1 / 16

Petroleum Funds and the Experience in Chad Silvana Tordo, Sr. Energy Economist, COCPO

Petroleum Funds and the Experience in Chad Silvana Tordo, Sr. Energy Economist, COCPO Washington, D.C. May 16-17, 2007. Introduction Characteristics of oil revenue Fiscal policy implications NRF: Objectives Some well established oil funds Important features

shelly
Download Presentation

Petroleum Funds and the Experience in Chad Silvana Tordo, Sr. Energy Economist, COCPO

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Petroleum Funds and the Experience in Chad • Silvana Tordo, Sr. Energy Economist, COCPO • Washington, D.C. • May 16-17, 2007

  2. Introduction • Characteristics of oil revenue • Fiscal policy implications • NRF: • Objectives • Some well established oil funds • Important features • Maturity of the HC sector: why does it matter? • Chad: • Is Chad is so special?

  3. Characteristics of Oil Revenue Uncertainty Volatility Mostly beyond the control of HG/Oil Companies

  4. Fiscal Policy Implications To mitigate the effects of uncertain and volatile revenue countries could: • “Stabilize” expenditure, use revenue to ensure against volatility/uncertainty • Promote investment friendly environment

  5. Fiscal Policy Rules • Level of public expenditure to be consistent with sustainable rate/capacity growth • Use conservative price and production forecast • Use appropriate risk mitigation tools (fiscal systems, oil funds, contracts, hedging ..) • Save excess revenue abroad • …but fiscal discipline is the “key”

  6. Objectives of NRFs To protect the economy from resource revenue volatility • Stabilization • Savings • Precautionary • Other To set aside revenue for future generations To hedge against extraordinary events Lack of absorptive capacity

  7. Indicators of the Relation of the Oil Sector to the Economy, 2004 Source: Experiences with oil funds. ESMAP 2006

  8. Some well established oil funds:

  9. Important Features of NRFs: • Integration with the budget process: • Virtual • Real • Other practical issues: • Legal foundation • Rules for flows in and out of the NRF • Financial management (clear investment strategy, performance benchmark) • Oversight (accountability, independent audit, transparency)

  10. New producers, especially developing countries, face a number of issues which make the use of NRFs both attractive and problematic

  11. Maturity of the HC sector: why does it matter?

  12. Is Chad so special? • New hydrocarbon province: geological risk, quality, development cost • Relatively high country risk • Large immediate expenditure needs • Low absorptive capacity • Public expenditure management issues • Governance challenges

  13. Initial arrangement

  14. Temporary mechanism

  15. Thank you!

More Related