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Seminar on Central African Petroleum Resources and Regional Governance & Roundtable of the Central African Hydrocarbon Resource Management

Initiative 24-25 November 2003 Organizers: Norwegian University of Science and Technology (NTNU) Ecole Nationale Supérieure des Mines de Paris (ENSMP) In cooperation with the Centre for the Study of Civil War (CSCW) at the International Peace Research Institute in Oslo (PRIO) Under the auspices of the Task Group on Fossil Fuels (TGFF) of the International Union of Geological Sciences (IUGS) Cosponsors: Ministry of Foreign Affairs of Norway Ambassade de France en Norvége Seminar Participants: Mr. Ado, Director of Petroleum, Ministry of Mines and Energy, Niger Dr. W. Zayed Awad, Head Basin Studies Exploration, Greater Nile Petroleum Operation Company, Sudan Pr. N. P. Gleditsch, PRIO Mr. E. Kvadsheim, Norwegian Petroleum Directorate Ms. I. Lagadrielliere, Ambassade de France en Norvége Mr. J. Lamy, Ministère de l’Economie, des Finances et de l’Industrie, France Mr. J. E. Leikvang, Norwegian Ministry of Foreign Affairs Dr. G. Magrin, The Centre for International Cooperation on Development-Oriented Agricultural Research (CIRAD), France Pr. J. M. Monget, Ecole de Mines de Paris Mr X. Morise, Ambassade de France en Norvége Mr. Asim Mohamed Ali Mukhtar, Sudanese Embassy in Norway Mr. T. Owen, PRIO Mr. A. Skæveland, Economic Policy Department, Norwegian Ministry of Finance Pr. R. Sinding-Larsen, NTNU Rapporteur: Ms. B. Lacina, PRIO Roundtable Participants: Mr. Ado Dr. W. Zayed Awad Pr. N. P. Gleditsch Mr. Leikvang Dr. G. Magrin Pr. J. M. Monget Mr X. Morise Mr. Mukhtar Pr. R. Sinding-Larsen

Seminar on Central Rift Petroleum Resources and Regional Governance 24-25 November 2003 This seminar drew together Central African, French, and Norwegian government representatives, academics, and NGO representatives to discuss the experiences of hydrocarbon resources management globally and in Central Africa, as well as potential economic, social, environmental, regional, and political problems associated with such resources, and strategies for addressing them. The first aspect of the seminar was presentation of geointelligence tools that can support resource management. Pr. J.M. Monget of the Ecole Nationale Supérieure des Mines de Paris presented a curriculum designed to train future engineers in the nontechnical aspects of managing petroleum projects, focusing on commercial, environmental, socio-economic issues. The course utilizes publicly available information on pipeline projects in the Central African area, and Pr. Monget argued that there is a surprising wealth of freely available information with which to accumulate parameters on oil reserves and eventually enable evaluation of the reserves themselves. The tools developed in these trainings could be of benefit to Central African resource managers, enabling these nations to gather information and develop resource management strategies, a check against the dangers of being pushed through these decisions by the momentum of actors such as oil companies and financing bodies. Pr. R. Sinding-Larsen of NTNU presented studies of oil reserves in the Sudan and Niger that utilized mapping and statistical software to analyze public data on previously explored areas and past discoveries. Using this software, and the knowledge that resource exploration tends to follow a logarithmic path of accelerating and then decreasing size of discoveries, Sinding-Larsen made predictions about the number of deposits in certain size ranges that should be expected in each of these two countries in future. This modelling process can provide information on the likely efficiency of further exploration, and is thus another tool for improving national resource management. The seminar also included several presentations on country-specific experiences in petroleum management. Mr. E. Kvadsheim of the Norwegian Petroleum Directorate presented the policy goals set for the Norwegian national oil reserves, and the evolution of the government and corporate structures that have been set-up for the regulation and commercial development of those resources. Mr. A. Skæveland of the Economic Policy Department of the Norwegian Ministry of Finance spoke on the Norwegian petroleum fund. Empirically, oil discovery has been associated with lowered GDP growth in many countries, due to bad investments of oil revenues that cause overheating of the economy instead of sustained growth, lack of fiscal discipline leading to unsustainable levels of public spending when oil revenues begin to slow, and loss of focus in structural policy, which lowers productivity, efficiency and growth in other sectors. The Norwegian petroleum fund is one potential tool for revenue management, and it has been used to impose increasingly strict fiscal rules in Norway and smooth out public spending of oil wealth over time. Dr. W. Zayed Awad, Head of Basin Studies Exploration at the Greater Nile Petroleum Company of the Sudan, spoke on the personnel management issues of a national

