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University of Dundee Oil, Gas and Mining Cameron, Peter; Stanley University of Dundee Oil, Gas and Mining Cameron, Peter; Stanley, Michael C. DOI: 10.1596/978-0-8213-9658-2 Publication date: 2017 Document Version Publisher's PDF, also known as Version of record Link to publication in Discovery Research Portal Citation for published version (APA): Cameron, P. D., & Stanley, M. C. (2017). Oil, Gas and Mining: A Sourcebook for Understanding the Extractive Industries. (1 ed.) Washington, D.C.: The World Bank Group. DOI: 10.1596/978-0-8213-9658-2 General rights Copyright and moral rights for the publications made accessible in Discovery Research Portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. • Users may download and print one copy of any publication from Discovery Research Portal for the purpose of private study or research. • You may not further distribute the material or use it for any profit-making activity or commercial gain. • You may freely distribute the URL identifying the publication in the public portal. Take down policy If you believe that this document breaches copyright please contact us providing details, and we will remove access to the work immediately and investigate your claim. Download date: 20. Mar. 2018 Oil, Gas, and Mining ABOUT THE ONLINE PLATFORM AND THIS PUBLICATION The Extractive Industries Source Book (EISB) is a free The online EI Source Book platform was conceived and online interactive source (http://www.eisourcebook.org) launched by Michael C. Stanley, Global Lead for Extractive that is built upon a coherent and incisive narrative analysis Industries at the World Bank, using a Development Grant of the extractive sector as a whole, supplemented by hun- Facility (DGF) grant prepared to foster a partnership dreds of downloads and other web resources, including between the World Bank Group and a Global Knowledge specially commissioned reports, summaries, and briefs. The Consortium. This collaboration includes a group of policy EISB provides end-users with technical understanding and centers in universities and other organizations, all focusing practical options around oil, gas, and mining sector devel- on practical solutions to extractive industries challenges, led opment issues. The end-user community using this resource by Professor Peter D. Cameron at the University of Dundee, is diverse, and includes representatives of government, United Kingdom. This print version was made possible industry, academic institutions, nongovernmental organi- through the many achievements of the online EI Source zations, and individuals. Book to date. Oil, Gas, and Mining A SOURCEBOOK FOR UNDERSTANDING THE EXTRACTIVE INDUSTRIES Peter D. Cameron and Michael C. Stanley © 2017 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 20 19 18 17 This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclu- sions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The bound- aries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) http://creativecommons .org/licenses/by/3.0/igo. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions: Attribution—Please cite the work as follows: Cameron, Peter D., and Michael C. Stanley. 2017. Oil, Gas, and Mining: A Sourcebook for Understanding the Extractive Industries. Washington, DC: World Bank. doi:10.1596/978-0-8213-9658-2. License: Creative Commons Attribution CC BY 3.0 IGO Translations—If you create a translation of this work, please add the following disclaimer along with the attribution: This translation was not created by The World Bank and should not be considered an official World Bank translation. The World Bank shall not be liable for any content or error in this translation. Adaptations—If you create an adaptation of this work, please add the following disclaimer along with the attribution: This is an adaptation of an original work by The World Bank. Views and opinions expressed in the adaptation are the sole responsibility of the author or authors of the adaptation and are not endorsed by The World Bank. Third-party content—The World Bank does not necessarily own each component of the content contained within the work. The World Bank therefore does not warrant that the use of any third-party-owned