GUIDELINES FOR DEFINING PARTICIPANTS CHALLENGES

OBJECTIVE

Starting from 1911, Petrad has added a new feature entitled CHALLENGES to its 8-weeks Programme. The objective of this new feature is to link the learning process in the programme directly to the participants work situation. Programme participants are asked to identify specific challenges from their organisations at home so that they may seek solutions to them during the course. Participants will explain and discuss their challenges in groups and teams so as to learn from each other and help each other by sharing experiences and viewpoints. Since efficient performance, particularly within the petroleum sector, calls for skills in interaction among personnel, work on Challenges in the 8-weeks Course is also designed to promote such effective interaction.
THE CHALLENGES PROCESS

The process of working with the Challenges comprises the following steps: 1. Prior to the beginning of the programme, each participant will discuss with her/his colleagues and seniors at home the most important challenges facing their institution and sector. 2. The challenges must be formulated accurately so that they can be understood clearly and correctly by other participants in the course from different countries and with varied backgrounds. 3. Prior to the start of the course, Petard staff will review the challenges and place them into one of the 6-7 Groups outlined below. 4. Within each Group, participants with closely related challenges will be called upon to work in Teams where they will jointly seek solutions to their challenges. Discussions within the teams will in addition help participants develop their skills of communication and co-operation; 5. Each Group will be assigned an expert Supervisor who will facilitate discussions within the Teams/Groups so as to help participants find solutions to their challenges. 6. Each participant will prepare a 3-page report on her/his challenge. The report shall be submitted no later than Wednesday 17th October. 7. Each Group will select one Challenge to present to the Plenum Meeting on .. A 10minutes PowerPoint presentation of this challenge shall be prepared by the Group for presentation at the Plenum Meeting on Friday 26th October. The presentation should summarise the most important ideas that have been generated during the course for dealing with the selected Challenge. 8. After returning home, each participant is expected to make a presentation on her/his challenge to their respective organisation. A short report should be sent to Petrad summarising how the presentation was received. 9. After returning home, participants are encouraged to follow up with their colleagues and tutors from the 8-weeks Programme by e-mail or otherwise through any social media of choice.

GUIDELINES FOR IDENTIFYING AND FORMULATING CHALLENGES

Participants to the 8-weeks Programme for 2012 are hereby asked to discuss with their colleagues and seniors important challenges that face their organisation or country. Once the most relevant CHALLENGE has been identified, it should be carefully formulated so that it can be discussed and worked on during the Programme. In order to assist the participants with defining their challenges, some examples are provided (Attachment 1). The issues related to petroleum governance are divided into six groups as follows: Group-1 Group-2 Group-3 Group-4 Group-5 Group-6 Group-7 Challenges related to petroleum policy, legislation, model contracts and strategic planning. Challenges related to economics, the fiscal regime and the commercial contract terms. Challenges related to Government petroleum institutions, defining their roles and responsibilities and developing their capacities. Challenges related to resource infrastructure, and gas utilisation. management, field development,

Challenges related to health, safety and the environment (HSE), as well as the impact of petroleum operations on the economy and social development. Challenges related to the supervision of petroleum operations in the various phases (not including HSE). Others

Participants in the 8-weeks course are kindly asked to follow the steps described below: 1) Study the six groups carefully. Identify one of the six groups to which you can relate an important CHALLENGE for your organization. 2) If you fail to find one suitable group for your CHALLENGE, try to indicate which groups comes close. If this also proves difficult, list your proposal at group-7 which covers Others. 3) To help you with the task of defining the CHALLENGE, we have provided one example under each group (Attachment 1). Since Group 6 covers several phases of operations, we have provided 3 examples to help illustrate the range of issues. 4) Our priority is that you identify and formulate your own CHALLENGE in consultation with colleagues and seniors, so that the organization has a true interest in making use of the results. We ask you to spend time to accurately formulate your CHALLENGE so that we can understand it and process it correctly in preparation for the group work under the 8-weeks Course. 5) Should you wish to take one of the examples given as a starting point for defining your particular CHALLENGE, you are welcome to do so. Nevertheless, please write your final text in the box immediately below the example.

