1. World Bank Involvement in Extractive Industries Paulo de Sa Manager Oil, Gas and mining Unit (SEGOM)
November 5, 2013

2.  Promote shared prosperity
The World Bank and Extractive industries
 End Extreme
Poverty
 Promote shared prosperity
twin wbg goals
Revenue Maximization, Transparency & Governance, Poverty Targeted Expenditures
Leveraging Inclusive Growth
Local Content, Jobs, Infrastructure
Conflict Prevention and Managing Fragility.
Sustainability: Resources, Environmental & Social
ei themes in support
1. Revenue Maximization, Transparency & Governance, Poverty Targeted Expenditures
EI provides one of the best sources of revenue for fighting poverty and dwarfs aid inflows. But it needs to be maximized and managed in a transparent manner (e.g. EITI) to ensure that the benefits reach the people.
2. Leveraging Inclusive Growth, Local Content, Jobs, Infrastructure
The government, private sector and communities can create shared value. The more the local economy can participate in the EI operation and leverage its infrastructure, the larger and more inclusive the benefits. Direct employment is low due to mechanization but skills development will increase local employment in higher income positions. Roads, rail, ports and power needed by EI (and built by private sector) can be made for multiple uses.
3. Conflict Prevention and Managing Fragility
There is a high correlation between fragile and conflict affected states and EI. Deeper diagnosis and solutions to reduce and prevent conflict are essential to ensure poverty gains are not eroded.
4. Sustainability: Resources, Environmental and Social
EI development needs to take place with minimum environment/social footprint (e.g. GGFR), and specific consideration to community and gender issues.

3. Strategic Setting: Governance Challenges for Extractives
Weak institutions, poor governance and lack of infrastructure remain major concerns.
The lack of modern geological data and overall knowledge of mineral potential is one of the key barriers to improving the quality of resource deals (Collier).
Lack of human capacity.
Poor capacity to negotiate investment agreements and monitor contract enforcement.
Weak Public Financial Management and Public Investment Management.
Limited local economic SME capacity and insufficient local and regional strategic planning to harness the economic linkages.
Weak track record in sharing benefits with local communities.
Political and institutional dimensions are important determinants of how resource rich countries perform.

4. SEGOM: Core Areas of Intervention
Sector Governance and Reform
Legal & regulatory framework and licensing/contracts /auctions
Institutional strengthening and capacity building
Geodata Acquisition
Hydrocarbon resources data management
Better governance and transparency (EITI agenda)
Oil, Gas and Poverty Alleviation
Gas policies as part of a lower carbon energy growth
Gas pricing, Gas Master Plan and development of domestic markets
Utilization of flared gas (GGFR)
Sustainable Livelihoods
Environmental and Social management
Local economic development planning, economic linkages and local content
Health & Safety
Support for reducing energy poverty 4

5. Transparency and Accountability across the whole chain
The Extractive Industries Value Chain
Better deals that are better managed for more development impact
World Bank has the capacity to support key links in the value chain
Transparency and Accountability across the whole chain 5

6. Strategic Setting: Challenges for Gas
Green Growth – leveraging gas as a transition to renewables: opportunity to optimize the use of gas in power systems, including intermittent renewables (e.g. integrated gas and renewables planning)
Access to energy and diversification of energy sources: Links to the Sustainable Energy for All (SEFA) Agenda
Trade: Foster exploration and an efficient use of gas at the country and regional level (e.g. infrastructure integration and/or demand pooling)
Integration of Gas-to-Power Value Chain: Harmonization of policy, regulation, and tariff setting to assure that gas is properly valued and risks mitigated along the entire value chain.
Harness new potential Shale Gas resources: Evaluate its potential and promote sound policy and regulation around its development

7. Role of the World Bank in Gas-to-Power
Electricity
Gas
Transportation
& Treatment
Electricity
Transmission
& Distribution
Gas
Production
Power
Generation
Electricity
Consumers
Resource estimation
Fiscal terms/tax
Licensing
Regulation and monitoring
Reduction of flaring
Gas pricing
Investment (IFC/MIGA)
Investment (private/public)
Tariffs
Regulation
Open access rules
Investment (private/public)
IPP framework/bidding
Regulation and monitoring
Electricity pricing
Guarantees
Energy efficiency
Investment
Regulation and monitoring
Electricity pricing
Guarantees
Efficiency
Integration of renewables
Electricity pricing
Subsidies
Energy efficiency
Cross-cutting issues
Pricing & Tariffs
Credit support
Reliability
Safeguards
Policy and Regulation
Transparency 7

8. Gas Map of Africa:
Where the Opportunities Are and how the Bank is Helping to Capture them
Gas as an Agent of Transformation
Resource:
Huge undeveloped discoveries
Non-associated gas, LNG
Rationale for Bank involvement:
Governance, macro management
Industrial development
Bank Interventions:
Revenue management
Institutional capacity building
Local gas market development
Forward/backward linkages (SME’s)
Gas as a Squandered Resource
Resource:
Huge proved reserves in Nigeria
Predominantly associated gas
Rationale for Bank involvement:
Energy access
Flaring avoidance
Bank Interventions:
GGFR
Gas and power pricing reform
Contract guarantees
Infrastructure finance
Gas as an Alternative to Coal
Resource:
Potential increase in pipeline gas exports from Mozambique
Potential shale gas and coal-bed methane
Offshore exploration beginning
Rationale for Bank involvement:
Lower carbon growth strategy
Possible Bank Interventions:
Regional pipeline expansion
Regulation of shale gas activities

