47115 v 2 A CITIZEN'S GUIDE TO NATIONAL OIL COMPANIES Part B Data Directory October 2008 Copyright © 2008 The International Bank for Reconstruction and Development/The World Bank 1818 H Street, NW Washington, DC 20433 and The Center for Energy Economics/Bureau of Economic Geology Jackson School of Geosciences, The University of Texas at Austin 1801 Allen Parkway Houston, TX 77019 All rights reserved. This paper is an informal document intended to provide input for the selection of a sample of representative national oil companies to be analyzed within the context of the Study on National Oil Companies and Value Creation launched in March 2008 by the Oil, Gas, and Mining Policy Division of The World Bank. The manuscript of this paper has not been prepared in accordance with the procedures appropriate to formally edited texts. Some sources cited in this paper may be informal documents that are not readily available. The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the International Bank for Reconstruction and Development/The World Bank and its affiliated organizations, or those of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. This report may not be resold, reprinted, or redistributed for compensation of any kind without prior written permission. For free downloads of this paper or to make inquiries, please contact: Oil, Gas, and Mining Policy Division Center for Energy Economics The World Bank Bureau of Economic Geology 2121 Pennsylvania Avenue, NW Jackson School of Geosciences Washington DC, 20433 The University of Texas at Austin Telephone: 202-473-6990 Telephone: +1 281-313-9753 Fax: 202-522 0395 Fax: +1 281-340-3482 Email: ogmc@worldbank.org E-mail: energyecon@beg.utexas.edu Web: http://www.worldbank.org/noc Web: www.beg.utexas.edu/energyecon ACKNOWLEDGMENTS This Citizen's Guide to National Oil Companies presents the results of a survey intended to provide input for the selection of a sample of representative national oil companies to be fully analyzed within the Study on National Oil Companies and Value Creation (launched in March 2008) by the Oil, Gas, and Mining Policy Division of The World Bank. The task manager for this report was Silvana Tordo (lead energy economist, Oil, Gas and Mining Division of the World Bank). The research was led Michelle Michot Foss, chief energy economist and head of the Center for Energy Economics, Bureau of Economy Geology, Jackson School of Geosciences at the University of Texas at Austin, and her team--Gurcan Gulen, senior energy economist; Miranda Ferrell Wainberg, senior researcher; Ruzanna Makaryan, senior energy analyst; Dmitry Volkov, energy analyst; Mariano Gurfinkel, former Assistant Head (now Unconventional Resources and New Ventures, Hess Corporation); Omar Valdez, Columbia University, School of International Public Affairs; Jim Starr, University of Richmond. Inputs and comments were also provided by a number of advisors and mentors, including: Bhamy Shenoy, consultant; Alfred Boulos, Boulos International; Jonathan Stern, Oxford Institute of Energy Studies; Javier Estrada, Analytica Energetica; Ernesto Marcos, Marcos y Asociados. The comments of World Bank reviewers--Olivier Fremond (country manager, AFMGA), Jonathan Walters (sector manager, MNSSD), Clive Armstrong (lead economist, COCSC), and Michael Levistky (lead economist, COCPO), and the contribution of the task manager are gratefully acknowledged. Special thanks go to Stephen Spector for editing the report and Esther Petrilli- Massey for coordinating its publication. LIST OFACRONYMS BOD Board of Directors BOE Barrels of oil equivalent CEE Center for Energy Economics at the University of Texas-Austin CSR Corporate social responsibility DA Data attribute E&P Exploration and Production EBIT Earnings before interest payments on borrowings and taxes EITI Extractive Industries Transparency Initiative EOY End of year ESMAP Energy Sector Management Assistance Program (World Bank) GAAP Generally Accepted Accounting Principles GDP Gross domestic product HC Hydrocarbon HR Human resources IFRC International Financial Reporting Standards IOC International oil company IPO Initial public offering IPP Independent power producer LNG Liquefied natural gas LPG Liquefied petroleum gas MW Megawatt NGL Natural gas liquids NOC National oil company PSA Production Sharing Agreement (also known as Production Sharing Contract) R/P Reserves-to-production (expressed in years) RMB Renminbi, Chinese currency ROA Return on assets ROCE Return on capital employed SEC Securities and Exchange Commission SOE State-owned enterprise USEIA United States Energy Information Administration WGI World Governance Indicators WTO World Trade Organization COMMON VOLUMETRIC TERMS MCF Thousand cubic feet (of natural gas) MMCF Million cubic feet MCF/D Thousand cubic feet per day MMCF/D Million cubic feet per day BCF Billion cubic feet BCF/D Billion cubic feet per day TCF Trillion cubic feet MB Thousand barrels (of oil or oil equivalent) MMB Million barrels MB/D Thousand barrels per day MMB/D Million barrels per day MCM Thousand cubic meters MMT Million tonnes (metric tons) TPA Tonnes (metric tons) per annum A Citizen's Guide to National Oil Companies Page 4 DEFINITIONS USED IN THIS DIRECTORY Avg reserve replacement rate (BOE, %) Net BOE additions/BOE production Avg reserve replacement cost ($/BOE) Avg total cost incurred in upstream oil & gas activities/avg net BOE reserve additions Change in BOE reserves (%) Across all periods Change in BOE production (%) Across all periods Avg upstream operating cash flow/upstream (DDA + results of operations from producing capital expenditures (%) activities)/total upstream CAPEX DDA is depreciation, depletion and amortization Avg upstream exploration and production Total costs incurred in oil & gas activities/total expenses ($/BOE) BOE production Avg production costs excluding production Production costs excluding production taxes ($/BOE) taxes/total BOE production Avg upstream after-tax income/revenues (%) (Upstream income or loss before income and non-income taxes - income taxes - non-income taxes)/total E&P revenues Avg earnings before interest & taxes ($/BOE) Upstream income or loss before income and non-income taxes/total BOE production Avg income after all taxes ($/BOE) (Upstream income or loss before income and non-income taxes - income taxes - non-income taxes)/total BOE production Avg effective tax rate (%) (Income taxes + non-income taxes)/Upstream income or loss before income and non-income taxes Avg operating cash flow vs costs incurred (%) (DDA + results of operations from producing activities)/total costs incurred in oil & gas activities After tax return on assets Results of operations from producing activities/total value upstream assets Avg refinery utilization rate (%) Total refining throughput/primary distillation capacity A Citizen's Guide to National Oil Companies Page 5 Change in total refining production (%) Across all periods Change in refinery capacity (%) Across all periods Avg income from operations per unit volume Refining and marketing income or loss/total ($M/barrel) refinery production Avg refining and marketing operating cash (DDA + refining and marketing income or flow/capital expenditures (%) loss)/total capital expenditures Avg pre-tax return on assets (%) Refining and marketing income before taxes and other costs/total value refining and marketing assets Avg total operating cash flow/total capital Cash provided by operating activities/total expenditures (%) capital expenditures Avg gross debt/after-tax capital employed (%) Gross debt/total capital employed Avg operating margin (%) EBIT/total revenues Avg profit margin (%) Net income/total revenues Avg effective tax rate (%) (Income taxes + non-income taxes)/EBIT Avg reinvestment risk (%) Cash provided by operating activities/total capital expenditures Avg return on assets (%) Net income/total assets Avg return on total capital employed (%) Net income/total capital employed Total capital employed is gross debt plus total equity Avg fiscal contribution to State (%) Total fiscal contribution to State/total revenues BOE R/P (years) Country BOE reserves/(country BOE production*365) Net oil and gas export revenues as share of Country BOE export revenues/country total overall export revenues (oil trade balance as export revenues % of exports of goods and services) Total oil and gas revenues as a share of GDP Country BOE export revenues/real GDP PPP (%) Total oil and gas revenue as a share of total Country BOE export revenues/total Treasury government revenue (%) inflows A Citizen's Guide to National Oil Companies Page 6 Country oil/natural gas split, reserves (%) Country oil reserves/total BOE reserves Country oil/natural gas split, production (%) Country oil production/total BOE production Company domestic reserves as % of country (Company total BOE reserves - company BOE reserves international BOE reserves)/country total BOE reserves Company domestic reserves as % of total (Company total BOE reserves - company company reserves international BOE reserves)/company total BOE reserves Company domestic BOE production as % of (Company total BOE production - company country BOE production international BOE production)/(country BOE production*365) Country BOE production as % of total Country BOE production/country BOE country BOE consumption consumption Company primary distillation capacity as % Company primary distillation capacity/country of total country primary distillation capacity primary distillation capacity Company refinery throughput as % of total Company refinery throughput/country refinery country refinery throughput throughput Avg company international BOE production Company international BOE as % avg total company BOE production production/company total BOE production Avg company international refinery capacity Company international primary distillation as % company total refinery capacity capacity/company total primary distillation capacity Asset value relative to workforce (total assets Total assets/total employees with adjustments per employee, $ M) for $ scale Compensation obligations relative to Total employee compensation costs/total workforce ($ M) employees with adjustments for $ scale Financial performance relative to workforce Total revenues/total employees with (total revenue per employee, $ M) adjustments for $ scale A Citizen's Guide to National Oil Companies Page 7 Table of Contents ACKNOWLEDGMENTS.......................................................................................3 LIST OF ACRONYMS ...........................................................................................3 COMMON VOLUMETRIC TERMS....................................................................4 DEFINITIONS USED IN THIS DIRECTORY....................................................5 OVERVIEW OF THE GUIDE.............................................................................13 Why a Citizen's Guide to NOCs?................................................................................................ 13 Organization of the Guide.......................................................................................................... 14 PART B. DATA DIRECTORY ............................................................................14 NOCs contained in this Directory ............................................................................................. 14 Structure of the Directory.......................................................................................................... 15 The NOCs in East Asia and the Pacific..................................................................................... 16 China: China National Offshore Oil Company (CNOOC)....................................................... 17 Summary Report................................................................................................................... 17 Database................................................................................................................................ 19 Sources of Information ......................................................................................................... 37 China: PetroChina..................................................................................................................... 38 Summary Report................................................................................................................... 38 Database................................................................................................................................ 40 Sources of Information ......................................................................................................... 56 China: China Petroleum & Chemical Corporation (Sinopec)................................................... 57 Summary Report................................................................................................................... 57 Database................................................................................................................................ 59 Sources of Information ......................................................................................................... 73 Indonesia: Pertamina................................................................................................................. 74 Summary Report................................................................................................................... 74 Database................................................................................................................................ 77 Sources of Information ......................................................................................................... 94 Malaysia: Petroliam Nasional Berhad (Petronas)..................................................................... 95 Summary Report................................................................................................................... 95 Database................................................................................................................................ 98 Sources of Information ....................................................................................................... 113 Thailand: PTT Public Company Ltd....................................................................................... 114 Summary Report................................................................................................................. 114 Database.............................................................................................................................. 116 A Citizen's Guide to National Oil Companies Page 8 Sources of Information ....................................................................................................... 131 Vietnam: Petrovietnam ........................................................................................................... 132 Summary Report................................................................................................................. 132 Database.............................................................................................................................. 134 Sources of Information ....................................................................................................... 145 The NOCs in Europe and Central Asia .................................................................................. 146 Azerbaijan: State Oil Company of Azerbaijan Republic (SOCAR)....................................... 147 Summary Report................................................................................................................. 147 Database.............................................................................................................................. 149 Sources of Information ....................................................................................................... 159 Belarus: Belarusneft................................................................................................................ 160 Summary Report................................................................................................................. 160 Database.............................................................................................................................. 162 Sources of Information ....................................................................................................... 171 France: Gaz de France (GDF)................................................................................................. 172 Summary Report................................................................................................................. 172 Database.............................................................................................................................. 174 Souces of Information......................................................................................................... 185 Kazakhstan: KazMunaiGaz .................................................................................................... 186 Summary Report................................................................................................................. 186 Database.............................................................................................................................. 188 Souces of Information......................................................................................................... 199 Norway: StatoilHydro............................................................................................................. 200 Summary Report................................................................................................................. 200 Database.............................................................................................................................. 203 Sources of Information ....................................................................................................... 220 Russia: Gazprom..................................................................................................................... 221 Summary Report................................................................................................................. 221 Database.............................................................................................................................. 223 Sources of Information ....................................................................................................... 235 Russia: Rosneft ....................................................................................................................... 236 Summary Report................................................................................................................. 236 Database.............................................................................................................................. 238 Sources of Information ....................................................................................................... 251 Russia: Transneft .................................................................................................................... 252 Summary Report................................................................................................................. 252 Database.............................................................................................................................. 254 Sources of Information ....................................................................................................... 265 Uzbekistan: Uzbekneftegaz .................................................................................................... 266 Summary Report................................................................................................................. 266 Database.............................................................................................................................. 268 Sources of Information ....................................................................................................... 278 The NOCs in Latin America and the Carribean.................................................................... 279 Argentina: Energía Argentina Sociedad Anónima (ENARSA).............................................. 280 Summary Report................................................................................................................. 280 A Citizen's Guide to National Oil Companies Page 9 Data Table........................................................................................................................... 282 Souces of Information......................................................................................................... 294 Bolivia: Yacimientos Petrolíferos Fiscales Bolivianos (YPFB)............................................. 295 Summary Report................................................................................................................. 295 Database.............................................................................................................................. 297 Sources of Information ....................................................................................................... 308 Brazil: Petróleo Brasileiro S.A. (Petrobras)............................................................................ 309 Summary Report................................................................................................................. 309 Database.............................................................................................................................. 312 Sources of Information ....................................................................................................... 328 Colombia: Ecopetrol........................................................................................................... 329 Summary Report................................................................................................................. 329 Database.............................................................................................................................. 331 Sources of Information ....................................................................................................... 342 Ecuador: PetroEcuador ........................................................................................................... 343 Summary Report................................................................................................................. 343 PetroEcuador Data Table.................................................................................................... 345 PetroEcuador Sources......................................................................................................... 356 Mexico: Petroleos Mexicanos (PEMEX)................................................................................ 357 Summary Report................................................................................................................. 357 Database.............................................................................................................................. 360 Sources of Information ....................................................................................................... 374 Peru: PetroPeru ....................................................................................................................... 375 Summary Report................................................................................................................. 375 Database.............................................................................................................................. 377 Sources of Information ....................................................................................................... 388 Venezuela: Petroleos de Venezuela S.A. (PDVSA)............................................................... 389 Summary Report................................................................................................................. 389 Database.............................................................................................................................. 391 Sources of Information ....................................................................................................... 405 The NOCs in the Middle East and North Africa ................................................................... 406 Algeria: Sonatrach .................................................................................................................. 407 Summary Report................................................................................................................. 407 Database.............................................................................................................................. 409 Sources of Information ....................................................................................................... 421 Egypt: Egyptian General Petroleum Corporation (EGPC)..................................................... 422 Summary Report................................................................................................................. 422 Database.............................................................................................................................. 424 Sources of Information ....................................................................................................... 435 Iran: National Iranian Oil Company (NIOC).......................................................................... 436 Summary Report................................................................................................................. 436 Database.............................................................................................................................. 438 Sources of Information ....................................................................................................... 449 Kuwait: Kuwait Petroleum Corporation (KPC)...................................................................... 450 Summary Report................................................................................................................. 450 Database.............................................................................................................................. 452 A Citizen's Guide to National Oil Companies Page 10 Sources of Information ....................................................................................................... 464 Libya: Libyan National Oil Corporation (LNOC).................................................................. 465 Summary Report................................................................................................................. 465 Database.............................................................................................................................. 467 Sources of Information ....................................................................................................... 479 Oman: Petroleum Development Oman (PDO) ....................................................................... 480 Summary Report................................................................................................................. 480 Database.............................................................................................................................. 482 PDO Sources....................................................................................................................... 492 Qatar: Qatar Petroleum (QP) .................................................................................................. 493 Summary Report................................................................................................................. 493 Database.............................................................................................................................. 495 Sources of Information ....................................................................................................... 505 Saudi Arabia: Saudi Aramco .................................................................................................. 506 Summary Report................................................................................................................. 506 Database.............................................................................................................................. 508 Sources of Information ....................................................................................................... 519 Syria: Syrian Petroleum Company (SPC)............................................................................... 520 Summary Report................................................................................................................. 520 Database.............................................................................................................................. 522 Source of Information......................................................................................................... 533 Tunisia: Entreprise Tunisienne d'Activités Pétrolières (ETAP) ............................................. 534 Summary Report................................................................................................................. 534 Database.............................................................................................................................. 536 Sources of Information ....................................................................................................... 546 United Arab Emirates (UAE): Abu Dhabi National Oil Company (ADNOC) ...................... 547 Summary Report................................................................................................................. 547 Database.............................................................................................................................. 549 Sources of Information ....................................................................................................... 560 The NOCs in South Asia........................................................................................................... 561 Bangladesh: PetroBangla........................................................................................................ 562 Summary Report................................................................................................................. 562 Database.............................................................................................................................. 564 Sources of Information ....................................................................................................... 575 India: Oil and Natural Gas Corporation Ltd. (ONGC) ........................................................... 576 Summary Report................................................................................................................. 576 Database.............................................................................................................................. 578 Sources of Information ....................................................................................................... 590 Pakistan: Oil & Gas Development Corporation Ltd. (OGDCL)............................................. 591 Summary Report................................................................................................................. 591 Database.............................................................................................................................. 593 Sources of Information ....................................................................................................... 605 The NOCs in Sub-Saharan Africa........................................................................................... 606 Angola: Sonangol.................................................................................................................... 607 Summary Report................................................................................................................. 607 A Citizen's Guide to National Oil Companies Page 11 Database.............................................................................................................................. 609 Sources of Information ....................................................................................................... 621 Cameroon: Société Nationale des Hydrocarbures (SNH)....................................................... 622 Summary Table................................................................................................................... 622 Database.............................................................................................................................. 624 Sources of Information ....................................................................................................... 635 Chad: Société des Hydrocarbures du Tchad (SHT)................................................................ 636 Summary Report................................................................................................................. 636 Database.............................................................................................................................. 638 Sources of Information ....................................................................................................... 649 Congo (Brazzaville): Societe Nationale des Petroles du Congo (SNPC)............................... 650 Summary Report................................................................................................................. 650 Database.............................................................................................................................. 652 Sources of Information ....................................................................................................... 664 Côte d'Ivoire: Société Nationale d'Operations Pétrolières de la Côte d'Ivoire (PETROCI)... 665 Summary Report................................................................................................................. 665 Database.............................................................................................................................. 667 Sources of Information ....................................................................................................... 677 Equatorial Guinea: GEPetrol .................................................................................................. 678 Summary Report................................................................................................................. 678 Database.............................................................................................................................. 680 Sources of Information ....................................................................................................... 690 Ghana: Ghana National Petroleum Corporation (GNPC)....................................................... 691 Summary Report................................................................................................................. 691 Database.............................................................................................................................. 693 Sources of Information ....................................................................................................... 705 Mozambique: Empresa Nacional de Hidrocarbonetos de Mocambique (ENH)..................... 706 Summary Report................................................................................................................. 706 Database.............................................................................................................................. 708 Sources of Information ....................................................................................................... 718 Nigeria: Nigerian National Petroleum Company (NNPC) ..................................................... 719 Summary Report................................................................................................................. 719 Database.............................................................................................................................. 721 Sources of Information ....................................................................................................... 735 South Africa: PetroSA ............................................................................................................ 736 Summary Report................................................................................................................. 736 Data Table........................................................................................................................... 738 Sources of Information ....................................................................................................... 750 Sudan: Sudan Petroleum Company Ltd. (Sudapet) ................................................................ 751 Summary Report................................................................................................................. 751 Database.............................................................................................................................. 753 Sources of Information ....................................................................................................... 764 A Citizen's Guide to National Oil Companies Page 12 A CITIZEN'S GUIDE TO NATIONAL OIL COMPANIES OVERVIEW OF THE GUIDE At the request of the World Bank, the Center for Energy Economics at the University of Texas­ Austin (CEE) undertook a broad survey of national oil companies (NOCs) to assemble background information in support of further analysis (the upcoming Study on NOCs and Value Creation, due to be completed in 2010). The Bank's ultimate goal is to improve the understanding of these organizations and the role each plays within its country's economic development trajectory. This will lead to improved policy recommendations in a sector that has major political, social, and developmental impacts. This guide presents a collection and preliminary analysis of data on a large group of NOCs, and provides a starting point for discussion in resource-rich countries among policy makers, civil society, and other stakeholders to engage on these issues with the objective of strengthening and improving the contribution of NOCs to economic and social development. Why a Citizen's Guide to NOCs? NOCs control the dominant share of worldwide hydrocarbon resource endowments as well as many of the major oil and gas infrastructure systems. This can be overtly, as actual producers, or as the "gatekeepers" for exploitation access by international energy companies. As such, NOCs are of great consequence to hydrocarbon sector performance. Even the smallest NOCs are powerful organizations within their nation-states. They are charged with serving the public interest in a number of ways: supplying essential energy fuels and associated services, generating revenue streams that contribute to economic development, responsibly managing environmental and other risks, and performing well in many other regards. NOCs differ from each other in many respects: some rely on a monopolistic position in their home country while others face competition; some participate in joint ventures while others operate on a sole risk basis; some operate internationally while others remain in their home country, some concentrate on particular segments of the value chain while others are fully integrated, etc. Each NOC faces distinct challenges and has a different economic, social and political impact. A systematic collection of data on NOCs is a first steps towards improving the understanding of these differences. A Citizen's Guide to National Oil Companies Page 13 Organization of the Guide The analysis presented in this Citizen's Guide to National Oil Companies (hereafter, the Guide), focuses on the drivers and measures of NOCs' performance along a variety of measures. The Guide is composed of two parts: Part A, a technical report and Part B, a data directory. The Guide's analysis is entirely based on information drawn from public domain sources, rather than private and proprietary documents that are not accessible by wide audiences. Both Part A and Part B of the Guide are available and can be downloaded via the Internet on both the World Bank and CEE-UT websites. Interested readers should check http://www.worldbank.org/noc and www.beg.utexas.edu/energyecon for updates. PART B. DATA DIRECTORY NOCs contained in this Directory The Data Directory contains all data and information collected on the NOCs surveyed in the Guide. These are listed in below, by region and in alphabetical order by country. The information contained in this Directory is updated to the summer 2008. Quantitative data cover the period 2004-07. It is our intention to continue updating this Directory with additional information as it may become available or as may be provided by the relevant countries and NOCs. Table 1. NOCs contained in this Data Directory East Asia and Europe and Latin America Middle East South Asia Sub-Saharan Pacific Central Asia and Caribbean and North Africa Africa China (CNOOC) Azerbaijan Argentina (Enarsa) Algeria Bangladesh Angola (SOCAR) (Sonatrach) (Petrobangla) (Sonangol) China Belarus Bolivia (YPFB) Egypt (EGPC) India (ONGC) Cameroon (SNH) (Petrochina) (Belarusneft) China (Sinopec) France Brazil (Petrobras) Iran (NIOC) Pakistan Chad (SHT) (Gaz de France) (OGDCL) Indonesia Kazakhstan Colombia Kuwait Congo (SNPC) (Pertamina) (KazMunaiGaz) (Ecopetrol) (Kuwait Petroleum Corp.) Malaysia Norway Ecuador Libya Cote d'Ivoire (Petronas) (StatoilHydro) (Petroecuador) (LNOC) (PETROCI) Thailand (PTT) Russia (Gazprom) Mexico (PEMEX) Oman (PDO) Equatorial Guinea (GEPetrol) Vietnam Russia (Rosneft) Peru (PetroPeru) Qatar Ghana (GNPC) (Petrovietnam) (Qatar Petroleum) Russia (Transneft) Venezuela Saudi Arabia Mozambique (PDVSA) (Saudi Aramco) (ENH) Uzbekistan Syria (SPC) Nigeria (NNPC) (Uzbekneftegaz) Tunisia (ETAP) South Africa (PetroSA) United Arab Sudan (Sudapet) Emirates (ADNOC) A Citizen's Guide to National Oil Companies Page 14 Structure of the Directory In this Directory, data and information is presented by region and by company. For each of the 49 NOCs presented in the Guide, the following information is provided: (a) A summary report highlighting the key features of the corporate governance and performance of each NOC; and (b) A data table organized along the primary dimensions of analysis (DAs) described in Part A of the Guide. Appendix 1 of Part A of the Guide, Technical Report, provides details on the DAs and indicators and metrics used for the Data Directory. For ease of reference, definitions used in this Data Directory are provided above. The data contained in this Data Directory was compiled between May and July 2008. Data on macro variables--such as oil and gas reserves and production, country gross domestic product (GDP) and so on--are the most recent available (2006­2007). Resource endowment data are taken from industry sources. Macro economic data are derived from official publications of the International Monetary Fund and the World Bank1. Operational and financial performance results are calculated as average of data reported by NOCs in the period 2004­2007. Financial ratios, such as returns on assets, are compiled using the averages. The reader should note that not all NOCs and/or government data are reported for all years in the 2004­2007 timeframe. In order to improve consistency across all NOCs in the Directory, 2007 is the most recent year for reporting. Information reported in quotes is a citation from public domain sources used to compile this Data Directory. We also need a caveat: a problem that clearly emerged during the collection and interpretation of data was the need to deal with the ample variation in the quality of data made publicly available by NOCs and their governments. The use of experts' opinion (specialized research teams, World Bank, industry and governments' experts) only partially addresses this limitation. As highlighted in Part I, it is important to remind the readers that the analysis presented in this Guide clearly implies a certain level of judgement and subjectivity. 