individual component or part contained in the work will not infringe on the rights of those third parties. The risk of claims resulting from such infringement rests solely with you. If you wish to re-use a component of the work, it is your responsibility to determine whether permission is needed for that re-use and to obtain permission from the copyright owner. Examples of components can include, but are not limited to, tables, figures, or images. All queries on rights and licenses should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: [email protected]. ISBN (paper): 978-0-8213-9658-2 ISBN (electronic): 978-0-8213-9961-3 DOI: 10.1596/978-0-8213-9658-2 Cover design: Bill Pragluski/Critical Stages Library of Congress Cataloging-in-Publication Data has been requested. CONTENTS Foreword xi Acknowledgments xiii About the Authors xv Abbreviations xvii PART I EXTRACTIVES FOR DEVELOPMENT Chapter 1 Shifting Patterns of Demand and Supply 3 1.1 Introduction 3 1.2 The Demand for Knowledge 4 1.3 The Supply of Knowledge 8 1.4 Bridging the Knowledge Gap 10 1.5 Our Approach 14 1.6 Conclusions 15 Notes 15 References 16 Other Resources 17 Chapter 2 Extractives: Opportunities and Challenges for Development 19 2.1 Introduction 19 2.2 The Opportunities Arising from Resource Abundance 20 2.3 The Challenges 23 2.4 Understanding the Challenges: Changing Perspectives 27 2.5 Applying New Insights 29 2.6 Conclusions 30 Notes 31 References 33 Other Resources 37 Chapter 3 The Extractive Industries 39 3.1 Introduction 39 3.2 Common Features of the Industries 40 3.3 Key Differences of the Industries 42 3.4 EI Sector Dynamics 46 3.5 Conclusions 51 Notes 51 v References 52 Other Resources 53 PART II THE VALUE CHAIN APPROACH TO EXTRACTIVES Chapter 4 Policy, Legal, and Contractual Framework 57 4.1 Knowledge Core 57 4.2 Getting Started: Facts of EI Life 58 4.3 Eight Key Challenges 60 4.4 Policy Priorities 61 4.5 Hydrocarbons and Mining Laws 66 4.6 Contracts and Licenses 73 4.7 The Award of Contracts and Licenses 90 4.8 Why Regulations Are Necessary 97 4.9 Investment Guarantees: Stabilization 99 4.10 Contract Negotiations 101 4.11 Disputes: Anticipating and Managing Them 102 4.12 Summary 106 4.13 Taking Action: Recommendations and Tools 107 Notes 108 References 111 Other Resources 114 Chapter 5 Sector Organization and Regulatory Institutions 115 5.1 Knowledge Core 115 5.2 Organization in the Public Interest 116 5.3 Special Issues 131 5.4 Summary and Recommendations 144 5.5 Practical Tools 145 Notes 145 References 146 Other Resources 148 Chapter 6 Fiscal Design and Administration 149 6.1 Knowledge Core 149 6.2 Key Fiscal Objectives 150 6.3 The Main Types of EI Fiscal Systems 154 6.4 Main Fiscal Instruments under a Fiscal Regime 155 6.5 Special EI Fiscal Topics and Provisions 166 6.6 EI Fiscal Administration 173 6.7 Summary and Recommendations 176 6.8 Action Tools 178 Notes 178 References 179 Other Resources 181 Chapter 7 Revenue Management and Distribution 183 7.1 Knowledge Core 183 7.2 Why Revenue Management is Difficult 184 7.3 Consume or Save? 185 7.4 Resource Funds and Their Popularity 189 7.5 Alternative Means of Addressing Fiscal Sustainability 196 7.6 Addressing Volatility: Stabilization Funds 198 7.7 Alternative Means of Addressing Volatility 200 7.8 Spending Choices and Use of Government Revenues 201 vi CONTENTS 7.9 Revenue Allocation and Subnational Issues 205 7.10 Summary and Recommendations 211 7.11 Practical Tools 211 Notes 212 References 214 Other Resources 218 PART III TOWARD GOOD GOVERNANCE Chapter 8 Transparency and Accountability 221 8.1 Knowledge Core 221 8.2 Definition and Scope 222 8.3 The Benefits of Transparency 223 8.4 Challenges and Special Issues 224 8.5 Transparency Initiatives 228 8.6 Emerging Global Norms and Standards 231 8.7 Conclusions 234 8.8 Action Tools 235 Notes 235 References 236 Other Resources 238 Chapter 9 Sustainable Development Implementation 239 9.1 Knowledge Core 239 9.2 Two Key Challenges 241 9.3 Challenge 1: Designing and Implementing Policies to Ensure That EI Sector Investments Create Positive and Sustainable Impacts 242 9.4 Challenge 2: Environmental and Social Impacts 252 9.5 Tools: Legal and Regulatory 260 9.6 The Responses 269 9.7
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