Attachment 1 EXAMPLES FOR THE DEFINITION OF CHALLENGES

CHALLENGE GROUP GROUP 1: Challenges related to petroleum policy, legislation, model contracts and strategic planning Example 1.1 Our petroleum law dates back to 1981 and obviously needs updating. We have in the meantime not discussed or agreed on a petroleum policy document. Our current operations are largely based on 8 PSA agreements all of which contain a stability clause that has dissuaded the country from updating its legislation. Recent speculative seismic surveys have shown highly prospective blocks with potential giant fields in Area B, to the north of Area A where operations are ongoing today. We intend to announce a major license round in Area B as soon as possible. How should we improve the frame conditions ahead of this rather important license round? How will that affect the earlier agreements? I wish to identify the most important preparation items, their minimum scope and time required to develop them, the right sequencing of actions, and a timetable for implementation. Participants own Proposal, or modification of the Example STATEMENT OF CHALLENGE

GROUP 2: Challenges related to economics, the fiscal regime and the commercial contract terms

Example 2.1 Our government insists on 12% royalty as stated by the law. There is no room for flexibility or exemption. Two medium sized oilfields are now under production and both pay full royalty. However, the country is keen to help develop three discoveries which the licensees claim to be non-commercial unless they are granted some tax relief. The licensees have proposed the following options: 1. 2. 3. A postponement of 50% of the royalty in the first two years to years 4 and 5 respectively. An option to buy the government share at a negotiated price Permission to burn the gas for the first 3 years

How should the Ministry prepare itself for such negotiations? What are the steps to be followed in such preparations? What are the options that should be considered in addition to the companys proposals? What are the impacts of a decision on any of the licensees proposals?

Participants own Proposal, or modification of the Example

GROUP 3: Challenges related to

Example 3.1 The petroleum regulatory authority (PRA) where I work was established in 2003

Government petroleum institutions, defining their roles and responsibilities and developing their capacities

to relieve the national oil company (NOCO) from its duties as regulator and thus make the latter concentrate on its business functions. Now, after nine years, the competence of PRA is still weak and the Ministry still turn to NOCO for advice and support. PRA has lost many of its outstanding personnel to the oil companies including NOCO. As revealed in a recent internal report, the main cause of the problem is the low salary scale at PRA which is identical with all other government institutions. I would like to explore what can be done to enhance the PRAs position so that it can meet the intentions behind its establishment. Are there ways to increase the salary of personnel at PRA? What other motivations can be used to attract talents and keep them in PRA? Can the problem be solved by seconding personnel from NOCO to PRA?

Participants own Proposal, or modification of the Example

GROUP 4: Challenges related to resource management, field development, infrastructure, and gas utilisation

Example 4.1 How can the regulatory authority influence the commercial choices made by the licensees when considering options for developing an oilfield? What are the most important principles that ought to be provided for in the legislation that will help promote a mutually meaningful and profitable dialogue between the licensees and the regulatory authority? What kind and level of competence do we need at the regulatory authority to accomplish our role effectively? How should reporting, consultations and discussions be organised between the authority and the operator/licensee? How do we bridge the gap between corporate economic objectives and social economic objectives in the important context of field development?

I wish to write a memo of three to four pages on the above subject during the course. I hope the memo will help my organisation in meeting these challenges. Participants own Proposal, or modification of the Example

GROUP 5: Challenges related to health, safety and the environment (HSE), as well as the impact of petroleum operations on the economy and social development

Example 5.1 My country is contemplating the first round of licensing within the next year. For a developing country like mine, with limited financial and human resources, what are the essential preparations for petroleum exploration and production operations, from the viewpoint of health safety and environmental protection that should be in place ahead of this first licensing round? Why are such preparations necessary? How can these be financed without creating a heavy burden on the government budget? Participants own Proposal, or modification of the Example

GROUP 6: Supervision/Monitoring of operations (excluding HSE): a) Pre-licensing issues b) Licensing and exploration issues. c) Development and Planning issues. d) Production issues e) Transportation issues. f) End production and decommissioning issues g) Downstream value enhancement issues.

Example 6.1 GENERAL In connection with drafting our first petroleum regulations I have been asked to supply views on the following 1. 2. 3. 4. 5. How can the government monitor petroleum operations without matching the operators organisations in terms of size and competence? Who owns the data from petroleum operations? Where should they be stored and for how long? What is the role of government in managing petroleum data both during the confidentiality period and after it? What are the principles that should be used in deciding on the form and frequency of reporting by operators to government authorities? Should the regulations clearly specify the form and quality of data that the operator supplies the regulatory authority?

Example 6.2 (a to d) 1. What are the specific roles and responsibilities of a regulatory authority which is responsible for monitoring exploration and production operations on behalf of the Ministry? Write a list of the main functions that will guide the authority in its work. What kind of relationship should the organisation have with a. The operator? b. The licensees? c. Other government regulatory organisations? d. Public?

2.

Example 6.3 (a to d) In a country where only 8 Exploration and Production licenses have been issued and only two fields are likely to be commercial so far: What is the optimum form and structure for organising the Regulatory Authority? What is the minimum number of personnel in total and in each unit? What should be the mode of work across disciplines and/or units? Which disciplines should be secured in house for each phase and totally? What external support services (if any) should be bought as and when required? Why? Participants own Proposal, or modification of the Example

GROUP 7 Others

Participants own Proposal