1The World Governance Indicators (World Bank) used in the summary reports refer to the years 1996, 1998, 2000, and 2002-2006. A Citizen's Guide to National Oil Companies Page 15 The NOCs in East Asia and the Pacific A Citizen's Guide to National Oil Companies Page 16 China: China National Offshore Oil Company (CNOOC) China: China National Offshore Oil Company (CNOOC) Summary Report Corporate Governance Highlights Corporate Organization and Ownership CNOOC Ltd. is a joint stock company incorporated in the People's Republic of China (PRC). Its ultimate parent company is China National Offshore Oil Corp. (CNOOC-Parent) which is 100% owned by the government. CNOOC-Parent owns 100% of Overseas Oil & Gas Corp., Ltd. (Bermuda) which in turn owns 100% of CNOOC (BVI) Ltd. (British Virgin Islands) which in turn owns 66% of CNOOC Ltd. Shares Controlled by Government 100% government owned CNOOC-Parent owns 66% of the shares of CNOOC Ltd through various internationally-based wholly owned subsidiaries. Domestic, International Exchanges for Equity Listings CNOOC Ltd. is listed on the Hong Kong Stock Exchange and the New York Stock Exchange. Board of Directors Structure The BOD has 12 members: 7 are company officers and 5 are independent. The Nomination Committee (2 independent directors, 1 company director) nominates directors which are elected by shareholders. CNOOC-Parent exercises all the rights of a controlling shareholder, including election of directors and voting to amend CNOOC Ltd.'s articles of association. Independent Board Members There are 5 independent directors which are nominated by the Nomination Committee and elected by shareholders. See "Board of Directors Structure" above. Is chairman also minister of energy or otherwise appointed by head of state? The Chairman is the Chief Executive Officer of CNOOC Ltd. See "Board of Directors Structure" above. Operations Highlights Upstream Oil CNOOC Ltd. is the only company permitted to operate offshore China, either alone or in association with other companies subject to Production Sharing Contracts negotiated by CNOOC-Parent with input from CNOOC Ltd. CNOOC Ltd. has the right to take up to a 51% interest in any commercial discovery offshore China. In 2006 48% of domestic oil production came from assets subject to PSAs and 52% came from independent operations. CNOOC Ltd. also operates internationally: primarily in Indonesia, Australia and Nigeria and secondarily in Equatorial Guinea, Philippines, Kenya and Myanmar. In 2006 international oil production represented 6% of total oil production. Midstream Oil CNOOC is not in this business domestically or internationally. Downstream Oil CNOOC is not in this business domestically or internationally. Upstream Natural Gas CNOOC Ltd. is the only company permitted to operate offshore China, either alone or in association with other companies subject to Production Sharing Contracts negotiated by CNOOC-Parent with input from CNOOC Ltd. CNOOC Ltd. has the right to take up to a 51% interest in any commercial discovery offshore China. In 2006 41% of domestic gas production came from assets subject to PSAs and 59% came from independent operations. CNOOC Ltd. also operates internationally: primarily in Indonesia, Australia and Nigeria and secondarily in Equatorial Guinea, Philippines, Kenya and Myanmar. In 2006 international gas production represented 27% of total gas production. Midstream Natural Gas CNOOC is not in this business domestically or internationally. Downstream Natural Gas CNOOC Ltd has a 25% interest in the China LNG Joint Venture project with the 6 original partners in the Northwest Shelf Australia LNG Project. Commercial operation began in 2006.CNOOC-Parent, CNOOC Ltd's controlling shareholder, has one regasification facility in operation (Guangdong province) and one under construction (Fujian province). LNG supply for the Guangdong is under a 25 yr. contract with Australia's NW Shelf consortium. Fujian will receive LNG from BP's Tangguh consortium in Indonesia. Other None. A Citizen's Guide to National Oil Companies Page 17 China: China National Offshore Oil Company (CNOOC) Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 1,463 Upstream: Average Proved Gas Reserves (BCF) 5,401 Upstream: Average Annual Oil Production (MM Barrels) 127 Upstream: Average Annual Natural Gas Production (BCF) 147 Downstream: Average Annual Refinery Production (MM Barrels) No data Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 8,853 Consolidated Average Total Assets ($Millions) 15,085 Consolidated Average EBIT ($Millions) 4,651 Consolidated Average Net Income ($Millions) 3,003 Categorization Indicat Categories: Scores: Corporate Governance 69 Corporate Governance Public Sector Governance 64 100 Commercialization 100 Public Sector Oil Dependency 50 Fiscal Regimes 100 Governance Resource Endowment 5 0 Oil Dependency 97 Resource Commercializa Local Contribution 74 Endowment Sector and Trade Openness 61 Fiscal Regimes Average 73 CNOOC Average NOC Worldwide Governance Indicators \ Trends and Issues Approximately half of CNOOC Ltd's reserve base is proved undeveloped. The company has numerous development projects planned and their implementation should lead to production growth. Development of natural gas assets is a focus area of the company. CNOOC Ltd. has gas reserves in the South and East China Seas and has invested in a LNG project in Australia. CNOOC ­Parent has invested in LNG regasification facilities in China. Like many companies worldwide, CNOOC Ltd.'s costs have increased: Production costs rose 21% from 2005 to 2006 and reserve replacement cost rose from $9.78/BOE to $23.37/BOE over the same time period. A Citizen's Guide to National Oil Companies Page 18 China: China National Offshore Oil Company (CNOOC) Database Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data Corporate Ownership Sole NOC or 2006 3 CNOOC Ltd. or CNOOC (a Governance Structure and Its one of cluster of subsidiary of China National Organization NOCs and other Offshore Oil Corporation) has sovereign the exclusive right to explore enterprises in and produce oil and gas country offshore. Corporate Ownership Number of 2006 3 Three. CNOOC Ltd. or CNOOC Governance Structure and Its NOCs of (a subsidiary of China National Organization country Offshore Oil Corporation) is one of three NOCs operating in the PRC. The other two NOCs are PetroChina Company Ltd. or PetroChina (a subsidiary of China National Petroleum Corp. or CNPC) and China Petroleum & Chemical Corporation or Sinopec (a subsidiary of the Sinopec Group Company). Corporate Ownership Description of 2006 1 CNOOC Ltd. is a joint stock Governance Structure and Its incorporation company incorporated in the Organization and ownership PRC. Its ultimate parent company is China National Offshore Oil Corp. (CNOOC- Parent) which is 100% owned by the government. CNOOC-Parent owns 66% of the shares of CNOOC Ltd through various internationally-based subsidiaries as follows: CNOOC-Parent owns 100% of Overseas Oil & Gas Corp., Ltd. (Bermuda) which in turn owns 100% of CNOOC (BVI) Ltd. (British Virgin Islands) which in turn owns 66% of CNOOC Ltd. Corporate Ownership % shares 2006 1 66% Governance Structure and Its controlled by Organization government Corporate Ownership Domestic, 2006 1 CNOOC Ltd. is listed on the Governance Structure and Its international Hong Kong Stock Exchange and Organization exchanges the New York Stock Exchange. where shares are listed Corporate Ownership Domestic, 2006 1 CNOOC Ltd. is listed on the Governance Structure and Its international Hong Kong Stock Exchange and Organization exchanges the New York Stock Exchange. where bonds are traded A Citizen's Guide to National Oil Companies Page 19 China: China National Offshore Oil Company (CNOOC) Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data Corporate Ownership Company files 2006 1 Yes Governance Structure and Its form 20-F with Organization SEC? Corporate Board of Does a BOD 2006 1 Yes Governance Directors (BOD) exist Corporate Board of Description of 2006 1 The BOD has 12 members: 7 are Governance Directors (BOD) BOD and company officers and 5 are structure independent. The Nomination Committee (2 independent directors, 1 company director) nominates directors which are elected by shareholders. CNOOC-Parent exercises all the rights of a controlling shareholder, including election of directors and voting to amend CNOOC Ltd.'s articles of association. Corporate Board of Is chairman also 2006 1 The Chairman is the Chief Governance Directors (BOD) minister of Executive Officer of CNOOC energy or Ltd. See "Board of Directors otherwise Structure" above. appointed by head of state Corporate Board of Are any BOD 2006 1 There are 5 independent Governance Directors (BOD) members directors which are nominated considered by the Nomination Committee independent and elected by shareholders. See (external) and, if "Board of Directors Structure" so, how are they above. appointed Corporate Board of Term of service 2006 1 The Terms of Service are Governance Directors (BOD) (years, with re- undisclosed. appointment). Comment if they can be readily removed. Corporate Role of BOD Description of 2006 1 To appoint corporate officers, Governance role and policy and executive management; To statements review operating and financial performance; to approve financial statements; to appoint independent auditors; to approve debt issuance; to declare dividends; to approve registration of securities; to evaluate management performance and to set compensation levels; to monitor code of ethics and compliance with business conduct policies. A Citizen's Guide to National Oil Companies Page 20 China: China National Offshore Oil Company (CNOOC) Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data Corporate Role of BOD Based on 2006 1 The BOD has considerable Governance available power and authority. CNOOC- information, Parent, the majority shareholder, does BOD have has a considerable influence on power, impact, the selection of directors. decision making authority Corporate Recruitment/Re General process 2006 1 Undisclosed. Governance placement Key for recruitment, Executives replacement of key execs and senior managers Corporate Decision Level of NOC 2006 1 CNOOC prepares the capital Governance Making budget budget annually. It has a formal Processes authority. strategic planning process in Comment on the which the Ministry of general decision Commerce and the National flow within Reform and Development NOC and Commission participate. It also between NOC has an International Advisory and government Board that provides strategic for major advice. Government approvals projects. are required for new independent development and production projects and new production sharing contracts (PSAs). Corporate Decision Based on 2006 1 The budget is a predictable Governance Making available annual process. Government Processes, information, is entities participate at various Budget NOC budget stages of budget preparation Autonomy process and/or approval (see above). The predictable and budget process is separate from separate from the national budget process. government Corporate Decision Does the NOC 2006 1 CNOOC-Parent has the Governance Making have authority to exclusive right to enter into Processes, partner with PSAs with foreign companies Budget other entities? for offshore exploration and Autonomy production. CNOOC Ltd advises CNOOC-Parent on PSA negotiations, but the Parent has ultimate decision on PSAs terms. Corporate Mission and Does NOC have 2008 4 Focus on reserves and Governance Objectives a mission production growth; develop and statement and, if expand natural gas business; so, what are key maintain financial discipline. elements Corporate Sources of Based on 2006 1 Historically the company has Governance Capital available had sufficient cash flow from information, operations to fund its investment budgeting portfolio and has registered A Citizen's Guide to National Oil Companies Page 21 China: China National Offshore Oil Company (CNOOC) Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data process and increases in reserves and policy including production. % of cash flow/revenue available for reinvestment Corporate Disclosure/Tran Disclosure of 2006 1 In 2006 the financial auditor was Governance sparency Policy audited data and Ernst & Young and the reserves other indications auditor was Ryder Scott. of disclosure and transparency Corporate Skill Base Based on 2006 1 In 2006 68% of employees were Governance available involved in exploration and information, production activities; 7% were in NOC accounting/finance and the demographics remainder was senior (% management, management, PSA coordinators % technical, and environmental supervisors. other There is a union but no strikes or descriptors) other labor protests have been reported. Corporate Incentives/Caree Based on 2008, 1, 4 There is no public disclosure of Governance r Management available 2006 HR policies. HR goals are not information, HR part of the company goals except promotion and for the following statement of professional responsibility: "We will not development sacrifice our employees' policies individual development." Corporate Full Disclosure Based on 2008, 1, 4 Limited and generally Governance and available 2006 qualitative. Measurement of information, Non-commercial brief description Objectives of reporting on noncommercial objectives Corporate Full Disclosure Based on 2008, 1, 4 Non-commercial objectives Governance and available 2006 appear limited. CNOOC's Measurement of information, employee base is small relative Non-commercial extent of non- to PetroChina and Sinopec. Also Objectives commercial unlike the other two NOCs, obligations CNOOC generally obtaines market prices for its production and does not provide price subsidies. A Citizen's Guide to National Oil Companies Page 22 China: China National Offshore Oil Company (CNOOC) Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data Value Creation Operating Upstream oil 2006 1 CNOOC Ltd. is the only Metrics Performance E&P. Where company permitted to operate does it operate offshore China, either alone or in (solely in the association with other companies country or subject to Production Sharing abroad-name Contracts negotiated by countries)? CNOOC-Parent with input from Does it have CNOOC Ltd. CNOOC Ltd. has sole access to the right to take up to a 51% country's interest in any commercial resources? discovery offshore China (but exceptions have been made in specific cases). In 2006 48% of domestic oil production came from assets subject to PSAs and 52% came from independent operations. Value Creation Operating Does the NOC 2006 1 CNOOC Ltd. also operates Metrics Performance operate abroad? internationally: primarily in Indonesia, Australia and Nigeria and secondarily in Equatorial Guinea, Philippines, Kenya and Myanmar. In 2006 international oil production represented 6% of total oil production. Value Creation Operating Midstream oil 2006 1 CNOOC Ltd. is not in this Metrics Performance pipelines, business. storage, shipping Value Creation Operating Downstream oil 2006 1 CNOOC Ltd. is not in this Metrics Performance refining & business. marketing, petrochemicals Value Creation Operating Upstream 2006 1 CNOOC Ltd. is the only Metrics Performance natural gas E&P company permitted to operate offshore China, either alone or in association with other companies subject to Production Sharing Contracts negotiated by CNOOC-Parent with input from CNOOC Ltd. Until 2006 CNOOC Ltd has the right to take up to a 51% interest in any commercial discovery offshore China (this percentange was decreased to 30% for certain deepwater blocks). In 2006 41% of domestic gas production came from assets subject to PSAs and 59% came from independent operations. CNOOC Ltd. also operates internationally: A Citizen's Guide to National Oil Companies Page 23 China: China National Offshore Oil Company (CNOOC) Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data primarily in Indonesia, Australia and Nigeria and secondarily in Equatorial Guinea, Philippines, Kenya and Myanmar. In 2006 international gas production represented 27% of total gas production. Value Creation Operating Midstream 2006 1 CNOOC Ltd has a 25% interest Metrics Performance natural gas in the China LNG Joint Venture pipelines, project with the 6 original storage, LNG partners in the Northwest Shelf Australia LNG Project. Commercial operation began in 2006.CNOOC-Parent has one regasification facility in operation (Guangdong province) and one under construction (Fujian province). LNG supply for the Guangdong is under a 25- year contract with Australia's NW Shelf consortium. Fujian will receive LNG from BP's Tangguh consortium in Indonesia. Value Creation Operating Downstream 2006 1 CNOOC Ltd. is not in these Metrics Performance natural gas businesses. distribution, NGL sales, petrochemicals Value Creation Operating Other (power 2006 1 None. Metrics Performance generation, etc) Value Creation Operating Avg reserve 191% Metrics Performance replacement rate (BOE, %) Value Creation Operating Avg reserve $14.78 Metrics Performance replacement cost ($/BOE) Value Creation Operating Change in BOE 14% Metrics Performance reserves (%) Value Creation Operating Change in BOE 21% Metrics Performance production (%) Value Creation Operating Avg upstream 90% Metrics Performance operating cash flow/upstream capital expenditures (%) Value Creation Operating Avg upstream $28.24 Metrics Performance exploration and production A Citizen's Guide to National Oil Companies Page 24 China: China National Offshore Oil Company (CNOOC) Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data expenses ($/BOE) Value Creation Operating Avg production $4.83 Metrics Performance costs excluding production taxes ($/BOE) Value Creation Operating Avg upstream 47% Metrics Performance after-tax income/revenues (%) Value Creation Operating Avg earnings $31.22 Metrics Performance before interest & taxes ($/BOE) Value Creation Operating Avg income $20.17 Metrics Performance after all taxes ($/BOE) Value Creation Operating Avg effective 35% Metrics Performance tax rate (%) Value Creation Operating Avg operating 90% Metrics Performance cash flow vs costs incurred (%) Value Creation Operating After tax return 21% Metrics Performance on assets Value Creation Operating Avg refinery No data Metrics Performance utilization rate (%) Value Creation Operating Change in total No data Metrics Performance refining production (%) Value Creation Operating Change in No data Metrics Performance refinery capacity (%) Value Creation Operating Avg income No data Metrics Performance from operations per unit volume ($M/barrel) Value Creation Operating Avg refining No data Metrics Performance and marketing operating cash flow/capital expenditures (%) Value Creation Operating Avg pre-tax No data Metrics Performance return on assets (%) Value Creation Financial Avg total 116% Metrics Performance operating cash flow/total capital A Citizen's Guide to National Oil Companies Page 25 China: China National Offshore Oil Company (CNOOC) Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data expenditures (%) Value Creation Financial Avg operating 53% Metrics Performance margin (%) Value Creation Financial Avg profit 34% Metrics Performance margin (%) Value Creation Financial Avg effective 35% Metrics Performance tax rate (%) Value Creation Financial Avg 116% Metrics Performance reinvestment risk (%) Value Creation Financial Avg debt profile 25% Metrics Performance (%) Value Creation Financial Avg return on 20% Metrics Performance assets (%) Value Creation Financial Avg return on 20% Metrics Performance total capital employed (%) Value Creation Financial Avg fiscal 26% Metrics Performance contribution to State (%) Other Factors Public Sector Based on 2007 6 In December 2007 the PRC Governance available published an overall energy information, policy with focus on domestic presence of a hydrocarbons exploration and publicly production. Coal-bed methane articulated role gas, oil shale and tar sands were of the targeted. Improvement of the oil hydrocarbon and gas pipeline system was sector with emphasized. Improvement of the respect to legal system for hydrocarbon national development in China was development considered an imperative, and objectives other countries' oil and gas legislation was being studied. The policy paper further recognized the need to reform pricing mechanisms along the energy value chain. Increasing foreign participation in upstream oil and gas was among the objectives of the energy policy. Other Factors Public Sector Based on 2006 1 The commercial function Governance available appears to be clearly separated information, from policy and regulatory clear definition functions. The latter two appear of the roles of to be entrusted to various policy, government entities with commercial overlapping functions. A Citizen's Guide to National Oil Companies Page 26 China: China National Offshore Oil Company (CNOOC) Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data operation and regulation and assignment to specific entities avoiding conflicts of interest Other Factors Public Sector Based on 2008 4 Focus on reserves and Governance available production growth; develop and information, expand natural gas business; presence of maintain financial discipline. publicly stated objectives ranked by priority for NOC(s) Other Factors Public Sector Based on 2006 1 CNOOC does not have publicly Governance available stated non-commercial information, objectives. It does not provide presence of a price subsidies. When CNOOC strategy to was partially privatized, the transfer NOC government assumed pension non-commercial liabilities for current, laid off objectives to and retired workers. CNOOC's government or only pension obligation is to other agencies make an annual contribution to as capacity the relevant government pension becomes scheme. The contribution is available expensed annually. Other Factors Public Sector Based on Petroleum revenues received by Governance available the government are not information, segregated from other sources of transparent revenue, and are managed in hydrocarbon accordance with the country's sector revenue public finance management management procedures. including revenue distribution within the country Other Factors Public Sector NOC and/or 2008 7 Not participating. Governance country participate in EITI and/or other transparency initiatives Other Factors Fiscal Based on 2006, 1, 3, 6 Historically the three Chinese Sustainability available 2007 NOCs have been able to fund information, do capital expenditures from hydrocarbon operating cash flow. With A Citizen's Guide to National Oil Companies Page 27 China: China National Offshore Oil Company (CNOOC) Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data sector fiscal respect to non-NOC participants, regimes allow interest is centered on the for sufficient upstream offshore due to the capital maturity of onshore resources investment and the unattractive refined products pricing schemes. Increasing foreign participation in the hydrocarbon sector is one of PRC's policy goals. In line with the foregoing, CNOOC's required "back-in" for commercial discoveries in certain deepwater blocks offered in some bidding rounds was reduced from up to 51% to up to 30%. Other Factors Fiscal Based on All three Chinese NOCs have Sustainability available investment grade ratings. information, do CNOOC is A-/A2/A. hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Factors Fiscal Based on 2006 1, 3 USEIA notes that Chinese NOCs Sustainability available are focused on meeting domestic information, are demand. "Many foreign hydrocarbon companies have been contracted sector fiscal to undertake oil exploration and regimes production activities in China. appropriate for China's NOCs are entitled by the development law to take up to 51 percent) stage of the stake in any commercial domestic discovery. The back-in rights resource base were reduced to up to 31 percent for certain deepwater blocks in specific bidding rounds. The NOCs can also take over field operations once the contracted firm has recovered its development costs. In offshore zones, CNOOC reserves the right to take over operations at any new discoveries, although certain shallow water locations such as the Zhao Dong field in the Bohai Bay are exempt. The Chinese government typically mandates a royalty fee of 12.5 percent for foreign companies involved in the oil sector, A Citizen's Guide to National Oil Companies Page 28 China: China National Offshore Oil Company (CNOOC) Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data although discounts have been offered for development and exploration in more remote onshore areas, such as the western provinces of Qinghai and Xinjiang". Industry reports suggest that fiscal regimes, in particular ownership requirements, may discourage inbound capital investment given the difficult geology and remoteness of some locations. Other Factors Access to Hydrocarbon 2004 5 The PRC Exploitation of Reserves law to facilitate Offshore Oil Resources in competitive Cooperation with Foreign Parties upstream Regulations (1982) and the PRC investment Exploitation of Onshore Oil Resources in Cooperation with Foreign Parties Regulations (1993) and implementing regulations govern oil and gas exploration and production activities. Other Factors Access to Based on 2006 1, 3 There are many PSAs Reserves available particularly in the offshore area. information, existence of negotiated contracts/agree ments for upstream investment Other Factors Operating Based on 2006 1, 3 CNOOC works in association Strategy available with other oil companies through information, production sharing contracts. types of joint ventures, role of NOC(s) Other Factors Operating Based on No data. Strategy available information, extent of turnkey contracts used directly by NOC(s) Other Factors Business Vertical, 2006 1 CNOOC Ltd. is an upstream Integration horizontal company. integration Other Factors International Does NOC Yes. Presence make investments A Citizen's Guide to National Oil Companies Page 29 China: China National Offshore Oil Company (CNOOC) Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data abroad Other Factors International Avg company 11% Presence international BOE production as % avg total company BOE production Other Factors International Change in 7% Presence company BOE production from international operations (%) Other Factors International Does NOC 2006 1 No Presence make investments abroad Other Factors International Avg company No data Presence international refinery throughput as % total refinery throughput Other Factors International Change in No data Presence company refinery throughput from international operations (%) Other Factors International Avg company No data Presence international refinery capacity as % company total refinery capacity Other Factors International Change in No data Presence company refinery capacity from international operations (%) Other Factors Commercializati Non-NOC 2006 1, 3 Numerous particularly offshore. on participants in upstream Other Factors Commercializati Competition 2006 1, 3 Non-NOC participants required on level in to negotiate PSAs with the NOC. upstream Until 2006 the NOC had the including non- right to "back-in", without NOC paying exploration costs, into participants and any commercial discovery for up requirement to to a 51% interest (with some include NOC as exceptions). This was later A Citizen's Guide to National Oil Companies Page 30 China: China National Offshore Oil Company (CNOOC) Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data partner reduced to up to 31% for certain deepwater blocks in specific bidding rounds. Other Factors Commercializati Competition Not applicable for CNOOC. on level in midstream, downstream including non- NOC participants and requirement to include NOC as partner Other Factors Commercializati Competition Not applicable for CNOOC. on level in midstream and downstream sectors Other Factors Commercializati Based on 2006 1, 3 Numerous alliances between on available CNOOC and non-NOCs information, domestically and internationally. prevalence and success of NOC/non-NOC alliances, joint ventures Other Factors Commercializati Partial 2006 1 Non-government shareholders on privatization of own 34% of CNOOC Ltd. the NOC (as measured by ownership structure) Other Factors Commercializati Based on 2006 1 Not available. on available information, level and quality of NOC international operations Other Factors Commercializati Based on 2006 1 Not available on available information, percent of non- core commercial activities in overall operations Other Factors Regulation Presence of 2006 1 The regulatory functions are independent, entrusted to various government well-funded and entities. In particular, the trained Ministry of Land and Resources, A Citizen's Guide to National Oil Companies Page 31 China: China National Offshore Oil Company (CNOOC) Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data regulatory the State Administration for agencies, HC Environmental Protection, the agency name, National Development and budget, number Reform Commission and the of staff Ministry of Commerce, all intervene at various stages of the approval process for exploration and production activities carried out in association with foreign oil companies. Sales of hydrocarbons are coordinated by the National Development and Reform Commission. Other Factors Regulation NOCs are 2006 1 Only partially given CNOOC's compelled to "back-in" right (see above). adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Factors Regulation Regulators 2006, 1, 6 The regulatory functions reside assure market 2007 in several ministries. Data transparency and provision has improved and good quality, further improvement efforts are unbiased data continuing: "In light of the and information. demand of transparency of the HC agency WTO, China has relaxed control independence over the scope of geological data indicators of a public welfare nature, strengthened the work of releasing energy policies, improved the energy data and statistics system and promptly released energy statistics, so as to ensure the openness and transparency of energy policies, statistics and information" (Energy Policy Paper 2007) A Citizen's Guide to National Oil Companies Page 32 China: China National Offshore Oil Company (CNOOC) Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data Other Factors Regulation Regulators No data available. effectively resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Factors Non-commercial Provision and 2006 1 CNOOC is not required to sell Objectives level of crude oil below market price hydrocarbon (while PetroChina and Sinopec price subsidies are required to sell certain ($/BOE refined products below market production) price). provided by NOC and/or government. brief description of subsidy program, approach, cost Other Factors Non-commercial Provision and 2006 1, 4 Limited information is available Objectives level of direct on this point. NOC funding of country social and economic programs. Brief description of programs and support Other Factors Non-commercial Measure of $5,553.32 Objectives NOC employees relative to total assets ($ M) Other Factors Non-commercial Compensation No data Objectives obligations relative to workforce ($ M) Other Factors Non-commercial Financial $3,259.05 Objectives performance relative to workforce ($ M) A Citizen's Guide to National Oil Companies Page 33 China: China National Offshore Oil Company (CNOOC) Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data Other Quality of Data Availability, 2006 1, 6 Good with respect to NOC SEC Comments extent, Form 20Fs. "China recognizes reliability of the need for transparent and high data provided by quality energy data and is NOC(s) and striving for continous governments improvement in this arena." Other Longevity of Based on 2006 1 CNOOC Parent was established Comments NOC available in 1982. CNOOC Ltd. was information, incorporated in 1999 in Hong history and Kong, under the Hong Kong persistence of Companies Ordinance. CNOOC NOC(s) Parent transferred all of its then and current operational and commercial interests in its offshore petroleum business to CNOOC Ltd. Other Country Status Trends and 50% of CNOOC Ltd's reserve base Comments issues related to is proved undeveloped. The country company has numerous hydrocarbon development projects planned and sector their implementation should lead to production growth. Development of endowments and natural gas assets is a focus area of performance the company. CNOOC Ltd. has gas reserves in the South and East China Seas and has invested in a LNG project in Australia. CNOOC ­ Parent has invested in LNG regasification facilities in China. Like many companies worldwide, CNOOC Ltd.'s costs have increased: Production costs rose 21% from 2005 to 2006 and reserve replacement cost rose from $9.78/BOE to $23.37/BOE over the same time period. Other Factors Non-commercial Number of 2,716 Objectives employees Other Factors Non-commercial BOE production 56,229 Objectives per employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Factors Oil Dependency BOE R/P (years) 15.08 Other Factors Oil Dependency Net oil and gas -6.32% export revenues as share of overall export revenues (oil trade balance as % of exports of A Citizen's Guide to National Oil Companies Page 34 China: China National Offshore Oil Company (CNOOC) Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data goods and services) Other Factors Oil Dependency Total oil and gas -2.59% revenues as a share of GDP (%) Other Factors Resource Avg EOY oil 15,493.40 Endowment reserves (MM Barrels) Other Factors Resource Avg EOY 66,541.71 Endowment natural gas reserves (BCF) Other Factors Resource Total all source 26,966.11 Endowment BOE reserves (MM Barrels) Other Factors Resource Audited or Audited through the three NOCs Endowment unaudited? Other Factors Operating Company 7% Conditions domestic reserves as % of country BOE reserves Other Factors Operating Company 93% Conditions domestic reserves as % of total company reserves Other Factors Operating Company 8.44% Conditions domestic BOE production as % of country BOE production Other Factors Operating Company No data Conditions primary distillation capacity as % of total country primary distillation capacity Other Factors Operating Company No data Conditions refinery throughput as % of total country refinery throughput Other Factors Operating Country 57.46% Conditions oil/natural gas split, reserves (%) A Citizen's Guide to National Oil Companies Page 35 China: China National Offshore Oil Company (CNOOC) Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data Other Factors Operating Country 99.97% Conditions oil/natural gas split, production (%) Other Factors Operating Country BOE 51.76% Conditions production as % of total country BOE consumption Other Factors Trade Openness WTO Yes Membership Other Factors Competition OPEC No Membership A Citizen's Guide to National Oil Companies Page 36 China: China National Offshore Oil Company (CNOOC) Sources of Information Source # Year of Source Description Links Source 1 2006 CNOOC SEC Form 20F 2006 www.sec.gov 2 2007 2008 BP Statistical Review of www.bp.com World Energy 3 2006 USEIA, Country Analysis Brief- www.eia.doe.gov China, 12/13/06 4 2008 Company website www.cnoocltd.com 5 2004 China's 2004 Energy Sector. Michael Aruda, Fulbright & Jaworski. 6 2007 "China's Energy Conditions and Policies," Information Office of the State Council of the People's Republic of China, December, 2007. 7 2008 EITI www.eitransparency.org A Citizen's Guide to National Oil Companies Page 37 China: PetroChina China: PetroChina Summary Report Corporate Governance Highlights Corporate Organization and Ownership PetroChina Company Limited is a joint stock company incorporated in the PRC. It is a subsidiary of China National Petroleum Corporation (CNPC). CNPC is 100% owned by the government. CNPC owns 86.29% of PetroChina's shares. Shares Controlled by Government 86.29 % Domestic, International Exchanges for Equity Listings Hong Kong, New York Board of Directors Structure 11 directors elected at a meeting of shareholders for a term of three years, renewable upon re-election and re-appointment. 5 of the directors are currently affiliated with CNPC or an affiliate of CNPC. Independent Board Members 3 are independent, non-executive; same appointment process. Is chairman also minister of energy or otherwise appointed by head of state? No. Appoitments to the company's BOD are approved by the shareholders, and de facto controlled by CNPC as majority shareholder of PetroChina. Operations Highlights Upstream Oil The company operates in China and abroad in 12 countries including Kazakhstan, Peru, Venezuela, and Indonesia. Formed international joint venture entity with CNODC (Central Asia Petroleum Company Ltd) and CNPC E&D) into which overseas assets owned by CNODC were transferred. PetroChina does not have sole access to Chinese hydrocarbons resources. Midstream Oil In China, the company owns 9,620 kilometers of crude oil pipelines with an average daily throughput of approximately 2.50 million barrels; crude oil storage facilities with an aggregate storage capacity of approximately 17.2 million cubic meters; 2,413 kilometers of refined product pipelines with an average daily throughput of approximately 37,000 tons; refined product storage facilities with a total storage capacity of approximately 18.7 million cubic meters. Downstream Oil The company owns 26 refineries, 22 regional sales and distribution branch companies and one lubricants branch company. These operations include the refining, transportation, storage and marketing of crude oil, and the wholesale, retail and export of refined products, including gasoline, diesel, kerosene and lubricants. Upstream Natural Gas The company is the largest natural gas producer in China (Sichuan is the largest gas region). Midstream Natural Gas The company is the largest natural gas transporter and seller. 19,662 km of pipelines (95% of China's total capacity). Developed and operates West to East pipeline. No LNG developments. Downstream Natural Gas The company owns 12 chemical plants and four chemical products sales companies. Produces and markets basic petrochemical products, derivative petrochemical products, and other chemical products. Other na Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 10,750 Upstream: Average Proved Gas Reserves (BCF) 47,917 Upstream: Average Annual Oil Production (MM Barrels) 826 Upstream: Average Annual Natural Gas Production (BCF) 1,331 Downstream: Average Annual Refinery Production (MM Barrels) 579 A Citizen's Guide to National Oil Companies Page 38 China: PetroChina Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 67,315 Consolidated Average Total Assets ($Millions) 93,887 Consolidated Average EBIT ($Millions) 26,331 Consolidated Average Net Income ($Millions) 16,151 Categorization Indicator Categories: Scores: Corporate Governance 69 Corporate Governance Public Sector Governance 64 100 Commercialization 100 Public Sector Oil Dependency 50 Governance Fiscal Regimes 75 Resource Endowment 5 0 Oil Dependency 97 Resource Commercializa Local Contribution 72 Endowment Sector and Trade Openness 54 Fiscal Regimes Average 68 PetroChina Average NOC Worldwide Governance Indicators Trends and Issues China became a net importer of oil in the late 1990s. China's energy policy and energy security considerations have guided the reorganization of the sector and inform the strategies of the NOC. A Citizen's Guide to National Oil Companies Page 39 China: PetroChina Database Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of 2006 4 China National Petroleum Governance Its Organization cluster of NOCs and Corporation (CNPC) of which other sovereign PetroChina is the listed arm, is enterprises in country one of three NOCs operating in the PRC. The other two NOCs are CNOOC and Sinopec. CNPC/PetroChina and Sinopec have the exclusive rights to explore and produce oil and gas onshore. Corporate Ownership Structure and Number of NOCs of 2006 4 3 - CNPC (China national Governance Its Organization country Petroleum Corp of which PetroChina is a subsidiary), Sinopec (China Petroleum and Chemical Corporation, CNOOC (China national Offshore Oil Company) Corporate Ownership Structure and Description of 2006 3 PetroChina Company Limited is Governance Its Organization incorporation and 2007 15 a subsidiary of China national ownership Petroleum Corp (CNPC). CNPC is 100% owned by the government. CNPC owns 86.29% of PetroChina's shares. PetroChina was established as a joint stock company with limited liabilities under the Company Law of the PRC on November 5, 1999, as part of the restructuring of CNPC. In the restructuring, CNPC injected into PetroChina most of the assets and liabilities of CNPC relating to its exploration and production, refining and marketing, chemicals and natural gas businesses. Corporate Ownership Structure and % shares controlled by 2006 3 86.29% Governance Its Organization government 2007 15 Corporate Ownership Structure and Domestic, international 2006 3 Hong Kong, New York, Governance Its Organization exchanges where shares 2007 15 Shanghai. are listed Corporate Ownership Structure and Domestic, international 2006 3 Hong Kong, New York, Governance Its Organization exchanges where bonds 2007 15 Shanghai. are traded Corporate Ownership Structure and Company files form 20- 2006 3 Yes Governance Its Organization F with SEC? Corporate Board of Directors (BOD) Does a BOD exist 2006 3 Yes Governance A Citizen's Guide to National Oil Companies Page 40 China: PetroChina Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Board of Directors (BOD) Description of BOD 2006 3 11 directors elected at a meeting Governance and structure 2007 7 of shareholders for a term of three years, renewable upon re- election and re-appointment. 5 of the directors are currently affiliated with CNPC or an affiliate of CNPC (i.e., current or former employees of CNPC, or members of the BOD of Petrochina) Corporate Board of Directors (BOD) Is chairman also 2006 3 No. Appoitments to the Governance minister of energy or company's BOD are approved otherwise appointed by by the shareholders, and de head of state facto controlled by CNPC as majority shareholder of PetroChina. Corporate Board of Directors (BOD) Are any BOD members 2006 3 3 are independent, non- Governance considered independent executive; same appointment (external) and, if so, process. how are they appointed Corporate Board of Directors (BOD) Term of service (years, 2006 3 3 years with re-election and re- Governance with re-appointment). appointment upon expiration of Comment if they can be term of office. readily removed. Corporate Role of BOD Description of role and 2006 3 Functions and powers include: Governance policy statements 2007 7 to be responsible for the convening of the shareholders' general meeting and to report its work to the shareholders in general meetings; to implement the resolutions passed by the shareholders in general meetings; to determine the company's business plans and investment proposals; to formulate the company's annual preliminary and final financial budgets; and to formulate the company's profit distribution proposals and loss recovery proposals. Corporate Role of BOD Based on available Current 5 Yes. A supervisory committee Governance information, does BOD exists, including members that have power, impact, represent employee interests, decision making but is subject to removal by authority shareholders if so voted. Company statements clarify that CNPC, which is the majority shareholder, does not interfere in PetroChina operations. Statements also clarify that the BOD, Supervisory Committee and management team headed by the president of the company all work independently. A Citizen's Guide to National Oil Companies Page 41 China: PetroChina Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Recruitment/Replacement General process for Current 5 Three teams have been Governance Key Executives recruitment, established: management team, replacement of key professional technical team and execs and senior skills operating team. For managers management, "Measures such as open selection, competitive recruitment, job rotation and performance evaluation are adopted to form high-level management teams and improve management capability and quality". Corporate Decision Making Level of NOC budget 2000, 6, 3, 5 No government approval Governance Processes authority. Comment on 2006, needed for capital expenditures the general decision Current in oil and gas activities under flow within NOC and RMB 50 MM; above that between NOC and amount approvals are required. government for major Government approvals also projects. required for borrowings from foreign banks and foreign governments. Risk factors with respect to budget and decision making authority were identified in the IPO (and repeated in all subsequent filings): "the Company will be controlled by CNPC, whose interests may differ from those of other shareholders"; "CNPC may seek to influence the dividend policy of the Company because of its reliance on dividends received from the Company"; "business of the Company is substantially dependent on the provision by CNPC and CNPC's affiliates of services and products for which the Company currently has limited alternative sources of supply"; "the Company's ability to achieve a number of planned cost reductions may be limited by local governments in China". Corporate Decision Making Based on available 2006, 3, 6 Yes, in principles. Governance Processes, Budget information, is NOC Current Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have 2006, 3, 7 Needs permission if plans to Governance Processes, Budget authority to partner Current partner with foreign entities. Autonomy with other entities? Corporate Mission and Objectives Does NOC have a 2007 7 Development objective to build Governance mission statement and, PetroChina into international if so, what are key energy company with strong elements competitiveness. A Citizen's Guide to National Oil Companies Page 42 China: PetroChina Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Sources of Capital Based on available 2006 4 Appears to have ample cash for Governance information, budgeting reinvestment. Uses short and process and policy long term borrowings to including % of cash supplement cash. Mainly uses flow/revenue available short term borrowings to for reinvestment finance business operations. Must obtain government approval for certain investments and foreign borrowings. Some borrowings are from other CNPC subsidiaries. Corporate Disclosure/Transparency Disclosure of audited 2006 3 Audited financial and reserves Governance Policy data and other data for securities filings. indications of Financial - disclosure and PricewaterhouseCoopers. transparency Reserves - DeGolyer and Macnaughton, Gaffney, Cline and Assoc. Follows US GAAP. Corporate Skill Base Based on available 2006, 3, 5 Less than 1% of employees are Governance information, NOC Current management level in opcos or demographics (% other units. Majority of management, % employees (55%) are in E&P. technical, other "By the end of 2007, the descriptors) Company employed 13 academicians from the Chinese Academy of Sciences and the Chinese Academy of Engineering, and almost 700 experts who enjoyed from government allowances, 108 professional technical experts, 79 high-skill experts and 1,200 experts in various fields." Corporate Incentives/Career Based on available Current 5 Professional technical teams Governance Management information, HR undertake research projects, promotion and lead important projects, hold professional academic exchanges, and development policies engage in further study and systematic training. Accumulated investment in training exceeded RMB0.8 billion Yuan; about 2.8 million employee trainings with, on average, each employee receiving more than 5 days of training per year. In 2007, "organized 115 core training programs with attendance of 9,151 employee-times; regional companies organized over 1,600 professional training programs with 520,000 employees-times and more than 98% of professional staff on key posts receiving training". A Citizen's Guide to National Oil Companies Page 43 China: PetroChina Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Full Disclosure and Based on available Current, 5, 7 No detailed disclosure, except Governance Measurement of Non- information, brief 2007 for refining losses which are commercial Objectives description of reporting reported, and price subsidies on noncommercial which are discussed by the objectives company in the press. Social/economic role described in qualitative terms. Corporate Full Disclosure and Based on available 2000 6 Upon IPO non-commercial Governance Measurement of Non- information, extent of 2007 7 objectives and obligations were commercial Objectives non-commercial transferred to the government. obligations Petrochina's corporate social responsibility agenda has been growing. In 2007 the company published a corporate responsibility report detailing its active participatiion in social welfare initiatives with focus on poverty alleviation, educational promotion, disaster relief and environmental protection. Value Operating Performance Upstream oil E&P. 2006 3 Operates in China and abroad in Creation Where does it operate 12 countries including Metrics (solely in the country or Kazakhstan, Peru, Venezuela, abroad-name and Indonesia. Formed countries)? Does it international joint venture entity have sole access to with CNODC (Central Asia country's resources? Petroleum Company Ltd) and CNPC E&D) into which overseas assets owned by CNODC were transferred. PetroChina does not have sole access to Chinese resources. Value Operating Performance Does the NOC operate Yes Creation abroad? Metrics Value Operating Performance Midstream oil 2006 3 In China the company owns Creation pipelines, storage, 9,620 kilometers of crude oil Metrics shipping pipelines with an average daily throughput of approximately 2.50 million barrels; crude oil storage facilities with an aggregate storage capacity of approximately 17.2 million cubic meters; 2,413 kilometers of refined product pipelines with an average daily throughput of approximately 37,000 tons; refined product storage facilities with a total storage capacity of approximately 18.7 million cubic meters. A Citizen's Guide to National Oil Companies Page 44 China: PetroChina Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Downstream oil 2006 3 The company owns 26 Creation refining & marketing, refineries, 22 regional sales and Metrics petrochemicals distribution branch companies and one lubricants branch company. These operations include the refining, transportation, storage and marketing of crude oil, and the wholesale, retail and export of refined products, including gasoline, diesel, kerosene and lubricants. Value Operating Performance Upstream natural gas 2006 3 The company is China's largest Creation E&P natural gas producer (Sichuan is Metrics the largest gas region). Value Operating Performance Midstream natural gas 2006 3 The company is the largest Creation pipelines, storage, LNG natural gas transporter and Metrics seller. 19,662 km of pipelines (95% of China's total capacity). Developed and operates West to East pipeline. No LNG developments. Value Operating Performance Downstream natural gas 2007 3 The company owns 12 chemical Creation distribution, NGL sales, plants and four chemical Metrics petrochemicals products sales companies. Produces and markets basic petrochemical products, derivative petrochemical products, and other chemical products. Value Operating Performance Other (power na Creation generation, etc) Metrics Value Operating Performance Avg reserve 168% Creation replacement rate (BOE, Metrics %) Value Operating Performance Avg reserve $6.37 Creation replacement cost Metrics ($/BOE) Value Operating Performance Change in BOE 12% Creation reserves (%) Metrics Value Operating Performance Change in BOE 10% Creation production (%) Metrics Value Operating Performance Avg upstream operating 196% Creation cash flow/upstream Metrics capital expenditures (%) Value Operating Performance Avg upstream $10.67 Creation exploration and Metrics production expenses ($/BOE) Value Operating Performance Avg production costs $5.11 Creation excluding production Metrics taxes ($/BOE) A Citizen's Guide to National Oil Companies Page 45 China: PetroChina Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg upstream after-tax 49% Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before $27.85 Creation interest & taxes Metrics ($/BOE) Value Operating Performance Avg income after all $18.82 Creation taxes ($/BOE) Metrics Value Operating Performance Avg effective tax rate 32% Creation (%) Metrics Value Operating Performance Avg operating cash 198% Creation flow vs costs incurred Metrics (%) Value Operating Performance After tax return on 35% Creation assets Metrics Value Operating Performance Avg refinery utilization 87% Creation rate (%) Metrics Value Operating Performance Change in total refining 9% Creation production (%) Metrics Value Operating Performance Change in refinery 17% Creation capacity (%) Metrics Value Operating Performance Avg income from ($0.00) Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and -15% Creation marketing operating Metrics cash flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on 4% Creation assets (%) Metrics Value Financial Performance Avg total operating 147% Creation cash flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin 39% Creation (%) Metrics Value Financial Performance Avg profit margin (%) 24% Creation Metrics Value Financial Performance Avg effective tax rate 39% Creation (%) Metrics Value Financial Performance Avg reinvestment risk 147% Creation (%) Metrics Value Financial Performance Avg debt profile (%) 26% Creation Metrics A Citizen's Guide to National Oil Companies Page 46 China: PetroChina Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg return on assets 17% Creation (%) Metrics Value Financial Performance Avg return on total 17% Creation capital employed (%) Metrics Value Financial Performance Avg fiscal contribution 28% Creation to State (%) Metrics Other Public Sector Governance Based on available 2000 6 From the PetroChina IPO, PRC Factors information, presence Government views oil & gas as of a publicly articulated strategic resources and has role of the hydrocarbon designated oil & gas industry as sector with respect to one of country's "pillar national development industries". objectives Other Public Sector Governance Based on available 2000, 6, 3, 7, 8 From all sources, with IPO Factors information, clear 2004, launched PetroChina's definition of the roles of 2006, operations became policy, commercial 2007 commercially focused. In operation and addition, government authority regulation and and oversight role (such as assignment to specific budget approvals, entities avoiding environmental oversight and so conflicts of interest on) appears to be clearly defined. From Arruda: process of separating energy production and distribution from government administration began in 1982; a distinct goal was greater competitiveness as China entered WTO. Other Public Sector Governance Based on available 2007, 5, 7 Both the PetroChina website Factors information, presence Current and corporate social of publicly stated responsibility report provide objectives ranked by clear objectives that parallel priority for NOC(s) apparent PRC intentions: focus on core businesses within established values. CSR report states: "We will pursue scientific development, implement the three strategies for resources, market and internationalization, and focus on the transformation of business growth models, the enhancement of independent innovative capabilities, the establishment of a long-acting mechanism of work safety, environmental protection and energy-saving, ultimately creating a harmonious enterprise". A Citizen's Guide to National Oil Companies Page 47 China: PetroChina Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available 2000 6 As apparent from the IPO, Factors information, presence strategy was for PRC agencies of a strategy to transfer and, to some extent, CNPC to NOC non-commercial absorb obligations with various objectives to funding streams for coverage. government or other IPO included this risk factor: agencies as capacity "CNPC's resources may not be becomes available adequate to allow the Company to collect all recoverable losses". Other Public Sector Governance Based on available 2000 6 Petroleum revenues received by Factors information, transparent the government are not hydrocarbon sector segregated from other sources revenue management of revenue, and are managed in including revenue accordance with the country's distribution within the public finance management country procedures. Other Public Sector Governance NOC and/or country Current, 9, 11, 12, China scores in the 50th Factors participate in EITI Current, 13 percentile on WGI. China is not and/or other Current, among the candidate countries transparency initiatives 2007 for EITI. Neither CNPC nor PetroChina are supporting companies. National Democratic Institute maintains several projects in China to encourage more open and accountable governance. Transparency International has an office at Tsinghua University in Beijing. Main transparency issues for China NOCs are related to outbound investment in sensitive countries/regions. Revenue Watch does not have projects in China, but does so in many countries where PetroChina operates. Other Fiscal Sustainability Based on available All PetroChina mainly funds capital Factors information, do company expenditure from operating hydrocarbon sector reports profit. Borrowings are a small fiscal regimes allow for percentage of capital employed sufficient capital (approx. 