Oil & Gas Policy Issues

Oil & Gas Policies that Benefit the Poor

If managed properly and in an environmentally responsible way, oil and gas production can provide substantial benefits to developing countries. In that context, the World Bank Group helps client countries to create the enabling environment for the private sector to finance and manage oil and gas activities, while governments concentrate on protecting the public interest through effective regulation and monitoring, as well as sound revenue management.

The Bank’s Oil, Gas, and Mining Policy division -through an integrated set of services, loans, technical assistance, guarantees and knowledge products- provides advice on legal, fiscal and contractual issues, regulation, sector restructuring, and privatization. These efforts help state-enterprises transition to the private sector –reducing the drain on the public sector, lowering costs of production, and providing a level playing field that encourages entrepreneurs to enter a competitive market. The government still retains a key role through regulation and monitoring, ensuring that monopolistic abuses are avoided.

Oil and gas production also raise profound developmental issues. Extraction contracts must benefit host governments and support future exploration and production, and tax revenue from these projects must be carefully accounted for and be maximized for the benefit of the country. The Bank group works with several governments to improve their governance and management of oil revenues and, where appropriate, designs the operating conditions for oil funds that will help manage these revenues for future generations. To support these efforts, the Bank has not only endorsed the Extractive Industries Transparency Initiative, but is also managing a multi-donor trust fund aimed at helping governments in developing countries to implement the transparency principles of the EITI process.

Finally, oil and gas production must be properly managed to avoid harmful environmental and social impacts. The Bank is working with interested parties to design best practice procedures and with local governments and communities to implement these procedures. Environmental activities such as working to improve fuel quality (including the phasing out of leaded gasoline) are important for public health, especially in large cities of the developing world.

Related publications:

Issues in estimating the employment generated by energy sector activities by Robert Bacon and Masami Kojima, June 2011.

Vulnerability to higher oil prices: Decomposition analysis of 158 countries between 2003 and 2008  
by Masami Kojima (preliminary results)

Changes in CO₂ Emissions from Energy Use: A Multicountry Decomposition Analysis by Masami Kojima and Robert Bacon , Extractive Industries for Development Series #11
Supplementary graphs on sectoral analysis for 21 countries 

Cambodia Oil & Gas Briefing Notes 

Biofuels: Big potential for some...but big risks too, Masami Kojima and Irina I. Klytchnikova. Development Outreach