9. Finance/Private Sector Development:
Examples of an Integrated Approach - Mozambique
SEGOM (Oil & Gas Unit):
Preparation of Gas Master Plan including downstream potential (financed by AAPF and PGI)
EI-TAF grant for legal support for mining negotiations and gas (LNG) negotiations
Direct/ immediate services to the government to improve sector governance
TA Project preparation ($50 mln IDA + pledges of US$20+ mln from at least two other donors for co-financing) for Government capacity building for both mining and gas
EITI implementation
Finance/Private Sector Development:
Supply chain linkages (through Growth Poles Project)
Economic Management:
Fiscal and revenue management (PRSP series)
Demand Side Governance work (jointly with EITI and CSO support grant) 9

10. Gas pricing policy study EITI implementation Africa Energy/SEGOM:
Examples of an Integrated Approach - Ghana
SEGOM:
Oil & Gas Capacity Building Project supports 11 agencies with responsibility for managing the sector ($38 mil)
Gas pricing policy study
EITI implementation
Africa Energy/SEGOM:
“Energizing Economic Growth in Ghana,” 2013 comprehensive study of petroleum and power sectors
Policy advice and TA on LNG import options
SEGOM/Economic Management:
Revenue management and forecasting technical assistance
Africa Energy/SEGOM (AFTEG)
Power sector financing and TA
WAGP guarantees 10

11. Summary Inventory of Our Oil and Gas Activities
Technical Assistance
Examples
Gas pricing policy development
Ghana, Iraq, Bangladesh
Gas master planning/domestic gas sector development
Mozambique, Ghana, Tanzania, Iraq
LNG import strategy
Bangladesh, Lebanon, Vietnam, Philippines
Balancing LNG Exports with domestic needs
Yemen, Tanzania
Shale gas and coal-bed methane policy and regulation
Poland, Botswana
Capacity Building
Ghana, Tanzania, Mozambique, Kenya
Financing
Examples
Lending for gas-fired power plants
Nigeria, Ghana, Bangladesh, Mauritania, Egypt
Partial risk guarantees for power/gas sales contracts
Nigeria, West African Gas Pipeline, Cote d’Ivoire
Gas distribution system efficiency improvement
Pakistan, Ukraine
Gathering systems (including flare reduction)
Kazakhstan,

12. Global Programs and Facilities That Support the Work
Extractive Industries Transparency Initiative (EITI)
Global standard for good governance in EI. Revenue transparency, tripartite process and platform for governance and accountability.
Extractive Industries Technical Advisory Facility (EI-TAF)
Better deals. Reducing asymmetry of information. Rapid response and support for contract negotiations
Global Gas Flaring Reduction (GGFR)
Capturing flared gas for energy access & power/industry

13. Global Gas Flaring Reduction (GGFR)
GGFR, a public-private partnership, supports national efforts to increase the use of associated natural gas, thus reducing gas flaring and venting which waste resources and increase global CO2 emissions. GGFR aims to improve energy efficiency, expand access to power by developing gas markets, and mitigate climate change through the reduction of greenhouse gas emissions from flaring.
Since its inception, GGFR has received almost $45 million in donor contributions which have helped finance 40 projects/activities (mostly in the Africa region).
GGFR has successfully contributed to a 20% decrease in global gas flaring the past seven years.
Gas flared annually in Africa could produce 200 TWh electricity (more than twice AFR’s power consumption (excl. South Africa).
GGFR Phase 4 began on January 1, 2013.

14. Extractive Industries Transparency Initiative (EITI)
EITI promotes and supports improved governance and transparency in resource-rich countries through the full publication and verification of company payments and government revenues.
As of March 2011, 38 countries are implementing EITI of which 20 countries have been declared compliant.
SEGOM manages a multi-donor trust fund that assists countries to implement the EITI. Since 2005, the EITI MDTF has received $61.5 million from 15 donors.
Next rules - Broadening and deepening EITI:
Improving quality of reports
Enhancing CSOs participation
New agenda: licensing and contract transparency, tax administration, budget transparency
Updated by Carmen

15. Extractive Industries Technical Advisory Facility (EI-TAF)
EI-TAF assists developing resource-rich countries to structure extractive industry transactions and related sector policies. EI-TAF facilitates rapid-response, third-party advisory services and capacity building for resource policy frameworks and transactions.
14 on-going projects in Liberia, Sierra Leone, Mozambique, Kenya, Guinea, Rwanda and Mauritania, Colombia, Haiti, etc.
Through its Knowledge Management window EI-TAF supports the production and dissemination of global knowledge products. The flagship product is the EI Source Book.
Established in 2009, EI-TAF has received a total of $25 million in contributions from 7 donors. Next steps include expanding the facility and increasing funding to US$ 50 million.