The difficulties faced by developing countries in managing oil revenues efficiently and fairly, the requirements of economic liberalisation and pressure from evolving international standards have placed the governance of the petroleum sector in sharp focus, states this Chatham House report, published in April 2007.
The paper sets out the potential outcomes of dialogue within oil companies, governments, NGOs and financial institutions on the requirements for a good governance of the national petroleum sector. This dialogue has been supplemented by further research and case-studies to provide principles and guidelines to help decisions-makers, oil producers and civil-society advocates to identify possible improvements in petroleum-sector governance.
Despite differing national contexts and development levels applying to the sector, the study identifies five universal principles of good governance for oil and gas:
- Clarity of goals for each policy, strategy or decision and clarity of roles and responsibilities between institutions, agencies and individuals;
- sustainable development should be at the heart of petroleum sector policymaking;
- individuals and institutions must have access to the necessary means in terms of authority, financial resources, information, human capacity and supporting processes to meet objectives;
- mechanisms such as regulation and industry audits must be implemented in order to ensure accountability of operators to shareholders and of government to society, and;
- transparency and accuracy of information.
These principles are developed into guidelines in the second part of the study. Suggestions on key tasks, including defining authority and responsibility, choosing objectives and enabling good decisions are set out according to national specifics, namely the political system and development of the petroleum sector.