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1. Facing the Future: What National Oil Companies Say About the Energy Transition

Author:
Andrea Furnaro and David Manley
Publication Date:
11-2023
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
National oil companies (NOCs) should publicly acknowledge the risk of the energy transition, assess this risk, and act by implementing mitigation plans. Only 9 out of 21 NOCs analyzed acknowledge the risk of the energy transition, 4 have mentioned the use of transition risk assessments, and 5 have explicitly mentioned strategies to mitigate the risk. None of the NOCs have published “just transition plans” detailing how they will help workers and communities. NOCs do not plan to decrease investments in risky oil and gas assets. Petrobras (Brazil), Petronas (Malaysia) and Sonangol (Angola) are divesting from less valuable assets, but not necessarily to mitigate transition risk or downsize operations. Some NOCs, such as NNPC (Nigeria) and GNPC (Ghana), want to expedite drilling before oil and gas demand falls and acquire assets divested by other companies. At least six NOCs intend to increase oil and gas investment to secure energy supplies. Most NOCs intend to diversify, especially into gas, oil refineries, petrochemicals and renewable energy. However, it is unclear how much NOCs are spending on diversification or whether these are effective mitigation strategies. NOCs can learn from each other. Two NOCs—Ecopetrol (Colombia) and Petrobras—are clear leaders in terms of recognition of energy transition risk. However, NOCs disclosing more transition risk information are not necessarily also those reducing higher-risk investments.
Topic:
Oil, Business, Investment, and Energy Transition
Political Geography:
Africa and Global Focus

2. No Time to Waste: Governing Cobalt Amid the Energy Transition

Author:
David Manley, Patrick Heller, and William Davis
Publication Date:
03-2022
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
Cobalt is critical. Along with other critical minerals, cobalt has important economic uses and currently few viable substitutes, yet its supply faces a high risk of disruption. Manufacturers of batteries for electric vehicles (EVs) want the metal. EV sales—and likewise, cobalt demand— could grow a lot more. Yet, cobalt may not remain critical for decades to come. EV buyers, battery manufacturers and miners fear the high prices and disrupted supply, as well as human right abuses, environmental destruction, corruption, and political risk. As with other critical minerals, industries are seeking to use less of the metal. The time available for the Democratic Republic of Congo (DRC) and other countries to benefit from mining the metal may be short-lived. Good governance is therefore important both for people in mining countries and for humanity to meet the Paris Climate Agreement. This report aims to help governments and their advisors in mining countries, such as the DRC, derive value from mining cobalt, develop industry along the battery-supply chains and address a host of problems from human rights abuses to corruption. The report is also for policy-makers working to ensure that the world delivers enough cobalt in time for the global energy transition.
Topic:
Natural Resources, Energy, Green Transition, and Cobalt
Political Geography:
Africa and Democratic Republic of Congo

3. Triple Win: How Mining Can Benefit Africa’s Citizens, Their Environment and the Energy Transition

Author:
Papa Daouda Diene, David Manley, Silas Olan'g, and Thomas Scurfield
Publication Date:
11-2022
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
Africa’s mineral wealth is essential for the energy transition and for the hundreds of millions of people currently living in poverty in African mining countries. Whether and how governments and companies move to further extract this mineral wealth is not only economically and environmentally important for Africa, but also for the vital importance of protecting the world’s rapidly diminishing forests. The world therefore needs a mining triple win: policies that can benefit Africa’s citizens, their environment, and the energy transition. These policies need to work for all if they are to work for any of them. But mining in Africa has been riddled with injustice. Humanity cannot afford to repeat the mistakes that have beset Africa’s mining in the past. To achieve a triple win, this time must be different. There are a whole host of policies available, and many ideas from experts. NRGI has brought these together and considered how they may work to truly achieve a triple win.
Topic:
Environment, Poverty, Natural Resources, Mining, Minerals, Energy, and Green Transition
Political Geography:
Africa

4. Surplus or Shortage? The Challenge of Setting a Domestic Supply Obligation for Tanzania’s Offshore Gas BRIEFING20 JULY 2021

Author:
David Manley and Thomas Scurfield
Publication Date:
07-2021
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
One of the priorities of Tanzania’s new president is negotiating a way forward for the country’s long-planned offshore gas project. A key issue in this negotiation is the amount of gas that the government will take in the form of a domestic supply obligation (DSO). To increase the country’s energy supply, it wants a larger DSO than the currently agreed amount of around 8.5 percent of reserves. This report analyzes the implications of a larger DSO for meeting Tanzania’s energy needs, for the offshore project and the government revenues it can generate. It builds on previous NRGI analyses by the authors.
Topic:
Energy Policy, Natural Resources, Gas, Regulation, Legislation, Tax Systems, Commodities, and Revenue Management
Political Geography:
Africa and Tanzania

5. How Tanzania Can Secure a Good Deal for its Offshore Gas

Author:
Thomas Scurfield and David Manley
Publication Date:
09-2019
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
The Tanzanian government and a consortium of companies are negotiating the regulatory terms for a game-changing liquefied natural gas (LNG) project. In this brief, the authors update a previous analysis of some of the key decisions that will be made in the negotiation and their potential impact on whether the LNG project proceeds and the levels of revenues that the project could generate for the government. This update accounts for new information and changes in company planning. There is a reasonable chance that foreign investment in the LNG project will not happen under current conditions. NRGI’s economic model and specific assumptions of the project suggest that a long-term LNG price of USD 11 per mmBtu is needed for investors to earn the return they usually require from LNG projects. Current forecasts by the IMF and World Bank are $7-8 per mmBtu. As the authors discuss in the brief, the chances of investment will shrink further if, during the negotiations, the government increases taxes and requires companies to share a greater portion of the gas with Tanzania’s home market. Government officials could wait and hope that conditions improve, and perhaps then impose stricter terms. However, this would delay the point at which the country would start generating benefits from the project. If officials want to accelerate development, without harming long-term gains for the country, they could: adopt a more progressive tax regime, avoid raising the share of gas to be sold to the home market, and establish a legal framework that both company managers and future generations of Tanzanians will trust.
Topic:
Gas, Regulation, Legislation, Tax Systems, Commodities, and State-Owned Enterprises
Political Geography:
Africa and Tanzania

6. Tanzania and Statoil: What Does the Leaked Agreement Mean for Citizens?

Author:
David Manley and Thomas Lassourd
Publication Date:
08-2014
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
The leak in July 2014 of an important addendum to a production sharing agreement (PSA) between Norwegian national oil company Statoil and the government of Tanzania has ignited a debate on whether Tanzania “got a good deal” from granting these extraction rights for a block now expected to produce large amounts of commercial natural gas. The debate demonstrates a public appetite for explanations from the government on the country’s management of its nascent oil and gas industry. Potentially at stake are billions of dollars of potential revenues that could boost socio-economic development in Tanzania if it becomes possible to extract these gas resources. An NRGI financial analysis suggests that the deal is not out of line with international standards for a country that had no proven offshore reserves of natural gas at the time when the original contract was signed. Thus claims that the addendum is on its face grossly unfair to Tanzania appear to be premature. The outgoing managing director of Tanzania’s national oil company TPDC gave an estimate of the government’s take of 61 percent, a figure that our own model determined to be plausible under a reasonable set of assumptions. There are some caveats to this result which we explain in the body of the main briefing.
Topic:
Corruption, Natural Resources, Tax Systems, Accountability, and Revenue Management
Political Geography:
Africa, Tanzania, and Sub-Saharan Africa