petroleum firm in a developing country. Training and capacity building is necessary to improving commercial awareness and technical skills of local employees, especially softer skills training that improves knowledge of business and commercial aspects of the petroleum industry and management issues surrounding socio-economic and environmental issues. There are a number of challenges faced in developing such a workforce, including brain drain to Gulf States and into foreign companies, lack of mentoring systems and career plans, and too many internationally-funded trainings that are based on classroom instruction in technical skills, rather than hands-on experience and development of managerial skills. All five international oil companies working in the Sudan have goals for local hiring in their contracts, but none has met them and nationals that have been hired have been funnelled into areas such as human resources. This is in part because training programs were not implemented when the contracts first began. When the deadline arrived for meeting hiring targets, numbers of qualified nationals were insufficient. Solutions include government insistence on training programs from the beginning, use of employee logs to improve evaluations and career planning, and cross-postings of nationals at partner companies in other countries rather than use of short-term trainings and workshops. Mr. Ado, Director of Petroleum at the Ministry of Mines and Energy of Niger, introduced the seminar to the organizational structure of the ministry and its strategy for resource development. Niger is surrounded by significant petroleum producers (Chad, Algeria, Libya, and Nigeria), but in spite of Niger’s similar geology no commercially-sized discoveries of hydrocarbon resources have been made in Niger. This may be due to insufficient exploration, and Mr. Ado discussed the current explorations being undertaken and the ministry’s scenarios for pipeline development in case of a commercial discovery. Mr. Lamy, of the French Ministére de l’Economie, des Finances et de l’Industrie, pointed out that the case of Niger raises the distinction between developing an energy policy that meets national needs and the commercial imperatives of international corporations focused on exports, as some of Niger’s natural gas deposits may be quite efficient for local power generation. The World Bank has resources set aside for the development of sustainable resource management and energy policy development that could be tapped for such a project. Mr. J. E. Leikvang, of the Norwegian Ministry of Foreign Affairs, supported this point, pointing out the great potential for developing a sub-regional energy policy by building a better trans-border electrical grid system. The seminar also heard perspectives on how local and national conflict can be spurred by oil resources. Dr. G. Magrin, of CIRAD, introduced the work of the Regional Pool of Applied Research for Central African Savannas’ Development in Cameroon, Central African Republic, Chad. The group confronts food security problems and resulting resource conflict. Initiatives for better land management have included technical agricultural innovations tested in cooperation with area peasants and creation of maps and data sources to improve equal access to information. Dr. Magrin pointed out that the regional dimension of these issues is usually not spontaneously taken into account by actors and that a project like CIRAD can play a role in bringing together groups separated by national boundaries. Dr. Magrin also commented on the potential tension between the hydrocarbon exploitation cycle and the shifting power balance between the local state and international actors. Conflict, he suggested, is more likely to occur in the final stages of the exploitation cycle, when negative local socio-economic and environmental consequences have begun to be felt but when

declining revenue streams leave little money or will to compensate. This, coupled with the eventual departure of the oil company from the region, leaves the state to deal with civil unrest, potentially resulting in conflict. Prof. N. P. Gleditsch of CSCW-PRIO presented academic perspectives on resource management and internal conflict. Theorists have proposed three models to explain the relationship between resources and conflict. First, ‘neo-Malthusian’ models of conflict suggest that resource scarcity and population pressures lead to social unrest and violence. Second, the ‘Cornucopian’ model argues a technological and/or economic solution to scarcity problems. And third, the ‘Resource Curse’ hypothesis suggests that abundance rather than scarcity will lead to and fuel conflict through black market funding of insurgency movements, the political economy of natural resource rents and the corruption, illegitimacy, and deterioration of public services often present in resource dependent governments (especially in the case of oil). Mr. Lamy presented on regional mediation of potential interstate oil revenue conflicts. Although commenting on the viability of larger conflict resolution processes, he focused his remarks on the conflict between Nigeria and Cameroon for drilling rights in the Bay of Guinea. The border dispute was mediated through an 8-year International Criminal Court investigation and ruling. The dispute resolution process is seen as being largely positive as it did not result in military conflict. However, the significant power imbalance between the two nations may have led to the eventual outcome in accordance with the Nigerian-favored boundary. Pr. Sinding-Larsen also spoke on the subject of regional cooperation around oil resources. He presented his experience with the CCOP (Coordinating Committee for Offshore Prospecting in Southeast Asia). Formed in the late 1970s under the Economic and Social commission for Asia and Pacific (ESCAP, a UN body), CCOP brought together the Southeast Asian nations at a time of great tension between these states and open warfare among some but has developed into an important body for regional technical cooperation and resource management. Recent priorities have included a Working Group on Resource Assessment (WGRA), which aims to allow countries to conduct analysis and projections regarding their resource endowments with a sophistication on par with that of the international companies they do business with; countries were recently provided with the software and correlated training presented at this conference. Follow-up initiatives include developing capacity in the area of national licensing and promotion strategies after resources have been appraised. The CCOP primarily utilizes workshops and meetings, an expert who has been hired to maintain the regional system, and production of several publications. Pr. Sinding-Larsen also spoke on the families of transnational organizations that can be relevant to regional technical cooperative initiatives in resource management. He pointed out that such initiatives often go forward without benefiting from the full concert of organizations available to support such work, relying only on traditional development agencies. One important family is the UN organizations, including development organizations such as the Economic Commission for Africa (UNECA), the UNDP, the World Bank, and UNESCO. There are also governmental bodies housed in the national foreign affairs, energy, and scientific ministries of various countries. In addition, there is a family of nongovernmental actors in the sciences. The International Council of Scientific Unions, a body supported by national academies of

