARAMCO, NIOC/NIGC, KOC (KPC)
Lukoil, Gasprom, Yukos, Sidanco, Sibneft, Rosneft
Instruments of Forein Policy
–
BP, Shell, TotalFinaElf, ENI, ExxonMobil, ChevronTexaco
Source: Gaffney, Cline & Associates
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Regulatory Roles and Functions
• Contract management
• Resource planning
• Licensing
• Depletion policy
• Operations oversight
• Health and Safety
• Control of environmental sensitive areas
• Market influence
• Fiscal control
• Employment
• Goods and Services
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Who regulates ?
• Ministry
• Classical administrator
• Skills to NOC in many cases
• Agency
• Board
• Regulator
• NOC
• Conflict of roles
• Sector regulation vs. commercial
• Public interest vs. international standards
• Skills
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Who regulates
• Selected countries:
• What they have in common
E&P acreage area granted through bid rounds and
concession agreements
Significant E&P offshore areas
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Regulator (s)
•
Main E&P areas: Gulf of Mexico, Texas and Alaska
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Main regulator of E&P sector:
U. S. Department of Interior / Minerals Management Service - MMS
(licensing of federal areas, royalties)
Landowner has rights on the underground minerals
Extremely competitive industry: ~ 2 millions of royalty owners,
including 5.000 E&P companies
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Substantial source of income to government:
~ US$ 6,0 billions / yr of leasing revenues
~ US$ 5,6 billions / yr of royalties
~ US$ 3,7 millions / yr of severeance taxes (state areas)
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Regulator (s)
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Main E&P areas : Onshore area in Province of Alberta and offshore
areas in northeastern coast (Newfoundland and Nova Scotia)
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Regulators of E&P sector in such a provinces:
 Newfoundland - “Board” (concession) and Department of Mines and
Energy- DME (royalties)
 Nova Scotia - “Board” (concession) and Petroleum Directorate (royalties)
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Large oil and natural gas exporter to the US (~ 2 million boe / day)
Production concentrated in Province of Alberta (~ 60%)
Domestic market concentrated in east coast
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Regulator (s)
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Main E&P areas : Onshore West Australia (WA) and Queensland, offshore
northwestern coast and Victoria coast
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Regulators of E&P sector in WA:
 Onshore licensing areas: Department of Minerals and Petroleum Resources
(DMPR) jointly with the Federal Government
 Offshore licensing areas : Federal Government by means of Petroleum and
Energy Division of the Commonwealth Department of Industry
 Tax and oil levies management:
Federal offshore areas (PRRT): Australian Taxation Office (ATO)
WA state onshore areas (royalties): DMPR
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Natural gas exporter, mainly to Japan, and oil importer: Indonesia is a
significant oil supplier
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Regulator (s)
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Main E&P areas : Área “offshore” do Mar do Norte
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Regulators of E&P sector :
 Areas concession: Department of Trade and Industry (DTI)
 Management of government takes:
PRT / Royalty: Oil Taxation Office (OTO), subordinado ao
Inland Revenue Service
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•
Self-sufficient with respect to oil since 1980 and with respect to natural
gas since 1996
Production declining from 1999 onwards; several mature areas near
abandonment
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Regulator (s)
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Main E&P areas : offshore:
North Sea, Norwegian Sea and Barents Sea (frontier)
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Main regulators of E&P sector:
 Licensing: Ministry of Petroleum and Energy (MPE)
 Management of government takes:
Special Petroleum Tax (SPT): Oil Taxation Office,
Ministry of Finance
Royalties: Norwegian Petroleum Directorate (NPD),
Ministry of Petroleum and Energy
•
Major exporter of oil and gas to Europe
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Experience of Brazil
From monopoly to regulator
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Institutional Evolution
 Decree 20,799 - Government Authorization
 1934 Constitution - Concessions
 1937 Constitution Reserves: State property
1931
1934
1937
1938
1944
1945
1953
1995
1997
 CNP Set up
 Lobato first oil finding (BA)
 Liberal Trend for Oil Sector
 Law 2004 – Oil Monopoly / PETROBRAS
 9,795 Amendment - End of PETROBRAS Monopoly
 Law 9,478 - ANP
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E&P activities in Brazil
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State monopoly from 1954 to 1995
Risk Service Contracts in years 70 and 80
Sole operator in early to mid 90s
Oil Law (1997):
– State grants E&P rights
– Concessions through bid rounds
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Changes in economy
Four key processes:
Globalization: inevitable process – Brazil’s sovereign insertion
in world context
Trade Liberalization: encourage competition of indigenous products with
imported ones / increase competitiveness of local industry
National Currency Stabilization: resume economic planning activity and
increased purchase power of low income population
Privatization / “state pull-out”: relieve the state of activities not related to its
end activities and develop its skills to regulate (interfere in) sectors which
render public services.
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Reasons of changing
From Monopoly to State Regulator:
Necessity of investment to upgrade and extend infra-structure
Controversy of the role of an “entrepreneur state”
Exhausted model regarding the direct involvement of the State
in the economy
Results:
Reduction of inflation
Insertion in international trade
Attraction of long term foreign capital (productive sector)
Search of fiscal balance
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Dual role aspects
• Attract and foster E&P investments
• Licensing Rounds Division
• Regulator (control)
• Divisions responsible for the management of the concession agreement
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Foster E&P investments
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Regulator ( the watch dog)
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Regulators in world context
Not policy makers
Independents and skilled
Granted autonomy
Organized as a board
Board members with mandate for a given timeframe
and non-coincident with each other
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Thank you
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