science, houses the International Union of Geological Sciences (the auspices under which this conference is organized) and the International Union for Geology and Geophysics (IUGG). Participants pointed out that other relevant organizations would be the African Development Bank (AfDB), which is not part of the UN family, and the New Economic Partnership for African Development (NEPAD). These organizations might be especially relevant for cooperating with regional commissions in the UN family; for example, the World Bank closely cooperates with AfDB. Participants agreed that a priority for moving forward with a Central African cooperative initiative is further research on which organizations the nations might wish to work most closely with.

Roundtable of experts and regional representatives; formation of the tentatively named Central African Hydrocarbon Resource Management Initiative 25 November 2003 The roundtable session that followed the Seminar on Central African Rift Petroleum Resources and Regional Governance summarized the themes of the meeting, and decided on first steps toward a (tentatively named) Central African Hydrocarbon Resource Management Initiative. The themes of the seminar were captured according to a strategic guideline that cooperative activities should keep in mind, and by selecting three areas in which activities are likely to be particularly valuable.

Areas of Strategy Activity

Multilevel Approach
Activities will be tailored in recognition of the distinctions between:

Regional and Local Issues Policy and Technical Cooperation Energy Policy and Resource Policy

Information Networks

Training and Capacity Building

Governance of Revenues & Assets

The strategy that the participants emphasized was the need for multilevel approaches. Cooperative activities should be designed to distinguish, first, between questions that are most usefully approached with a regional versus a local scope, bearing in mind that the regional dimensions to problems are often not considered spontaneously by structures that are nationally-based. Second, policy and technical cooperation are distinct areas. Some types of cooperation, such as software training or personnel development, will be primarily addressed to bureaucratic and technical personnel, while others, such as designing regional energy policy or mediating potential for regional conflict, will be aimed at policymakers and diplomatic personnel. Finally, there is a distinction between the need for an energy policy that can sustainably meet national needs and policy to manage national resources, for export and domestic use, in a way that will have greatest economy-wide, social, and economic benefit. Potential future areas of activity include, first, developing networks to improve regional information sharing and the capacity for regional coordination. Needs here include databases of resources and capacities (such as available sources of funds for training), improved utilization of the internet and other public resources, improved ability to conduct resource assessments, links to regional universities, links to UN, transnational, governmental, AfDB, World Bank, and NGO resources that support

such cooperation, and communication channels to international companies in the sector. A second area of activity identified was training and capacity building in support of applications of technical knowledge and other region’s management strategies into “fit-for-purpose” practices suitable for the Central African region. Workshops and seminars will be a primary activity in support of this goal. Third, there is a need for strategies to address the issue of governance of revenues and assets in order to curb problems of corruption and resource looting. An official statement was drafted at the end of the roundtable to outline the next steps to be taken in support of the proposed initiative. It follows here. The Central African Hydrocarbon Resource Management Initiative made the following recommendations at the conclusion of the roundtable discussion following the seminar: 1. The roundtable outlined that information networks, training and capacity building, and revenue management are areas of priority, all of which require taking a multilevel approach that distinguishes between regional and local issues, policy and technical cooperation, and resource and energy planning. 2. A French participant will approach the Chadian Ministry of Energy, Mining, and Petroleum, reporting on this seminar and its recommendations and inviting further participation in the initiative. 3. The participants from the Republic of Sudan agreed to pursue contacts with the UNDP regarding using the 2004 Khartoum petroleum and gas conference as an opportunity for the Central African nations to meet and progress with the resource management initiative. 4. The participants from the Republic of Sudan will consider hosting a small meeting for Sudanese policy representatives, with outside financial support, in order to discuss the findings of this seminar, the possibility of a long-term partnership for improving regional hydrocarbon resource management, and encourage them to discuss such a program with their Central African counterparts. The Oslo seminar will hopefully allow the participants from Niger and the Republic of Sudan to consult with their national colleagues and regional counterparts in order to determine the level and scope of this initiative, both at the national and regional levels. All participants expressed their gratitude to the hosting organizations and sponsors, as well as the Norwegian Academy of Science, which generously provided its excellent facilities for the meeting, and the French Ambassador, who received the participants at his residence.