5%). Recent annual investment reports note that a drop in price of crude oil would cause delays or reductions in scale of investments. Effective tax rate is relatively low, but PetroChina pays 10% of net income in dividends to PRC statutory fund and 40-50% of net income in dividends to shareholders (mainly CNPC, for services and also social obligations that CNPC bears on behalf of PetroChina). A Citizen's Guide to National Oil Companies Page 48 China: PetroChina Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Fiscal Sustainability Based on available All years All Yes - Fitch A+ Factors information, do company hydrocarbon sector reports fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available All All USEIA notes that Chinese Factors information, are years, company NOCs are focused on meeting hydrocarbon sector 2006 reports, domestic demand. Foreign fiscal regimes 4 companies have been contracted appropriate for the to undertake oil exploration and development stage of production activities in China the domestic resource but "China's national oil base companies are entitled to take a majority (51 percent) stake in any commercial discovery, although they can choose to take a minority stake". NOCs can take over field operations once development costs are recovered. Offshore, CNOOC reserves the right to take over operations with certain shallow water locations in the Bohai Bay exempt. "The Chinese government typically mandates a royalty fee of 12.5 percent for foreign companies" with lower rates in remote areas. Recent activity from industry reports suggests that fiscal regimes, in particular ownership requirements, may discourage inbound capex given difficult geology and remoteness of some locations. Other Access to Reserves Hydrocarbon law to 2004 8 In the oil and gas sector, the Factors facilitate competitive PRC Exploitation of Offshore upstream investment Oil Resources in Cooperation with Foreign Parties Regulations (1982) and the PRC Exploitation of Onshore Oil Resources in Cooperation with Foreign Parties Regulations (1993) were enacted, along with various other regulations and measures governing royalties and imports. Other Access to Reserves Based on available 2006 4 Several PSAs exist in the Factors information, existence country (also based on industry of negotiated news monitoring). Both NOCs contracts/agreements and IOCs must compete for and for upstream investment obtain licenses from Ministry of Land and Resources. Inbound investors must comply with ownership rules and participation as already noted. A Citizen's Guide to National Oil Companies Page 49 China: PetroChina Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Operating Strategy Based on available All years All PetroChina does not appear to Factors information, types of sources participate in any joint ventures joint ventures, role of for domestic operations. For NOC(s) outbound investment, PetroChina has various joint ventures and both active and passive positions in oil and gas activities as already noted. Other Operating Strategy Based on available All years All PetroChina utilizes turnkey Factors information, extent of sources contracts with both Chinese and turnkey contracts used international vendors for all directly by NOC(s) activities and operations. Other Business Integration Vertical, horizontal All years All PetroChina is both vertically Factors integration sources and horizontally integrated in its core businesses. Other International Presence Does NOC make All years All Yes, upstream only. Factors investments abroad sources Other International Presence Avg company 5% Factors international BOE production as % avg total company BOE production Other International Presence Change in company -2% Factors BOE production from international operations (%) Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants 2006 4 Yes, but limited according to Factors in upstream hydrocarbon sector rules as noted above. A Citizen's Guide to National Oil Companies Page 50 China: PetroChina Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Competition level in 2004, 4, 8 Principal competitors in China Factors upstream including 2006 are Sinopec, including its non-NOC participants subsidiary China National Star and requirement to Petroleum Corporation, or include NOC as partner CNSPC, and China National Offshore Oil Corporation, or CNOOC. IOCs are required to include Chinese NOCs as partner; CNOOC appears to be the main participant in these joint ventures. Foreign participation is regulated by Ministry of Foreign Economic Trade and Cooperation (MOFTEC) and Ministry of Commerce (MOFCOM). Other Commercialization Competition level in 2006 4 Dominated by Chinese NOCs. Factors midstream, downstream PetroChina has a joint venture including non-NOC with Kuwait for refining. IOCs participants and and other NOCs (mainly from requirement to include Middle Eastern NOC as partner producing/exporting countries) are the primary partners. With respect to natural gas, USEIA notes that, "One major hurdle for natural gas projects in China is the lack of a unified regulatory system. Currently, natural gas prices are governed by a patchwork of local regulations. The Chinese government is in the process of drafting a new legal framework for the natural gas sector, but the process has been slow, and there are still considerable uncertainties regarding price regulation and taxation issues dealing with natural gas sales". Other Commercialization Based on available All years All Given the regulatory Factors information, prevalence sources framework, it apprears that and success of investor interest has been NOC/non-NOC primarily in upstream activities.. alliances, joint ventures Other Commercialization Partial privatization of 2006 3 12% Factors the NOC (as measured by ownership structure) Other Commercialization Based on available All years All PetroChina's international oil & Factors information, level and sources gas production is only 5% of quality of NOC total, and has been declining international operations (2004-2006). Appears that international operations are not a significant contributor to performance, either because of quality and/or location, and that PetroChina may have difficulty sustaining them. A Citizen's Guide to National Oil Companies Page 51 China: PetroChina Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Based on available All years All From all sources, PetroChina Factors information, percent of sources appears to focus strongly on its non-core commercial core businesses and does not activities in overall direct capex outside of E&P, operations refining & marketing and related midstream infrastructure. In addition, budget approval process and restrictions on investments outside of oil and gas activities constrain diversification outside of core operations. Other Regulation Presence of All years All Numerous agencies have Factors independent, well- sources oversight for oil & gas funded and trained operations including midstream regulatory agencies, HC and downstream. Details on agency name, budget, agencies are not known. number of staff Other Regulation NOCs are compelled to All years All Yes, but with some Factors adopt practices that sources qualifications (mainly related to would provide results the role of CNPC; constraints similar to those in on budget authonomy, competitive markets administrative price imposed on with price, access to domestic sales of products; lack and quality of energy of regulatory framework for services. Brief natural gas; etc). description: HC agency enforcement powers Other Regulation Regulators assure 2007 13 China scores in the 50th Factors market transparency percentile (approx avg for all and good quality, years in survey) on WGI for unbiased data and government effectiveness, information. HC regulatory quality, rule of law. agency independence Details on hydrocarbon indicators agencies are not known. Other Regulation Regulators effectively All years All The PRC government is in the Factors resolve disputes and sources process of addressing internal conflicts and address and external concerns on the public concerns about operations of the NOCs with development of and particular emphasis on access to hydrocarbon environmental, health and resources and safety and human rights issues. infrastructure. HC PetroChina corporate social agency dispute responsibility report details the resolution policy company's intent with respect to the conduct of operations both China and abroad. Disputes and/or dispute resolution process are not reported. A Citizen's Guide to National Oil Companies Page 52 China: PetroChina Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Non-commercial Provision and level of 2007 14 Since 2006 PetroChina has been Factors Objectives hydrocarbon price subject to a crude oil special subsidies ($/BOE gain levy; payments totaled production) provided by US$10 billion for 2006 and NOC and/or 2007. However, PetroChina government. Brief also receives paybacks from the description of subsidy windfall profits levy for the program, approach, cost spread between cost of crude for refining and the administered prices for domestic sales of petroleum products. Petroleum products are subject to price controls in China. This policy has translated into refining and marketing losses for Petrochina. "In 2006 PetroChina paid a crude oil special gain levy of RMB 28.9 billion (US$3.6 billion) imposed by the Chinese government on domestic crude oil sold at or above US$40/barrel. PetroChina sells refined products in the domestic market at prices administered by the National Development and Reform Commission. The company incurred average annual refining losses 2004- 2006 of US $1.5 billion due primarily to the fact that the price increase of crude oil exceeded that of refined oil products in China." Other Non-commercial Provision and level of 2007 7 Since the company's IPO, all Factors Objectives direct NOC funding of social and economic programs country social and are funded by the PRC economic programs. government. However, brief description of PetroChina supports a number programs and support of social and cultural programs, and a major commitment was made to the 2008 Olympics, for both energy fuels and emissions reductions to improve air quality for the venues. Other Non-commercial Measure of NOC $215.05 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation $8.64 Factors Objectives obligations relative to workforce ($ M) Other Non-commercial Financial performance $154.19 Factors Objectives relative to workforce ($ M) A Citizen's Guide to National Oil Companies Page 53 China: PetroChina Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Quality of Data Availability, extent, All years All PetroChina provides extensive Comments reliability of data sources data and information in all of its provided by NOC(s) reports. Information on specific and governments hydrocarbon sector regulatation and oversight roles does not appear to be readily accessible. Other Longevity of NOC Based on available All years All China reorganized its Comments information, history and sources hydrocarbon sector several persistence of NOC(s) times in recent years. The launch of PetroChina's IPO in 2000 established a basis for independent operations. China may take further steps towards privatization by offering additional equity in PetroChina to the public. Other Country Status Trends and issues All years All China became a net importer of Comments related to country sources oil in the late 1990s. China hydrocarbon sector energy policy and energy endowments and security considerations have performance guided the reorganization of the sector and inform the strategies of the NOC. Other Non-commercial Number of employees 436,585 Factors Objectives Other Non-commercial BOE production per 3,742 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 15.08 Factors Other Oil Dependency Net oil and gas export -6.32% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas -2.59% Factors revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 15,493.40 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 66,541.71 Factors reserves (BCF) Other Resource Endowment Total all source BOE 26,966.11 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors A Citizen's Guide to National Oil Companies Page 54 China: PetroChina Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Operating Conditions Company domestic 60% Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic 96% Factors reserves as % of total company reserves Other Operating Conditions Company domestic 61.77% Factors BOE production as % of country BOE production Other Operating Conditions Company primary 36% Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery 35% Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 57.46% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.97% Factors split, production (%) Other Operating Conditions Country BOE 51.76% Factors production as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 55 China: PetroChina Sources of Information Source # Year of Source Description Links Source 1 2004 SEC 20-F, Year End 2004 http://www.sec.gov/Archives/edgar/data/1108329/000114554905002 125/h00219e20vfza.htm 2 2005 SEC 20-F, Year End 2005 http://www.sec.gov/Archives/edgar/data/1108329/000114554906000 842/h00585e20vf.htm 3 2006 SEC 20-F, Year End 2006 http://www.sec.gov/Archives/edgar/data/1108329/000114554907000 795/h01136e20vf.htm 4 2006 USEIA China country analysis brief http://www.eia.doe.gov/emeu/cabs/China/Oil.html 5 Current PetroChina web site http://www.petrochina.com.cn 6 2000 IPO Prospectus http://www.petrochina.com.cn/Ptr/Investor_Relations/Prospectus/ 7 2007 Corporate Social Responsibility Annual http://www.petrochina.com.cn/Ptr/Investor_Relations/ Report 8 2004 China's 2004 Energy Sector (Michael Arruda, Fulbright http://www.fulbright.com/index.cfm?fuseaction=correspondence.chi & Jaworski) naEnergyForm 9 Current Extractive Industries Transparency Initiative http://eitransparency.org/ 10 Current Transparency International, Tsinghua University, Beijing http://www.transparency.org/content/view/full/252/(filter)/c 11 Current Revenue Watch Institute http://www.revenuewatch.org/index.php 12 Current National Democratic Institute http://www.ndi.org/worldwide/asia/china/china.asp 13 2007 World Bank Worldwide Governance Indicators http://info.worldbank.org/governance/wgi2007/sc_chart.asp (1996, 1998, 2000-2006) 14 2007 SEC 20-F, Year End 2007 http://www.sec.gov/Archives/edgar/data/1108329/000114554908000 933/h02098e20vf.htm#tocpage 15 2007 Annual Report Year End 2007 http://www.petrochina.com.cn/Ptr/Investor_Relations/ A Citizen's Guide to National Oil Companies Page 56 China: China Petroleum & Chemical Corporation (Sinopec) China: China Petroleum & Chemical Corporation (Sinopec) Summary Report Corporate Governance Highlights Corporate Organization and Ownership Sinopec is a joint stock company incorporated in the PRC. It is a subsidiary of Sinopec Group Company (SGC). Shares Controlled by Government The government owns 100% of SGC share capital, who owns 75.84%of Sinopec. 23.49% of the share capital is traded on 4 stock exchanges, while the residual 0.67% is owned by a state-owned security entity. Domestic, International Exchanges for Equity Listings Sinopec is listed on the Hong Kong Stock Exchange, New York Stock Exchange, London Stock Exchange, and Shanghai Stock Exchange. Board of Directors Structure There are eleven BOD members of which 3 are independent. They are elected by the shareholders at a general meeting for a three year term and they can be re-elected for two terms only. Independent Board Members There are three independent directors elected by shareholders. Is chairman also minister of energy or otherwise appointed by head of state? The BOD Chairman is the President of Sinopec Group Company which is 100% government owned. Operations Highlights Upstream Oil Sinopec operates primarily onshore China and for the 3 years ended 2006 its oil and gas production accounted for 20% of China's total production. International upstream assets appear to reside in SGC as Sinopec does not report international assets in its Forms 20Fs. At the end of 2006 SGC held upstream assets in Russia, Iran and Canada. Midstream Oil Sinopec is actively expanding its pipeline network. The first phase of a 600 mile project with final capacity of 540,000 B/D began operation in 2006. Downstream Oil Sinopec is China's largest refiner with 3.5 million B/D of primary distillation capacity at the end of 2006. The company is actively building new refineries and upgrading existing plants to process heavier Middle Eastern crudes. Refinery throughput grew 10% from 2004 to 2006. 20% of its crude supply comes from its own production; the remainder is imported. Refinery product prices are subsidized in China and Sinopec reported a $3 billion loss in this segment in 2006. The company owns and franchises about 29,000 retail service stations. Service station supplies came 90% from Sinopec in 2006.Since 2005 wholly owned foreign companies are permitted to conduct oil retail operations. Sinopec does not mention partners outside of franchises. Upstream Natural Gas Sinopec operates primarily onshore China and for the 3 years ended 2006 its oil and gas production accounted for 20% of China's total production. International upstream assets appear to reside in SGC as Sinopec does not report international assets in its Forms 20Fs. SGC upstream assets are in Russia, Iran and Canada. Midstream Natural Gas Sinopec is studying options for the construction of a cross-country natural gas pipeline. Downstream Natural Gas Sinopec had 38 million tons of petrochemical capacity at the end of 2006. Throughput is high at 95% of capacity and the company has expanded both capacity and throughput about 20% from 2004 to 2006. 100% of petrochemical feedstock comes from Sinopec production. Unlike refining, this segment is profitable with income from operations averaging about $2 billion p.a. from 2004 through 2006. Other None. A Citizen's Guide to National Oil Companies Page 57 China: China Petroleum & Chemical Corporation (Sinopec) Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 3,285 Upstream: Average Proved Gas Reserves (BCF) 2,947 Upstream: Average Annual Oil Production (MM Barrels) 279 Upstream: Average Annual Natural Gas Production (BCF) 229 Downstream: Average Annual Refinery Production (MM Barrels) 876 Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 103,314 Consolidated Average Total Assets ($Millions) 66,116 Consolidated Average EBIT ($Millions) 11,375 Consolidated Average Net Income ($Millions) 5,807 Categorization Indi Scores Categories: : Corporate Corporate Governance 69 Governance Public Sector Governance 64 100 Commercialization 83 Public Sector Oil Dependency 50 Governance Fiscal Regimes 75 Resource Endowment 5 0 Oil Dependency 97 Resource Commercializa Endowment Local Contribution 88 Sector and Trade Openness 58 Fiscal Regimes Average 66 Sinopec Average NOC Worldwide Governance Indicators Trends and Issues In the first quarter of 2008 Sinopec continued to report decreased earnings due to refining losses attributed to the existance of price subsidies. This is expected to be a continuing issue for the company when oil prices are above $90/bbl if product prices are not liberalized. A Citizen's Guide to National Oil Companies Page 58 China: China Petroleum & Chemical Corporation (Sinopec) Database Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of 2006 3 Sinopec is one of three NOCs Governance Its Organization cluster of NOCs and other operating in the PRC. The other sovereign enterprises in two NOCs are CNPC and country Sinopec. Sinopec and CNPC have the exclusive rights to explore and produce oil and gas onshore. Corporate Ownership Structure and Number of NOCs of 2006 3 3 - CNPC (China national Governance Its Organization country Petroleum Corp of which PetroChina is a subsidiary), Sinopec (China Petroleum and Chemical Corporation, CNOOC (China national Offshore Oil Company) Corporate Ownership Structure and Description of 2006 1 China Petroleum & Chemical Governance Its Organization incorporation and Corp. (Sinopec) is a joint stock ownership company incorporated in the PRC. It is a subsidiary of Sinopec Group Company (SGC), wholly owned by the government. SGC owns 75.84%of Sinopec. 23.49% of the share capital is traded on 4 stock exchanges, while the residual 0.67% is owned by a state-owned security entity. Corporate Ownership Structure and % shares controlled by 2006 1 76.51 % Governance Its Organization government Corporate Ownership Structure and Domestic, international 2006 1 Sinopec is listed on the Hong Governance Its Organization exchanges where shares Kong Stock Exchange, the New are listed York Stock Exchange, the London Stock Exchange, and Shanghai. Corporate Ownership Structure and Domestic, international 2006 1 Sinopec Is listed on the Hong Governance Its Organization exchanges where bonds Kong Stock Exchange, the New are traded York Stock Exchange, the London Stock Exchange, and Shanghai. Corporate Ownership Structure and Company files form 20-F 2006 1 Yes Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist 2006 1 Yes Governance A Citizen's Guide to National Oil Companies Page 59 China: China Petroleum & Chemical Corporation (Sinopec) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Board of Directors (BOD) Description of BOD and 2006 1 There are eleven BOD members Governance structure 2007 4 of which 3 are independent non- executive directors. They are elected by the shareholders for a three year term and they can be re-elected for two terms only. The BOD is overseen by a Board of Supervisors which has 12 members: 8 elected by the shareholder and 4 from the company. The Supervisors monitor the performance of executive management, the BOD and oversee financial reporting. Corporate Board of Directors (BOD) Is chairman also minister 2006 1 The BOD Chairman is the Gover of energy or otherwise President of Sinopec Group nance appointed by head of state Company which is 100% government owned. Corporate Board of Directors (BOD) Are any BOD members 2006 1 There are three independent Governance considered independent directors. All directors are (external) and, if so, how elected by the general meeting are they appointed of shareholders. Corporate Board of Directors (BOD) Term of service (years, 2006 1 See BOD Structure above. Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and 2006 1 Elect corporate Governance policy statements officers/executive management; Review operating/financial performance; Approve financial statements; Appoint independent auditors; Approve debt issuance; Declare dividends; Approve registration of securities; Evaluate management performance/set compensation levels; Monitor code of ethics/business conduct policies compliance; BOD recruits/selects key executives. Corporate Role of BOD Based on available 2006 1 BOD has considerable authority, Governance information, does BOD and the majority shareholder has have power, impact, considerable influence on the decision making authority BOD through its chairman and through the selection of BOD members. Corporate Recruitment/Replacement General process for 2006 1 Undisclosed. Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget 2006 1 Sinopec prepares the capital Governance Processes authority. Comment on budget annually. The Ministry of the general decision flow Commerce and the National within NOC and between Reform and Development NOC and government for Commission must approve major projects. sizeable downstream projects as A Citizen's Guide to National Oil Companies Page 60 China: China Petroleum & Chemical Corporation (Sinopec) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data well as PSAs. Corporate Decision Making Based on available 2006 1 The budget is a predictable Governance Processes, Budget information, is NOC annual process. Government Autonomy budget process predictable entities participate at various and separate from stages of budget preparation government and/or approval (see above). The budget process is separate from the national budget process. Corporate Decision Making Does the NOC have 2006, 1, 3, 4 Sinopec has the authority to Governance Processes, Budget authority to partner with 2007 partner with other entities both Autonomy other entities? upstream and downstream but appears to do it much less than the other Chinese NOCs. It has a joint venture with ExxonMobil and Saudi Aramco at its Fujian refinery and ethylene complex. Corporate Mission and Objectives Does NOC have a mission 2008 4 Optimize exploration, Governance statement and, if so, what production and development are key elements plans; meet domestic demand for refined products and expand as necessary; expand retail oil products business and strengthen management; expand markets for chemical products, achieve overall cost reductions of 2.6 million RMB. Corporate Sources of Capital Based on available 2006 1 Historically the company has Governance information, budgeting had sufficient cash flow from process and policy operations to fund its investment including % of cash portfolio and has reported oil flow/revenue available for and gas production increases and reinvestment increases in refinery capacity, throughput and production. Corporate Disclosure/Transparency Disclosure of audited data 2006 1 In 2006 the financial auditor was Governance Policy and other indications of KPMG; reserves are unaudited. disclosure and transparency Corporate Skill Base Based on available 2006 1 In 2006 33% of employees were Governance information, NOC involved in exploration and demographics (% production activities; 42% were management, % technical, in refining and marketing; 23% other descriptors) were in chemicals and 2% were in corporate/other. There is a union but the company has not had strikes or other labor disturbances. Corporate Incentives/Career Based on available 2008 4 The Remuneration and Governance Management information, HR Performance Review Committee promotion and of the BOD is responsible for professional development researching and suggesting policies remuneration policies for directors and senior management. Recruitment, training and development activities are outlined in the company's website. The HR department is part of the A Citizen's Guide to National Oil Companies Page 61 China: China Petroleum & Chemical Corporation (Sinopec) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Functional Division (one of 5 divisions of the company). Corporate Full Disclosure and Based on available 2008 4 On its web site Sinopec provides Governance Measurement of Non- information, brief quantitative data on its poverty commercial Objectives description of reporting on relief and health contributions. noncommercial objectives These are also outlined in the Sustainability Report (first issued in 2007). Corporate Full Disclosure and Based on available 2008, 1, 4 Sinopec provides funding for Governance Measurement of Non- information, extent of 2006 health and poverty alleviation commercial Objectives non-commercial projects. It also provides obligations significant price subsidies for refined products. Value Operating Performance Upstream oil E&P. 2006 1 Sinopec operates primarily Creation Where does it operate onshore China and for the 3 Metrics (solely in the country or years ended 2006 its oil and gas abroad-name countries)? production accounted for 20% of Does it have sole access to China's total production. country's resources? International upstream assets appear to reside in SGC as Sinopec does not report international assets in its Forms 20Fs. SGC upstream assets are in Russia, Iran and Canada. Value Operating Performance Does the NOC operate 2006 1 No Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, 2006 1, 3 Sinopec is actively expanding its Creation storage, shipping pipeline network. The first phase Metrics of a 600 mile project with final capacity of 540,000 B/D began operation in 2006. Value Operating Performance Downstream oil refining 2006 1, 3 Sinopec is China's largest refiner Creation & marketing, with 3.5 million B/D of primary Metrics petrochemicals distillation capacity at the end of 2006. The company is actively building new refineries and upgrading existing plants to process heavier Middle Eastern crudes. Refinery throughput grew 10% from 2004 to 2006. 20% of its crude supply comes from its own production; the remainder is imported. Refinery product prices are subsidized in China and Sinopec reported a $3 billion loss in this segment in 2006. The company owns and franchises about 29,000 retail service stations. Service station supplies came 90% from Sinopec in 2006.Since 2005 wholly owned foreign companies re permitted to conduct oil retail operations. Sinopec does not mention A Citizen's Guide to National Oil Companies Page 62 China: China Petroleum & Chemical Corporation (Sinopec) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data partners outside of franchises. Value Operating Performance Upstream natural gas E&P 2006 1 Sinopec operates primarily Creation onshore China and for the 3 Metrics years ended 2006 its oil and gas production accounted for 20% of China's total production. International upstream assets appear to reside in SGC as Sinopec does not report international assets in its Forms 20Fs. SGC upstream assets are in Russia, Iran and Canada. Value Operating Performance Midstream natural gas 2006 1 Sinopec is studying options for Creation pipelines, storage, LNG the construction of a cross- Metrics country natural gas pipeline. Value Operating Performance Downstream natural gas 2006 1 Sinopec had 38 million tons of Creation distribution, NGL sales, petrochemical capacity at the Metrics petrochemicals end of 2006. At the end of 2006 throughput remained high (95%) although the company had increased both throughput and capacity by approximately 20% from 2004 to 2006. 100% of petrochemical feedstock comes from Sinopec production. Unlike refining, this segment is reported as profitable with income from operations averaging about $2 billion p.a. from 2004 through 2006. Value Operating Performance Other (power generation, 2006 1 None. Creation etc) Metrics Value Operating Performance Avg reserve replacement 105% Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement $12.85 Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves 0% Creation (%) Metrics Value Operating Performance Change in BOE 6% Creation production (%) Metrics Value Operating Performance Avg upstream operating 142% Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration $13.48 Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs $8.15 Creation excluding production Metrics taxes ($/BOE) A Citizen's Guide to National Oil Companies Page 63 China: China Petroleum & Chemical Corporation (Sinopec) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg upstream after-tax 37% Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before $23.55 Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes $14.59 Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) 38% Creation Metrics Value Operating Performance Avg operating cash flow 142% Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on assets 28% Creation Metrics Value Operating Performance Avg refinery utilization 85% Creation rate (%) Metrics Value Operating Performance Change in total refining 8% Creation production (%) Metrics Value Operating Performance Change in refinery 13% Creation capacity (%) Metrics Value Operating Performance Avg income from ($0.00) Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and -3% Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash 104% Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) 11% Creation Metrics Value Financial Performance Avg profit margin (%) 6% Creation Metrics Value Financial Performance Avg effective tax rate (%) 45% Creation Metrics Value Financial Performance Avg reinvestment risk (%) 104% Creation Metrics Value Financial Performance Avg debt profile (%) 30% Creation Metrics A Citizen's Guide to National Oil Companies Page 64 China: China Petroleum & Chemical Corporation (Sinopec) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg return on assets (%) 9% Creation Metrics Value Financial Performance Avg return on total capital 6% Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to 12% Creation State (%) Metrics Other Public Sector Governance Based on available 2007 6 In December 2007 the PRC Factors information, presence of a published an overall energy publicly articulated role of policy. With respect to the hydrocarbon sector hydrocarbons, exploration and with respect to national production will focus on development objectives domestic areas. Coal-bed methane gas, oil shale and tar sands are targeted. Improvement of the oil and gas pipeline system is emphasized. Improvement of the legal system for hydrocarbon development in China and the establishment of appropriate pricing mechanisms are imperatives. Measures in this direction are in process. The PRC aims to increase foreign participation in the upstream sector. Other Public Sector Governance Based on available 2006 1 The commercial function is Factors information, clear clearly separated from policy definition of the roles of and regulatory functions. The policy, commercial latter two are combined in operation and regulation overlapping entities. and assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available 2008 4 Optimize exploration, Factors information, presence of production and development publicly stated objectives plans; meet domestic demand ranked by priority for for refined products and expand NOC(s) as necessary; expand retail oil products business and strengthen management; expand markets for chemical products, achieve overall cost reductions of 2.6 million RMB. A Citizen's Guide to National Oil Companies Page 65 China: China Petroleum & Chemical Corporation (Sinopec) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available 2006, 1, 8 When Sinopec was partially Factors information, presence of a 2008 privatized, the government strategy to transfer NOC assumed pension liabilities for non-commercial current, laid off and retired objectives to government workers. Sinopec's only pension or other agencies as obligation is to make an annual capacity becomes contribution to the relevant available government entity which is expensed annually. The government is trying to slowly raise prices on refined products and ease Sinopec's price subsidies but this may take time. In 2008 the government gave Sinopec $1.7 billion to compensate for losses on refining following smaller payments in 2005 and 2006. (PetroChina did not receive government compensation as its larger exploration and production activities were deemed sufficient to offset refining losses). Other Public Sector Governance Based on available 2000 9 Petroleum revenues received by Factors information, transparent the government are not hydrocarbon sector segregated from other sources of revenue management revenue, and are managed in including revenue accordance with the country's distribution within the public finance management country procedures. Other Public Sector Governance NOC and/or country 2008 7 Not participating. Factors participate in EITI and/or other transparency initiatives Other Fiscal Sustainability Based on available 2006, 1, 3, 6 Historically the three Chinese Factors information, do 2007 NOCs have been able to fund hydrocarbon sector fiscal capital expenditures from regimes allow for operating cash flow. With sufficient capital respect to non-NOC participants, investment interest is centered on the upstream offshore due to the maturity of onshore resources and the unattractive refined products pricing schemes. The PRC aims to expand foreign participation in the hydrocarbon sector. Other Fiscal Sustainability Based on available All three Chinese NOCs have Factors information, do investment grade ratings. hydrocarbon sector fiscal Sinopec is at the "A" level. regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available 2006 1, 3 USEIA notes that Chinese Factors information, are NOCs are focused on meeting A Citizen's Guide to National Oil Companies Page 66 China: China Petroleum & Chemical Corporation (Sinopec) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data hydrocarbon sector fiscal domestic demand. "Many regimes appropriate for foreign companies have been the development stage of contracted to undertake oil the domestic resource exploration and production base activities in China. According to Chinese law, however, China's national oil companies are entitled to take stakes up to 51% in any commercial discovery. (up to 30% in certain deepwater blocks offered in specific bid rounds). The national oil companies have the option to take over field operations (i.e. become the operators) once the PSAs contractors have recovered their development costs. In offshore zones, CNOOC reserves the right to take over operations at any new discoveries, although certain shallow water locations such as the Zhao Dong field in the Bohai Bay are exempt. The Chinese government typically mandates a royalty fee of 12.5 percent for foreign companies involved in the oil sector, although incentives have been offered for development and exploration in more remote onshore areas, such as the western provinces of Qinghai and Xinjiang". Recent activity from industry reports suggests that fiscal regimes, in particular ownership requirements, may discourage inbound capex given difficult geology and remoteness of some locations. Other Access to Reserves Hydrocarbon law to 2004 5 In the oil and gas sector, the Factors facilitate competitive PRC Exploitation of Offshore upstream investment Oil Resources in Cooperation with Foreign Parties Regulations (1982) and the PRC Exploitation of Onshore Oil Resources in Cooperation with Foreign Parties Regulations (1993) were enacted, along with various other regulations and measures governing royalties and imports. Other Access to Reserves Based on available 2006 1, 3 PSAs are permitted onshore but Factors information, existence of Sinopec does not disclose any. negotiated contracts/agreements for upstream investment A Citizen's Guide to National Oil Companies Page 67 China: China Petroleum & Chemical Corporation (Sinopec) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Operating Strategy Based on available 2006 1, 3 Sinopec associates with other oil Factors information, types of joint companies through the use of ventures, role of NOC(s) production sharing contracts for upstream operations. Sinopec has two joint ventures (Exxon and Saudi Aramco) in refining. Other Operating Strategy Based on available No data. Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal 2006 1 Sinopec is a fully integrated Factors integration company and the PRC's largest refiner. Other International Presence Does NOC make No. Its parent company appears Factors investments abroad to do that. Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make 2006 1 No Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in 2006 1, 3 Numerous particularly offshore. Factors upstream Other Commercialization Competition level in 2006 1, 3 Non-NOC participants required Factors upstream including non- to negotiate PSAs with three NOC participants and Chinese NOCs. Chinese NOCs requirement to include have the right to "back-in", NOC as partner without paying exploration costs, into any commercial discovery. Until 2006 the percentage back-in was up to 51% (up to 30% in certain deepwater blocks offered in specific bid rounds). A Citizen's Guide to National Oil Companies Page 68 China: China Petroleum & Chemical Corporation (Sinopec) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Competition level in 2006 3 Dominated by Chinese NOCs. Factors midstream, downstream Sinopec has a joint venture with including non-NOC ExxonMobil and Saudi Aramco participants and for refining. IOCs and other requirement to include NOCs (mainly from Middle NOC as partner Eastern producing/exporting countries) are the primary partners. With respect to natural gas, USEIA notes that, "One major hurdle for natural gas projects in China is the lack of a unified regulatory system. Currently, natural gas prices are governed by a patchwork of local regulations. The Chinese government is in the process of drafting a new legal framework for the natural gas sector, but the process has been slow, and there are still considerable uncertainties regarding price regulation and taxation issues dealing with natural gas sales". Other Commercialization Based on available 2008 4 None reported by Sinopec Factors information, prevalence outside of Fujian refinery. and success of NOC/non- NOC alliances, joint ventures Other Commercialization Partial privatization of the 2006 1 Non-government shareholders Factors NOC (as measured by own 24% of Sinopec ownership structure) Other Commercialization Based on available 2006 1 No international operations. Factors information, level and quality of NOC international operations Other Commercialization Based on available 2006 1 None. Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, 2006 1 The regulatory functions reside Factors well-funded and trained in several ministries. regulatory agencies, HC agency name, budget, number of staff Other Regulation NOCs are compelled to 2006 1 In the upstream, only partially. Factors adopt practices that would Sinopec's 51% "back-in" right provide results similar to would not exist in competitive those in competitive markets. Price subsidies for markets with price, access refined products would not exist to and quality of energy in competitive markets. services. brief description: HC agency enforcement powers A Citizen's Guide to National Oil Companies Page 69 China: China Petroleum & Chemical Corporation (Sinopec) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Regulation Regulators assure market 2006, 1, 6 The regulatory functions reside Factors transparency and good 2007 in several ministries. Data quality, unbiased data and provision has improved and information. HC agency further improvement efforts are independence indicators continuing. Other Regulation Regulators effectively No data available. Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of 2006 1 Sinopec reported refining losses Factors Objectives hydrocarbon price of $3 billion in 2006. subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of 2006 4 Disclosure on company website. Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC $181.16 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations $6.42 Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance $283.09 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, 2006 1, 6 Good with respect to NOC SEC Comments reliability of data provided Form 20Fs. Country data is by NOC(s) and improving. governments Other Longevity of NOC Based on available 2006 1 Sinopec was incorporated in Comments information, history and 2000 and its principal businesses persistence of NOC(s) were transferred to it by Sinopec Group Company pursuant to a reorganization agreement. A Citizen's Guide to National Oil Companies Page 70 China: China Petroleum & Chemical Corporation (Sinopec) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Country Status Trends and issues related In the first quarter of 2008 Comments to country hydrocarbon Sinopec continued to report sector endowments and decreased earnings due to performance refining losses attributed to the existance of price subsidies. This is expected to be a continuing issue for the company when oil prices are above $90/bbl if product prices are not liberalized. Unless efforts are made to rationalize petroleum product pricing in China, the company's cash position will likely erode ultimately impacting its investment plans. Other Non-commercial Number of employees 364,955 Factors Objectives Other Non-commercial BOE production per 3,274 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency 15.08 Factors BOE R/P (years) Other Oil Dependency Net oil and gas export -6.32% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency -2.59% Factors Total oil and gas revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 15,493.40 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 66,541.71 Factors reserves (BCF) Other Resource Endowment 26,966.11 Factors Total all source BOE reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Audited in part through two Factors NOCs. Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production A Citizen's Guide to National Oil Companies Page 71 China: China Petroleum & Chemical Corporation (Sinopec) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Operating Conditions Company primary 50% Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery 48% Factors throughput as % of total country refinery throughput Other Operating Conditions 57.46% Factors Country oil/natural gas split, reserves (%) Other Operating Conditions 99.97% Factors Country oil/natural gas split, production (%) Other Operating Conditions Country BOE production 51.76% Factors as % of total country BOE consumption Other Trade Openness Yes Factors WTO Membership Other Competition No Factors OPEC Membership A Citizen's Guide to National Oil Companies Page 72 China: China Petroleum & Chemical Corporation (Sinopec) Sources of Information Source # Year of Source Description Links Source 1 2006 Sinopec SEC Form 20F 2006. www.sec.gov 2 2007 2008 BP Statistical Review of www.bp.com World Energy available at www.bp.com. 3 2006 USEIA, Country Analysis Brief- www.eia.doe.gov China, 12/13/06 available at www.eia.doe.gov. 4 2007 Sinopec Annual Report 2007. www.english.sinopec.com 5 2004 China's 2004 Energy Sector. Michael Aruda, Fulbright & Jaworski. 6 2007 "China's Energy Conditions and Policies," Information Office of the State Council of the People's Republic of China, December, 2007. 7 2008 EITI www.eitransparency.org 8 2008 "$18 billion cost of high price crude," Financial Times, 3/20/08. 9 2000 IPO Prospectus for PetroChina http://www.petrochina.com.cn/Ptr/Investor_Relations/Prospectus/ A Citizen's Guide to National Oil Companies Page 73 Indonesia: Pertamina Indonesia: Pertamina Summary Report Corporate Governance Highlights Corporate Organization and Ownership PT Pertamina (Persero) is a limited liability company established in Indonesia Shares Controlled by Government The Indonesian government owns 100% of Pertamina. The Ministry of State Owned Enterprises is the shareholder. Domestic, International Exchanges for Equity Listings None. In January 2008 the Ministry of State Owned Enterprises determined to establish Pertamina as a non-listed public company in 2008 which had not occurred as of November 2008. Board of Directors Structure The BOD has six members which are appointed by the President of Indonesia. The President-Director of Pertamina is also appointed by the President. There is also a state Board of Commissioners which monitors the performance of the BOD and Pertamina. The Chief Commissioner is appointed by the President. Independent Board Members None Is chairman also minister of energy or otherwise appointed by head of state? The Indonesian President appoints all members of the BOD. Operations Highlights Upstream Oil In 2004 Pertamina reported 1.5 million barrels of proven oil reserves and 133 MB/D of oil production, representing 35% and 12% of Indonesia's reserves and production respectively. The oil upstream sector is dominated by international oil companies (Chevron, BP, ConocoPhillips, ExxonMobil, Total, PetroChina and CNOOC) operating pursuant to production sharing contracts (PSAs). Indonesia's two largest oil fields, operated by Chevron, are in decline. The upstream regulator, BP Migas, has competitively tendered new upstream projects annually since 2001. In the 2006 tender the majority of awards went to smaller Indonesian firms. In 2004 Indonesia became a net oil importer. BP Migas was established in 2002 as the upstream supervisor and replaced Pertamina as the contracting party in PSAs. Midstream Oil Indonesia has 7,471 kilometers of oil pipelines and 1,365 kilometers of refined product pipelines. BPH Migas, established in 2002, is the regulator/supervisor of oil and refined products transportation and storage. Downstream Oil Pertamina operates all eight of Indonesia's refineries with capacity of 992,745 B/D. Pertamina reported refinery production of 282 MM barrels in 2004 suggesting a refinery utilization rate of 78%. Under the Law Oil of 2001 Pertamina was permitted to retain the operating rights for all its existing downstream businesses. However third parties are permitted to participate in new construction, upgrades and expansions. Indonesia's first privately owned (local firm) refinery with capacity of 300,000 B/D is under construction and should be completed in 2010. In 2004 Pertamina sold 573 MM barrels of refined products with 91% destined for domestic markets. Refinery product imports accounted for 22% of sales. Third parties are permitted to participate in marketing and distribution and BP and Petronas entered this segment in 2004. BP Migas is the regulator/supervisor of refining, distribution and marketing of oil and oil products. It is the licensing agency and determines prices for subsidized fuels. Upstream Natural Gas Pertamina reported 19 TCF of proven gas reserves and 1.1 BCF/D of gas production in 2004 accounting for 19% and 16% of Indonesian reserves and production respectively. 70% of the country's gas reserves are offshore. Pertamina and six international oil companies (Total, ExxonMobil, BP/ENI, ConocoPhillips, BP and Chevron) operating under production sharing contracts account for more than 90% of production. As in the upstream oil sector, BP Migas is the upstream gas supervisor/regulator and licensing authority and replaces Pertamina as the contracting party in PSAs. Indonesia is trying to shift natural gas production to domestic markets to replace crude oil. Pertamina and Indonesia are emphasizing natural gas exploration to satisfy increasing domestic demand and meet its LNG contract obligations. Pertamina and Indonesian gas production increased from 2003 to 2004. A Citizen's Guide to National Oil Companies Page 74 Indonesia: Pertamina Midstream Natural Gas Pertamina is not involved in this sector. Gas transmission is under the purview of state-owned Perusahaan Gas Negara (PGN). It operates more than 3,100 miles of gas transmission and distribution lines. Limited interconnectivity has restrained growth in domestic consumption. PGN is building new pipelines to improve connectivity (Integrated Gas Transportation System) which is being financed by PGN, the World Bank and the Asian Development Bank. BP Migas is the regulator/supervisor of this sector with respect to development, tariffs and capacity allocation. Downstream Natural Gas Indonesia has the capacity to produce 31.6 million tons of LNG at the two liquefaction plants in Arun and Bontang. Pertamina has a 55% interest in Bontang and a 55% interest in Arun. In 2004 LNG production was 25.1 million tons or 80% of capacity. Declining LNG exports are due to declining production and diversion of gas production for domestic use, particularly fertilizer plants. In December 2005 it was decided that 25% of production from all future gas discoveries should go to the domestic market. With recent refined product subsidy cuts, gas is the more attractive fuel for power and the industrial sector. Since domestic gas prices are not near the level of the feed gas to the LNG plants and the domestic pipeline system needs significant expansion, this policy is creating great uncertainty in the economics of developing known and new gas fields. PSA operators are reluctant to further develop existing gas fields and there are sharp production declines in the fields feeding the two LNG plants. As a result Indonesia is failing to meet its contractual LNG export commitments, particularly to Japan. The Japanese are turning to other LNG sources as many contracts with Indonesia come up for renewal in 2009. Decreased exports will adversely affect the country's trade balance. The Indonesian government approved a new BP-led LNG project at Tangguh in March 2005; Pertamina is not a participant. Other In 2004 Pertamina produced 137.09 Mtons/day of geothermal energy. Pertamina has been the seller of the government's share of oil and gas production in Japan, the Philippines and Taiwan and domestically. BP Migas selects the gas seller. Pertamina's president was quoted as saying "We are hopeless" at marketing Indonesia's LNG. BP Migas appointed BP to market the government's share of LNG from the new Tangguh LNG project. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 1,210 Upstream: Average Proved Gas Reserves (BCF) 13,495 Upstream: Average Annual Oil Production (MM Barrels) 0 Upstream: Average Annual Natural Gas Production (BCF) 357 Downstream: Average Annual Refinery Production (MM Barrels) 280 Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) No data Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data Categorization Indicators Categories: Scores: Corporate Corporate Governance 47 Governance 100 Public Sector Governance 83 Commercialization 50 Public Sector Oil Dependency 50 Governance Fiscal Regimes 38 0 Resource Endowment 4 Oil Dependency 99 Resource Commercializa Endowment Local Contribution 0 Sector and Trade Openness 56 Fiscal Regimes Average 53 Pertamina Average NOC A Citizen's Guide to National Oil Companies Page 75 Indonesia: Pertamina Worldwide Governance Indicators Trends and Issues Pertamina has been undergoing a substantial transformation since 2003 to ready it to become "a non-listed public company" in 2008/2009. Non-core businesses such as airlines and hospitals are being divested; the workforce has been reduced; regulatory duties have been transferred to government agencies; price subsidies are being reduced and all sectors of the hydrocarbon industry are open to competition. The company appointed Ernst and Young as auditors for 2007 and will have a reputable independent firm prepare a reserve report. McKinsey & Co. was hired to improve corporate governance and PricewaterhouseCoopers was hired to organize non-core businesses for divestment. Pertamina is a "work in progress" and it will take some time to determine results. Similarly, Indonesia's commercial frameworks for the hydrocarbon sector have undergone major changes in 2001 (new Oil Law) and 2007 (new national Energy Law) and are in the process of evolving. A Citizen's Guide to National Oil Companies Page 76 Indonesia: Pertamina Database Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of 2005 1,2,6 PT Pertamina (Persero) is a Governance Its Organization cluster of NOCs and limited liability company other sovereign incorporated in Indonesia in enterprises in country 2003. There is another state- owned company, PGN (PT Perusahaan Gas Negara Tbk) which owns and operates gas transmission and distribution pipelines. Corporate Ownership Structure and Number of NOCs of 2005 1, 2, 6 2 Governance Its Organization country Corporate Ownership Structure and Description of 2004 1 Pertamina is a limited liability Governance Its Organization incorporation and company established in ownership Indonesia and is 100% government owned. Corporate Ownership Structure and % shares controlled by 2004 1 The Indonesian government Governance Its Organization government owns 100% of Pertamina. The Ministry of State Owned Enterprises is the shareholder. Corporate Ownership Structure and Domestic, international 2008 1 None. Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international 2008 1 None Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20- 2006 1 No Governance Its Organization F with SEC? Corporate Board of Directors (BOD) Does a BOD exist 2008 1 Yes Governance Corporate Board of Directors (BOD) Description of BOD and 2008 1 The BOD has six members Governance structure which are appointed by the President of Indonesia. The President-Director of Pertamina is also appointed by the President. There is also a state Board of Commissioners which monitors the performance of the BOD and Pertamina. The Chief Commissioner is appointed by the President. Corporate Board of Directors (BOD) Is chairman also 2008 1 The Indonesian President Governance minister of energy or appoints all members of the otherwise appointed by BOD. head of state Corporate Board of Directors (BOD) Are any BOD members 2008 1 There are no independent Governance considered independent board members. (external) and, if so, how are they appointed A Citizen's Guide to National Oil Companies Page 77 Indonesia: Pertamina Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Board of Directors (BOD) Term of service (years, No data. Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and 2005, 6, 1 The role of the BOD is largely Governance policy statements 2008 unknown. The BOD and BOC approved Pertamina's corporate plan and budget for 2008 "after tight review and discussion" which will be subject to "regular review." The shareholder directed the BOD and BOC to prepare Pertamina as a non-listed public company in 2008 and appointed Ernst and Young as auditor for 2007. At the annual meeting of the shareholder, BOD and BOC in January 2008 it was decided to have Pertamina's reserves audited by a "reputable independent consultant." Company goals for 2008 were proposed by the BOD and BOC and were approved by the shareholder. It is said that the Minister of Energy and President retain a considerable influence on the appointment of directors and commissioners which they could use to shape Pertamina in accordance with the government's national vision for the oil and gas industry. Corporate Role of BOD Based on available 2005 6 See above. Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replacement General process for 2008 1 Presidential prerogative. See Governance Key Executives recruitment, BOD Structure above. replacement of key execs and senior managers Corporate Decision Making Level of NOC budget 2005, 6, 1 Pertamina appears to have an Governance Processes authority. Comment on 2006 annual budget process which is the general decision reviewed and approved by the flow within NOC and BOD, BOC and shareholder. between NOC and Also present at that meeting in government for major January 2008 were the Deputy projects. and Asst. Deputy of Mining, Strategic Industry, Energy and Telecommunication. A Citizen's Guide to National Oil Companies Page 78 Indonesia: Pertamina Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Decision Making Based on available Appears to be predictable. No Governance Processes, Budget information, is NOC data if separate from national Autonomy budget process budget. predictable and separate from government Corporate Decision Making Does the NOC have 2005 6 Pertamina is party to 64 Governance Processes, Budget authority to partner with exploration and production Autonomy other entities? PSAs and is a party to various joint venture agreements and technical assistance contracts. It has formed strategic alliances with domestic and foreign partners and has set up a drilling service called Pertamina Drilling Services which owns 28 drilling rigs. It is a party to eight joint operating agreements for geothermal operations. It also owns two LNG liquefaction facilities in joint ventures with international oil companies. Pertamina dominates the refining sector and does not have partners although it is permitted. Corporate Mission and Objectives Does NOC have a 2008 8 Maintain oil production at 3.1 Governance mission statement and, MMB/D until 2012; 100% if so, what are key reserve replacement ratio by elements 2012/2013; achieve R/P ratio of 10 years; maintain gas production increases above demand growth; reduce gasoline imports; enact crucial operational upgrades in refining and petrochemicals and reduce investment leverage. In order to meet these goals Pertamina needs: greater flexibility, enhanced execution capacity and sufficient resources. Corporate Sources of Capital Based on available No data. Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited 2008 1 The shareholder appointed Governance Policy data and other Ernst & Young as the financial indications of disclosure auditor for 2007 although and transparency financial results are not publicly disclosed. Pertamina is in process of finding a reserves auditor. A Citizen's Guide to National Oil Companies Page 79 Indonesia: Pertamina Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Skill Base Based on available No data. Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available 2,008 1 Pertamina has corporate Governance Management information, HR strategies for human resource promotion and development but they are not professional publicly disclosed on its web development policies site (special authorization required). Corporate Full Disclosure and Based on available 2008 1 Qualitative disclosure of Governance Measurement of Non- information, brief social/economic contributions commercial Objectives description of reporting on web site under Corporate on noncommercial Social Responsibility. The objectives company envisions dedicating 1-3% of net profit after government take to these efforts. Price subsidies are reimbursed by the government. Corporate Full Disclosure and Based on available 2008 1 See above. Governance Measurement of Non- information, extent of commercial Objectives non-commercial obligations Value Operating Performance Upstream oil E&P. 2006, 1, 2 In 2004 Pertamina reported 1.5 Creation Where does it operate 2007 million barrels of proven oil Metrics (solely in the country or reserves and 133 MB/D of oil abroad-name production, representing 35% countries)? Does it and 12% of Indonesia's have sole access to reserves and production country's resources? respectively. The oil upstream sector is dominated by international oil companies (Chevron, BP, ConocoPhillips, ExxonMobil, Total, PetroChina and CNOOC) operating pursuant to production sharing contracts (PSAs). Indonesia's two largest oil fields, operated by Chevron, are in decline. The upstream regulator, BP Migas, has competitively tendered new upstream projects annually since 2001. In the 2006 tender the majority of awards went to smaller Indonesian firms. In 2004 Indonesia became a net oil importer. BP Migas was established in 2002 as the upstream supervisor and replaced Pertamina as the contracting party in PSAs. A Citizen's Guide to National Oil Companies Page 80 Indonesia: Pertamina Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Does the NOC operate 2007, 1, 2 No Creation abroad? 2008 Metrics Value Operating Performance Midstream oil pipelines, 2007 2 Indonesia has 7,471 kilometers Creation storage, shipping of oil pipelines and 1,365 Metrics kilometers of refined product pipelines. BP Migas, established in 2002, is the regulator/supervisor of oil and refined products transportation and storage. Value Operating Performance Downstream oil refining 2008, 1, 2 Pertamina operates all eight of Creation & marketing, 2007 Indonesia's refineries with Metrics petrochemicals capacity of 992,745 B/D. Pertamina reported refinery production of 282 MM barrels in 2004 suggesting a refinery utilization rate of 78%. Under the Law Oil of 2001 Pertamina was permitted to retain the operating rights for all its existing downstream businesses. However third parties are permitted to participate in new construction, upgrades and expansions. Indonesia's first privately owned (local firm) refinery with capacity of 300,000 B/D is under construction and should be completed in 2010. In 2004 Pertamina sold 573 MM barrels of refined products with 91% destined for domestic markets. Refinery product imports accounted for 22% of sales. Third parties are permitted to participate in marketing and distribution and BP and Petronas entered this segment in 2004. BP Migas is the regulator/supervisor of refining, distribution and marketing of oil and oil products. It is the licensing agency and determines prices for subsidized fuels. Value Operating Performance Upstream natural gas 2006 1 Pertamina reported 19 TCF of Creation E&P proven gas reserves and 1.1 Metrics BCF/D of gas production in 2004 accounting for 19% and 16% of Indonesian reserves and production respectively. 70% of the country's gas reserves are offshore. Pertamina and six international A Citizen's Guide to National Oil Companies Page 81 Indonesia: Pertamina Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data oil companies (Total, ExxonMobil, BP/ENI, ConocoPhillips, BP and Chevron) operating under production sharing contracts account for more than 90% of production. As in the upstream oil sector, BP Migas is the upstream gas supervisor/regulator and licensing authority and replaces Pertamina as the contracting party in PSAs. Indonesia is trying to shift natural gas production to domestic markets to replace crude oil. Pertamina and Indonesia are emphasizing natural gas exploration to satisfy increasing domestic demand and meet its LNG contract obligations. Pertamina and Indonesian gas production increased from 2003 to 2004. Value Operating Performance Midstream natural gas 2008, 1, 2 Pertamina is not involved in Creation pipelines, storage, LNG 2007 this sector. Gas transmission is Metrics under the purview of state- owned Perusahaan Gas Negara (PGN). It operates more than 3,100 miles of gas transmission and distribution lines. Limited interconnectivity has restrained growth in domestic consumption. PGN is building new pipelines to improve connectivity (Integrated Gas Transportation System) which is being financed by PGN, the World Bank and the Asian Development Bank. BP Migas is the regulator/supervisor of this sector with respect to development, tariffs and capacity allocation. A Citizen's Guide to National Oil Companies Page 82 Indonesia: Pertamina Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Downstream natural gas 2006 8 Indonesia has the capacity to Creation distribution, NGL sales, produce 31.6 million tons of Metrics petrochemicals LNG at the two liquefaction plants in Arun and Bontang. Pertamina has a 55% interest in Bontang and a 55% interest in Arun. In 2004 LNG production was 25.1 million tons or 80% of capacity. Declining LNG exports are due to declining production and diversion of gas production for domestic use, particularly fertilizer plants. In December 2005 it was decided that 25% of production from all future gas discoveries should go to the domestic market. With the refined product subsidy cuts, gas is the more attractive fuel for power and the industrial sector. Since domestic gas prices are not near the level of the feed gas to the LNG plants and the domestic pipeline system needs significant expansion, this policy is creating great uncertainty in the economics of developing known and new gas fields. PSA operators are reluctant to further develop existing gas fields and there are sharp production declines in the fields feeding the two LNG plants. As a result Indonesia is failing to meet its contractual LNG export commitments, particularly to Japan. The Japanese are turning to other LNG sources as many contracts with Indonesia come up for renewal in 2009. Decreased exports will adversely affect the country's trade balance. The Indonesian government approved a new BP-led LNG project at Tangguh in March 2005; Pertamina is not a participant. A Citizen's Guide to National Oil Companies Page 83 Indonesia: Pertamina Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Other (power 2005, 1, 2, 6, In 2004 Pertamina produced Creation generation, etc) 2006, 8 137.09 Mtons/day of Metrics 2007, geothermal energy. Pertamina 2008 has been the seller of the government's share of oil and gas production in Japan, the Philippines and Taiwan and domestically. BP Migas selects the gas seller. BP Migas appointed BP to market the government's share of LNG from the new Tangguh LNG project. Value Operating Performance Avg reserve No data Creation replacement rate (BOE, Metrics %) Value Operating Performance Avg reserve No data Creation replacement cost Metrics ($/BOE) Value Operating Performance Change in BOE reserves 108% Creation (%) Metrics Value Operating Performance Change in BOE 14% Creation production (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream Metrics capital expenditures (%) Value Operating Performance Avg upstream No data Creation exploration and Metrics production expenses ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes Metrics ($/BOE) Value Operating Performance Avg income after all No data Creation taxes ($/BOE) Metrics Value Operating Performance Avg effective tax rate No data Creation (%) Metrics Value Operating Performance Avg operating cash flow No data Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on No data Creation assets Metrics A Citizen's Guide to National Oil Companies Page 84 Indonesia: Pertamina Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining 1% Creation production (%) Metrics Value Operating Performance Change in refinery 0% Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating Metrics cash flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin No data Creation (%) Metrics Value Financial Performance Avg profit margin (%) No data Creation Metrics Value Financial Performance Avg effective tax rate No data Creation (%) Metrics Value Financial Performance Avg reinvestment risk No data Creation (%) Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets No data Creation (%) Metrics Value Financial Performance Avg return on total No data Creation capital employed (%) Metrics Value Financial Performance Avg fiscal contribution No data Creation to State (%) Metrics A Citizen's Guide to National Oil Companies Page 85 Indonesia: Pertamina Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available 2005, 6, 9 Although not specifically Factors information, presence of 2007 related to national a publicly articulated development objectives, the role of the hydrocarbon passage of Oil and Gas Law sector with respect to No. 22/2001 in late 2001 national development produced a huge change in objectives Indonesia's hydrocarbon sector. This law ended Pertamina's monopoly, promoted competition and transferred Pertamina's upstream and downstream regulatory roles to two separate government agencies. In 2007 Indonesia passed a new Energy Law No. 30/2007 which addressed the hydrocarbon sector's role in national development and established overall energy policies. Other Public Sector Governance Based on available 2005, 6, 9 Commercial functions are Factors information, clear 2007 separated from policy and definition of the roles of regulatory functions in the policy, commercial hydrocarbon sector. Pertamina, operation and regulation PGN, and non-NOC and assignment to participants in the upstream specific entities and downstream sectors have a avoiding conflicts of commercial role as authorized interest by Oil and Gas Law No. 22/2001. Pertamina competes with IOCs for the allocation of petroleum rights. Pursuant to the 2007 Energy Law, Indonesia will create a National Energy Council which will design and formulate national energy policies to be adopted by the government with House of Representatives approval. The Council will have 15 members: 7 appointed by Indonesia's President and eight are selected by the House of Representatives. These latter members will include people from academia, industry, technology, environmental and consumer circles. BP Migas is the upstream regulator and BP Migas is the downstream regulator. A Citizen's Guide to National Oil Companies Page 86 Indonesia: Pertamina Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available 2008 1 Pertamina's unranked goals Factors information, presence of include: fuel sales volumes publicly stated targets; oil and gas production objectives ranked by targets; revenue, cost and net priority for NOC(s) profit targets; investment targets and an overall performance rating target. Other Public Sector Governance Based on available 2008, 1, 2 No transfer strategy disclosed Factors information, presence of 2006 for the activities reported on a strategy to transfer Pertamina's website, corporate NOC non-commercial social responsibility. The objectives to government already bears the government or other cost of the price subsidies. agencies as capacity becomes available -Other Public Sector Governance Based on available 2008 13, 14 Indonesia does not have a Factors information, transparent petroleum fund. In application hydrocarbon sector of the Mining Royalties Act revenue management local governments and some including revenue provinces receive a percentage distribution within the of the royalties from the sale country of oil and gas. The website of the Ministry of Finance reports data such as budget note (nota keuangan), draft budget, approved budget, revised budget, and realized budget, once they are launched. The budget has very detailed information of each revenue account (including natural resources revenue, tax and non-tax). Of particular interest is the website of the rehabilitation and reconstruction treasury office in Aceh, which published daily updates on public spending. The website is often cited as best practice, and is considered a pilot project for improved budget transparancy. Other Public Sector Governance NOC and/or country 2008, 7, 10, Indonesia and Pertamina are Factors participate in EITI 2007 11 currently not involved in the and/or other EITI effort. National transparency initiatives Democratic Institute and Transparency International have active programs in the country. Other Fiscal Sustainability Based on available 2005- 1, 2, 6, Information is not available to Factors information, do 2008 8 assess Pertamina's ability to hydrocarbon sector fund capital expenditures. fiscal regimes allow for There has been a high level of sufficient capital investment in the upstream and investment LNG sectors in the past as evidenced by operating projects and PSAs. However, A Citizen's Guide to National Oil Companies Page 87 Indonesia: Pertamina Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data upstream investment has declined in recent years and production is declining. As a result, Indonesia appears to be increasing flexiblility with regard to PSA terms, offering a lower government take for deeper water, technically difficult, gas-prone and/or remote acreage. There is also an increasing shortfall in refining capacity and imports account for 33% of domestic consumption. Indonesia would like to double its refining capacity but price subsidies on domestic products continue despite recent reductions in their levels and are a disincentive. There is preliminary interest from Saudi Aramco, the National Iranian Oil Co. and Kuwait Oil Co. in an export-oriented refinery (targeting China). Other Fiscal Sustainability Based on available Pertamina is unrated. Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available See comments on investment Factors information, are levels above. hydrocarbon sector fiscal regimes appropriate for the development stage of the domestic resource base Other Access to Reserves Hydrocarbon law to 2005 6 Oil and Gas Law No. 22/2001. Factors facilitate competitive upstream investment Other Access to Reserves Based on available Yes, see comments on Factors information, existence investment levels above. of negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available 2005 6 PSAs and joint venture LNG Factors information, types of projects. joint ventures, role of NOC(s) Other Operating Strategy Based on available No data. Factors information, extent of turnkey contracts used directly by NOC(s) A Citizen's Guide to National Oil Companies Page 88 Indonesia: Pertamina Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Business Integration Vertical, horizontal 2006 1 Pertamina is an integrated Factors integration company operating in the upstream and downstream sectors. The midstream and downstream gas sector is the purview of another NOC-PGN (see above). Other International Presence Does NOC make 2008 1 No Factors investments abroad Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company No data Factors BOE production from international operations (%) Other International Presence Does NOC make 2006 1 No Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants 2007 2 Upstream PSAs and LNG joint Factors in upstream ventures. Other Commercialization Competition level in 2005- 1, 2, 6 See above. The 2001 law does Factors upstream including non- 2007 not appear to require that non- NOC participants and NOCs partner with Pertamina. requirement to include For example, Pertamina does NOC as partner not participate in the Tangguh LNG project. Other Commercialization Competition level in 2006 8 PGN dominates the Factors midstream, downstream midstream/downstream gas including non-NOC sector. Pipeline expansions are participants and underway but non-NOCs do requirement to include not appear to be investing in NOC as partner them. There is open pipeline access and direct sales to Indonesian end users are permitted; BP Migas must approve price and contract A Citizen's Guide to National Oil Companies Page 89 Indonesia: Pertamina Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data conditions. Other Commercialization Based on available 2007 2 Successful PSAs and LNG Factors information, prevalence joint ventures. and success of NOC/non-NOC alliances, joint ventures Other Commercialization Partial privatization of 2008 1 None to date. Factors the NOC (as measured by ownership structure) Other Commercialization Based on available 2008 1 No international operations. Factors information, level and quality of NOC international operations Other Commercialization Based on available 2005 6 Pertamina is divesting non- Factors information, percent of core hotel, airline, insurance non-core commercial and hospital businesses among activities in overall others. operations Other Regulation Presence of 2005 6 BP Migas, established in 2002, Factors independent, well- regulates upstream oil and gas funded and trained exploration and production. It regulatory agencies, HC is also the contracting party in agency name, budget, PSAs. BP Migas, established number of staff in 2002, regulates oil and gas refining, storage, transportation, distribution and marketing. The effect of the 2001 Oil Law and its implementing regulations is not clear in many places and the regulators are evolving. Other Regulation NOCs are compelled to 2005 6 See above. Price subsidies, Factors adopt practices that although reduced, limit would provide results competition in some sectors. similar to those in competitive markets with price, access to and quality of energy services. Brief description: HC agency enforcement powers Other Regulation Regulators assure No data. Factors market transparency and good quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively No data. Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute A Citizen's Guide to National Oil Companies Page 90 Indonesia: Pertamina Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data resolution policy Other Non-commercial Provision and level of 2006 3 Although Pertamina provides Factors Objectives hydrocarbon price oil products and LPG price subsidies ($/BOE subsidies, these are directly production) provided by recompensed by the NOC and/or government and are not a net government. brief cost to the company. Despite description of subsidy sharp price increases, price program, approach, cost subsidies remain a significant cost to the Indonesian government at $7.7 billion and $9.9 billion in 2004 and 2005, respectively. Other Non-commercial Provision and level of 2008 1 Disclosure on company Factors Objectives direct NOC funding of website. Most appear health country social and related. economic programs. Brief description of programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation No data Factors Objectives obligations relative to workforce ($ M) Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, 2008 1 Extremely limited with respect Comments reliability of data to Pertamina. There is good provided by NOC(s) country data on Indonesia, and governments particularly through the US Embassy in Jakarta. Other Longevity of NOC Based on available 2008 1 Pertamina was established in Comments information, history and 1957 with a monopoly in oil persistence of NOC(s) and gas upstream and downstream activities. It was transformed in 2003 into a public liability company PT Pertamina (Persero). Other Country Status Trends and issues Indonesia faces serious Comments related to country questions with regard to hydrocarbon sector sustainability of its natural gas endowments and production and related performance businesses. Various issues in recent years have forced Pertamina to acquire LNG cargos from other suppliers in order to meet contractual issues. Indonesia's exit from OPEC represented something of a cultural shift for that nation's oil and gas business interests. To its advantage, Pertamina has had long and successful experience with A Citizen's Guide to National Oil Companies Page 91 Indonesia: Pertamina Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data petroleum contracts, agreements and joint ventures. With reorganization to ensure sufficient capitalization and with better footing for Indonesia's nascent regulator, a robust internal market for natural gas could evolve as Pertamina adjusts its long term business strategies. Other Non-commercial Number of employees 18,000 Factors Objectives Other Non-commercial BOE production per 21,614 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 29.78 Factors Other Oil Dependency Net oil and gas export -4.84% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas -1.46% Factors revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 4,370.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 105,943.99 Factors reserves (BCF) Other Resource Endowment Total all source BOE 22,636.20 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited. Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic No data Factors BOE production as % of country BOE production Other Operating Conditions Company primary 94% Factors distillation capacity as % of total country primary distillation capacity A Citizen's Guide to National Oil Companies Page 92 Indonesia: Pertamina Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 19.31% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.89% Factors split, production (%) Other Operating Conditions Country BOE 121.00% Factors production as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership Yes Factors A Citizen's Guide to National Oil Companies Page 93 Indonesia: Pertamina Sources of Information Source # Year of Source Description Links Source 1 2004, 2008 2004 Annual Report and company www.pertamina.com website. 2 2007 USEIA Country Analysis Brief- www.eia.doe.gov Indonesia, Jan. 07. 3 2006 "Coping with Higher Oil Prices," Report 323/06, World Bank, ESMAP, August 2006. 4 2008 WTO www.wto.org 5 2007 2008 BP Statistical Review of World www.bp.com Energy. 6 2005 "National Interests," by Ashley Wright www.projectfinancemagazine.com and Adelene Tan, ProjectFinance Asia Pacific Report 2005. 7 2008 EITI www.eitransparency.org 8 2006 "Recent Key Developments in SE Asia's http://energy.ihs.com Midstream-Indonesia: A Nation in Transition," by Jeremy Bowder, IHS. 9 2007 Law of the Republic of Indonesia No. 30 Year 2007 on Energy. 10 Current Transparency International - Indonesia http://www.ti.or.id/ 11 2007 National Democratic Institute - Indonesia http://www.ndi.org/worldwide/asia/indonesia/ indonesia.asp 12 2008 Oil & Gas Financial Journal http://www.ogfj.com/display_article/313620/8 2/ARCHI/none/none/1/Transforming- Pertamina-into-a-competitive-powerhouse/ 13 2008 Ministry of Finance http://www.perbendaharaan.go.id http://www.anggaran.depkeu.go.id 14 2008 Rehabilitation and Reconstruction http://www.danarrapbn.org/monitor/asp/defau Treasury Office - Aceh lt.asp A Citizen's Guide to National Oil Companies Page 94 Malaysia: Petroliam Nasional Berhad (Petronas) Malaysia: Petroliam Nasional Berhad (Petronas) Summary Report Corporate Governance Highlights Corporate Organization and Ownership Petroliam Nasional Berhad (Petronas) is a Malaysian integrated oil and gas company. The Petronas Group has 62 direct subsidiaries of which 42 are wholly-owned. Of the 42 wholly-owned subsidiaries, 27 are domestic and 15 are foreign. Shares Controlled by Government The Malaysian government owns 100% of Petronas and the company reports directly to the Prime Minister of Malaysia. The shareholder is the Ministry of Finance. Domestic, International Exchanges for Equity Listings Four Petronas subsidiaries are listed on the Malaysian Stock Exchange. Board of Directors Structure The BOD has eight members and reports directly to the Prime Minister. Four members are from Petronas management including the Chairman of the BOD. The other four members are government-related: Director General of the Economic Planning Unit; General Secretary of the Ministry of Finance; Director of the Economic and Coordination Unit and the independent advocate and solicitor. Independent Board Members No independent BOD members. Is chairman also minister of energy or otherwise appointed by head of state? The Prime Minister appoints the Chairman of the BOD who is also Chairman of Petronas. The Chairman reports directly to the Prime Minister. Operations Highlights Upstream Oil For the fiscal year ended 3/31/07 Petronas reported proven domestic reserves of 5.4 million barrels of oil and 86 TCF of gas reserves which represents 100% of Malaysia's reserves. Petronas reported domestic production of 1.1 MMBOE/D for 2007 down 3% from 2006. 55% of its domestic production is natural gas. Petronas accounts for 77% of Malaysia's oil production and 65% of its gas production. Foreign and private companies operate pursuant to production sharing contracts (PSAs) negotiated and administered by Petronas. ExxonMobil is the largest oil producer of the private/foreign companies. Exploration activities are currently focusing on offshore deepwater prospects. Petronas is a net exporter of oil and gas focusing on Asian markets. For fiscal 2007, Petronas reported international reserves of 2.6 million barrels of oil and 22 TCF of gas representing 33% and 20% of the company's oil and gas reserves respectively. International production for fiscal 2007 was 582 MBOE/D up 35% from 2006. International production accounts for 34% of Petronas' total production. Petronas operates in more than 20 countries including Vietnam, Myanmar, Indonesia, Sudan, Iran, Chad, Egypt, Pakistan, Thailand, Russia, India and Turkmenistan. Most international investment is carried out by Petronas Carigali and has an upstream focus. Midstream Oil Petronas operates 2,146 kilometers of condensate, oil and refined product pipelines in Malaysia. Downstream Oil As of 3/31/07 Malaysia had 556.3 MMB/D of refinery capacity: 56% of this capacity is owned and operated by Petronas and the remainder is operated by Shell and ExxonMobil. Petronas' 2007 refinery utilization rate was 91%. Petronas exported 49% of its refined product production in 2007. 58% of refinery feedstock came from Malaysia with the remainder from Turkmenistan and Sudan. Petronas' domestic retail arm, Petronas Dagangan Berhad (PDB), has a 42% market share and faces competition from Shell, Chevron and BP. Petronas also conducts oil products retail businesses in South Africa, Sudan, Thailand, Japan, Singapore, China and Italy. The company owns a refinery in South Africa. Upstream Natural Gas Proved domestic natural gas reserves increased 1.1% from 2006 to 2007. Petronas' gas production was 1.3 TCF in 2007 down 2% from 2006 and representing 70% of total Malaysian production. Malaysia is a net exporter of gas in the form of LNG primarily to Japan, South Korea and Taiwan. Natural gas exploration and production is currently focused deepwater offshore. Petronas reported international gas reserves of 21.8 TCF at fiscal year end 2007, up 5% from 2006, and representing 25% of Petronas' total gas reserves. 2007 international gas production was 709 BCF, up 36% from 2006, and representing 35% of Petronas' total gas production. Most international gas production comes from Egypt and Iran followed by Thailand and Myanmar. A Citizen's Guide to National Oil Companies Page 95 Malaysia: Petroliam Nasional Berhad (Petronas) Midstream Natural Gas Petronas operates the 880 mile, 2 BCF/D capacity, Peninsular Gas Utilization (PGU) pipeline project. Throughput on PGU increased 5% from 2006 to 2007 and the system is operating at or above capacity. The PGU permits small amounts of piped gas trading with Singapore and Indonesia. In 2006 the Trans-Thailand-Malaysia Gas Pipeline System was completed which allows Petronas to transport gas produced in the Malaysia-Thailand joint development area to peninsular Malaysia. Electric generation accounts for 67% of Malaysian gas demand and total demand grew 4% from 2006 to 2007. Petronas provides significant gas price subsidies to power generators and the non-power sector (small industrial, commercial, residential users) in Malaysia. The subsidy for fiscal 2007 was $4.3 billion, up 9% from fiscal 2006. The subsidy to the non-power sector grew 39% from 2006 to 2007. The cumulative subsidy since 1997 is about $16 billion. Downstream Natural Gas Malaysia has three LNG liquefaction plants with total capacity of 22.7 million metric tons per year. Petronas has a 60-65% interest in all three plants. Petronas domestic LNG production remained flat from 2006 to 2007 at 21.5 million metric tons. Petronas has two overseas LNG projects: a 7.2 MMt/y liquefaction plant in Egypt and a regasification plant in the UK. Petronas owns 36-38% of the Egyptian plant which became operational in 2006. The UK plant expects operations to begin by year end 2008. Petronas' petrochemical production increased 11% to 9.8 million metric tons in fiscal 2007 with a capacity utilization rate of 95%. Other Petronas has logistics and maritime businesses led by subsidiary MISC Berhad. It operates 112 LNG vessels and more than two- thirds of its fleet services Petronas' oil, LNG and petrochemical businesses. The company expects to add six new LNG vessels by 2009-2011. In late 2007 Petronas purchased eight upstream areas in Mauritania from Woodside Petroleum Ltd. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 7,394 Upstream: Average Proved Gas Reserves (BCF) 105,786 Upstream: Average Annual Oil Production (MM Barrels) 268 Upstream: Average Annual Natural Gas Production (BCF) 1,767 Downstream: Average Annual Refinery Production (MM Barrels) 138 Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 35,386 Consolidated Average Total Assets ($Millions) 68,513 Consolidated Average EBIT ($Millions) 16,647 Consolidated Average Net Income ($Millions) 10,105 Categorization Indicators Categories: Scores: Corporate Corporate Governance 63 Governance 100 Public Sector Governance 72 Commercialization 100 Public Sector Oil Dependency 50 Governance Fiscal Regimes 100 Resource Endowment 4 0 Oil Dependency 97 Resource Commercializa Local Contribution 67 Endowment Sector and Trade Openness 58 Fiscal Regimes Average 73 Petronas Average NOC A Citizen's Guide to National Oil Companies Page 96 Malaysia: Petroliam Nasional Berhad (Petronas) Worldwide Governance Indicato Trends and Issues Petronas has been a highly profitable company despite the gas price subsidy burden, its somewhat opaque corporate governance and its regulatory duties in the PSA arena. Its international operations are more extensive than most other NOCs. The company intends to rely on international upstream activities to balance possibly declining Malaysian reserves and production. However, analysts state that Petronas' international operations are less diversified and less developed than those of major oil companies. The government recently reduced the gas price subsidy which has been politically controversial in Malaysia and is generating negative press for Petronas. A Citizen's Guide to National Oil Companies Page 97 Malaysia: Petroliam Nasional Berhad (Petronas) Database Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of 2006 1 Petroliam Nasional Berhad Governance Its Organization cluster of NOCs and (Petronas) is a Malaysian integrated other sovereign oil and gas company. The Petronas enterprises in country Group has 62 direct subsidiaries of which 42 are wholly-owned. Of the 42 wholly-owned subsidiaries, 27 are domestic and 15 are foreign. Corporate Ownership Structure and Number of NOCs of 2006 1 1 Governance Its Organization country Corporate Ownership Structure and Description of 2006 1 The Malaysian government owns Governance Its Organization incorporation and 100% of Petronas and the company ownership reports directly to the Prime Minister of Malaysia. The shareholder is the Ministry of Finance. Corporate Ownership Structure and % shares controlled by 2006 1 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international 2006 1 Four Petronas subsidiaries are listed Governance Its Organization exchanges where on the Malaysian Stock Exchange. shares are listed Corporate Ownership Structure and Domestic, international 2006 Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 2006 1 No Governance Its Organization 20-F with SEC? Corporate Board of Directors Does a BOD exist 2006 1 Yes Governance (BOD) Corporate Board of Directors Description of BOD 2006 1 The BOD has eight members and Governance (BOD) and structure reports directly to the Prime Minister. Four members are from Petronas management including the Chairman of the BOD. The other four members are government- related: Director General of the Economic Planning Unit; General Secretary of the Ministry of Finance; Director of the Economic and Coordination Unit and the independent advocate and solicitor. Corporate Board of Directors Is chairman also 2007 1, 5 The Prime Minister appoints the Governance (BOD) minister of energy or Chairman of the BOD who is also otherwise appointed by Chairman of Petronas. The head of state Chairman reports directly to the Prime Minister. Corporate Board of Directors Are any BOD members 2006 1 None who is independent of the Governance (BOD) considered independent company or the government. (external) and, if so, how are they appointed Corporate Board of Directors Term of service (years, 2006 1 No data. Governance (BOD) with re-appointment). Comment if they can be readily removed. A Citizen's Guide to National Oil Companies Page 98 Malaysia: Petroliam Nasional Berhad (Petronas) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Role of BOD Description of role and 2006 7 Sets strategic goals; approves Governance policy statements investments and cash deployment; controls the budgeting process. Corporate Role of BOD Based on available 2007 5 The Chairman of the Board has Governance information, does BOD considerable personal power as he is have power, impact, selected by and reports to the Prime decision making Minister. The current Chairman, authority Mohd Hassan Marican, is also President and Chief Executive Officer of Petronas. He became Chairman in 2004 after a Petronas career that began in 1989. Petronas is largely independent of other government ministries. Corporate Recruitment/Replacement General process for No data. Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget 2006- 1, 5, 7 No data. From its financial reports, Governance Processes authority. Comment 2007 the company clearly manages a large on the general decision capital budget. Petronas management flow within NOC and has a reputation for good between NOC and commercial management which is government for major competent and highly effective. The projects. BOD appears to control the budget process. Corporate Decision Making Based on available 2007 1, 5, 7 See above. Governance Processes, Budget information, is NOC Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have 2007 1, 6 Yes as evidenced by Petronas' Governance Processes, Budget authority to partner participation in PSAs with foreign Autonomy with other entities? and private companies in the upstream sector and its joint venture participation in three LNG liquefaction facilities. Corporate Mission and Objectives Does NOC have a 2008 1 Vision: "To be a leading Oil and Gas Governance mission statement and, Multinational of Choice". It will if so, what are key develop a leading core oil and gas elements business in which it is "capability advantaged" and will expand these businesses internationally. It will be focused on profitability and growth. It will develop an increasingly international culture and world class organizational management and business practices while retaining a distinct Malaysian identity. It will be a good corporate citizen in the areas where it operates. A Citizen's Guide to National Oil Companies Page 99 Malaysia: Petroliam Nasional Berhad (Petronas) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Sources of Capital Based on available 2007 1, 6 Petronas has been able to fund its Governance information, budgeting investment projects; for the three process and policy years ended 2006 operating cash including % of cash flow/capital expenditures was 242%. flow/revenue available There is continued active investment for reinvestment in Malaysia's upstream sector and several new projects will come onstream in the next several years. Corporate Disclosure/Transparency Disclosure of audited 2006 1 Petronas states that its financial Governance Policy data and other statements are audited in accordance indications of with standards issued by the disclosure and Malaysian Accounting Standards transparency Board, but does not disclose the auditor. Corporate Skill Base Based on available No data. Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available 2,007 1 No data. In its 2007 annual report Governance Management information, HR Petronas emphasizes its investments promotion and in professional development and professional skills training to increase capability development policies and competency. Coaching and mentoring programs are widely implemented and leadership training is employed. Corporate Full Disclosure and Based on available 2008 1 On its web site Petronas provides Governance Measurement of Non- information, brief qualitative data on social and commercial Objectives description of reporting economic contributions to Malaysia on noncommercial and other countries. It discloses objectives annually the cost of the natural gas price subsidies it provides to domestic power generators and other industries. Corporate Full Disclosure and Based on available 2006 1 Natural gas price subsidies for the Governance Measurement of Non- information, extent of three years ended 2006 totaled close commercial Objectives non-commercial to $7 billion. obligations A Citizen's Guide to National Oil Companies Page 100 Malaysia: Petroliam Nasional Berhad (Petronas) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Upstream oil E&P. 2006 1, 6 For the fiscal year ended 3/31/07 Creation Where does it operate Petronas reported proven domestic Metrics (solely in the country reserves of 5.4 million barrels of oil or abroad-name and 86 TCF of gas reserves which countries)? Does it represents 100% of Malaysia's have sole access to reserves. Petronas reported domestic country's resources? production of 1.1 MMBOE/D for 2007 down 3% from 2006. 55% of its domestic production is natural gas. Petronas accounts for 77% of Malaysia's oil production and 65% of its gas production. Foreign and private companies operate pursuant to production sharing contracts (PSAs) negotiated and administered by Petronas. ExxonMobil is the largest oil producer of the private/foreign companies. Exploration activities are currently focusing on offshore deepwater prospects. Petronas is a net exporter of oil and gas focusing on Asian markets. For fiscal 2007, Petronas reported international reserves of 2.6 million barrels of oil and 22 TCF of gas representing 33% and 20% of the company's oil and gas reserves respectively. International production for fiscal 2007 was 582 MBOE/D up 35% from 2006. International production accounts for 34% of Petronas' total production. Petronas operates in more than 20 countries including Vietnam, Myanmar, Indonesia, Sudan, Iran, Chad, Egypt, Pakistan, Thailand, Russia, India and Turkmenistan. Most international investment is carried out by Petronas Carigali and has an upstream focus. Value Operating Performance Does the NOC operate 2006 1 Yes. Petronas is largely Creation abroad? characterized as being on the Metrics forefront of NOC-NOC international joint ventures. Value Operating Performance Midstream oil 2006 1, 6 Petronas operates 2,146 kilometers Creation pipelines, storage, of condensate, oil and refined Metrics shipping product pipelines in Malaysia. A Citizen's Guide to National Oil Companies Page 101 Malaysia: Petroliam Nasional Berhad (Petronas) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Downstream oil 2006 1, 6 As of 3/31/07 Malaysia had 556.3 Creation refining & marketing, MMB/D of refinery capacity: 56% Metrics petrochemicals of this capacity is owned and operated by Petronas and the remainder is operated by Shell and ExxonMobil. Petronas' 2007 refinery utilization rate was 91%. Petronas exported 49% of its refined product production in 2007. 58% of refinery feedstock came from Malaysia with the remainder from Turkmenistan and Sudan. Petronas' domestic retail arm, Petronas Dagangan Berhad (PDB), has a 42% market share and faces competition from Shell, Chevron and BP. Petronas also conducts oil products retail businesses in South Africa, Sudan, Thailand, Japan, Singapore, China and Italy. The company owns a refinery in South Africa. Value Operating Performance Upstream natural gas 2006 1, 6 Proved domestic natural gas reserves Creation E&P increased 1.1% from 2006 to 2007. Metrics Petronas' gas production was 1.3 TCF in 2007 down 2% from 2006 and representing 70% of total Malaysian production. Malaysia is a net exporter of gas in the form of LNG primarily to Japan, South Korea and Taiwan. Natural gas exploration and production is currently focused deepwater offshore. Petronas reported international gas reserves of 21.8 TCF at fiscal year end 2007, up 5% from 2006, and representing 25% of Petronas' total gas reserves. 2007 international gas production was 709 BCF, up 36% from 2006, and representing 35% of Petronas' total gas production. Most international gas production comes from Egypt and Iran followed by Thailand and Myanmar. A Citizen's Guide to National Oil Companies Page 102 Malaysia: Petroliam Nasional Berhad (Petronas) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Midstream natural gas 2006 1, 6 Petronas operates the 880 mile, 2 Creation pipelines, storage, BCF/D capacity, Peninsular Gas Metrics LNG Utilization (PGU) pipeline project. Throughput on PGU increased 5% from 2006 to 2007 and the system is operating at or above capacity. The PGU permits small amounts of piped gas trading with Singapore and Indonesia. In 2006 the Trans- Thailand-Malaysia Gas Pipeline System was completed which allows Petronas to transport gas produced in the Malaysia-Thailand joint development area to peninsular Malaysia. Electric generation accounts for 67% of Malaysian gas demand and total demand grew 4% from 2006 to 2007. Petronas provides significant gas price subsidies to power generators and the non-power sector (small industrial, commercial, residential users) in Malaysia. The subsidy for fiscal 2007 was $4.3 billion, up 9% from fiscal 2006. The subsidy to the non-power sector grew 39% from 2006 to 2007. The cumulative subsidy since 1997 is about $16 billion. Value Operating Performance Downstream natural 2006 1 Malaysia has three LNG liquefaction Creation gas distribution, NGL plants with total capacity of 22.7 Metrics sales, petrochemicals million metric tons per year. Petronas has a 60-65% interest in all three plants. Petronas domestic LNG production remained flat from 2006 to 2007 at 21.5 million metric tons. Petronas has two overseas LNG projects: a 7.2 MMt/y liquefaction plant in Egypt and a regasification plant in the UK. Petronas owns 36- 38% of the Egyptian plant which became operational in 2006. The UK plant expects operations to begin by year end 2008. Petronas' petrochemical production increased 11% to 9.8 million metric tons in fiscal 2007 with a capacity utilization rate of 95%. A Citizen's Guide to National Oil Companies Page 103 Malaysia: Petroliam Nasional Berhad (Petronas) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Other (power 2006 1 Petronas has logistics and maritime Creation generation, etc) businesses led by subsidiary MISC Metrics Berhad. It operates 112 LNG vessels and more than two-thirds of its fleet services Petronas' oil, LNG and petrochemical businesses. The company expects to add six new LNG vessels by 2009-2011. In late 2007 Petronas purchased eight upstream areas in Mauritania from Woodside Petroleum Ltd. Value Operating Performance Avg reserve 119% Creation replacement rate (BOE, Metrics %) Value Operating Performance Avg reserve $2.50 Creation replacement cost Metrics ($/BOE) Value Operating Performance Change in BOE 1% Creation reserves (%) Metrics Value Operating Performance Change in BOE 6% Creation production (%) Metrics Value Operating Performance Avg upstream No data Creation operating cash Metrics flow/upstream capital expenditures (%) Value Operating Performance Avg upstream No data Creation exploration and Metrics production expenses ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes Metrics ($/BOE) Value Operating Performance Avg income after all No data Creation taxes ($/BOE) Metrics Value Operating Performance Avg effective tax rate No data Creation (%) Metrics Value Operating Performance Avg operating cash No data Creation flow vs costs incurred Metrics (%) Value Operating Performance After tax return on No data Creation assets Metrics Value Operating Performance Avg refinery utilization 103% Creation rate (%) Metrics A Citizen's Guide to National Oil Companies Page 104 Malaysia: Petroliam Nasional Berhad (Petronas) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Change in total 0% Creation refining production (%) Metrics Value Operating Performance Change in refinery 1% Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating Metrics cash flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating 242% Creation cash flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin 47% Creation (%) Metrics Value Financial Performance Avg profit margin (%) 29% Creation Metrics Value Financial Performance Avg effective tax rate 39% Creation (%) Metrics Value Financial Performance Avg reinvestment risk 242% Creation (%) Metrics Value Financial Performance Avg debt profile (%) 22% Creation Metrics Value Financial Performance Avg return on assets 15% Creation (%) Metrics Value Financial Performance Avg return on total 20% Creation capital employed (%) Metrics Value Financial Performance Avg fiscal contribution 33% Creation to State (%) Metrics Other Public Sector Governance Based on available 2006 6, 7 Although not specifically related to Factors information, presence national development objectives, the of a publicly Petroleum Development Act of 1974 articulated role of the vests Petronas with the sole hydrocarbon sector ownership and rights of oil and gas with respect to national exploration and production in development objectives Malaysia. All foreign and private companies must operate through PSAs with Petronas. A Citizen's Guide to National Oil Companies Page 105 Malaysia: Petroliam Nasional Berhad (Petronas) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available 2006- 1, 5, 6, The Prime Minister's Economic Factors information, clear 2007 8 Planning Unit (EPU) and definition of the roles Implementation and Coordination of policy, commercial Unit (ICU) are responsible for operation and energy policies. Petronas and other regulation and non-NOC participants in the assignment to specific hydrocarbon sector have the entities avoiding commercial function. However, the conflicts of interest regulatory function is intertwined with policy and commercial functions: the EPU regulates natural gas prices and Petronas negotiates and administers PSAs. One independent ministry, the Ministry of Domestic Trade & Consumer Affairs, regulates the price of petroleum products. Other Public Sector Governance Based on available 2008 1 Vision: To be a leading Oil and Gas Factors information, presence Multinational of Choice. It will of publicly stated develop a leading core oil and gas objectives ranked by business in which it is "capability priority for NOC(s) advantaged" and will expand these businesses internationally. It will be focused on profitability and growth. It will develop an increasingly international culture and world class organizational management and business practices while retaining a distinct Malaysian identity. It will be a good corporate citizen in the areas where it operates. Other Public Sector Governance Based on available 2008 1 None disclosed. Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available The amount of oil and gas-related Factors information, revenue received eventually by transparent covernment is reported in official hydrocarbon sector budget documents, which are revenue management available on the Treasury's website including revenue (although the figures are not broken distribution within the down in detail). Except for a future country generation fund created in 1988, and a 5% of royalties allocated to three oil provinces, petroleum revenues are not differentiated from other revenues, and are managed in accordance with the country's public finance management system. A Citizen's Guide to National Oil Companies Page 106 Malaysia: Petroliam Nasional Berhad (Petronas) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance NOC and/or country 2008, 9, 10, Malaysia/Petronas do not participate Factors participate in EITI 2007 11 in EITI. National Democratic and/or other Institute and Transparency transparency initiatives International both operate in Malaysia. Other Fiscal Sustainability Based on available 2006, 1, 6, 7 Petronas has not had difficulty in Factors information, do 2007 funding its investment portfolio hydrocarbon sector despite the natural gas price subsidy fiscal regimes allow for burden: operating cash flow/capital sufficient capital expenditures was 242% for the three investment years ended 2006 and its debt/total capital is a reasonable 22%. There are numerous non-NOC participants investing in the upstream, LNG and retail oil products sectors. Other Fiscal Sustainability Based on available 2006 7 Petronas is investment grade: A-/A+ Factors information, do (Standard & Poors). hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available 2006 6 Exploration and production activities Factors information, are have grown in recent years and hydrocarbon sector Petronas and its PSA partners have fiscal regimes been most active exploring offshore appropriate for the areas, especially deepwater zones. development stage of the domestic resource base Other Access to Reserves Hydrocarbon law to 2008 1 The Petroleum Act of 1974 gives Factors facilitate competitive Petronas the exclusive right to upstream investment negotiate PSAs with other participants. Given the level of activity and investment, this approach has been successful. Other Access to Reserves Based on available 2008 1 See above. Factors information, existence of negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available 2006 6 PSAs in the upstream and joint Factors information, types of ventures in LNG. joint ventures, role of NOC(s) Other Operating Strategy Based on available No data. Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal 2006 1 Petronas is a vertically integrated Factors integration company. Other International Presence Does NOC make 2006 1 Yes, see operating conditions Factors investments abroad discussions above. A Citizen's Guide to National Oil Companies Page 107 Malaysia: Petroliam Nasional Berhad (Petronas) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other International Presence Avg company 25% Factors international BOE production as % avg total company BOE production Other International Presence Change in company 26% Factors BOE production from international operations (%) Other International Presence Does NOC make 2006 1 Yes Factors investments abroad Other International Presence Avg company 25% Factors international refinery throughput as % total refinery throughput Other International Presence Change in company 29% Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants 2006 1, 6 Yes, numerous. Factors in upstream Other Commercialization Competition level in 2006 1, 6 Non-NOC participants must enter Factors upstream including into PSAs with Petronas. non-NOC participants ExxonMobil is the largest oil and requirement to producer in Malaysia and most include NOC as partner natural gas production comes from PSAs operated by foreign companies. Other Commercialization Competition level in 2006 6 Petronas dominates the Factors midstream, midstream/downstream gas sectors downstream including including LNG with its 60-65% non-NOC participants ownership in the three liquefaction and requirement to facilities. In refining, ExxonMobil include NOC as partner and Shell control 53% of refining capacity without Petronas participation. Shell, Chevron and BP compete with Petronas in the retail oil products sector. Other Commercialization Based on available 2006 6 High prevalence and high success of Factors information, upstream PSAs and LNG joint prevalence and success ventures. of NOC/non-NOC alliances, joint ventures A Citizen's Guide to National Oil Companies Page 108 Malaysia: Petroliam Nasional Berhad (Petronas) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Partial privatization of 2008 1 None. Factors the NOC (as measured by ownership structure) Other Commercialization Based on available 2006 1 Generally good, reliable data. Factors information, level and Financial disclosure is more limited quality of NOC than that required by the US SEC but international operations Petronas reports much more financial data than other 100% government owned NOCs. Other Commercialization Based on available 2008 1 None. Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of 2003, 1, 5, 6, The regulatory function is Factors independent, well- 2007 8 intertwined with policy and funded and trained commercial functions: the EPU regulatory agencies, regulates natural gas prices and HC agency name, Petronas negotiates and administers budget, number of staff PSAs. One independent ministry, the Ministry of Domestic Trade & Consumer Affairs, regulates the price of petroleum products. Other Regulation NOCs are compelled to 2006 6 Some competition exists in the Factors adopt practices that upstream, refining, LNG and oil would provide results products sectors. similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure 2008 1 Petronas data is generally good Factors market transparency quality. and good quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively 2006 6 No data at the consumer interface. Factors resolve disputes and The investment interface appears to conflicts and address work well in the upstream, refining, public concerns about LNG and oil products sectors. development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy A Citizen's Guide to National Oil Companies Page 109 Malaysia: Petroliam Nasional Berhad (Petronas) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Non-commercial Provision and level of 2006 1 Petronas provides extensive natural Factors Objectives hydrocarbon price gas price subsidies to the power subsidies ($/BOE sector in order to maintain low production) provided electricity prices and the financial by NOC and/or viability of the state-owned government. brief electricity company. Some subsidies description of subsidy are provided to industrial customers. program, approach, The cumulative subsidy cost since cost 1997-2006 is about $11 billion. Other Non-commercial Provision and level of 2006 1 Disclosure on company website. Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC $2,141.03 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation No data Factors Objectives obligations relative to workforce ($ M) Other Non-commercial Financial performance $1,105.82 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, 2006 1 Generally good and reliable data. Comments reliability of data provided by NOC(s) and governments Other Longevity of NOC Based on available 2006 1 Petronas was incorporated in 1974 Comments information, history under the Companies Act of 1965. It and persistence of has remained wholly-owned by the NOC(s) government. It has four subsidiaries listed on the Bursa Malaysia. Other Country Status Trends and issues Petronas has been a highly profitable Comments related to country company despite the natural gas hydrocarbon sector price subsidy burden, its somewhat endowments and opaque corporate governance and its performance regulatory duties in the PSA arena. Its international operations are more extensive than most other NOCs. Indeed, Petronas is considered something of a pioneer with regard to overseas ventures pursued by closely held NOCs. The company intends to rely on international upstream activities to balance possibly declining Malaysian reserves and production. However, analysts state that Petronas' international operations are less diversified and less developed than those of major oil companies. The government recently reduced the gas price subsidy which has been politically controversial in Malaysia A Citizen's Guide to National Oil Companies Page 110 Malaysia: Petroliam Nasional Berhad (Petronas) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data and is generating negative press for Petronas. Other Non-commercial Number of employees 32,000 Factors Objectives Other Non-commercial BOE production per 22,198 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 31.71 Factors Other Oil Dependency Net oil and gas export 2.39% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas 2.56% Factors revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 5,357.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 87,403.79 Factors reserves (BCF) Other Resource Endowment Total all source BOE 20,426.62 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic 96% Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic 76% Factors reserves as % of total company reserves Other Operating Conditions Company domestic 68.39% Factors BOE production as % of country BOE production Other Operating Conditions Company primary 65% Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 26.23% Factors split, reserves (%) A Citizen's Guide to National Oil Companies Page 111 Malaysia: Petroliam Nasional Berhad (Petronas) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Operating Conditions Country oil/natural gas 99.87% Factors split, production (%) Other Operating Conditions Country BOE 179.10% Factors production as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 112 Malaysia: Petroliam Nasional Berhad (Petronas) Sources of Information Source Year of Source Description Links # Source 1 2006 Petronas Annual Reports and Annual www.petronas.com/investorrelations Consolidated Financial Statements. 2 2008 CIA World Factbook-Malaysia, 6/19/08. www.cia.gov/library/publications/the-world- factbook/index.html 3 2008 WTO www.wto.org 4 2007 2008 BP Statistical Review of World www.bp.com Energy 5 2007 "Petronas: A National Oil Company with www.rice.edu/energyevents an International Vision," by Dr. Fred R. von der Mehden with Al Troner, Presented at James A. Baker III Institute for Public Policy, Rice University, March 2007. 6 2007 USEIA Country Analysis Brief-Malaysia, www.eia.doe.gov March 2007. 7 2006 "Petroliam Nasional Berhad Ratings www.ratingsdirect.com Analysis," Standard & Poor's, 10/11/06. 8 2008 Economic Planning Unit, Prime www.epu.jpm.my Minister's Department 9 2008 EITI www.eitransparency.org 10 2007 National Democratic Institute - Malaysia http://www.ndi.org/worldwide/asia/malaysia/malaysia.asp 11 2008 Transparency International - Malaysia http://www.transparency.org.my/ A Citizen's Guide to National Oil Companies Page 113 Thailand: PTT Public Company Ltd. Thailand: PTT Public Company Ltd. Summary Report Corporate Governance Highlights Corporate Organization and Ownership The share capital is devided as follows: 52.31% Ministry of Financed; 7.77% Vayupak Fund 1 by MFC Asset Management Plc; 7.77% Vayupak Fund 1 by Krung Thai Asset Management Plc.; and 31.15% Institutional and Public Investors such as various banks; Social Security Office; Government Pension Fund, etc. Shares Controlled by Government 52.31 % Domestic, International Exchanges for Equity Listings Security Exchange of Thailand (SET). PTT plc accounts for 20 per cent of the total capitalization on the SET. Board of Directors Structure PTT Board of Directors consists of 4 committees: Audit Committee, Nominating Committee, Remuneration Committee and Corporate Governance Committee. The President, who is the top executive, manages PTT through 11 committees. The present Board consists of 15 directors: 14 non-management directors (10 of whom are independent), and one President. Independent Board Members Ten of fifteen board members are independent. The shareholders' meetings are held to elect qualified directors who have previously been selected and nominated by the Nominating Committee (based on certain criteria). Is chairman also minister of energy or otherwise appointed by head of state? No Operations Highlights Upstream Oil Through its E&P subsidiary, PTTEP, PTT's overseas locations include Southeast Asian countries, among them Burma, Cambodia, Indonesia, and Malaysia. However, PTTEP has also invested in E&P projects in Algeria, Iran, and Oman, and has considered upstream investments in several other countries. Midstream Oil Operated by PTT's subsidiary - Thai Petroleum Pipeline Company (Thappline). Thappline supplies 30-40 % of refined petroleum products. It owns a distribution network of 255 kilometers of pipeline. Thappline oil transportation system includes a multiproduct (jet fuel, diesel oil, gasoline, etc) pipeline with a capacity of 26,000 million liters of oil per year. There are 2 oil distribution terminals, constructed by Thappline. Downstream Oil PTT is considerably involved in the downstream sector with stakes in all 4 of the country's refineries and equity interests in downstream subsidiaries (Thaioil and Thappline). Upstream Natural Gas In the upstream, there is competition among several producers, with three companies dominating ­ UNOCAL (now Chevron), PTTEP and Total. These companies also have joint partnerships in some projects. Midstream Natural Gas "Gas transmission is solely operated by the public organization, PTT. The pipeline tariff rate is regulated by NEPO/NEPC. Future demand for gas transmission system remains continual." Downstream Natural Gas "PTT purchases all indigenous gas from the producers, including PTTEP and transmits it through its pipelines to end-users. The rate of return from the gas supply and distribution is regulated by NEPO/NEPC." Other 74% of natural gas supply is used for power generation; mostly by Electricity Generating Authority of Thailand (EGAT). A Citizen's Guide to National Oil Companies Page 114 Thailand: PTT Public Company Ltd. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 168 Upstream: Average Proved Gas Reserves (BCF) 5,001 Upstream: Average Annual Oil Production (MM Barrels) 21 Upstream: Average Annual Natural Gas Production (BCF) 344 Downstream: Average Annual Refinery Production (MM Barrels) No data Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 33,199 Consolidated Average Total Assets ($Millions) 20,878 Consolidated Average EBIT ($Millions) 3,662 Consolidated Average Net Income ($Millions) 2,523 Categorization Indicators Scores: Categories: Corporate Governance Corporate Governance 84 100 Public Sector Governance 71 Public Sector Oil Dependency 50 Commercialization 100 Governance Fiscal Regimes 100 0 Resource Endowment 0 Resource Oil Dependency 0 Commercializa Endowment Local Contribution 97 Sector and Trade Openness 83 Fiscal Regimes Average 59 PTT Average NOC Worldwide Governance Indicators 1998 Voice and Accountability 2002 Political Stability Government Effectiveness Regulatory Quality Rule of Law Control of Corruption 2004 2006 0 25 50 75 100 Trends and Issues As stated in the Japanese Credit Rating Agency's outlook, PTT is strategically important to the Thai government because it plays a strong public policy role in developing long-term supply of gas and indirectly supporting electricity supply in Thailand. Because the company is 51% owned by the Ministry of Finance, the financial performance of the NOC is monitored by the Ministry of Finance for soundness and because of its strategic importance in energy policy. A Citizen's Guide to National Oil Companies Page 115 Thailand: PTT Public Company Ltd. Database Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of 2007 3 Only PTT Public Company Ltd. Governance Its Organization cluster of NOCs and other (formerly the Petroleum sovereign enterprises in Authority of Thailand). country Corporate Ownership Structure and Number of NOCs of 2007 1 1 Governance Its Organization country Corporate Ownership Structure and Description of 2007 1 The share capital is devided as Governance Its Organization incorporation and follows: 52.31% Ministry of ownership Financed; 7.77% Vayupak Fund 1 by MFC Asset Management Plc; 7.77% Vayupak Fund 1 by Krung Thai Asset Management Plc.; and 31.15% Institutional and Public Investors such as various banks; Social Security Office; Government Pension Fund, etc Corporate Ownership Structure and % shares controlled by 2007 1 52.31% Governance Its Organization government Corporate Ownership Structure and Domestic, international 2007 1 Security Exchange of Thailand Governance Its Organization exchanges where shares (SET). PTT plc accounts for 20 are listed per cent of the total capitalization on the SET. Corporate Ownership Structure and Domestic, international No data. Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F Yes Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist Yes Governance Corporate Board of Directors (BOD) Description of BOD and 2007 1 PTT Board of Directors consists Governance structure of 4 committees: Audit Committee, Nominating Committee, Remuneration Committee, and Corporate Governance Committee. The President, who is the top executive, manages PTT through 11 committees. The present Board consists of 15 directors: 14 non-management directors (10 of whom are independent), and one President. Corporate Board of Directors (BOD) Is chairman also minister No Governance of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members 2007 1 Ten of fifteen board members Governance considered independent are independent. The (external) and, if so, how shareholders' meetings are held are they appointed to elect qualified directors who have previously been selected and nominated by the A Citizen's Guide to National Oil Companies Page 116 Thailand: PTT Public Company Ltd. Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Nominating Committee (based on certain criteria). Corporate Board of Directors (BOD) Term of service (years, 2007 1 "At every Annual General Governance with re-appointment). Meeting of Shareholders Comment if they can be (AGM), one-third of the readily removed. directors ­ or if this number is not a multiple of three, then the number nearest to one-third ­ must retire. The names of the directors to retire during the first and second year after PTT was listed are to be drawn by lots. For subsequent years, those with the longest terms must retire. In voting for the dismissal of directors from office before the expiry of their terms, a three- quarter (3/4) vote of eligible shareholders present at the meeting is required, provided that the number of shares represented by the three-quarters vote is at least half of the total number of shares represented by the total number of eligible shareholders present at the meeting." Corporate Role of BOD Description of role and 2007 1 "Authority of the Board The Governance policy statements Board is authorized to supervise and manage PTT under relevant laws, objectives, regulations, and resolutions of shareholders' meetings. The Board is to elect one director to serve as Chairman. If suitable, one Vice Chairman or more may be elected. The Board is to elect one director to serve as President and Secretary to the Board if suitable. Duties and Responsibilities of the Board The Board is to: Carry out its duties under relevant laws, objectives, regulations, and resolutions of shareholders' meetings. Define the Company's vision, directions, and strategies. Endorse major Company strategies and policies, including objectives, financial targets, and operating plans; monitor and ensure plan implementation. Institute proper systems for corporate accounting, financial reporting, and financial auditing; institute efficient and effective internal control and internal A Citizen's Guide to National Oil Companies Page 117 Thailand: PTT Public Company Ltd. Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data audit systems. Supervise and remedy problems arising from conflicts of interest and connected transactions. Define comprehensive risk management guidelines; and ensure an efficient risk management system or process. Ensure a suitable compensation system or mechanism for senior management, to induce short- term and long-term motivation. Assess the performance of the President and determine suitable compensation. Ensure suitable communicating channels with each group of shareholders and stakeholders. Ensure accurate, clear, transparent, credible, and high-quality disclosure of information. Show leadership and lead by example." Corporate Role of BOD Based on available No data. Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replacement General process for No clear indication. Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget No data. Governance Processes authority. Comment on the general decision flow within NOC and between NOC and government for major projects. Corporate Decision Making Based on available No data. Governance Processes, Budget information, is NOC Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have Yes. Governance Processes, Budget authority to partner with Autonomy other entities? A Citizen's Guide to National Oil Companies Page 118 Thailand: PTT Public Company Ltd. Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Mission and Objectives Does NOC have a mission 2007 1 "Ever since our inception, our Governance statement and, if so, what focus has been on fostering the are key elements security of supply and laying down a firm foundation that would lead to economic potency and add value for Thailand and its people... Our aim is not only to foster a national energy company that's known for its robust growth in the world arena, but also to achieve a harmonious balance between economic, social, and environmental growth. In other words, PTT strives for Thailand's growth while providing sustainable power for a brighter tomorrow for Thais." Vision: "A world-class self- financing integrated petroleum and related corporation in Thailand and overseas, aiming for value maximization for the ultimate benefit of the organization, balancing commercial and government objective." Corporate Sources of Capital Based on available PTT seems to have adequate Governance information, budgeting cash flow to support its process and policy investment targets. including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data Office of Corporate Audit and Governance Policy and other indications of Audit Committee exist, but there disclosure and is no clear indication of extent of transparency transparency. Corporate Skill Base Based on available The only information available Governance information, NOC is the breakdown by number of demographics (% people in business units: Gas ­ management, % technical, 1,108; Oil ­ 1,254; other descriptors) Petrochemicals and Refining - 75; Support Staff /Secondees to PTT Affiliates ­ 1,107; Subsidiaries and Jointly Controlled Entities ­ 7,086. A Citizen's Guide to National Oil Companies Page 119 Thailand: PTT Public Company Ltd. Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Incentives/Career Based on available 2007 1 "At the heart of human resource Governance Management information, HR management is human resource promotion and development. PTT has professional development developed career management policies processes for greater efficiency through the appointment of career counseling teams and a career management counseling committee, both charged with defining and developing employees' individual competence in support of PTT's future business. The objective of career management processes is to give employees maximum professional competence and expertise, the development of which will be defined by the Company. Development may be achieved through training programs, job rotation, and appointment and promotion of employees to suit their responsibility and potential. Properly implemented, this employee development will produce employees with the competence desired by both the individuals and the Company ­ leading to PTT's ultimate achievement." Corporate Full Disclosure and Based on available Information is available on Governance Measurement of Non- information, brief environmental, education, commercial Objectives description of reporting on society and community, sports, noncommercial objectives arts, and culture projects supported. Corporate Full Disclosure and Based on available No data. Governance Measurement of Non- information, extent of commercial Objectives non-commercial obligations Value Operating Performance Upstream oil E&P. 2007 3 Through its E&P subsidiary, Creation Where does it operate PTTEP, PTT's overseas Metrics (solely in the country or operations include other abroad-name countries)? Southeast Asian countries, such Does it have sole access to as Burma, Cambodia, Indonesia, country's resources? and Malaysia. In addition, PTTEP participates in E&P projects in Algeria, Iran, and Oman, and has considered upstream investments in several other countries. Value Operating Performance Does the NOC operate Yes Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, Operated by PTT's subsidiary - Creation storage, shipping Thai Petroleum Pipeline Metrics Company (Thappline). A Citizen's Guide to National Oil Companies Page 120 Thailand: PTT Public Company Ltd. Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Thappline supplies 30-40 % of refined petroleum products. It owns a distribution network of 255 kilometers of pipeline. Thappline oil transportation system includes a multiproduct (jet fuel, diesel oil, gasoline, etc) pipeline with a capacity of 26,000 million liters of oil per year. There are 2 oil distribution terminals, constructed by Thappline. Value Operating Performance Downstream oil refining 2007 3 PTT is considerably involved in Creation & marketing, the downstream sector with Metrics petrochemicals stakes in all 4 of the country's refineries and equity interests in downstream subsidiaries (Thaioil and Thappline). Value Operating Performance Upstream natural gas E&P In the upstream, there is Creation competition among several Metrics producers, with three companies dominating - UNOCAL (now Chevron), PTTEP and Total. These companies also have joint partnerships in some projects. Value Operating Performance Midstream natural gas 2005 4 "Gas transmission is solely Creation pipelines, storage, LNG operated by the public Metrics organization, PTT. The pipeline tariff rate is regulated by NEPO/NEPC. Future demand for gas transmission system remains continual." Value Operating Performance Downstream natural gas 2005 4 "PTT purchases all indigenous Creation distribution, NGL sales, gas from the producers, Metrics petrochemicals including PTTEP and transmits it through its pipelines to end- users. The rate of return from the gas supply and distribution is regulated by NEPO/NEPC." Value Operating Performance Other (power generation, 74% of natural gas supply is Creation etc) used for power generation; Metrics mostly by Electricity Generating Authority of Thailand (EGAT) Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE No data Creation production (%) Metrics A Citizen's Guide to National Oil Companies Page 121 Thailand: PTT Public Company Ltd. Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow No data Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash 120% Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) 11% Creation Metrics Value Financial Performance Avg profit margin (%) 8% Creation Metrics A Citizen's Guide to National Oil Companies Page 122 Thailand: PTT Public Company Ltd. Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) 120% Creation Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets (%) 12% Creation Metrics Value Financial Performance Avg return on total capital 4% Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to 3% Creation State (%) Metrics Other Public Sector Governance Based on available 2008 10 As stated in the Japanese Credit Factors information, presence of a Rating Agency's outlook, PTT publicly articulated role of is strategically important to the the hydrocarbon sector Thai government - which with respect to national controls the majority of PTT's development objectives share capital ­ for its role in developing long-term supply of gas, and indirectly supporting the electricity sector. The Ministry of Finance monitors the financial performance of the NOC. Other Public Sector Governance Based on available The Energy Policy and Planning Factors information, clear Office (EPPO), which is part of definition of the roles of Thailand's Ministry of Energy, policy, commercial oversees all aspects of the operation and regulation country's energy policies, and assignment to specific including the oil, natural gas, entities avoiding conflicts and power sectors. The National of interest Economic and Social Development Board oversees large energy infrastructure projects and also assists in the policy planning process. Commercial activities are carried out by PTT and its subsidiaries. Other Public Sector Governance Based on available 2007 7 The main objective of PTT is "to Factors information, presence of serve as an efficient government publicly stated objectives working arm in implementing ranked by priority for national energy policy for the NOC(s) country's best interests." Other Public Sector Governance Based on available No data. Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes A Citizen's Guide to National Oil Companies Page 123 Thailand: PTT Public Company Ltd. Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data available Other Public Sector Governance Based on available Oil and gas revenues are Factors information, transparent reported in the state budget hydrocarbon sector (although not in a disaggregated revenue management form) published on the Ministry including revenue of Finance's website. Thailand distribution within the does not have a petroleum fund country or a publicly disclosed petroleum revenue management policy. Other Public Sector Governance NOC and/or country Thailand does not participate in Factors participate in EITI and/or EITI initiatives. other transparency initiatives Other Fiscal Sustainability Based on available Thai III Fiscal Regime: royalty Factors information, do hydrocarbon sector fiscal - sliding scale on sales volume level (5%-15%); petroleum regimes allow for sufficient capital income tax - fixed rate 50%; special remuneration benefits - investment 0-75%. SRB is "windfall profits" tax, payable only in years concessionaire has "petroleum profit". In calculating such petroleum profit for the year, there may be deducted capital expenditure, operating costs, a special reduction (an expense "uplift") for the year, and petroleum loss carried forward from prior years. SRB is calculated by exploration block at following rates, subject to a ceiling of 75% of petroleum profit: Income per SRB meter of well Up to Baht zero 4,800 Baht 4,800 to 1% per each 14,400 Baht 240 increment Baht 14,400 to 1% per each 33,600 Baht Baht 960 increment Over 33,600 1% per each Baht Baht 3,840 increment To determine "income per meter of well", first calculate annual petroleum profit and adjust for A Citizen's Guide to National Oil Companies Page 124 Thailand: PTT Public Company Ltd. Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data inflation and exchange rates; then calculate accumulated total meters of all wells drilled during concession period. Income per meter of well equals adjusted annual petroleum profit divided by total depth of all wells + GSF. "GSF" means "geological stability factor", which is fixed for each geological region and is at least 150,000 meters, higher in difficult drilling areas. Other Fiscal Sustainability Based on available 2008 5 As of Feb 2008, PTT Public Factors information, do Company Limited's (PTT) hydrocarbon sector fiscal National Long-term rating was regimes allow for at 'AA+(tha)' and its National investment grade NOC Short-term rating - at 'F1+(tha)'. credit ratings The National Long-term rating on PTT's outstanding senior unsecured and unsubordinated debentures amounts to THB88.2 billion at 'AA+(tha)'. No data that this links to fiscal regimes. Other Fiscal Sustainability Based on available current 5 Thai fiscal regime has last been Factors information, are revised in 1989 by the hydrocarbon sector fiscal government in an effort to make regimes appropriate for it more attractive for foreign the development stage of companies. Thai III introduced the domestic resource base the royalty rate to a sliding scale to enable commercial production for all sizes of fields. Existing concessionaires willingly applied to be under the new regime. Other Access to Reserves Hydrocarbon law to current 5 In 1989, Thailand substantially Factors facilitate competitive amended and enacted the upstream investment Petroleum Act No. 4 and the Petroleum Income Tax Act No.4. There were no significant changes in the PA and PITA until 2007, when PA No 6 revised treatment of small fields, marginal fields, and fields with declining production; streamlined approval process; and made other provisions for improvement of investments. Other Access to Reserves Based on available Information is existing on Factors information, existence of agreement terms, bidding negotiated process, etc. contracts/agreements for upstream investment Other Operating Strategy Based on available PTT has a number of Joint Factors information, types of joint Ventures. ventures, role of NOC(s) Other Operating Strategy Based on available Turnkey contracts are used by Factors information, extent of PTT, e.g. expansion of refining A Citizen's Guide to National Oil Companies Page 125 Thailand: PTT Public Company Ltd. Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data turnkey contracts used facilities. PTTs partners and directly by NOC(s) IOCs operating in Thailand also use turnkey contracts. Other Business Integration Vertical, horizontal High degree of integration from Factors integration upstream to downstream. Other International Presence Does NOC make Yes. Factors investments abroad Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in Yes Factors upstream Other Commercialization Competition level in Thailand's oil sector is open to Factors upstream including non- foreign involvement, although NOC participants and foreign companies often work in requirement to include joint ventures with PTT NOC as partner Exploration and Production (PTTEP), PTT's upstream subsidiary. Other Commercialization Competition level in No competition in midstream. Factors midstream, downstream Pipelines are run by PTT including non-NOC subsidiaries. participants and requirement to include NOC as partner Other Commercialization Based on available Joint ventures seem to be Factors information, prevalence successful. and success of NOC/non- NOC alliances, joint ventures A Citizen's Guide to National Oil Companies Page 126 Thailand: PTT Public Company Ltd. Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Partial privatization of the Multiple banks, funds and Factors NOC (as measured by private owners hold shares of ownership structure) PTT. PTT was partially privatized in 2001, raising $833 million in an initial public offering. There were attempts to de-list PTT because of alleged conflicts of interest and inadequate public hearings. Other Commercialization Based on available 2007 1 Good involvement Factors information, level and internationally. In 2007, BOD quality of NOC established a PTT International international operations Co. to invest in natural gas, energy and related business through joint investment with domestic and foreign partners. Other Commercialization Based on available Sponsors many social, and Factors information, percent of community, sport programs. non-core commercial One of the major investment activities in overall projects is the establishment of operations the Research and Development Center, worth US$40 million, which will be the first national petroleum research and development center of the country. Other Regulation Presence of independent, No independent regulator exists. Factors well-funded and trained regulatory agencies, HC agency name, budget, number of staff Other Regulation NOCs are compelled to No data. Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market No data. Factors transparency and good quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively No data. Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy A Citizen's Guide to National Oil Companies Page 127 Thailand: PTT Public Company Ltd. Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Non-commercial Provision and level of Diesel subsidies - $0.01 per liter, Factors Objectives hydrocarbon price which cost treasury $2.92 billion subsidies ($/BOE in the 19 months to July 2005. production) provided by Other subsidies exist for very NOC and/or government. small power producers, for brief description of adding renewables. subsidy program, approach, cost Other Non-commercial Provision and level of See above. The NOC sponsors Factors Objectives direct NOC funding of several social, community, and country social and sport programs. One of the economic programs. brief major investment projects is the description of programs establishment of the Research and support and Development Center, worth US$ 40 million, which will be the first national petroleum research and development center of the country. Other Non-commercial Measure of NOC $1,964.03 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations $12.09 Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance $3,123.11 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Sufficient information is Comments reliability of data provided available. by NOC(s) and governments Other Longevity of NOC Based on available 2007 2 "The company was created as Comments information, history and the Petroleum Authority of persistence of NOC(s) Thailand (PTT) in 1978 and continued strong development of the sector's pipeline, refinery and by 1988 expanded to include 4 major natural gas fields (which were operated by Unocal). Original privatization was planned for 1999, but took place in 2001. With the support of the government and one of the region's strong economies, PTT is the strongest player in the country and one of the prime players in the region." A Citizen's Guide to National Oil Companies Page 128 Thailand: PTT Public Company Ltd. Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Country Status Trends and issues related Thailand is a net importer of oil Comments to country hydrocarbon and natural gas. Management sector endowments and and capitalization of PTT are performance clearly being done so as to support outbound investments, an Asian phenomenon. Thailand's own political stability, while it does not appear to have impacted PTT or its strategies as yet, could undermine the company's soundness. The company's own ratings may be supporting the country's overall international position to some extent (PTT's local currency ratings are better than the country's). Other Non-commercial Number of employees 10,630 Factors Objectives Other Non-commercial BOE production per 7,555 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency 9.13 Factors BOE R/P (years) Other Oil Dependency Net oil and gas export No data Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency No data Factors Total oil and gas revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 461.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 11,653.84 Factors reserves (BCF) Other Resource Endowment Total all source BOE 2,470.28 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production A Citizen's Guide to National Oil Companies Page 129 Thailand: PTT Public Company Ltd. Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions 18.66% Factors Country oil/natural gas split, reserves (%) Other Operating Conditions 99.86% Factors Country oil/natural gas split, production (%) Other Operating Conditions Country BOE production 49.42% Factors as % of total country BOE consumption Other Trade Openness Yes Factors WTO Membership Other Competition No Factors OPEC Membership A Citizen's Guide to National Oil Companies Page 130 Thailand: PTT Public Company Ltd. Sources of Information Source # Year of Source Description Links Source 1 2007 PTT Plc Annual report http://www.pttplc.com/en/ir_an.aspx?aB MloOREoMuW 2 2007 PTT website http://www.pttplc.com/en/ 3 2007 USEIA Country Brief http://www.eia.doe.gov/emeu/cabs/Thail and/Full.html 4 2005 "Privatisation and Liberalisation of the Energy Sector in Thailand," UN Public Administration http://unpan1.un.org/intradoc/groups/pub Network lic/documents/APCITY/UNPAN020058. pdf 5 2008 Reuters, Fitch Thailand affirms PTT's ratings at 'AA+(tha)' Wed Feb 13, 2008 http://uk.reuters.com/article/oilRpt/idUK WNA070820080213 6 2007 Supplemental Information on Petroleum Exploration and Production Activities Under the http://www.pttep.com/imgUpload/FAS69 US Financial Accounting Standard no. 69 (FAS -2007-Eng(4).pdf 69) and other information - Unaudited 7 2008 Thai Ministry of Energy website http://www.energy.go.th/en/ 8 2008 Thai Department of Mineral Fuels website http://www.dmf.go.th/law/ 9 2008 Reuters http://in.reuters.com/article/oilRpt/idINB KK30463520080312 10 2008 Press release, JCR Affirms A-/A+ (FC/LC) on PTT; Outlook Stable http://www.pttplc.com/Files/DebtDoc/15 04_T.pdf A Citizen's Guide to National Oil Companies Page 131 Vietnam: Petrovietnam Vietnam: Petrovietnam Summary Report Corporate Governance Highlights Corporate Organization and Ownership Vietnam Oil and Gas Corporation (PetroVietnam) covers all operations from oil and gas exploration and production to storage, processing, transportation, distribution and services. Shares Controlled by Government Petrovietnam is wholly owned by the government of Vietnam and is responsible for all oil and gas resources in the country. Domestic, International Exchanges for Equity Listings Some of its subsidiaries are quoted on the Ho Chi Minh stock exchange. Board of Directors Structure The Board of Directors of Petrovietnam comprises 7 members, including a Chairman and 6 members. All the members of the Board are appointed by the Prime Minister. Independent Board Members All members are appointed by the Prime Minister. Given political organization in the country, it is likely that approval of the chairman resides with the Politburo. Is chairman also minister of energy or otherwise appointed by head of state? Appointed by Prime Minister. Operations Highlights Upstream Oil Upstream operations are carried out based on petroleum contracts signed with the Vietnam Oil and Gas Corporation. Midstream Oil Petrolimex, a unit of Petrovietnam, is the primary company charged with importing petroleum products, accounting for about 60 percent of the country's imports. Petrolimex also operates 300 miles of petroleum product pipelines, although much of the country's fuel supply is transported by road. Downstream Oil Having no refineries, Vietnam imports all its oil products. However, construction of the Dung Quat refinery is underway and the Nghi Son refinery is in planning stage. Upstream Natural Gas Petrovietnam dominates the natural gas sector. Petrovietnam's main foreign partners involved in the production and development of natural gas resources are BP, Chevron, ConocoPhillips, KNOC, Petronas, Thailand's PTTEP, and Talisman. Most natural gas production in Vietnam is processed and then sent directly to industrial and power sector end-users, such as the Phu My power complex. Midstream Natural Gas The Rang Dong ­ Bach Ho, Nam Con Son, PM3-Ca Mau Gas pipeline system provided 6.09 million cubic meters of gas; 270,000 tons of condensate and 308,000 tons of LPG, satisfied production of 40 percent of electricity output, 30 percent of fertilizer demand, and 40 percent of LPG of the whole country. 2007 recorded the first succees of PV group in operating Phu My Nitrogenous Fertilizer plant with volume of 767 thousand tons of urea, equivalent to 103.7% of plant's capacity. This is the first time that the plant produced over the designed capacity since it went to operation. Downstream Natural Gas For downstream activities, several government-owned companies, such as Petrolimex and Petec, under the Ministry of Trade, PetroVietnam Trading Company (Petechim) under PetroVietnam, SaigonPetro under Ho Chi Minh City People's Committee and Vinapco, under Vietnam Airlines, have been licensed to import oil and gas. Other Vietnam is a growing consumer and exporter of liquefied petroleum gas (LPG). A Citizen's Guide to National Oil Companies Page 132 Vietnam: Petrovietnam Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 600 Upstream: Average Proved Gas Reserves (BCF) 6,800 Upstream: Average Annual Oil Production (MM Barrels) 44 Upstream: Average Annual Natural Gas Production (BCF) 106 Downstream: Average Annual Refinery Production (MM Barrels) No data Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 11,400 Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data Categorization Indicators Categories: Scores: Corporate Governance Corporate Governance 38 100 Public Sector Governance 52 Public Sector Oil Dependency 50 Commercialization 67 Governance Fiscal Regimes 50 0 Resource Endowment 1 Resource Oil Dependency 97 Commercializa Endowment Local Contribution 54 Sector and Trade Openness 57 Fiscal Regimes Average 51 PetroVietnam Average NOC Worldwide Governance Indicators 1998 Voice and Accountability 2002 Political Stability Government Effectiveness Regulatory Quality Rule of Law Control of Corruption 2004 2006 0 25 50 75 100 Trends and Issues The hydrocarbon sector is a key component in Vietnam's economy. It plays a vital role in the nation's industrialization, development, enery security, and social life. Vietnam's oil and gas industry is currently the country's biggest foreign currency earner, and a major procurer of imported technology, services and equipment. Consumption appears to be growing faster than domestic supplies can support. Consequently, the emphasis on outbound investment is likely to grow. A Citizen's Guide to National Oil Companies Page 133 Vietnam: Petrovietnam Database Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data Corporate Ownership Structure Sole NOC or one of 9 PetroVietnam is the only NOC. Governance and Its Organization cluster of NOCs and other sovereign enterprises in country Corporate Ownership Structure Number of NOCs of 1 Governance and Its Organization country Corporate Ownership Structure Description of Current 1, 9 PetroVietnam was established in Governance and Its Organization incorporation and 1975. With rapid development, ownership PV covers all operations from oil and gas exploration and production to storage, processing, transportation, distribution and services though its numerous subsidiaries and ventures. Corporate Ownership Structure % shares controlled 9 Petrovietnam is wholly owned by Governance and Its Organization by government the government of Vietnam and is responsible for all oil and gas resources in the country. As a result of the 2006 reorganization of the sector, some of its subsidiaries are quoted (for example, Morgan Stanley aquired 10% of PV's financial arm, PVFC. A total of 12% of PVFC's share capital was traded as of November 3, 2008). Corporate Ownership Structure Domestic, Some of its subsidiaries are Governance and Its Organization international quoted on the Ho Chi Minh stock exchanges where exchange. shares are listed Corporate Ownership Structure Domestic, No data. Governance and Its Organization international exchanges where bonds are traded Corporate Ownership Structure Company files form None Governance and Its Organization 20-F with SEC? Corporate Board of Directors Does a BOD exist Current 1 Yes Governance (BOD) Corporate Board of Directors Description of BOD Current 1 The Board of Directors of Governance (BOD) and structure PetroVietnam comprises 7 members, including a Chairman and 6 members. All the members of the Board are appointed by the Prime Minister. Corporate Board of Directors Is chairman also The chairman is appointed by the Governance (BOD) minister of energy or Prime Minister, and is in principle otherwise appointed unaffiliated with the government. by head of state Corporate Board of Directors Are any BOD All members are appointed by the Governance (BOD) members considered Prime Minister. Given political independent organization in the country, it is (external) and, if so, likely that approval of the A Citizen's Guide to National Oil Companies Page 134 Vietnam: Petrovietnam Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data how are they chairman resides with the appointed Politburo. Corporate Board of Directors Term of service Unclear Governance (BOD) (years, with re- appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role No data. Governance and policy statements Corporate Role of BOD Based on available No data. Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replace General process for No data. Governance ment Key recruitment, Executives replacement of key execs and senior managers Corporate Decision Making Level of NOC budget 2007 2 PetroVietnam appears to set its Governance Processes authority. Comment own investment targets. A certain on the general level of interaction between decision flow within PetroVietnam and the Politburo NOC and between has been reported by industry NOC and sources. government for major projects. Corporate Decision Making Based on available Investment targets are disclosed Governance Processes, Budget information, is NOC and clear. Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have Yes, PetroVietnam is currently Governance Processes, Budget authority to partner engaged in partnerships and Autonomy with other entities? actively seeking others. Corporate Mission and Does NOC have a Current 1 Company materials state that Governance Objectives mission statement PetroVietnam is vested wholly and, if so, what are with the oil and gas resources of key elements the State and charged with the responsibility of value added development. Corporate Sources of Capital Based on available Current 1 Except for past (2001-2005) Governance information, investment targets, financial data budgeting process is not disclosed. Historical and policy including investment targets were strong - % of cash approx US$9 billion - and it is flow/revenue unlikely that PetroVietnam would available for be able to carry out these kinds of reinvestment commitments without partners. Corporate Disclosure/Transpar Disclosure of audited No data. Governance ency Policy data and other indications of disclosure and transparency A Citizen's Guide to National Oil Companies Page 135 Vietnam: Petrovietnam Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data Corporate Skill Base Based on available No data. Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available Current 1 PetroVietnam indicates a number Governance Management information, HR of programs for personnel training promotion and and development, as well as professional specialized institutes development policies (subsidiaries) for R&D in upstream, downstream and information technology segments. They also indicate relationships with undergraduate and graduate education programs at Vietnamese universities and colleges. Corporate Full Disclosure and Based on available PetroVietnam only indicates Governance Measurement of information, brief corporate programs in Non-commercial description of Vietnamese culture and arts, as Objectives reporting on well as some community noncommercial development projects. objectives Corporate Full Disclosure and Based on available No data. Governance Measurement of information, extent of Non-commercial non-commercial Objectives obligations Value Creation Operating Upstream oil E&P. PetroVietnam is an operator in its Metrics Performance Where does it operate home country and participates in (solely in the country E&P investments in large number or abroad-name of countries around the world, countries)? Does it including Algeria, Malaysia, and have sole access to Venezuela. Access to resources country's resources? in Vietnam is provided through various forms of association and contracts with PetroVietnam. Value Creation Operating Does the NOC No Metrics Performance operate abroad? Value Creation Operating Midstream oil PetroVietnam operates marine Metrics Performance pipelines, storage, shipping and related logistics for shipping crude oil shipments. Value Creation Operating Downstream oil No refining capacity exists in Metrics Performance refining & marketing, Vietnam. All petroleum products petrochemicals are imported. Value Creation Operating Upstream natural gas PetroVietnam operates natural gas Metrics Performance E&P producing fields and engages in natural gas E&P. Value Creation Operating Midstream natural PetroVietnam has a natural gas Metrics Performance gas pipelines, master plan under development, storage, LNG mainly to foster domestic utilization of the resource. Value Creation Operating Downstream natural PetroVietnam operates limited Metrics Performance gas distribution, NGL natural gas transmission facilities sales, petrochemicals mainly for deliveries of natural gas to industrial and power A Citizen's Guide to National Oil Companies Page 136 Vietnam: Petrovietnam Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data generation customers. Value Creation Operating Other (power PetroVietnam is participating in Metrics Performance generation, etc) development of gas-fired power generation as a natural gas monetization strategy with investors, including IOCs. Value Creation Operating Avg reserve No data Metrics Performance replacement rate (BOE, %) Value Creation Operating Avg reserve No data Metrics Performance replacement cost ($/BOE) Value Creation Operating Change in BOE No data Metrics Performance reserves (%) Value Creation Operating Change in BOE No data Metrics Performance production (%) Value Creation Operating Avg upstream No data Metrics Performance operating cash flow/upstream capital expenditures (%) Value Creation Operating Avg upstream No data Metrics Performance exploration and production expenses ($/BOE) Value Creation Operating Avg production costs No data Metrics Performance excluding production taxes ($/BOE) Value Creation Operating Avg upstream after- No data Metrics Performance tax income/revenues (%) Value Creation Operating Avg earnings before No data Metrics Performance interest & taxes ($/BOE) Value Creation Operating Avg income after all No data Metrics Performance taxes ($/BOE) Value Creation Operating Avg effective tax rate No data Metrics Performance (%) Value Creation Operating Avg operating cash No data Metrics Performance flow vs costs incurred (%) Value Creation Operating After tax return on No data Metrics Performance assets Value Creation Operating Avg refinery No data Metrics Performance utilization rate (%) Value Creation Operating Change in total No data Metrics Performance refining production (%) Value Creation Operating Change in refinery No data Metrics Performance capacity (%) A Citizen's Guide to National Oil Companies Page 137 Vietnam: Petrovietnam Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data Value Creation Operating Avg income from No data Metrics Performance operations per unit volume ($M/barrel) Value Creation Operating Avg refining and No data Metrics Performance marketing operating cash flow/capital expenditures (%) Value Creation Operating Avg pre-tax return on No data Metrics Performance assets (%) Value Creation Financial Avg total operating No data Metrics Performance cash flow/total capital expenditures (%) Value Creation Financial Avg operating No data Metrics Performance margin (%) Value Creation Financial Avg profit margin No data Metrics Performance (%) Value Creation Financial Avg effective tax rate No data Metrics Performance (%) Value Creation Financial Avg reinvestment No data Metrics Performance risk (%) Value Creation Financial Avg debt profile (%) No data Metrics Performance Value Creation Financial Avg return on assets No data Metrics Performance (%) Value Creation Financial Avg return on total No data Metrics Performance capital employed (%) Value Creation Financial Avg fiscal 46% Metrics Performance contribution to State (%) Other Factors Public Sector Based on available Current 8 Oil and gas is one of the top Governance information, presence priority sectors for development of a publicly by the Vietnamese government articulated role of the since it is viewed as a key to hydrocarbon sector national economic growth and with respect to energy security. In 2006, the national development Ministry of Industry and the objectives Ministry of Trade emphasized the economic role of PetroVietnam as one of the four leading industrial groups in the country. Other Factors Public Sector Based on available The petroleum sector is under the Governance information, clear supervision of the Ministry of definition of the roles Industry and Trade. The legal and of policy, regulatory framework oulines the commercial operation roles of the Ministry, the and regulation and regulatory agencies and assignment to PetroVietnam. In practice, there specific entities appears to be a certain overlap of avoiding conflicts of responsibilities and weak control interest mechanisms. A Citizen's Guide to National Oil Companies Page 138 Vietnam: Petrovietnam Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data Other Factors Public Sector Based on available No data. Governance information, presence of publicly stated objectives ranked by priority for NOC(s) Other Factors Public Sector Based on available No data. Governance information, presence of a strategy to transfer NOC non- commercial objectives to government or other agencies as capacity becomes available Other Factors Public Sector Based on available The amount of oil and gas-related Governance information, revenue received eventually by transparent covernment is reported in official hydrocarbon sector budget documents, which are revenue management available on the Ministry of including revenue Finance's website (although the distribution within figures are not broken down in the country detail). Other Factors Public Sector NOC and/or country Vietnam is not a candidate Governance participate in EITI country for EITI. Other and/or other transparency programs do not transparency appear to operate in the country. initiatives Other Factors Fiscal Sustainability Based on available Vietnamese oil and natural gas information, do reserves have both grown, but hydrocarbon sector indications are that the country's fiscal regimes allow growth in demand for these for sufficient capital resources is outstripping domestic investment supply. The fiscal regime appears to be competitive relative to Vietnam's resource endowments. Other Factors Fiscal Sustainability Based on available No data. information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Factors Fiscal Sustainability Based on available The Vietnamese have revised information, are fiscal terms twice, in 2000 and hydrocarbon sector 2006 to try to increase fiscal regimes participation. While the country's appropriate for the resource endowments are healthy development stage of by regional standards, they are the domestic resource small by international standards. base The government and PetroVietnam appear to recognize this constraint and to be responding accordingly. Other Factors Access to Reserves Hydrocarbon law to The Petroleum Law was revised facilitate competitive in 2000 and 2006 as indicated upstream investment above to increase competitive bidding. A Citizen's Guide to National Oil Companies Page 139 Vietnam: Petrovietnam Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data Other Factors Access to Reserves Based on available PetroVietnam provides terms and information, conditions for how investors must existence of bid and subsequently license negotiated blocks for participation. contracts/agreements for upstream investment Other Factors Operating Strategy Based on available JVs are numerous. Terms for information, types of PetroVietnam are not transparent joint ventures, role of but it is clear that PV must be a NOC(s) partner. Other Factors Operating Strategy Based on available Both PV and its partners manage information, extent of turnkey contracts. turnkey contracts used directly by NOC(s) Other Factors Business Integration Vertical, horizontal PV is vertically integrated. integration Other Factors International Does NOC make Yes Presence investments abroad Other Factors International Avg company No data Presence international BOE production as % avg total company BOE production Other Factors International Change in company No data Presence BOE production from international operations (%) Other Factors International Does NOC make Yes Presence investments abroad Other Factors International Avg company No data Presence international refinery throughput as % total refinery throughput Other Factors International Change in company No data Presence refinery throughput from international operations (%) Other Factors International Avg company No data Presence international refinery capacity as % company total refinery capacity Other Factors International Change in company No data Presence refinery capacity from international operations (%) Other Factors Commercialization Non-NOC The upstream sector mainly participants in consists of diverse NOC partners upstream from the Asia-Pacific region. PetroVietnam is seeking to attract more IOC partners. A Citizen's Guide to National Oil Companies Page 140 Vietnam: Petrovietnam Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data Other Factors Commercialization Competition level in Upstream competition has been upstream including vigorous but has not met non-NOC government expectations. participants and PetroVietnam must be a partner. requirement to include NOC as partner Other Factors Commercialization Competition level in PetroVietnam has a variety of midstream, partners for its midstream downstream businesses but these do not appear including non-NOC to be obtained through open participants and bidding. requirement to include NOC as partner Other Factors Commercialization Based on available Existing partnerships appear to be information, successful and, as stated earlier, prevalence and PetroVietnam is seeking success of NOC/non- additional IOC participation. NOC alliances, joint ventures Other Factors Commercialization Partial privatization None of the NOC (as measured by ownership structure) Other Factors Commercialization Based on available The ventures in Algeria and information, level Malaysia appear to be sound. and quality of NOC international operations Other Factors Commercialization Based on available PetroVietnam sticks closely to its information, percent core businesses. of non-core commercial activities in overall operations Other Factors Regulation Presence of No separate regulator appears to independent, well- exist. funded and trained regulatory agencies, HC agency name, budget, number of staff Other Factors Regulation NOCs are compelled Government administration of to adopt practices energy fuels and services in that would provide Vietnam appears to be fairly results similar to strong. those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers A Citizen's Guide to National Oil Companies Page 141 Vietnam: Petrovietnam Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data Other Factors Regulation Regulators assure No data. market transparency and good quality, unbiased data and information. HC agency independence indicators Other Factors Regulation Regulators No data. effectively resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Factors Non-commercial Provision and level It is not clear the extent to which Objectives of hydrocarbon price fuel subsidies are used. subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Factors Non-commercial Provision and level No data. Objectives of direct NOC funding of country social and economic programs. brief description of programs and support Other Factors Non-commercial Measure of NOC No data Objectives employees relative to total assets ($ M) Other Factors Non-commercial Compensation No data Objectives obligations relative to workforce ($ M) Other Factors Non-commercial Financial $518.18 Objectives performance relative to workforce ($ M) Other Quality of Data Availability, extent, Descriptive data is abundant. Comments reliability of data Operating (volumetric) and provided by NOC(s) financial data are quite poor. and governments Other Longevity of NOC Based on available PetroVietnam has existed for Comments information, history more than 30 years and appears to and persistence of be firmly in place. NOC(s) A Citizen's Guide to National Oil Companies Page 142 Vietnam: Petrovietnam Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data Other Country Status Trends and issues The hydrocarbon sector is a key Comments related to country component in Vietnam's hydrocarbon sector economy. It plays a vital role in endowments and the nation's industrialization, performance development, enery security, and social life. Vietnam's oil and gas industry is currently the country's biggest foreign currency earner, and a major procurer of imported technology, services and equipment. Consumption appears to be growing faster than domestic supplies can support. Consequently, the emphasis on outbound investment is likely to grow. Other Factors Non-commercial Number of 22,000 Objectives employees Other Factors Non-commercial BOE production per 2,849 Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Factors Oil Dependency BOE R/P (years) 27.77 Other Factors Oil Dependency Net oil and gas 3.66% export revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Factors Oil Dependency Total oil and gas 2.81% revenues as a share of GDP (%) Other Factors Resource Avg EOY oil 3,410.00 Endowment reserves (MM Barrels) Other Factors Resource Avg EOY natural gas 7,769.23 Endowment reserves (BCF) Other Factors Resource Total all source BOE 4,749.52 Endowment reserves (MM Barrels) Other Factors Resource Audited or Audited Endowment unaudited? Other Factors Operating Company domestic No data Conditions reserves as % of country BOE reserves Other Factors Operating Company domestic No data Conditions reserves as % of total company reserves A Citizen's Guide to National Oil Companies Page 143 Vietnam: Petrovietnam Indicator Indicator Indicator Year of Category Description (Query) Source Source Response of Data Other Factors Operating Company domestic No data Conditions BOE production as % of country BOE production Other Factors Operating Company primary No data Conditions distillation capacity as % of total country primary distillation capacity Other Factors Operating Company refinery No data Conditions throughput as % of total country refinery throughput Other Factors Operating Country oil/natural 71.80% Conditions gas split, reserves (%) Other Factors Operating Country oil/natural 99.96% Conditions gas split, production (%) Other Factors Operating Country BOE 136.78% Conditions production as % of total country BOE consumption Other Factors Trade Openness WTO Membership Yes Other Factors Competition OPEC Membership No A Citizen's Guide to National Oil Companies Page 144 Vietnam: Petrovietnam Sources of Information Source # Year of Source Source Description Links 1 Current PetroVietnam website http://www.petrovietnam.com.vn/Modules/PVHome.asp 2 2007 USEIA Country Analysis Brief http://www.eia.doe.gov/cabs/Vietnam/Full.html 3 2005 Prospectus on Vietnamese oil and gas http://www.ambhanoi.um.dk/NR/rdonlyres/9CFCC625- industry for Danish D3AE-441D-9B41- investors 3E6BE6F2F198/0/BLPOilGassectorpaperVietnam.doc 4 2007 Opportunities for Japanese companies www.jogmec.go.jp/news/bid/news/docs/2007/koubo_07 0912.pdf 5 Current Coordinating Committee for http://www.ccop.or.th/epf/vietnam/vietnam_terms.html Geoscience Programmes in East and Southeast Asia 6 2007 Ministry of Industry and Trade/Energy and http://www.iea.org/textbase/work/2007/bangkok/truong Petroleum Department _son.pdf presentation to IEA on Vietnam energy security 7 2008 Mirae Assets http://miraeasset.com.vn/ 8 Current MOI web site http://www.moi.gov.vn/EN/News/Main.asp 9 2006 Decision No. 198/2006/QD-TTg of http://news.vnanet.vn/vietnamlaw/Reports.asp?CATEG August 29, 2006, ORY_ID=1&NEWS_ID=1538&SUBCATEGORY_ID approving the scheme =18 on the formation of the Vietnam national oil and gas group. Official Gazette, Issue No. 04/September 2006 A Citizen's Guide to National Oil Companies Page 145 The NOCs in Europe and Central Asia A Citizen's Guide to National Oil Companies Page 146 Azerbaijan: State Oil Company of Azerbaijan Republic (SOCAR) Azerbaijan: State Oil Company of Azerbaijan Republic (SOCAR) Summary Report Corporate Governance Highlights Corporate Organization and Ownership SOCAR is incorporated in Azerbaijan Republic Shares Controlled by Government 100 % Domestic, International Exchanges for Equity Listings None Board of Directors Structure No BOD exists for SOCAR. Independent Board Members Not applicable Is chairman also minister of energy or otherwise appointed by head of state? Not applicable Operations Highlights Upstream Oil Operates solely in the country and has sole access to resources. Midstream Oil SOCAR has 708 km of oil pipelines; 14 storage facilities with 417,000 m3 of capacity; an oil export terminal; operations in Azerbaijan, Georgia and Turkey (25% in BTC); and an oil tanker fleet. Downstream Oil Operates 2 refineries Upstream Natural Gas Operates both onshore and offshore, participates in PSAs. Midstream Natural Gas No data Downstream Natural Gas No data Other No data Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) 66 Upstream: Average Annual Natural Gas Production (BCF) 222 Downstream: Average Annual Refinery Production (MM Barrels) 50 Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) No data Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) -1,171 A Citizen's Guide to National Oil Companies Page 147 Azerbaijan: State Oil Company of Azerbaijan Republic (SOCAR) Categorization Indicators Categories: Scores: Corporate Corporate Governance 47 Governance 100 Public Sector Governance 55 Public Sector Commercialization 75 Oil Dependency 50 Governance Fiscal Regimes 75 Resource Endowment 3 0 Oil Dependency 36 Resource Local Contribution 0 Commercializa Endowment Sector and Trade Openness 31 Average 48 Fiscal Regimes SOCAR Average NOC Worldwide Governance Indicators Trends and Issues Azerbaijan is a resource rich Caspian country in a geopolitically sensitive region. By all accounts, substantial oil and gas endowments exist. Challenges remain with respect to oil and natural gas export transit routes, environmental issues in the Caspian Sea region, and internal and regional geopolitics. A Citizen's Guide to National Oil Companies Page 148 Azerbaijan: State Oil Company of Azerbaijan Republic (SOCAR) Database Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Ownership Structure and Sole NOC or one of cluster State Oil Company of Governance Its Organization of NOCs and other Azerbaijan Republic (SOCAR) sovereign enterprises in is the sole NOC. country Corporate Ownership Structure and Number of NOCs of 1 Governance Its Organization country Corporate Ownership Structure and Description of SOCAR is incorporated in Governance Its Organization incorporation and Azerbaijan Republic ownership Corporate Ownership Structure and % shares controlled by 100 Governance Its Organization government Corporate Ownership Structure and Domestic, international None Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international None Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist No Governance Corporate Board of Directors (BOD) Description of BOD and Not applicable Governance structure Corporate Board of Directors (BOD) Is chairman also minister of Not applicable Governance energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members Not applicable Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, Not applicable Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and Activity is defined by the Governance policy statements decrees and orders issued by the President of Azerbaijan Republic, decisions and orders of the Ministers Council of Azerbaijan Republic, and other normative acts. Corporate Role of BOD Based on available Not applicable Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers A Citizen's Guide to National Oil Companies Page 149 Azerbaijan: State Oil Company of Azerbaijan Republic (SOCAR) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Decision Making Level of NOC budget SOCAR's budget authority is Governance Processes authority. Comment on the very low. General decision general decision flow making flows through the within NOC and between president and government. NOC and government for major projects. Corporate Decision Making Based on available The company's budget process Governance Processes, Budget information, is NOC is inseparable from Autonomy budget process predictable government; and the budget and separate from process is unpredictable. government Corporate Decision Making Does the NOC have Yes Governance Processes, Budget authority to partner with Autonomy other entities? Corporate Mission and Objectives Does NOC have a mission 2008 1 Yes. By the decree of the Governance statement and, if so, what government, the company's are key elements mission is defined as follows: "The main purpose of the Company includes the development, exploring and processing of oil gas fields, including both the shore and offshore areas, the transportation of oil, gas and condensate and the products received of them, processing and sale, the reliable meeting the needs of consumers in the corresponding energy carriers, carrying out of other kinds of activity and obtaining of profits." Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data No audited data Governance Policy and other indications of disclosure and transparency Corporate Skill Base Based on available 2007 2 29.8% management Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available Promotion policies appear Governance Management information, HR promotion adequate. and professional development policies Corporate Full Disclosure and Based on available The company reports activities Governance Measurement of Non- information, brief without details commercial Objectives description of reporting on noncommercial objectives A Citizen's Guide to National Oil Companies Page 150 Azerbaijan: State Oil Company of Azerbaijan Republic (SOCAR) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Full Disclosure and Based on available 2008 1 Company's non-commercial Governance Measurement of Non- information, extent of non- obligations are significant and commercial Objectives commercial obligations include housing, healthcare, etc. Value Operating Performance Upstream oil E&P. Where The company operates solely Creation does it operate (solely in in the country and has sole Metrics the country or abroad-name access to resources. countries)? Does it have sole access to country's resources? Value Operating Performance Does the NOC operate Yes Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, 2007 2 SOCAR has 708 km of oil Creation storage, shipping pipelines; 14 storage facilities Metrics with 417,000 m3 of capacity; two oil export terminals; operations in Azerbaijan, Georgia and Turkey (25% in BTC); and an oil tanker fleet. Value Operating Performance Downstream oil refining & 2007 2 The company operates 2 Creation marketing, petrochemicals refineries Metrics Value Operating Performance Upstream natural gas E&P The company operates both Creation onshore and offshore, Metrics participates in PSAs Value Operating Performance Midstream natural gas No data Creation pipelines, storage, LNG Metrics Value Operating Performance Downstream natural gas No data Creation distribution, NGL sales, Metrics petrochemicals Value Operating Performance Other (power generation, No data Creation etc) Metrics Value Operating Performance Avg reserve replacement 253% Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement $1.47 Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE production No data Creation (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration $3.71 Creation and production expenses Metrics ($/BOE) A Citizen's Guide to National Oil Companies Page 151 Azerbaijan: State Oil Company of Azerbaijan Republic (SOCAR) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Value Operating Performance Avg production costs $2.81 Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow vs No data Creation costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization 37% Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery capacity No data Creation (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and marketing No data Creation operating cash flow/capital Metrics expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) No data Creation Metrics Value Financial Performance Avg profit margin (%) No data Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) No data Creation Metrics A Citizen's Guide to National Oil Companies Page 152 Azerbaijan: State Oil Company of Azerbaijan Republic (SOCAR) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Value Financial Performance Avg debt profile (%) 100% Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total capital -358% Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to No data Creation State (%) Metrics Other Public Sector Governance Based on available 2008 1 "The oil factor just as means of Factors information, presence of a strengthening our publicly articulated role of independence and improving the hydrocarbon sector the economy of the country. I with respect to national believe that our country will development objectives make the best use of this income, and this will help the other sectors of the economy grow" (Presidential statement). Other Public Sector Governance Based on available 2008 1 Only the role of the NOC is Factors information, clear specifically defined. definition of the roles of policy, commercial operation and regulation and assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available The company's objectives are Factors information, presence of not disclosed publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available Not available Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available 2008 7 A State Oil Fund of Azerbaijan Factors information, transparent (SOFAZ) was established in hydrocarbon sector revenue 1999 to manage foreign management including currency and assets generated revenue distribution within from oil and gas exploration the country and development. SOFAZ is an independent legal entity and an off-budget institution with its own administrative structure. The executive director, who is appointed and can be dismissed by the President of Azerbaijan, is responsible for the management of the Fund. Regular reporting of the operations of the Fund is A Citizen's Guide to National Oil Companies Page 153 Azerbaijan: State Oil Company of Azerbaijan Republic (SOCAR) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data available on its website. Other Public Sector Governance NOC and/or country 2008 3,4,5,6 Azerbaijan is a candidate Factors participate in EITI and/or country for EITI. A group of other transparency NGOs is independently initiatives monitoring the EITI implementation. Transparency International operates in the country via its Berlin office and National Democratic Institute has a long-established presence. Other Fiscal Sustainability Based on available Judging by the high level of Factors information, do interest in Azerbaijan and the hydrocarbon sector fiscal significant amount of foreign regimes allow for sufficient investment, the fiscal regime capital investment would seem adequate. Other Fiscal Sustainability Based on available No Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available Yes Factors information, are hydrocarbon sector fiscal regimes appropriate for the development stage of the domestic resource base Other Access to Reserves Hydrocarbon law to Does not exist Factors facilitate competitive upstream investment Other Access to Reserves Based on available Most investment takes place in Factors information, existence of the form of PSAs. negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available SOCAR participates mostly Factors information, types of joint through PSAs. ventures, role of NOC(s) Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal A vertically integrated Factors integration company. Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company international No data Factors BOE production as % avg total company BOE production A Citizen's Guide to National Oil Companies Page 154 Azerbaijan: State Oil Company of Azerbaijan Republic (SOCAR) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make The NOC's international Factors investments abroad investments are currently limited but there are plans to expand. Other International Presence Avg company international No data Factors refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company international No data Factors refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in Yes, many private companies Factors upstream participate in the upstream sector. Other Commercialization Competition level in Low. SOCAR is a party to all Factors upstream including non- ventures and controls all NOC participants and resource distribution. requirement to include NOC as partner Other Commercialization Competition level in Very low Factors midstream, downstream including non-NOC participants and requirement to include NOC as partner Other Commercialization Based on available Such alliances are considered Factors information, prevalence to be very successful based on and success of NOC/non- the results of existing NOC alliances, joint Production Sharing ventures Agreements Other Commercialization Partial privatization of the 0% Factors NOC (as measured by ownership structure) Other Commercialization Based on available The company has some mid- Factors information, level and stream activity in the region. quality of NOC international operations Other Commercialization Based on available Non-core commercial activities Factors information, percent of account for less than 5% non-core commercial activities in overall operations A Citizen's Guide to National Oil Companies Page 155 Azerbaijan: State Oil Company of Azerbaijan Republic (SOCAR) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Regulation Presence of independent, There are no independent Factors well-funded and trained agencies. The NOC shares regulatory agencies, HC regulatory functions with the agency name, budget, Ministry of Industry and number of staff Energy. Other Regulation NOCs are compelled to No Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market Not applicable Factors transparency and good quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively Not applicable Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of Such subsidies, estimated at Factors Objectives hydrocarbon price over $500 million annually, are subsidies ($/BOE provided by the NOC. production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of The company undertakes some Factors Objectives direct NOC funding of social programs, which are country social and mainly aimed at company economic programs. brief employees. description of programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations $2.87 Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Some data are reported in great Comments reliability of data provided detail, but not under by NOC(s) and international standards and governments they are not audited. A Citizen's Guide to National Oil Companies Page 156 Azerbaijan: State Oil Company of Azerbaijan Republic (SOCAR) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Longevity of NOC Based on available SOCAR was established in Comments information, history and 1992 as Azerbaijan persistence of NOC(s) transitioned into an independent republic, and should remain in operation for the foreseeable future. Other Country Status Trends and issues related to Azerbaijan is a resource rich Comments country hydrocarbon sector Caspian country in a endowments and geopolitically sensitive region. performance By all accounts, substantial oil and gas endowments exist. Challenges remain with respect to oil and natural gas export transit routes, environmental issues in the Caspian Sea region, and internal and regional geopolitics. Other Non-commercial Number of employees 60,344 Factors Objectives Other Non-commercial BOE production per 2,610 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 38.95 Factors Other Oil Dependency Net oil and gas export 89.41% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues 64.17% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 7,000.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 45,131.60 Factors reserves (BCF) Other Resource Endowment Total all source BOE 14,781.31 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production A Citizen's Guide to National Oil Companies Page 157 Azerbaijan: State Oil Company of Azerbaijan Republic (SOCAR) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 47.36% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.98% Factors split, production (%) Other Operating Conditions Country BOE production 451.48% Factors as % of total country BOE consumption Other Trade Openness WTO Membership No Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 158 Azerbaijan: State Oil Company of Azerbaijan Republic (SOCAR) Sources of Information Source # Year of Source Source Description Links 1 2008 Company web-site http://www.socar.gov.az/index-en.html 2 2007 Annual report 2006 http://socar.az/others-az.html 3 2008 EITI - Azerbaijan http://eitransparency.org/Azerbaijan 4 2008 EITI - Azerbaijan NGO web site http://www.eiti-az.org/ts_gen/eng/index.php 5 2008 National Democratic Institute http://www.ndi.org/worldwide/eurasia/azerbaijan/azerbaijan .asp 6 2008 Transparency International (through Berlin office) http://www.transparency.org/regional_pages/europe_central _asia/contact 7 2008 SOFAZ http://www.oilfund.az/en A Citizen's Guide to National Oil Companies Page 159 Belarus: Belarusneft Belarus: Belarusneft Summary Report Corporate Governance Highlights Corporate Organization and Ownership 100% state-owned company incorporated in the Republic of Belarus. Set up as non-profit organization. Part of the state-owned holding company, Belneftekhim. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings None Board of Directors Structure Not applicable Independent Board Members Not applicable Is chairman also minister of energy or otherwise appointed by head of state? Not applicable Operations Highlights Upstream Oil Mostly in Belarus, but in Iran, Venezuela and Russia as well. Does not have sole access to resources in Belarus. Midstream Oil BN operates 45 warehouses for oil products storage with a total volume of 780 MCM. Downstream Oil Sales of oil and gas products - 425 retail gas stations as well as wholesale activities. Another affiliate of Belneftekhim is a major player in refining Upstream Natural Gas BN has 1 gas processing facility of 48.356 MMCF/D Midstream Natural Gas Does not operate Downstream Natural Gas Does not operate Other BN operates a 21 MW power plant, machine-building, agriculture. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 242 Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) 13 Upstream: Average Annual Natural Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) 0.15 Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues($Millions) No data Consolidated Average Total Assets($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data A Citizen's Guide to National Oil Companies Page 160 Belarus: Belarusneft Categorization Indicators Categories: Scores: Corporate Governance 38 Cor por ate Gover nance Public Sector Governance 57 100 Commercialization 17 Public Sector OilDependency 50 Gover nance Fiscal Regimes 0 Resource Endowment 0 0 Oil Dependency 99 Resour ce Endowment Commer cialization Local Contribution 0 Sector and Trade Openness 11 FiscalRegimes Average 35 Belarusneft Average NOC Worldwide Governance Indicators Trends and Issues Belarus is very opaque both politically and with respect to its hydrocarbon sector. The country has aligned itself in interesting ways with other producing/exporting governments that have specific geopolitical agendas. The energy sector in general continues to be dominated by Russian influence with issues such as payment of natural gas deliveries from Russia a key political lever in the relationship. A Citizen's Guide to National Oil Companies Page 161 Belarus: Belarusneft Database Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of 2008 1 PA "Belorusneft" is 100% Governance Its Organization cluster of NOCs and other owned by the government of sovereign enterprises in the Republic of Belarus. country Corporate Ownership Structure and Number of NOCs of 5 Governance Its Organization country Corporate Ownership Structure and Description of 2008 1, 5 100% state-owned company Governance Its Organization incorporation and incorporated in the Republic of ownership Belarus. Set up as non-profit organization. Corporate Ownership Structure and % shares controlled by 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international None Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international None Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist No Governance Corporate Board of Directors (BOD) Description of BOD and Not applicable Governance structure Corporate Board of Directors (BOD) Is chairman also minister Not applicable Governance of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members Not applicable Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, Not applicable Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and Not applicable Governance policy statements Corporate Role of BOD Based on available Not applicable Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replacement General process for Appointed by the government Governance Key Executives recruitment, replacement of key execs and senior managers A Citizen's Guide to National Oil Companies Page 162 Belarus: Belarusneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Decision Making Level of NOC budget 2008 7 Very low. All operational and Governance Processes authority. Comment on financial targets are assigned the general decision flow by the government, as well as within NOC and between volume of various funding NOC and government for allocations to the budget, etc. major projects. Corporate Decision Making Based on available Unpredictable and not separate Governance Processes, Budget information, is NOC Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have Yes Governance Processes, Budget authority to partner with Autonomy other entities? Corporate Mission and Objectives Does NOC have a mission 2008 5 It has a mission statement Governance statement and, if so, what established by Government are key elements decree. Creation of unified system of oil product supply in the Republic; increase in export sales and development of inter- industrial cooperation. Corporate Sources of Capital Based on available The budget is set up and Governance information, budgeting approved by the Government; process and policy same for profit allocations. including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data No data available Governance Policy and other indications of disclosure and transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available No data Governance Management information, HR promotion and professional development policies Corporate Full Disclosure and Based on available 2008 1 In house healthcare, catering, Governance Measurement of Non- information, brief day care, resorts, etc. Does not commercial Objectives description of reporting on report details. noncommercial objectives Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, extent of commercial Objectives non-commercial obligations Value Operating Performance Upstream oil E&P. 2008 1 Mostly in Belarus, but in Iran, Creation Where does it operate Venezuela and Russia as well. Metrics (solely in the country or Does not have sole access to abroad-name countries)? resources in Belarus. Does it have sole access to country's resources? A Citizen's Guide to National Oil Companies Page 163 Belarus: Belarusneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Does the NOC operate 2008 1 Yes Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, 2008 1 BN operates 45 warehouses for Creation storage, shipping oil products storage with a total Metrics volume of 780 MCM. Value Operating Performance Downstream oil refining 2008 1, 4 Sales of oil and gas products - Creation & marketing, 425 retail gas stations as well Metrics petrochemicals as wholesale activities. Sate- owned Belneftekhim is a major player in refining Value Operating Performance Upstream natural gas E&P 2008 1 BN has 1 gas processing Creation facility of 48.356 MMCF/D Metrics Value Operating Performance Midstream natural gas Does not operate Creation pipelines, storage, LNG Metrics Value Operating Performance Downstream natural gas Does not operate Creation distribution, NGL sales, Metrics petrochemicals Value Operating Performance Other (power generation, 2008 1 BN operates a 21 MW power Creation etc) plant, machine-building, Metrics agriculture. Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE No data Creation production (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream Metrics capital expenditures (%) Value Operating Performance Avg upstream exploration $8.66 Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation A Citizen's Guide to National Oil Companies Page 164 Belarus: Belarusneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Metrics Value Operating Performance Avg operating cash flow No data Creation vs. costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining 15% Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) No data Creation Metrics Value Financial Performance Avg profit margin (%) No data Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) No data Creation Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total capital No data Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to No data Creation State (%) Metrics A Citizen's Guide to National Oil Companies Page 165 Belarus: Belarusneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available 2006 12 The hydrocarbon sector is Factors information, presence of a tasked with securing sufficient publicly articulated role of supply of oil & gas to meet the hydrocarbon sector domestic needs. with respect to national development objectives Other Public Sector Governance Based on available Roles defined in the decrees Factors information, clear and ordinances of the Council definition of the roles of of Ministers. The role of policy, commercial Belarusneft is clearly separated operation and regulation from the policy and regulatory and assignment to specific functions, some of which is entities avoiding conflicts held by the parent holding of interest company, Belneftekhim.. Other Public Sector Governance Based on available See mission statement above Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available Not disclosed Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available No data. Factors information, transparent hydrocarbon sector revenue management including revenue distribution within the country Other Public Sector Governance NOC and/or country Belarus is not a candidate Factors participate in EITI and/or country or supporter of EITI. other transparency Transparency International initiatives operates through the Berlin office. No other major transparency program appears to be active in the country. Other Fiscal Sustainability Based on available No Factors information, do hydrocarbon sector fiscal regimes allow for sufficient capital investment Other Fiscal Sustainability Based on available Fiscal regime is unpredictable Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings A Citizen's Guide to National Oil Companies Page 166 Belarus: Belarusneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Fiscal Sustainability Based on available Fiscal regime is rather Factors information, are appropriate for resource hydrocarbon sector fiscal development, yet dependence regimes appropriate for on Russian oil supply and lack the development stage of of alternatives puts additional the domestic resource pressure on the company. base Other Access to Reserves Hydrocarbon law to No data Factors facilitate competitive upstream investment Other Access to Reserves Based on available None Factors information, existence of negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available None Factors information, types of joint ventures, role of NOC(s) Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal Horizontal Factors integration Other International Presence Does NOC make 2008 1 Yes Factors investments abroad Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) A Citizen's Guide to National Oil Companies Page 167 Belarus: Belarusneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Non-NOC participants in None Factors upstream Other Commercialization Competition level in 0 Factors upstream including non- NOC participants and requirement to include NOC as partner Other Commercialization Competition level in Very limited - Russian Slavneft Factors midstream, downstream owns 50% of one refinery including non-NOC participants and requirement to include NOC as partner Other Commercialization Based on available Not applicable Factors information, prevalence and success of NOC/non- NOC alliances, joint ventures Other Commercialization Partial privatization of the 0 Factors NOC (as measured by ownership structure) Other Commercialization Based on available Exploration in Iran and Factors information, level and Venezuela; service contracts in quality of NOC Russia international operations Other Commercialization Based on available No data Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, Absent Factors well-funded and trained regulatory agencies, HC agency name, budget, number of staff Other Regulation NOCs are compelled to Yes - allocation of finances for Factors adopt practices that would general and administrative provide results similar to expenses are tied up to those in competitive profitability markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market Not applicable Factors transparency and good quality, unbiased data and information. HC agency independence indicators A Citizen's Guide to National Oil Companies Page 168 Belarus: Belarusneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Regulation Regulators effectively Not applicable Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of No data Factors Objectives hydrocarbon price subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of No data Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Virtually non-existent Comments reliability of data provided by NOC(s) and governments Other Longevity of NOC Based on available 2008 1 Belorusneft was created in Comments information, history and 2006. persistence of NOC(s) Other Country Status Trends and issues related Belarus is very opaque both Comments to country hydrocarbon politically and with respect to sector endowments and its hydrocarbon sector. The performance country has aligned itself in interesting ways with other producing/exporting governments that have specific geopolitical agendas. The energy sector in general continues to be dominated by Russian influence with issues such as payment of natural gas deliveries from Russia a key political lever in the relationship. Other Non-commercial Number of employees 7,900 Factors Objectives A Citizen's Guide to National Oil Companies Page 169 Belarus: Belarusneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Non-commercial BOE production per 1,689 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 16.12 Factors Other Oil Dependency Net oil and gas export 1.63% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues 1.01% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 198.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 95.87 Factors reserves (BCF) Other Resource Endowment Total all source BOE 214.53 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 92.29% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.99% Factors split, production (%) Other Operating Conditions Country BOE production 7.78% Factors as % of total country BOE consumption Other Trade Openness WTO Membership No Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 170 Belarus: Belarusneft Sources of Information Source # Year of Source Description Links Source 1 2008 Company web-site www.beloil.by 2 2008 Ministry of Statistics and Analysis of the Republic of www.belstat.gov.by/homep/en/main.html Belarus (rus) 3 2008 National Bank of the Republic of Belarus (rus) http://www.nbrb.by/engl/statistics/Rates/AvgRate/ 4 2008 Belneftekhim web-site (rus) http://www.belneftekhim.by/ru/about/ 5 2008 Web-site of the Ministry of Energy of the Republic of http://www.minenergo.gov.by/ Belarus (rus) 6 2006 Ministry of Finance http://www.minfin.gov.by/rmenu/budget/legislation/lawr b/bud/year06/pril4/ 7 Current Transparency International (operated through Berlin) http://www.transparency.org/regional_pages/europe_cent ral_asia/contact 8 2002 Eastern Europe, Russia and Central Asia, Europa http://books.google.com/books?id=EPP3ti4hysUC&pg=P Publications/Taylor & Francis A164&lpg=PA164&dq=belarusneft+employees&source= web&ots=pqhLdkLyPU&sig=uUipg4gZvv- 8y0jsi1bd3vjpkfg&hl=en&sa=X&oi=book_result&resnu m=1&ct=result#PPA164,M1 9 2007 "On Changes and Additions to the Decree #671 of June 21, http://www.pravo.by/webnpa/text.asp?start=1&RN=C207 2005 by the Council Of 01610 Ministers of the Republic of Belarus". Ordinance of the Council Of Ministers of the Republic of Belarus #1610 of November 26, 2007 (rus) 10 2007 News item (rus) http://www.tehnoprogress.ru/lenta/news24323.html 11 2006 News item (rus) http://liberty-belarus.info/content/view/750/46/ 12 2006 Economic development program for Belarus, Ministry of http://w3.economy.gov.by/ministry/economy.nsf/000000 Economy web site 00000000000000000000000000/686d98a674831210c225 718d00361cb9?OpenDocument A Citizen's Guide to National Oil Companies Page 171 France: Gaz de France (GDF) France: Gaz de France (GDF) Summary Report Corporate Governance Highlights Corporate Organization and Ownership Gaz de France is a société anonyme (joint-stock company) with a Board of Directors. Shares Controlled by Government 80.2% Domestic, International Exchanges for Equity Listings Euronext (France) Board of Directors Structure The Board consists of 18 members: six directors appointed by General Shareholders' Meeting; six representatives of the French State appointed by decree; and six employee representatives elected by the personnel of the company. Independent Board Members No Is chairman also minister of energy or otherwise appointed by head of state? No Operations Highlights Upstream Oil Reserves are primarily in the North Sea, Germany and North Africa, including reserves in fields operated directly by Gaz de France. Midstream Oil Does not operate Downstream Oil Does not operate Upstream Natural Gas Mostly international Midstream Natural Gas The company operates 31,600 km of pipelines, 15 storage facilities with 9.5 bcm of capacity, and is the number one natural gas supplier in France and one of the leading natural gas suppliers in Europe. It has shares in both regas and LNG terminals worldwide. Downstream Natural Gas GDF operates over 185,000 km of distribution pipelines, produces 8,000 B/D of NGL. Other Owns the Shotton plant (215 MW) in the United Kingdom, DK6 (788 MW) in France, and interests in SPE (approximately 1,600 MW) in Belgium and AES Cartagena (1,200 MW) in Spain. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) 15 Upstream: Average Annual Natural Gas Production (BCF) 173 Downstream: Average Annual Refinery Production (MM Barrels) No data Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues($Millions) 28,603 Consolidated Average Total Assets($Millions) 47,750 Consolidated Average EBIT ($Millions) 3,152 Consolidated Average Net Income ($Millions) 2,184 A Citizen's Guide to National Oil Companies Page 172 France: Gaz de France (GDF) Categorization Indicators Categories: Scores: Corporate Corporate Governance 97 Governance 100 Public Sector Governance 100 Public Sector Commercialization 100 Oil Dependency 50 Governance Fiscal Regimes 88 0 Resource Endowment 0 Oil Dependency 97 Resource Commercializa Endowment Local Contribution 95 Sector and Trade Openness 73 Fiscal Regimes Average 80 GDF Average NOC Worldwide Governance Indicators Trends and Issues France is a net oil and natural gas importer. GDF works to secure critical natural gas supplies for the nation as well as to leverage its competencies in the international arena as a large and prominent midstream and downsream player. The major issues for France - and the Western European continent in general - are energy security related. In particular, the governments have long been sensitive to dependence on limited suppliers for natural gas (Russia, Algeria) and GDF is working to expand LNG options. GDF is mainly focused on re-gasification and supply procurement; the much debated acquisition of SUEZ is a component of the overall strategy. A Citizen's Guide to National Oil Companies Page 173 France: Gaz de France (GDF) Database Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data Corporate Ownership Structure and Sole NOC or one of cluster Single NOC, although French Governance Its Organization of NOCs and other enterprises are widely viewed sovereign enterprises in to be "national champions" country and thus closely aligned with government interests. Corporate Ownership Structure and Number of NOCs of 1 Governance Its Organization country Corporate Ownership Structure and Description of 2007 1 Gaz de France is a société Governance Its Organization incorporation and anonyme (joint-stock ownership company) with a Board of Directors. Corporate Ownership Structure and % shares controlled by 2007 1 80% Governance Its Organization government Corporate Ownership Structure and Domestic, international 2008 4 Euronext (France) Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist Yes Governance Corporate Board of Directors (BOD) Description of BOD and 2007 1 The Board consists of 18 Governance structure members: six directors appointed by General Shareholders' Meeting; six representatives of the French State appointed by decree; and six employee representatives elected by the personnel of the company. Corporate Board of Directors (BOD) Is chairman also minister No Governance of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members No Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, 2008 4 Elected for 5 years. Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and 2008 4 The Board is the Group's Governance policy statements main decision-making and oversight body. Corporate Role of BOD Based on available Has all decision-making Governance information, does BOD powers have power, impact, decision making authority A Citizen's Guide to National Oil Companies Page 174 France: Gaz de France (GDF) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data Corporate Recruitment/Replacement General process for By merit Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget High independence Governance Processes authority. Comment on the general decision flow within NOC and between NOC and government for major projects. Corporate Decision Making Based on available Predictable and separate Governance Processes, Budget information, is NOC Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have Yes, has numerous JVs Governance Processes, Budget authority to partner with worldwide Autonomy other entities? Corporate Mission and Objectives Does NOC have a mission 2008 4 "The Gaz de France Group's Governance statement and, if so, what objective is to be the are key elements European energy industry leader for its customers, shareholders and employees." to provide its customers with competitive energy and services, to become the benchmark infrastructure operator in Europe, to be a committed player in sustainable development, to create value for its shareholders. Corporate Sources of Capital Based on available Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data Somewhat detailed and Governance Policy and other indications of independently audited. disclosure and transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available Very adequate Governance Management information, HR promotion and professional development policies Corporate Full Disclosure and Based on available Mainly cultural and Governance Measurement of Non- information, brief educational. commercial Objectives description of reporting on noncommercial objectives A Citizen's Guide to National Oil Companies Page 175 France: Gaz de France (GDF) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data Corporate Full Disclosure and Based on available GDF Foundation sponsorship Governance Measurement of Non- information, extent of non- and patronage worldwide. No commercial Objectives commercial obligations details reported. Value Operating Performance Upstream oil E&P. Where 2007 3 Reserves are primarily in the Creation does it operate (solely in North Sea, Germany and Metrics the country or abroad- North Africa, including name countries)? Does it reserves in fields operated have sole access to directly by Gaz de France. country's resources? Value Operating Performance Does the NOC operate Yes Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, Does not operate Creation storage, shipping Metrics Value Operating Performance Downstream oil refining & Does not operate Creation marketing, petrochemicals Metrics Value Operating Performance Upstream natural gas E&P Mostly internationally Creation Metrics Value Operating Performance Midstream natural gas 2007 1, 3 The company operates 31,600 Creation pipelines, storage, LNG km of pipelines, 15 storage Metrics facilities with 9.5 bcm of capacity, an is the number one natural gas supplier in France and one of the leading natural gas suppliers in Europe. It has shares in both regas and LNG terminals worldwide. Value Operating Performance Downstream natural gas 2007 1 GDF operates over 185,000 Creation distribution, NGL sales, km of distribution pipelines, Metrics petrochemicals produces 8,000 B/D of NGL. Value Operating Performance Other (power generation, 2007 3 Owns the Shotton plant (215 Creation etc) MW) in the United Kingdom, Metrics DK6 (788 MW) in France, and interests in SPE (approximately 1,600 MW) in Belgium and AES Cartagena (1,200 MW) in Spain. Value Operating Performance Avg reserve replacement 112% Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE production -8% Creation (%) Metrics A Citizen's Guide to National Oil Companies Page 176 France: Gaz de France (GDF) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow vs No data Creation costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total after-tax 8% Creation income/revenues (%) Metrics Value Financial Performance Avg total operating cash 165% Creation flow/total capital Metrics expenditures (%) A Citizen's Guide to National Oil Companies Page 177 France: Gaz de France (GDF) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data Value Financial Performance Avg gross debt/after-tax 53% Creation capital employed (%) Metrics Value Financial Performance Avg operating margin (%) 11% Creation Metrics Value Financial Performance Avg profit margin (%) 8% Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) 165% Creation Metrics Value Financial Performance Avg debt profile (%) 53% Creation Metrics Value Financial Performance Avg return on assets (%) 5% Creation Metrics Value Financial Performance Avg return on total capital 6% Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to 5% Creation State (%) Metrics Other Public Sector Governance Based on available 2006 6 "France has very limited Factors information, presence of a energy reserves. In this publicly articulated role of context, meeting France's the hydrocarbon sector energy needs involves a risk with respect to national that should be managed. In development objectives macroeconomic terms, the aim is to limit the exposure of our economy to fluctuations in energy prices, in particular by developing domestic production. In terms of physical supplies, the aim is to ensure the availability of sufficient capacity to cope with the problems of shortages of electricity (capacity and availability of generation plants, transmission quality and interconnection level), gas (management of stocks) and oil (management of security stocks)." Other Public Sector Governance Based on available Clearly defined Factors information, clear definition of the roles of policy, commercial operation and regulation and assignment to specific entities avoiding conflicts A Citizen's Guide to National Oil Companies Page 178 France: Gaz de France (GDF) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data of interest Other Public Sector Governance Based on available 2007 3 "...to provide its customers Factors information, presence of with competitive energy and publicly stated objectives services, to become the ranked by priority for benchmark infrastructure NOC(s) operator in Europe, to be a committed player in sustainable development, to create value for its shareholders." Other Public Sector Governance Based on available Not applicable Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available Public accounts are disclosed Factors information, transparent on the website of the Ministry hydrocarbon sector of Finance. Given its limited revenue management importance, revenue derived including revenue from petroleum sector distribution within the taxation is not segretated in country budget documents. Other Public Sector Governance NOC and/or country France supports EITI. Factors participate in EITI and/or other transparency initiatives Other Fiscal Sustainability Based on available Seem to be adequate Factors information, do hydrocarbon sector fiscal regimes allow for sufficient capital investment Other Fiscal Sustainability Based on available Aa1 - Moody's Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available Not applicable given France's Factors information, are small resource endowment. hydrocarbon sector fiscal regimes appropriate for the development stage of the domestic resource base Other Access to Reserves Hydrocarbon law to "Code Minier" (Mining Code) Factors facilitate competitive upstream investment Other Access to Reserves Based on available Factors information, existence of negotiated contracts/agreements for upstream investment A Citizen's Guide to National Oil Companies Page 179 France: Gaz de France (GDF) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data Other Operating Strategy Based on available Numerous JV's worldwide - Factors information, types of joint primarily in midstream ventures, role of NOC(s) Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal Factors integration Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company international No data Factors BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company international No data Factors refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company international No data Factors refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in Yes Factors upstream Other Commercialization Competition level in High - no requirement Factors upstream including non- NOC participants and requirement to include NOC as partner Other Commercialization Competition level in High - no requirement Factors midstream, downstream including non-NOC participants and requirement to include NOC as partner Other Commercialization Competition level in High Factors midstream and downstream sectors A Citizen's Guide to National Oil Companies Page 180 France: Gaz de France (GDF) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data Other Commercialization Based on available Minor role, mostly successful Factors information, prevalence and success of NOC/non- NOC alliances, joint ventures Other Commercialization Partial privatization of the 19.8% Factors NOC (as measured by ownership structure) Other Commercialization Based on available 2007 1 Production in 5 countries: Factors information, level and UK, Germany, Norway, quality of NOC Netherlands, Ivory Coast; international operations Exploration in 9 countries (see production + Egypt, Algeria, Nigeria, Denmark, Mauritania). Manages 1 distribution company in Hungary and one of Romania's 2 principal distribution firms, Distrigaz Sud. The Group also has stakes in gas distribution firms in Italy, Germany, Portugal, Slovakia, etc. Outside Europe, Gaz de France owns distribution subsidiaries in Mexico. Holds 10% in Petronet LNG. Other Commercialization Based on available Insignificant - less than 1% Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, 2007 3 CRE (Commission de Factors well-funded and trained Régulation de l'Énergie) is an regulatory agencies, HC independent regulative agency name, budget, authority in the gas and number of staff electricity sector. The Minister of Energy also has powers of oversight and the right to impose fines etc. Other Regulation NOCs are compelled to Yes - especially in light of Factors adopt practices that would recent EU legislation provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers A Citizen's Guide to National Oil Companies Page 181 France: Gaz de France (GDF) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data Other Regulation Regulators assure market 2008 5 "The autonomy of CRE is Factors transparency and good guaranteed by article 35 of the quality, unbiased data and law of 10 February 2000, information. HC agency which requires agents and independence indicators members of the CRE to act with complete impartiality and proscribes any instruction from the government or a third party." Other Regulation Regulators effectively 2008 5 "The concerned parties Factors resolve disputes and (except non-eligible conflicts and address customers) may refer any public concerns about dispute relating to access to development of and access public transmission or to hydrocarbon resources electricity distribution grids, and infrastructure. HC transmission of natural gas agency dispute resolution distribution networks and policy LNG or natural gas storage facilities to CRE. After a due process investigation, and a possible inquiry, the Commission will decide within 2 months (or longer if necessary) on the settlement of disputes. A request for protective measures may simultaneously be submitted to it. Its decisions may be contested before the Court of Appeal in Paris, which may order an enforcement stay. " Other Non-commercial Provision and level of Not applicable Factors Objectives hydrocarbon price subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of Not applicable Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC $1,013.87 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations $62.13 Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance $607.32 Factors Objectives relative to workforce ($ M) A Citizen's Guide to National Oil Companies Page 182 France: Gaz de France (GDF) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data Other Quality of Data Availability, extent, 2007 1 Mazars & Guérard and E&Y; Comments reliability of data provided DeGolyer & McNaughton by NOC(s) and certified 98% of reserves in governments past 3 years; One third of reserves certified annually by independent, external audit; reports according to IFRS. Other Longevity of NOC Based on available 2007 3 Founded in 1946 Comments information, history and persistence of NOC(s) Other Country Status Trends and issues related France is a net oil and natural Comments to country hydrocarbon gas importer. GDF works to sector endowments and secure critical natural gas performance supplies for the nation as well as to leverage its competencies in the international arena as a large and prominent player. The major issues for France - and the Western European continent in general - are energy security related. In particular, the governments have long been sensitive to dependence on limited suppliers for natural gas (Russia, Algeria) and GDF is working to expand LNG options. GDF is mainly focused on regasification and supply procurement; the much debated acquisition of SUEZ is a component of the overall strategy. Other Non-commercial Number of employees 47,097 Factors Objectives Other Non-commercial BOE production per 949 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 10.66 Factors Other Oil Dependency Net oil and gas export -12.00% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues -3.19% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 122.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 300.00 Factors reserves (BCF) A Citizen's Guide to National Oil Companies Page 183 France: Gaz de France (GDF) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data Other Resource Endowment Total all source BOE 173.72 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 70% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 100% Factors split, production (%) Other Operating Conditions Country BOE production 2% Factors as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 184 France: Gaz de France (GDF) Souces of Information Source # Year of Source Source Description Links 1 2007 Annual Report 2006 http://www.gazdefrance.com/EN/D/877/resul ts-and-presentations.html 2 2007 Consolidated Financial http://www.gazdefrance.com/EN/D/877/resul Statements 2006 ts-and-presentations.html 3 2007 GDF - Reference http://www.gazdefrance.com/EN/D/877/resul document 2006 ts-and-presentations.html 4 2008 Company web-site http://www.gazdefrance.com/EN/D/877/resul ts-and-presentations.html 5 2008 CRE web-site http://www.cre.fr/en/presentation/statut 6 2006 "France's energy http://www.industrie.gouv.fr/energie/anglais/ situation". pdf/politique-energetique-ang.pdf A Citizen's Guide to National Oil Companies Page 185 Kazakhstan: KazMunaiGaz Kazakhstan: KazMunaiGaz Summary Report Corporate Governance Highlights Corporate Organization and Ownership Owned by the Republic of Kazakhstan. Shares Controlled by Government 100% in 2006 Domestic, International Exchanges for Equity Listings The E&P affiliate is listed in LSE - GDR, Kazakhstan SE - common stock-2006 (both); KazMunaiGaz owns about 62% of E&P affiliate after IPO Board of Directors Structure There are 5 members, serving 3-year terms. Independent Board Members Yes, 2 out of 5, appointed by the state. Is chairman also minister of energy or otherwise appointed by head of state? Yes The Chairman is a deputy minister of energy. Operations Highlights Upstream Oil The company operates solely in the country. The NOC has preferential access rights to resources. Midstream Oil The company operates oil trunklines. It is also involved in a few international (export) pipeline projects (CPC, Atasu-Alashankou (50%), Kuryk-BTC). Overall the company controls 100% of gas exports and 80% of oil exports; it also operates a tanker fleet. Downstream Oil The company operates one refinery; produces propane and wide range of distillates; participates in several JVs in greenfield petrochemical facilities (none completed); a Joint Venture in a Russian refinery; operates about 4% out of 3,783 gas stations in the country; co-owns an oil terminal in Georgia. Upstream Natural Gas The company operates only in the oil sector (the company does not report any natural gas production). Midstream Natural Gas The company operates 11,000 km of main gas pipelines. It is also involved in an export pipeline project, Intergas Central Asia. It develops and operates gas storage facilities. Downstream Natural Gas In 2006, the company acquired "Tbilgasi" - NG distribution company in Georgia with 2,414 km of distribution network. Other To a very small extent, the company is also engaged in power generation, and some unrelated manufacturing activities. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 719 Upstream: Average Proved Gas Reserves (BCF) No data. Upstream: Average Annual Oil Production (MM Barrels) 68 Upstream: Average Annual Natural Gas Production (BCF) No data. Downstream: Average Annual Refinery Production (MM Barrels) 23 Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues($Millions) 6,989 Consolidated Average Total Assets($Millions) 10,593 Consolidated Average EBIT ($Millions) 2,425 Consolidated Average Net Income ($Millions) 1,193 A Citizen's Guide to National Oil Companies Page 186 Kazakhstan: KazMunaiGaz Categorization Indicators Categories: Scores: Corporate Governance 63 Corporate Governance Public Sector Governance 48 100 Commercialization 83 Public Sector Oil Dependency 50 Governance Fiscal Regimes 75 Resource Endowment 10 0 Oil Dependency 74 Resource Commercializ Endowment Local Contribution -63 Sector and Trade Openness 28 Fiscal Regimes Average 59 Kazmunaigas Average NOC Worldwide Governance Indicators Trends and Issues Kazakhstan is the largest oil producer in Central Asia, and a target for export development. The country and its companies are under increasing international scrutiny for gas flaring, transparency and other concerns. The entry of China into Central Asia development activity poses additional challenges. A Citizen's Guide to National Oil Companies Page 187 Kazakhstan: KazMunaiGaz Database Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of cluster 2007 1 A holding company, Samruk, Governance Its Organization of NOCs and other holds all state shares in state sovereign enterprises in companies; it also owns country KazMunaiGaz (KMG), which in turn owns affiliates in different sectors. Corporate Ownership Structure and Number of NOCs of 1 Governance Its Organization country Corporate Ownership Structure and Description of Owned by the Republic of Governance Its Organization incorporation and Kazakhstan. ownership Corporate Ownership Structure and % shares controlled by 100% in 2006 Governance Its Organization government Corporate Ownership Structure and Domestic, international 2007 The E&P affiliate is listed in Governance Its Organization exchanges where shares LSE - GDR, Kazakhstan SE - are listed common stock-2006(both); KazMunaiGaz owns about 1 62% after IPO Corporate Ownership Structure and Domestic, international 2008, 2, 6 Only KMG E&P Governance Its Organization exchanges where bonds are 2007 traded Corporate Ownership Structure and Company files form 20-F 2007 No Governance Its Organization with SEC? 1 Corporate Board of Directors (BOD) Does a BOD exist 2006 5 Yes Governance Corporate Board of Directors (BOD) Description of BOD and 2006 5 5 members/3 years Governance structure Corporate Board of Directors (BOD) Is chairman also minister 2006 5 Yes Governance of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members 2006 5 Yes, 2 out of 5 at least Governance considered independent nominally, appointed by the (external) and, if so, how sole shareholder are they appointed Corporate Board of Directors (BOD) Term of service (years, 2006 5 3 years Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and All major functions (strategy, Governance policy statements senior appointments, remunerations, budgeting, audit) Corporate Role of BOD Based on available Yes, but dominated by the Governance information, does BOD representatives of the State have power, impact, decision making authority A Citizen's Guide to National Oil Companies Page 188 Kazakhstan: KazMunaiGaz Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Recruitment/Replacement General process for BOD approves appointments. Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget The decision flow is Governance Processes authority. Comment on the dominated by the state. general decision flow within NOC and between NOC and government for major projects. Corporate Decision Making Based on available There is little predictability. Governance Processes, Budget information, is NOC The process is not separate Autonomy budget process predictable from government. and separate from government Corporate Decision Making Does the NOC have Yes, the company can partner Governance Processes, Budget authority to partner with through JVs and such, Autonomy other entities? including international operations. Corporate Mission and Objectives Does NOC have a mission 2008 3 "Providing maximum benefits Governance statement and, if so, what to the Republic of Kazakhstan are key elements by participation in development of national oil and gas industry"; Increase in company's capitalization; improvement of financial indicators; increase in company's reserves and production; improvement of management system in the company". Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data The company reports under Governance Policy and other indications of Kazakh accounting guidelines disclosure and transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available KMG E&P is more Governance Management information, HR promotion developed, has share-option and professional plan, and extended training development policies programs. Corporate Full Disclosure and Based on available The company reports none as Governance Measurement of Non- information, brief objectives, but discloses some commercial Objectives description of reporting on costs and activities, albeit not noncommercial objectives in much detail. A Citizen's Guide to National Oil Companies Page 189 Kazakhstan: KazMunaiGaz Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Full Disclosure and Based on available Rather significant Governance Measurement of Non- information, extent of non- commercial Objectives commercial obligations Value Operating Performance Upstream oil E&P. Where The company operates solely Creation does it operate (solely in in the country; and has Metrics the country or abroad- preferential access rights to name countries)? Does it resources. have sole access to country's resources? Value Operating Performance Does the NOC operate Yes but not in upstream. Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, 2007 1 The company operates oil Creation storage, shipping trunklines. It is also involved Metrics in a few international (export) pipeline projects (CPC, Atasu-Alashankou (50%), Kuryk-BTC). All in all the company controls 100% of gas exports and 80% of oil exports; also has a tanker fleet. Value Operating Performance Downstream oil refining & 2007 1 Operates one refinery; Creation marketing, petrochemicals produces propane and wide Metrics range of distillates; participates in several JVs in greenfield petrochemical facilities (none completed); a JV in a Russian refinery; operates about 4% out of 3783 gas stations in the country; co- owns oil terminal in Georgia. Value Operating Performance Upstream natural gas E&P The company operates in the Creation oil sector only. Metrics Value Operating Performance Midstream natural gas 2007 1 The company operates 11,000 Creation pipelines, storage, LNG km of main gas pipelines. It is Metrics also involved in an export pipeline project, Intergas Central Asia, and develops and operates gas storage facilities. Value Operating Performance Downstream natural gas 2008 3 In 2006, the company Creation distribution, NGL sales, acquired "Tbilgasi" - NG Metrics petrochemicals distribution company in Georgia with 2,414 km of distribution network. Value Operating Performance Other (power generation, 2008 2 The company has very little of Creation etc) power generation, and some Metrics unrelated manufacturing activities Value Operating Performance Avg reserve replacement 2007 11 0% Creation rate (BOE, %) Metrics A Citizen's Guide to National Oil Companies Page 190 Kazakhstan: KazMunaiGaz Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg reserve replacement No data. Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data. Creation (%) Metrics Value Operating Performance Change in BOE production 7% Creation (%) Metrics Value Operating Performance Avg upstream operating 237% Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration No data. Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs $10.45 Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax 20% Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before $20.59 Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes $8.62 Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) 58% Creation Metrics Value Operating Performance Avg operating cash flow vs No data. Creation costs incurred (%) Metrics Value Operating Performance After tax return on assets 17% Creation Metrics Value Operating Performance Avg refinery utilization No data. Creation rate (%) Metrics Value Operating Performance Change in total refining No data. Creation production (%) Metrics Value Operating Performance Change in refinery No data. Creation capacity (%) Metrics Value Operating Performance Avg income from $0.00 Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and No data. Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data. Creation assets (%) Metrics A Citizen's Guide to National Oil Companies Page 191 Kazakhstan: KazMunaiGaz Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg total operating cash 610% Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) 35% Creation Metrics Value Financial Performance Avg profit margin (%) 17% Creation Metrics Value Financial Performance Avg effective tax rate (%) 77% Creation Metrics Value Financial Performance Avg reinvestment risk (%) 610% Creation Metrics Value Financial Performance Avg debt profile (%) No data. Creation Metrics Value Financial Performance Avg return on assets (%) 11% Creation Metrics Value Financial Performance Avg return on total capital No data. Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to 163% Creation State (%) Metrics Other Public Sector Governance Based on available Not available Factors information, presence of a publicly articulated role of the hydrocarbon sector with respect to national development objectives Other Public Sector Governance Based on available 2004 10 Functions and rights of the Factors information, clear (2006) Ministry are well defined and definition of the roles of detailed. policy, commercial operation and regulation and assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available See mission statement Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available Not present Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available A Citizen's Guide to National Oil Companies Page 192 Kazakhstan: KazMunaiGaz Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available The National Fund of the Factors information, transparent Republic of Kazakhstan was hydrocarbon sector created in 2000 as a revenue management stabilization fund that ensures including revenue the economy of the Republic distribution within the of Kazakhstan will be stable country against the price swings of oil, gas, and metals. The assets of the National Fund assets are monitored by the National Bank of the Republic of Kazakhstan. The Ministry of Finance's website publishes reports on accumulation and withdrawals from the Fund. A Managing Council, presided over and appointed by the President of the Republic of Kazakhstan, defines the policies and oversees the functioning the Fund. Other Public Sector Governance NOC and/or country 2008 12, 13 Kazakhstan is a candidate Factors participate in EITI and/or country for EITI, and has until other transparency 9 March 2010 to complete the initiatives validation process. Other Fiscal Sustainability Based on available Yes, the fiscal regime appears Factors information, do to be attractive for investors hydrocarbon sector fiscal notwithstanding recent regimes allow for amendments that raised sufficient capital government take. investment Other Fiscal Sustainability Based on available KMG E&P has a BB+ rating Factors information, do from S&P hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available Yes, according to industry Factors information, are sources. hydrocarbon sector fiscal regimes appropriate for the development stage of the domestic resource base Other Access to Reserves Hydrocarbon law to 2006 9 The major laws are the Law Factors facilitate competitive on Petroleum, dated June 28, upstream investment 1995 and the Law on the Subsoil and Subsoil Use, dated January 27, 1996. KMG has preferential rights in resource allocation and influences the decision- making process. Recent amendments require mandatory use of Kazakh employees, suppliers and service providers. A Citizen's Guide to National Oil Companies Page 193 Kazakhstan: KazMunaiGaz Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Access to Reserves Based on available Most investment takes place Factors information, existence of via PSAs. negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available 206 9 Mandatory participation of Factors information, types of joint KazMunaiGaz in offshore ventures, role of NOC(s) project with a minimum share of 50%. Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal Vertically integrated Factors integration Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company international No data. Factors BOE production as % avg total company BOE production Other International Presence Change in company BOE No data. Factors production from international operations (%) Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company international No data. Factors refinery throughput as % total refinery throughput Other International Presence Change in company No data. Factors refinery throughput from international operations (%) Other International Presence Avg company international No data. Factors refinery capacity as % company total refinery capacity Other International Presence Change in company No data. Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in Yes, the influence of KMG is Factors upstream significant A Citizen's Guide to National Oil Companies Page 194 Kazakhstan: KazMunaiGaz Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Competition level in 2007 6 KMG is the second largest oil Factors upstream including non- producer in the country. There NOC participants and are 6 mid-size E&P requirement to include companies and a number of NOC as partner smaller ones, yet KMG has a dominant role. "KMG E&P has the right of first refusal on the acquisition of existing onshore oil and gas assets, access to new oil and gas acreage and guaranteed access to pipeline infrastructure. KMG E&P is the only company in Kazakhstan that has these advantages." There is a mandatory participation of KMG at a minimum of 50% in all ventures since 2002. Since 2005, KMG has priority buy-back rights of any assets. Other Commercialization Competition level in The level of competition is Factors midstream, downstream very low, except for the retail including non-NOC segment. participants and requirement to include NOC as partner Other Commercialization Based on available Very successful until recently Factors information, prevalence due to tightened regulation and success of NOC/non- and legislation NOC alliances, joint ventures Other Commercialization Partial privatization of the 38% Factors NOC (as measured by ownership structure) Other Commercialization Based on available Very limited; the company Factors information, level and operates mainly in Georgia quality of NOC international operations Other Commercialization Based on available KMZ has a number of social Factors information, percent of projects, yet no quantitative non-core commercial details reported activities in overall operations Other Regulation Presence of independent, The Ministry shares Factors well-funded and trained regulatory function with regulatory agencies, HC KMG; there is no independent agency name, budget, regulator. number of staff A Citizen's Guide to National Oil Companies Page 195 Kazakhstan: KazMunaiGaz Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Regulation NOCs are compelled to Not applicable Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market Only to a certain extent Factors transparency and good quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively Based on recent conflicts in Factors resolve disputes and the industry, disputes are not conflicts and address always resolved effectively. public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of Energy fuel subsidies are Factors Objectives hydrocarbon price substantial and financed subsidies ($/BOE through petroleum export production) provided by earnings, given the dominance NOC and/or government. of petroleum revenues in the brief description of subsidy Kazakh economy. program, approach, cost Other Non-commercial Provision and level of 2007 1 The company spent about $1 Factors Objectives direct NOC funding of billion on social programs in country social and 2002-2005 (sponsorship of economic programs. brief various activities, transport description of programs infrastructure, housing, and support kindergartens, hospitals, sports facilities, and so on. Other Non-commercial Measure of NOC $311.55 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations $12.57 Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance $205.55 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Very limited Comments reliability of data provided by NOC(s) and governments Other Longevity of NOC Based on available KMG E&P was created in Comments information, history and 2004. KMG was created in persistence of NOC(s) 2002 by the decree of the President. A Citizen's Guide to National Oil Companies Page 196 Kazakhstan: KazMunaiGaz Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Country Status Trends and issues related Kazakhstan is the largest oil Comments to country hydrocarbon producer in Central Asia, and sector endowments and a target for export performance development. The country and its companies are under increasing international scrutiny for gas flaring, transparency and other concerns. The entry of China into Central Asia development activity poses additional challenges. Other Non-commercial Number of employees 34,000 Factors Objectives Other Non-commercial BOE production per 2,664 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 72.42 Factors Other Oil Dependency Net oil and gas export 54.05% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues 26.15% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 39,828.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 67,203.26 Factors reserves (BCF) Other Resource Endowment Total all source BOE 51,414.77 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data. Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data. Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data. Factors production as % of country BOE production Other Operating Conditions Company primary No data. Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data. Factors throughput as % of total country refinery A Citizen's Guide to National Oil Companies Page 197 Kazakhstan: KazMunaiGaz Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data throughput Other Operating Conditions Country oil/natural gas 77.46% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.97% Factors split, production (%) Other Operating Conditions Country BOE production 354.66% Factors as % of total country BOE consumption Other Trade Openness WTO Membership No Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 198 Kazakhstan: KazMunaiGaz Souces of Information Source # Year of Source Source Description Links 1 2007 Annual Report 2005- 2006 http://www.kmg.kz/index.cfm?tid=181 2 2008 Official exchange rates of National Bank of http://www.nationalbank.kz/?docid=364&uid=6E97D5A3- Kazakhstan 802C-E8F0-EFF3C04847516706 3 2008 Company's web-site (rus) http://www.kmg.kz/rus/ 4 2008 Financial report 2007 (rus) http://www.kmg.kz/index.cfm?tid=28 5 2006 Changes to by-laws (rus) http://www.kmg.kz/index.cfm?tid=135 6 2007 Annual Report 2006 - KazMunaiGaz E&P http://www.kmgep.kz/eng/investor_relations/annual_report s/ 7 2008 KazMunaiGaz E&P GCA Report http://www.kmgep.kz/eng/investor_relations/other_reports/ 8 2008 Web-site of the Ministry of Energetic and Mineral http://www.memr.gov.kz/?lng=eng&mod=min Resources 9 2006 The framework for oil & gas legislation in http://www.salans.com/FileServer.aspx?oID=1823&lID=0 Kazakhstan. By James E. Hogan, Salans 10 2004 (2006) The Statute on the Ministry of Energy and http://www.memr.gov.kz/?mod=pol&lng=eng&year=2007 Mineral Resources 11 2008 "KazMunaiGaz Increases Reserves by http://www.rigzone.com/NEWS/article.asp?a_id=56297 18%" 12 2008 EITI - Kazakhstan (country web site not http://eitransparency.org/Kazakhstan available) 13 2008 Transparency International (through http://www.transparency.org/regional_pages/europe_centra Berlin office) l _asia/contact A Citizen's Guide to National Oil Companies Page 199 Norway: StatoilHydro Norway: StatoilHydro Summary Report Corporate Governance Highlights Corporate Organization and Ownership StatoilHydro is an integrated oil and gas company organized as a public limited liability company. In a 2001 decision the Storting (Norwegian Congress) required that the Norwegian state must continue to own two-thirds of StatoilHydro. Shares Controlled by Government Currently the Norwegian government owns 62.5% of StatoilHydro (SH) which ownership interest is managed by the Ministry of Petroleum and Energy. The government plans to increase its ownership interest to 67% over time. Domestic, International Exchanges for Equity Listings Oslo Stock Exchange and New York Stock Exchange. Board of Directors Structure The Annual General Meeting (AGM) of shareholders is the company's supreme body. It elects the shareholder's representatives to the Corporate Assembly (CA), elects the Nomination Committee, elects the external auditor and approves all financial reports. The Nomination Committee has 3 independent members and the Director General of the Ministry of Petroleum and Energy. It recommends individuals to be considered for the CA and the BOD. The Corporate Assembly has 20 members: 12 are elected by the shareholders and 8 are employee representatives elected by employees. The CA elects the BOD. The BOD has 10 members and there are no company representatives other than three employee members. The other 7 BOD members are independent. The BOD appoints the President and Chief Executive Officer of the company. Independent Board Members Seven out of 10 are independent and nominated by the Nomination Committee. Is chairman also minister of energy or otherwise appointed by head of state? No Operations Highlights Upstream Oil In 2007 SH reported proven domestic oil reserves of 1,604 million barrels of oil, down 4% from 2006, and accounting for 20% of Norway's oil reserves. 74% of SH's oil reserves are proved developed. SH reported domestic oil production of 299 million barrels for 2007, down 5% from 2006, and accounting for 32% of Norway's oil production. Foreign and private companies compete with Statoil and partnership with Statoil is not required. Large private oil producers include ConocoPhillips, ExxonMobil and BP. SH is increasingly focusing exploration to unexplored areas of the Norwegian Sea and Barents Sea. SH is a net exporter of oil primarily to the UK and European markets. Midstream Oil Norway has 2,444 kilometers of oil pipelines. There is a large network of subsea oil pipelines SH operates the Oseberg Transportation System (765,000 B/D) in which they have a 36.2% interest including the Sture crude oil terminal. It also operates the 265,000 B/D Grane pipeline and the twin Troll I/II pipeline system with capacity of 565,000 B/D. Downstream Oil SH is the majority owner (79%) and operator of the Mongstad refinery in Norway which has 179 mbbls/d of primary distillation capacity, representing 58% of Norway's total capacity. Shell owns the other 21% of Mongstad. The other major refinery in Norway is operated by ExxonMobil. SH's refinery utilization rate for the three years ended 2007 was 97%. 45% of Mongstad's production goes to Scandinavian markets and 55% is exported to NW Europe and the US. 85% of Mongstad's production is light products including gasoline/naphtha, jet/kero and gasoil. SH also owns and operates the 118 mbbls/d Kalundborg refinery in Demark which had a three average refinery utilization rate of 91%. 78% of Kalundborg's production is the light product slate mentioned previously supplying markets in Denmark and Sweden. SH has 2,485 service stations in 8 countries. SH has a retail market market share of 30% in Norway, 32% in Sweden, 17% in Denmark, 40% in Estonia and 32% in Latvia. Upstream Natural Gas SH reported 18.9 TCF in proved Norwegian gas reserves in 2007, accounting for 18% of Norway's gas reserves and 66% of SH's BOE Norwegian reserves. Production was 1.2 TCF, down 1% from 2006. SH production represents 14% of Norway's gas production and 42% of SH's total Norwegian BOE production. SH is a large gas supplier to European markets. Norway is counting on non-North Sea projects (Norwegian Sea and Barents Sea) to provide significant gas production. A Citizen's Guide to National Oil Companies Page 200 Norway: StatoilHydro Midstream Natural Gas In 2003 all gas pipelines with third party access in Norway were combined in a single joint venture, Gassled with capacity of 4.4 TCF/ year; 2007 throughput was 68% of capacity. SH has a 28% interest in Gassled which is operated by Gassco SA, a wholly- owned company of the Norwegian state. Gassco also operates receiving terminals in Europe. The Ministry of Petroleum and Energy sets pipeline tariffs based on operating costs and returns on capital invested. SH is also responsible for the operation, maintenance and further development of two large gas processing plants (capacity of 224 MMCM/D) on behalf of Gassco. SH owns 51% of one of the largest air separation units in Scandinavia as well as 51% of the first Norwegian liquefaction plant at Tjeldbergodden with a capacity of 1.3 BCF. SH developed the Snohvit LNG project (initial capacity 4.1 million tons/yr.) in the Barents Sea that will serve European and US markets. The first LNG shipment from Snohvit took place in 2007. SH will use its capacity rights at the Cove Point LNG regasification plant in Maryland to receive shipments from Snohvit. In late 2007 SH became a 24% equity owner in the Russian Shtokman Development Co. Shtokman is the world's largest undeveloped offshore gas field with gas in place estimates of 131 TCF. Downstream Natural Gas SH owns 82% of the methanol plant at Tjeldbergodden which produced .70 MMT in 2007. Other SH is required by the Norwegian government to transport and market the gas production from the state's directly-owned equity interests in producing fields. The government's production accounted for 34% of SH's total marketed production in 2007. As a result, SH markets 80% of all Norwegian Continental Shelf gas. If the government decided to move this function from SH to another entity, the company says it could have a negative impact on their marketing business. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 2,475 Upstream: Average Proved Gas Reserves (BCF) 20,667 Upstream: Average Annual Oil Production (MM Barrels) 388 Upstream: Average Annual Natural Gas Production (BCF) 1,344 Downstream: Average Annual Refinery Production (MM Barrels) 117 Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 85,809 Consolidated Average Total Assets ($Millions) 77,502 Consolidated Average EBIT ($Millions) 24,809 Consolidated Average Net Income ($Millions) 6,674 Categorization Indicators Categories: Scores: Corporate Corporate Governance 81 Governance Public Sector Governance 78 100 Commercialization 100 Public Sector Oil Dependency 50 Fiscal Regimes 100 Governance Resource Endowment 5 0 Oil Dependency 86 Local Contribution 74 Resource Commercializa Endowment Sector and Trade Openness 71 Average 75 Fiscal Regimes StatoilHydro Average NOC A Citizen's Guide to National Oil Companies Page 201 Norway: StatoilHydro Worldwide Governance Indicators Trends and Issues A key consideration for Norway is natural decline in established North Sea fields. SH plans to maintain stable volumes from the Norwegian Continental Shelf over the next few years through a combination of active exploration and effective field management of existing producing assets. It should continue to play a leading role in the European natural gas market. Production growth from international operations is a key component in achieving upstream growth. However, international reserve replacement costs are quite high. SH's ability to execute mega-projects is still uncertain: Snohvit LNG project had two cost overruns and there are still operational problems which is negatively impacting stable deliveries. Participation in the Shtokman project is a major undertaking for the company. A Citizen's Guide to National Oil Companies Page 202 Norway: StatoilHydro Database Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of 2007 1 Since October 2007, Governance Its Organization cluster of NOCs and other StatoilHydro (SH) is the sole oil sovereign enterprises in and gas NOC in Norway; prior country to that they were two separate companies. Corporate Ownership Structure and Number of NOCs of 2007 1 4 NOCs. In addition to SH, Governance Its Organization country Petoro SA manages the state's direct financial interest (SDFI) in producing assets; Gassco SA operates the joint-venture owned gas pipeline system, Gassled, and Gassnova is an agency promoting gas power technology. Petoro, Gassco and Gassnova are 100% government owned. Corporate Ownership Structure and Description of 2007 1 StatoilHydro is an integrated oil Governance Its Organization incorporation and and gas company organized as a ownership public limited liability company. In a 2001 decision the Storting (Norwegian Congress) required that the Norwegian state must continue to own two-thirds of StatoilHydro. Corporate Ownership Structure and % shares controlled by 2007 1 Currently the Norwegian Governance Its Organization government government owns 62.5% of StatoilHydro (SH) which ownership interest is managed by the Ministry of Petroleum and Energy. The government plans to increase its ownership interest to 67% over time. Corporate Ownership Structure and Domestic, international 2007 1 Oslo Stock Exchange and New Governance Its Organization exchanges where shares York Stock Exchange. are listed Corporate Ownership Structure and Domestic, international 2007 1 Oslo Stock Exchange and New Governance Its Organization exchanges where bonds York Stock Exchange. are traded Corporate Ownership Structure and Company files form 20-F 2007 1 Yes Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist 2007 1 Yes Governance A Citizen's Guide to National Oil Companies Page 203 Norway: StatoilHydro Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Board of Directors (BOD) Description of BOD and 2007 1 The Annual General Meeting Governance structure (AGM) of shareholders is the company's supreme body. It elects the shareholder's representatives to the Corporate Assembly (CA), elects the Nomination Committee, elects the external auditor and approves all financial reports. The Nomination Committee has 3 independent members and the Director General of the Ministry of Petroleum and Energy. It recommends individuals to be considered for the CA and the BOD. The Corporate Assembly has 20 members: 12 are elected by the shareholders and 8 are employee representatives elected by employees. The CA elects the BOD. The BOD has 10 members and there are no company representatives other than three employee members. The other 7 BOD members are independent. The BOD appoints the President and Chief Executive Officer of the company. Corporate Board of Directors (BOD) Is chairman also minister 2007 1 No Governance of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members 2007 1 Seven out of 10 are independent Governance considered independent and nominated by the (external) and, if so, how Nomination Committee. are they appointed Corporate Board of Directors (BOD) Term of service (years, 2007 1 No data Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and 2007 1 Responsible for overall Governance policy statements management of the company. It appoints the company's President and CEO and terms and conditions of employment. Through the Audit Committee, the BOD ensures the quality and integrity of financial statements, the external auditor and overall company compliance with legal and regulatory requirements. Through the Compensation Committee, the BOD assists with respect to CEO and key executive compensation and devises performance metrics related to company goals. A Citizen's Guide to National Oil Companies Page 204 Norway: StatoilHydro Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Role of BOD Based on available 2007 1 Yes with respect to those duties Governance information, does BOD directly in its purview. The have power, impact, Corporate Assembly supervises decision making authority the BOD and CEO, makes decisions on matters involving substantial investments and on matters regarding operational restructuring. Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget 2007 1 Generally SH is not required to Governance Processes authority. Comment on submit any decisions relating to the general decision flow its operations to the Storting within NOC and between (Congress). However, major NOC and government for plans for operation and major projects. development of fields require Storting approval. Corporate Decision Making Based on available 2007 1 Generally separate from Governance Processes, Budget information, is NOC government and predictable. Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have 2007 1 Yes Governance Processes, Budget authority to partner with Autonomy other entities? Corporate Mission and Objectives Does NOC have a mission 2007 1 Maximize value and potential Governance statement and, if so, what on the Norwegian Continental are key elements Shelf (NCS) while growing international production profitably. It includes developing profitable midstream and downstream businesses and creating a new platform for new energy. Corporate Sources of Capital Based on available 2007 1 100% retention of net cash flow Governance information, budgeting after taxes and dividends. SH process and policy dividend policy targets a net including % of cash return to shareholders through flow/revenue available for cash dividends and share reinvestment repurchases of 45-50% of consolidated net income. Corporate Disclosure/Transparency Disclosure of audited data 2007 1 Financial statements audited by Governance Policy and other indications of Ernst & Young; reserves audited disclosure and by DeGolyer & MacNaughton. transparency Corporate Skill Base Based on available 2007 1 Of 29,500 employees, 11,000 Governance information, NOC work outside of Norway. 55% demographics (% of the employees of the parent management, % technical, company have other descriptors) college/university education and 21% have craft certificates. 35% of the workforce is women. 69% of the workforce is unionized. A Citizen's Guide to National Oil Companies Page 205 Norway: StatoilHydro Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Incentives/Career Based on available 2007 1, 5 SH is Norway's biggest Governance Management information, HR company for apprentices and its promotion and training of skilled workers professional development maintains a stable and high policies level. Corporate Full Disclosure and Based on available 2007 1, 5 Detailed and quantitative. Governance Measurement of Non- information, brief Outside of taxes, dividends, commercial Objectives description of reporting on payroll etc. in Norway, much of noncommercial objectives SH's direct social/economic program investment appears to be international. Corporate Full Disclosure and Based on available 2007 1 34% of annual revenues to Governance Measurement of Non- information, extent of Norway. commercial Objectives non-commercial obligations Value Operating Performance Upstream oil E&P. Where 2007 1 In 2007 SH reported proven Creation does it operate (solely in domestic oil reserves of 1,604 Metrics the country or abroad- million barrels of oil, down 4% name countries)? Does it from 2006, and accounting for have sole access to 20% of Norway's oil reserves. country's resources? 74% of SH's oil reserves are proved developed. SH reported domestic oil production of 299 million barrels for 2007, down 5% from 2006, and accounting for 32% of Norway's oil production. Foreign and private companies compete with Statoil and partnership with Statoil is not required. Large private oil producers include ConocoPhillips, ExxonMobil and BP. SH is increasingly focusing exploration to unexplored areas of the Norwegian Sea and Barents Sea. SH is a net exporter of oil primarily to the UK and European markets. A Citizen's Guide to National Oil Companies Page 206 Norway: StatoilHydro Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Does the NOC operate 2007 1 In 2007 SH reported Creation abroad? international oil reserves of 785 Metrics million barrels, up 4% from 2006, and representing 33% of SH's total oil reserves. International oil production in 2007 was 92 million barrels up 31% from 2006. International oil production accounts for 24% of SH's total oil production.SH operates in Canada, the US Gulf of Mexico, Alaska, Venezuela, Brazil, Algeria, Libya, Egypt, Angola, Nigeria, Tanzania, Azerbaijan, UK and Indonesia. In 2007 SH reported 114 BCF of international gas production, up 36% from 2006, accounting for 8% of SH's total gas production.SH also owns and operates the 118 mbbls/d Kalundborg refinery in Demark which had a three average refinery utilization rate of 91%. 78% of Kalundborg's production slate is light products supplying markets in Denmark and Sweden. SH has 2,485 service stations in 8 countries. SH has a retail market market share of 30% in Norway, 32% in Sweden, 17% in Denmark, 40% in Estonia and 32% in Latvia. Value Operating Performance Midstream oil pipelines, 2007 1 Norway has 2,444 kilometers of Creation storage, shipping oil pipelines. There is a large Metrics network of subsea oil pipelines SH operates the Oseberg Transportation System (765,000 B/D) in which they have a 36.2% interest including the Sture crude oil terminal. It also operates the 265,000 B/D Grane pipeline and the twin Troll I/II pipeline system with capacity of 565,000 B/D. A Citizen's Guide to National Oil Companies Page 207 Norway: StatoilHydro Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Downstream oil refining 2007 1 SH is the majority owner (79%) Creation & marketing, and operator of the Mongstad Metrics petrochemicals refinery in Norway which has 179 mbbls/d of primary distillation capacity, representing 58% of Norway's total capacity. Shell owns the other 21% of Mongstad. The other major refinery in Norway is operated by ExxonMobil. SH's refinery utilization rate for the three years ended 2007 was 97%. 45% of Mongstad's production goes to Scandinavian markets and 55% is exported to NW Europe and the US. 85% of Mongstad's production is light products including gasoline/naphtha, jet/kero and gasoil. SH also owns and operates the 118 mbbls/d Kalundborg refinery in Demark which had a three average refinery utilization rate of 91%. 78% of Kalundborg's production slate is the light products mentioned previously supplying markets in Denmark and Sweden. SH has 2,485 service stations in 8 countries. SH has a retail market market share of 30% in Norway, 32% in Sweden, 17% in Denmark, 40% in Estonia and 32% in Latvia. Value Operating Performance Upstream natural gas E&P 2007 1 SH reported 18.9 TCF in proved Creation Norwegian gas reserves in 2007, Metrics accounting for 18% of Norway's gas reserves and 66% of SH's BOE Norwegian reserves. Production was 1.2 TCF, down 1% from 2006. SH production represents 14% of Norway's gas production and 42% of SH's total Norwegian BOE production. SH is a large gas supplier to European markets. Norway is counting on non- North Sea projects (Norwegian Sea and Barents Sea) to provide significant gas production. A Citizen's Guide to National Oil Companies Page 208 Norway: StatoilHydro Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Midstream natural gas 2007 1 In 2003 all gas pipelines with Creation pipelines, storage, LNG third party access in Norway Metrics were combined in a single joint venture, Gassled with capacity of 4.4 TCF/year; 2007 throughput was 68% of capacity. SH has a 28% interest in Gassled which is operated by Gassco SA, a wholly-owned company of the Norwegian state. Gassco also operates receiving terminals in Europe. The Ministry of Petroleum and Energy sets pipeline tariffs based on operating costs and returns on capital invested. SH is also responsible for the operation, maintenance and further development of two large gas processing plants (capacity of 224 MMCM/D) on behalf of Gassco. SH owns 51% of one of the largest air separation units in Scandinavia as well as 51% of the first Norwegian liquefaction plant at Tjeldbergodden with a capacity of 1.3 BCF. SH developed the Snohvit LNG project (initial capacity 4.1 million tons/yr.) in the Barents Sea that will serve European and US markets. The first LNG shipment from Snohvit took place in 2007. SH will use its capacity rights at the Cove Point LNG regasification plant in Maryland to receive shipments from Snohvit. In late 2007 SH became a 24% equity owner in the Russian Shtokman Development Co. Shtokman is the world's largest undeveloped offshore gas field with gas in place estimates of 131 TCF. Value Operating Performance Downstream natural gas 2007 1 SH owns 82% of the methanol Creation distribution, NGL sales, plant at Tjeldbergodden which Metrics petrochemicals produced .70 MMT in 2007. A Citizen's Guide to National Oil Companies Page 209 Norway: StatoilHydro Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Other (power generation, 2007 1 SH is required by the Creation etc) Norwegian government to Metrics transport and market the gas production from the state's directly-owned equity interests in producing fields. The government's production accounted for 34% of SH's total marketed production in 2007. As a result, SH markets 80% of all Norwegian Continental Shelf gas. If the government decided to move this function from SH to another entity, the company says it could have a negative impact on their marketing business. Value Operating Performance Avg reserve replacement 73% Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement $25.06 Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves -5% Creation (%) Metrics Value Operating Performance Change in BOE 1% Creation production (%) Metrics Value Operating Performance Avg upstream operating 96% Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration $18.42 Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs $6.21 Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax 15% Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before $36.62 Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes $8.61 Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) 76% Creation Metrics Value Operating Performance Avg operating cash flow 96% Creation vs costs incurred (%) Metrics A Citizen's Guide to National Oil Companies Page 210 Norway: StatoilHydro Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance After tax return on assets 13% Creation Metrics Value Operating Performance Avg refinery utilization 108% Creation rate (%) Metrics Value Operating Performance Change in total refining -9% Creation production (%) Metrics Value Operating Performance Change in refinery 0% Creation capacity (%) Metrics Value Operating Performance Avg income from $0.01 Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and 216% Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on 24% Creation assets (%) Metrics Value Financial Performance Avg total after-tax 8% Creation income/revenues (%) Metrics Value Financial Performance Avg total operating cash 154% Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg gross debt/after-tax 55% Creation capital employed (%) Metrics Value Financial Performance Avg operating margin (%) 29% Creation Metrics Value Financial Performance Avg profit margin (%) 8% Creation Metrics Value Financial Performance Avg effective tax rate (%) 73% Creation Metrics Value Financial Performance Avg reinvestment risk (%) 154% Creation Metrics Value Financial Performance Avg debt profile (%) 55% Creation Metrics Value Financial Performance Avg return on assets (%) 9% Creation Metrics Value Financial Performance Avg return on total capital 10% Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to 26% Creation State (%) Metrics A Citizen's Guide to National Oil Companies Page 211 Norway: StatoilHydro Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available 2007 1 Policy is to ensure that Factors information, presence of a petroleum activities create the publicly articulated role of highest possible value for the the hydrocarbon sector Norwegian state. There does not with respect to national appear to be a public strategy development objectives for economic diversification. Other Public Sector Governance Based on available 2007 11 The commercial entities in the Factors information, clear sector are separated, in general, definition of the roles of from the policy/regulatory policy, commercial entities. The Ministry of operation and regulation Petroleum and Energy (MPE) is and assignment to specific responsible for policy execution entities avoiding conflicts with respect to upstream of interest resource management and regulation and the Norwegian Petroleum Directorate (NPD) is subordinate to the MPE and focuses on safety, emergency preparedness, environmental protection, education and international cooperation. Statoil/Hydro and Petoro SA are the state's upstream commercial entities. Petoro manages the state's direct financial interest (SDFI) in producing assets although SH continues to market the state's production subject to Petoro oversight. SH states the coordinated marketing policy with SDFI could lead to conflicts of interest. The government asserts that its presence as a passive interest owner in NCS producing assets aligns state and upstream company objectives: if the companies make money so does the state. Wholly state-owned Gassco SA operates the Gassled gas transportation system in which SH (among other JV members) has an interest and Gassled is regulated by the MPE. Other Public Sector Governance Based on available 2007 1 Objectives include maximizing Factors information, presence of value and potential on the publicly stated objectives Norwegian Continental Shelf ranked by priority for (NCS) while growing NOC(s) international production profitably. They include developing profitable midstream and downstream positions and creating a new platform for new energy. Objectives not ranked publicly. A Citizen's Guide to National Oil Companies Page 212 Norway: StatoilHydro Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available There does not appear to be a Factors information, presence of a need for this in Norway as SH strategy to transfer NOC does not have extensive non- non-commercial commercial burdens in Norway objectives to government aside from taxes, dividends and or other agencies as payroll. capacity becomes available Other Public Sector Governance Based on available 2007 12 Norway has a Government Factors information, transparent Pension Fund-Global which is a hydrocarbon sector continuation of the Petroleum revenue management Fund. The fund's inflow consists including revenue of all state petroleum revenues distribution within the as well as the return on the country fund's investments. The outflow from the fund is the sum needed to cover the non-oil budget deficit, making net allocations to the fund equal to the total budget surplus including oil revenues. Norges Bank manages the fund's investments reporting to the Ministry of Finance. The fund was established to address intergenerational issues resulting from a depleting asset and to meet a rapid rise in public pension expenditures in coming years. The Fund is cited as one of the best examples of governance and transparency in the management of petroleum revenue. Value of the fund was about $300 billion at 1/1/07. Other Public Sector Governance NOC and/or country 2007 9 SH supports and actively Factors participate in EITI and/or participates in EITI activities in other transparency EITI implementing countries. initiatives Other Fiscal Sustainability Based on available 2007, 10 Multiple non-NOC companies Factors information, do 2006 participate in the upstream, hydrocarbon sector fiscal midstream and downstream regimes allow for sectors in Norway. Although oil sufficient capital production is declining as a investment result of NCS maturity, gas production is growing indicating continuing investment. SH cash flow is sufficient to cover capital expenditures. However, many oil majors have begun to withdraw from the NCS in order to enter higher growth potential areas. Other Fiscal Sustainability Based on available 2008 11 Yes; SH is investment grade at Factors information, do the "A" level. hydrocarbon sector fiscal regimes allow for investment grade NOC A Citizen's Guide to National Oil Companies Page 213 Norway: StatoilHydro Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data credit ratings Other Fiscal Sustainability Based on available 2006, 10 Structure of tax regime renders Factors information, are 2007 smaller, marginal fields hydrocarbon sector fiscal unprofitable. SH tax regime regimes appropriate for may become problematic as it the development stage of enters higher risk frontier and the domestic resource base international exploration areas. Other Access to Reserves Hydrocarbon law to 2006, 10 There is a comprehensive Factors facilitate competitive 2007 hydrocarbon law: Norwegian upstream investment Petroleum Act of 1996. The Norwegian resource management system explicitly has commercial roles for non- NOC participants in partnership with SH saying "Competition among oil companies yields the best result when it comes to maximizing the value of petroleum resources." Other Access to Reserves Based on available 2006, 10 Companies including Factors information, existence of 2007 ConocoPhillips, ExxonMobil negotiated and BP have a sizeable presence contracts/agreements for in the Norwegian upstream. upstream investment Other Operating Strategy Based on available 2007 10 Exploration and production Factors information, types of joint licenses are awarded to multi- ventures, role of NOC(s) company joint ventures. The companies compete but must also cooperate to maximize the value from the license. Expertise and experience from around the world are gathered together in nearly all the production licenses on the NCS. MPE decides the form of the joint operating agreements and appoints the operator. The MPE approves plans for development and operation. Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal 2007 1 SH is a fully-integrated Factors integration company. Other International Presence Does NOC make 2007 1 Yes Factors investments abroad Other International Presence Avg company 16% Factors international BOE production as % avg total company BOE production Other International Presence Change in company BOE 32% Factors production from international operations A Citizen's Guide to National Oil Companies Page 214 Norway: StatoilHydro Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data (%) Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company 30% Factors international refinery throughput as % total refinery throughput Other International Presence Change in company -4% Factors refinery throughput from international operations (%) Other International Presence Avg company 40% Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company 0 Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in 2007, 10 Yes in partnership with Statoil. Factors upstream 2006 Other Commercialization Competition level in 2007, 10 International oil majors have a Factors upstream including non- 2006 sizeable presence in the NOC participants and Norwegian upstream in requirement to include partnership with Statoil. NOC as partner However, SH continues to control over 60% of the country's oil and gas production. Other Commercialization Competition level in 2007 10 Non-NOC entities participate in Factors midstream, downstream the midstream and downstream including non-NOC refining. Six foreign companies participants and have interests in the Gassled gas requirement to include transportation system which is NOC as partner controlled by Petoro/SH (70%). ConocoPhillips operates the Norpipe oil pipeline connecting Ekofisk fields to refining facilities in England. Shell has a 21% participation in the Mongstad refinery. ExxonMobil operates the 110,000 B/D Slagen refinery. Other Commercialization Competition level in 2007 10 See above. Factors midstream and downstream sectors Other Commercialization Based on available 2007 10 From the beginning Norway Factors information, prevalence envisioned a commercial role and success of NOC/non- for international oil companies NOC alliances, joint in the upstream sector where ventures they now have a sizeable presence. However, importantly, Norway had to make substantial changes to its fiscal regimes during the 1980s A Citizen's Guide to National Oil Companies Page 215 Norway: StatoilHydro Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data following an exodus of IOCs. SH still controls over 60% of the country's oil and gas production. Other Commercialization Partial privatization of the 2007 Non-government entities own Factors NOC (as measured by 37.5% of SH. ownership structure) Other Commercialization Based on available 2007 10 SH's international oil and gas Factors information, level and production/reserves is quality of NOC significant (see Upstream international operations Operations above) and is a major growth area for the company. International reserve replacement costs are high at $56.42/BOE. Other Commercialization Based on available 2007 1 None. Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, 2007 10 The MPE and NPD have the Factors well-funded and trained major regulatory functions with regulatory agencies, HC respect to the hydrocarbon agency name, budget, sector with the participation of number of staff other ministries as relevant. They are well-staffed and funded. Other Regulation NOCs are compelled to 2007 10 The MPE and NPD regulate the Factors adopt practices that would gas transportation section with provide results similar to respect to access and tariffs. those in competitive They also regulate the upstream markets with price, access sector with an objective of to and quality of energy promoting competition. services. brief description: HC agency enforcement powers Other Regulation Regulators assure market 2007 10 The MPE and NPD provide high Factors transparency and good quality, unbiased data. quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively 2007 No data Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy A Citizen's Guide to National Oil Companies Page 216 Norway: StatoilHydro Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Non-commercial Provision and level of 2007 1 No price subsidies reported. Factors Objectives hydrocarbon price subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of 2007 5 No data; qualitative disclosure Factors Objectives direct NOC funding of only. Direct expenditures appear country social and to be directed at other countries. economic programs. brief description of programs and support Other Non-commercial Measure of NOC $2,627.20 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance $2,908.80 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, 2007 10, 5 Extensive good quality data Comments reliability of data provided provided by SH and the by NOC(s) and Norwegian government. governments Other Longevity of NOC Based on available 2007 1 Statoil was established by the Comments information, history and Storting in 1972 and became a persistence of NOC(s) public limited listed company in 2001. Norsk Hydro was awarded its first oil and gas exploration and production licenses in 1965. The two companies merged in October 2007. The government owns 62.5% of SH and plans to increase its interest to 67% over time. A Citizen's Guide to National Oil Companies Page 217 Norway: StatoilHydro Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Country Status Trends and issues related 2007 10 A key consideration for Norway Comments to country hydrocarbon is natural decline in established sector endowments and North Sea fields. SH plans to performance maintain stable volumes from the Norwegian Continental Shelf over the next few years through a combination of active exploration and effective field management of existing producing assets. It should continue to play a leading role in the European natural gas market. Production growth from international operations is a key component in achieving upstream growth. However, international reserve replacement costs are quite high. SH's ability to execute mega- projects is still uncertain: Snohvit LNG project had two cost overruns and there are still operational problems which is negatively impacting stable deliveries. Participation in the Shtokman project is a major undertaking for the company. Other Non-commercial Number of employees 29,500 Factors Objectives Other Non-commercial BOE production per 25,268 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 17.71 Factors Other Oil Dependency Net oil and gas export 29.35% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues 13.55% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 8,171.59 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 104,566.72 Factors reserves (BCF) Other Resource Endowment Total all source BOE 26,200.33 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic 19% Factors reserves as % of country BOE reserves A Citizen's Guide to National Oil Companies Page 218 Norway: StatoilHydro Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Operating Conditions Company domestic 83% Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE 33.80% Factors production as % of country BOE production Other Operating Conditions Company primary 96% Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 31.19% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.94% Factors split, production (%) Other Operating Conditions Country BOE production 1,388.08% Factors as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 219 Norway: StatoilHydro Sources of Information Source # Year of Source Description Links Source 1 2007 StatoilHydro SEC Form 20F 2007. This Form 20F www.sec.gov reflects a change in accounting standards from US GAAP to IFRS. Figures reflecting the merger of Statoil and NorskHydro in Oct. 2007 are available only for 2006 and 2007. 2 2007 Based on total Norway export percentages www.bp.com calculated from the difference between country production and consumption as reported in the 2008 BP Statistical Review of World Energy. 3 2007 SH's downstream sector includes refining, marketing and a large gas processing plant. SH SEC Form 20F 2007: Business segments notes. 4 2007 Other costs include: early retirement costs, commodity derivatives, impairment losses. SH SEC Form 20F 2007: Business segments notes. 5 2007 StatoilHydro 2007 Sustainability Report. The www.statoilhydro.com direct social/economic expenditures and signature bonuses are reported in US dollars suggesting these are expenditures outside Norway (other contribution to state items are in $ NOK). 6 2008 CIA World Factbook-Norway, 6/19/08. www.cia.gov 7 2008 WTO www.wto.org 8 2007 BP Statistical Review of World Energy 2008 9 2008 EITI www.eitransparency.org 10 2007 USEIA Country Analysis Brief-Norway, 8/23/06. www.npd.no SH Form 20F 2007. Norwegian Petroleum Directorate: Petrofacts 2008. 11 2008 Company's official web-site www.statoilhydro.com 12 2007 Petrofacts 2008. Also Ministry of Finance www.regjeringen.no/en/dep/fin/ A Citizen's Guide to National Oil Companies Page 220 Russia: Gazprom Russia: Gazprom Summary Report Corporate Governance Highlights Corporate Organization and Ownership Gazprom is the world's largest gas company basically focused on geological exploration, production, transmission, storage, processing and marketing of gas and other hydrocarbons. The state owns a 50.002 per cent controlling stake in Gazprom. Shares Controlled by Government 50.002% Domestic, International Exchanges for Equity Listings St. Petersburg Stock Exchange (Russian Federation), LSE (UK) Board of Directors Structure 11 members, elected at shareholders meeting. Directors can be re-elected. Independent Board Members 2 Is chairman also minister of energy or otherwise appointed by head of state? The chairman is appointed by majority vote at the shareholders meeting. Operations Highlights Upstream Oil Gazprom through affiliate GazpromNeft produced 45.4 million tons in 2006. Midstream Oil The company does not operate any oil pipelines. Downstream Oil Through the affiliate GazpromNeft, the company has 765 MB/D of refining capacity and operates retail business. Upstream Natural Gas The company produced 556 bcm of natural gas in 2006. Midstream Natural Gas The company operates 157,000 km of trunklines and has 65 bcm of storage capacity. Downstream Natural Gas Gazprom controls about 80% of the distribution network in the country. Other The company has significant assets in power generation and petrochemical sector. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 3,038 Upstream: Average Proved Gas Reserves (BCF) 596,570 Upstream: Average Annual Oil Production (MM Barrels) 615 Upstream: Average Annual Natural Gas Production (BCF) 19,571 Downstream: Average Annual Refinery Production (MM Barrels) 179 Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues($Millions) 44,789 Consolidated Average Total Assets($Millions) 153,243 Consolidated Average EBIT ($Millions) 18,050 Consolidated Average Net Income ($Millions) 13,079 A Citizen's Guide to National Oil Companies Page 221 Russia: Gazprom Categorization Indicators Categories: Scores: Corporate Governance 78 Corporate Governance Public Sector Governance 74 100 Commercialization 100 Public Sector Oil Dependency 50 Fiscal Regimes 75 Governance Resource Endowment 65 0 Oil Dependency 87 Resource Commercializa Local Contribution 40 Endowment Sector and Trade Openness 44 Fiscal Regimes Average 80 Gazprom Average NOC Worldwide Governance Indicators Trends and Issues With strong support from its government, Gazprom is a dominant force in its businesses in all locations where it operates, and is attempting to exert considerable influence outside of Russia and in locations where the company appears to be taking strategic positions (Africa, Atlantic Basin LNG and so on). Gazprom's domestic crude oil reserves and production surged with the takeover of Yukos and other assets. The company is pursuing two high profile-high risk projects - Shtockman and Baltic LNG - and has altered terms and conditions several times with regard to potential and/or actual partners. A question is whether the company will be able to support the many commitments it is developing in a variety of locations. A Citizen's Guide to National Oil Companies Page 222 Russia: Gazprom Database Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of Several non-affiliated NOCs - upstream Governance Its Organization cluster of NOCs and downstream (Gazprom, Rosneft, Tatneft) other sovereign and midstream (Transneft) - operate in enterprises in the Russian Federation and country internationally. Corporate Ownership Structure and Number of NOCs of 4 Governance Its Organization country Corporate Ownership Structure and Description of 2008 9 Gazprom is a joint stock company Governance Its Organization incorporation and incorporated in Russian Federation, ownership majority owned by the state. It has an 11 member Board of Directors and a Management Committee running the company Corporate Ownership Structure and % shares controlled The state owns a 50.002% stake in the Governance Its Organization by government company. Corporate Ownership Structure and Domestic, St. Petersburg Stock Exchange (Russia), Governance Its Organization international London Stock Exchange (UK) exchanges where shares are listed Corporate Ownership Structure and Domestic, London Stock Exchange Governance Its Organization international exchanges where bonds are traded Corporate Ownership Structure and Company files form No Governance Its Organization 20-F with SEC? Corporate Board of Directors Does a BOD exist Yes Governance (BOD) Corporate Board of Directors Description of BOD 11 members, elected at shareholders Governance (BOD) and structure meeting. 5 members represent the state; no more than 25% of the board could be from the Management Committee; and there are members representing minority shareholders.. Corporate Board of Directors Is chairman also The chairman is appointed by the major Governance (BOD) minister of energy or shareholder (the Sovereign). otherwise appointed by head of state Corporate Board of Directors Are any BOD 2 members. Elected at shareholders Governance (BOD) members considered meeting. Directors can be re-elected. independent (external) and, if so, how are they appointed Corporate Board of Directors Term of service Elected at shareholders meeting. Governance (BOD) (years, with re- Directors can be re-elected. appointment). Comment if they can be readily removed. A Citizen's Guide to National Oil Companies Page 223 Russia: Gazprom Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Role of BOD Description of role No data. Governance and policy statements Corporate Role of BOD Based on available 2008 9 The BOD develops company strategy; Governance information, does approves annual budgets and investment BOD have power, programs; decides on shareholder capital impact, decision changes, buyback of shares & bonds; making authority creates or terminates executive branches; decides on compensation for Management Committee; decides on hiring and termination of MC members; and carries out other typical BOD functions. Corporate Recruitment/Replacement General process for 2007 5 Reported to be mostly by merit. Governance Key Executives recruitment, replacement of key executives and senior managers Corporate Decision Making Level of NOC In principle, the BOD appears to have Governance Processes budget authority. considerable budget and decision making Comment on the authority and autonomy. general decision flow within NOC and between NOC and government for major projects. Corporate Decision Making Based on available 2007 5 To a certain extent, predictable and Governance Processes, Budget information, is NOC separate from the Government budget Autonomy budget process process. "The Government regulates predictable and wholesale natural gas prices, which apply separate from to most of Gazprom's sales of natural gas government in the domestic market, tariffs for the services provided to independent producers related to natural gas transportation through trunk gas pipelines and those related to natural gas transportation through gas distribution networks, fees charged for supply and sales services, and retail natural gas prices." Corporate Decision Making Does the NOC have Yes the company has numerous Governance Processes, Budget authority to partner partnerships both internationally and Autonomy with other entities? domestically. Corporate Mission and Objectives Does NOC have a 2006 1 "Ensure an efficient and balanced gas Governance mission statement supply to consumers in the Russian and, if so, what are Federation and fulfill long-term contracts key elements and intergovernmental gas export agreements." Corporate Sources of Capital Based on available 2007 5 "The Government has the right to exerts Governance information, influence over Gazprom's operations budgeting process because of its controlling shareholding. and policy including The Government controls Gazprom's % of cash cash flows through its representatives on flow/revenue the Board of Directors, which is available for authorized to approve the financial plan reinvestment and investment programs." A Citizen's Guide to National Oil Companies Page 224 Russia: Gazprom Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Disclosure/Transparency Disclosure of 2007 5 The company's auditor is ZAO Governance Policy audited data and PricewaterhouseCoopers (Moscow). other indications of Consolidated financial statements are disclosure and prepared in accordance with International transparency Financial Reporting Standards (IFRS). "Gazprom follows global best practice of information disclosure and the requirements of the Russian legislation. The Board of Directors approved Regulation on Gazprom's information disclosure in February 2005." Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available 2007 5 In 2006, Gazprom adopted a formal Governance Management information, HR "human resources management policy." promotion and Extensive training programs for all levels professional of employees are part of this policy. development policies Corporate Full Disclosure and Based on available Gazprom reports activities, but not in Governance Measurement of Non- information, brief detail commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available Insignificant outside of the company Governance Measurement of Non- information, extent commercial Objectives of non-commercial obligations Value Operating Performance Upstream oil E&P. The company operates internationally as Creation Where does it well (exploration and natural gas Metrics operate (solely in the midstream). Gazprom does not have sole country or abroad- access to resources. Oil upstream name countries)? operations are very recent - affiliate Does it have sole GazpromNeft created in 2005. access to country's resources? Value Operating Performance Does the NOC Yes Creation operate abroad? Metrics Value Operating Performance Midstream oil The company does not participate in oil Creation pipelines, storage, midstream. Metrics shipping Value Operating Performance Downstream oil Very recent ­ affiliate GazpromNeft Creation refining & created in 2005. Several refineries and a Metrics marketing, chain of gas stations. petrochemicals Value Operating Performance Upstream natural Gazprom controls 80% of gas production Creation gas E&P in the country. Exploration in India, Metrics Vietnam and other locations. A Citizen's Guide to National Oil Companies Page 225 Russia: Gazprom Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Midstream natural The company operates 156,900 km of gas Creation gas pipelines, pipelines (monopoly), has small-scale Metrics storage, LNG LNG facilities, 50+1% in Sakhalin LNG, 25 storage facilities with 65 bcm of capacity. Gazprom has a number of arrangements in a variety of countries that would add high visibility, large scale pipeline and LNG commitments to its portfolio (if consummated). Value Operating Performance Downstream natural Gazprom operates 318,391 km of Creation gas distribution, distribution pipelines - about 80% of the Metrics NGL sales, internal market. petrochemicals Value Operating Performance Other (power The company has significant assets in Creation generation, etc) power generation and the petrochemical Metrics sector. Value Operating Performance Avg reserve 86% Creation replacement rate Metrics (BOE, %) Value Operating Performance Avg reserve No data Creation replacement cost Metrics ($/BOE) Value Operating Performance Change in BOE 16% Creation reserves (%) Metrics Value Operating Performance Change in BOE 45% Creation production (%) Metrics Value Operating Performance Avg upstream No data Creation operating cash Metrics flow/upstream capital expenditures (%) Value Operating Performance Avg upstream No data Creation exploration and Metrics production expenses ($/BOE) Value Operating Performance Avg production No data Creation costs excluding Metrics production taxes ($/BOE) Value Operating Performance Avg upstream after- No data Creation tax income/revenues Metrics (%) Value Operating Performance Avg earnings before No data Creation interest & taxes Metrics ($/BOE) Value Operating Performance Avg income after all No data Creation taxes ($/BOE) Metrics Value Operating Performance Avg effective tax No data Creation rate (%) Metrics Value Operating Performance Avg operating cash No data Creation flow vs costs Metrics incurred (%) A Citizen's Guide to National Oil Companies Page 226 Russia: Gazprom Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance After tax return on No data Creation assets Metrics Value Operating Performance Avg refinery 64% Creation utilization rate (%) Metrics Value Operating Performance Change in total No data Creation refining production Metrics (%) Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from $0.00 Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating Metrics cash flow/capital expenditures (%) Value Operating Performance Avg pre-tax return No data Creation on assets (%) Metrics Value Financial Performance Avg total operating 472% Creation cash flow/total Metrics capital expenditures (%) Value Financial Performance Avg operating 40% Creation margin (%) Metrics Value Financial Performance Avg profit margin 29% Creation (%) Metrics Value Financial Performance Avg effective tax 142% Creation rate (%) Metrics Value Financial Performance Avg reinvestment 472% Creation risk (%) Metrics Value Financial Performance Avg debt profile (%) 29% Creation Metrics Value Financial Performance Avg return on assets 9% Creation (%) Metrics Value Financial Performance Avg return on total 10% Creation capital employed Metrics (%) Value Financial Performance Avg fiscal 60% Creation contribution to State Metrics (%) A Citizen's Guide to National Oil Companies Page 227 Russia: Gazprom Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available 2003 2 "A basis for economy development and a Factors information, instrument of domestic and foreign presence of a policy" publicly articulated role of the hydrocarbon sector with respect to national development objectives Other Public Sector Governance Based on available In principle, the separation of policy, Factors information, clear regulatory, and commercial roles among definition of the government entities is defiened by law. roles of policy, commercial operation and regulation and assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available 2006 1 Very detailed and ranked Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available No data Factors information, presence of a strategy to transfer NOC non- commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available 2008 6, 7 The Stabilization fund of the Russian Factors information, Federation was established on January 1, transparent 2004 as a part of the federal budget to hydrocarbon sector balance the federal budget when oil price revenue falls below a cut-off price defined for management budget preparation purposes. The Fund is including revenue managed by the Ministry of Finance, who distribution within delegates some asset management the country functions to the Central Bank. Accumulation, investment, and spending are reported regularly by the Ministry of Finance to the general public and to the Parliament. Since February 2008 the Stabilization fund has been split into two funds, one section managing official reserves, while the second part becomes the official sovereign wealth fund, National Welfare Fund. Transparency of the Fund has improved, but more needs to be done. A Citizen's Guide to National Oil Companies Page 228 Russia: Gazprom Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance NOC and/or country 2008 3,4 Gazprom and Russia do not participate or Factors participate in EITI support EITI. Transparency International and/or other operates in Russia via Brussels, National transparency Democratic Institute operates in Russia. initiatives Other Fiscal Sustainability Based on available Investment in the gas sector has been Factors information, do mostly sufficient to maintain production hydrocarbon sector and infrastructure. fiscal regimes allow for sufficient capital investment Other Fiscal Sustainability Based on available Standard and Poor's 29.11.2006 BBB Factors information, do Stable hydrocarbon sector Moody's 19.12.2006 A3 Stable fiscal regimes allow Fitch Ratings 05.12.2006 BBB- Positive for investment grade NOC credit ratings Other Fiscal Sustainability Based on available Fiscal regimes are appropriate for new Factors information, are field development as some investment is hydrocarbon sector taking place, mostly by Russian fiscal regimes companies, sometimes with foreign appropriate for the investors although direct foreign development stage investment has been limited. However, of the domestic investment environment and stability of resource base contracts have been prominent issues in the press in recent years. Other Access to Reserves Hydrocarbon law to 2008 8 The PSA model was adopted by decree in Factors facilitate the early 1990s to attract foreign competitive investment in upstream oil and gas. Four upstream investment PSAs were signed with majority foreign participation between 1994 and 2002. This form of associatiation has had mixed fortune, and possibilities of future PSA projects with majority foreign share may be limited. Indeed the trend appears to move towards stronger national control over oil and gas operations. A new law on strategic sectors was introduced in May 2008, which restricts the foreign ownership in strategic companies or assets. Parallel changes were also introduced in the Law On Subsoil that together with the strategic sectors law now more clearly govern foreign investors' access to the oil and gas sector. Other Access to Reserves Based on available A handful ofPSAs and mulitple JVs, Factors information, typically with majority control with existence of NOCs. negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available The company dominates in JVs - Factors information, types of typically over 50% joint ventures, role of NOC(s) A Citizen's Guide to National Oil Companies Page 229 Russia: Gazprom Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal Vertically integrated Factors integration Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company No data Factors BOE production from international operations (%) Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC Yes Factors participants in upstream Other Commercialization Competition level in Many companies are interested in Factors upstream including participating in the Russian gas sector but non-NOC Gazprom dominates the gas value chain participants and (see the cell below). No formal requirement to requirement to include NOC as a partner include NOC as except when the project is considered partner strategic in accordance with the law on strategic sectors. Other Commercialization Competition level in 2007 5 Moderate, except for gas export and Factors midstream, transportation (monopolized); no formal downstream requirement to include NOC as a partner. including non-NOC The Federal Law On Gas Export, participants and promulgated in 2006, granted Gazprom requirement to exclusive right to export natural gas. A Citizen's Guide to National Oil Companies Page 230 Russia: Gazprom Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data include NOC as "Gazprom's operations related to natural partner gas transportation through pipelines are treated as natural monopolies' operations in accordance with the Federal Law On Natural Monopolies." Other Commercialization Based on available PSAs and JVs represent a relatively small Factors information, share of operations. Reportedly not very prevalence and successful. success of NOC/non-NOC alliances, joint ventures Other Commercialization Partial privatization 49.998% Factors of the NOC (as measured by ownership structure) Other Commercialization Based on available Some exploration and production - Factors information, level mostly in FSU, gas storage in and quality of NOC transportation in FSU and Europe. international operations Other Commercialization Based on available Insignificant Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of Ministry has regulatory functions. Some Factors independent, well- level of influence exercised by the NOCs. funded and trained regulatory agencies, HC agency name, budget, number of staff Other Regulation NOCs are compelled Further reforms would be needed to Factors to adopt practices move towards a regulatory envorionment that would provide that supports the development of results similar to competitive markets. those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure No data Factors market transparency and good quality, unbiased data and information. HC agency independence indicators A Citizen's Guide to National Oil Companies Page 231 Russia: Gazprom Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Regulation Regulators No data Factors effectively resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level 2006 1 "As a condition of privatization in 1992, Factors Objectives of hydrocarbon price the Government imposed an obligation subsidies ($/BOE on the Group to provide an uninterrupted production) supply of gas to customers in the Russian provided by NOC federation at government controlled and/or government. prices". The Russian government has brief description of been working to increase pricing in order subsidy program, to enhance cost recovery for Gazprom approach, cost and the other NOCs, and has pressured export customers in the same regard. In turn, Gazprom has pressured independent producers to take lower netbacks, thus improving the company's margins (especially for export sales). Fuel pricing issues in Russia and the new independent states are quite sensitive. Other Non-commercial Provision and level Mostly within the company. Active Factors Objectives of direct NOC sponsorship outside. funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC $628.82 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation $24.41 Factors Objectives obligations relative to workforce ($ M) Other Non-commercial Financial $183.79 Factors Objectives performance relative to workforce ($ M) Other Quality of Data Availability, extent, 2007 7 Consolidated financial statements are Comments reliability of data prepared in accordance with International provided by NOC(s) Financial Reporting Standards (IFRS). and governments Other Longevity of NOC Based on available Russia, in its transition economy, has Comments information, history been through different stages already and persistence of with regard to sovereign control of its NOC(s) hydrocarbon sector. It is conceivable that Gazprom will continue to be a key element of the government's hydrocarbon sector strategy. A Citizen's Guide to National Oil Companies Page 232 Russia: Gazprom Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Country Status Trends and issues With strong support from its government, Comments related to country Gazprom is a dominant force in its hydrocarbon sector businesses in all locations where it endowments and operates, and is attempting to exert performance considerable influence outside of Russia and in locations where the company appears to be taking strategic positions (Africa, Atlantic Basin LNG and so on). Gazprom's domestic crude oil reserves and production surged with the takeover of Yukos and other assets. The company is pursuing two high profile, and very high risk, projects - Shtockman and Baltic LNG - and has altered terms and conditions several times with regard to potential and/or actual partners. A question is whether the company will be able to support the many commitments it is developing in a variety of locations. Other Non-commercial Number of 243,700 Factors Objectives employees Other Non-commercial BOE production per 17,102 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 47.86 Factors Other Oil Dependency Net oil and gas 44.50% Factors export revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas 13.39% Factors revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil 79,432.08 Factors reserves (MM Barrels) Other Resource Endowment Avg EOY natural 1,576,753.11 Factors gas reserves (BCF) Other Resource Endowment Total all source 351,286.07 Factors BOE reserves (MM Barrels) Other Resource Endowment Audited or Unaudited Factors unaudited? Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company A Citizen's Guide to National Oil Companies Page 233 Russia: Gazprom Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data reserves Other Operating Conditions Company domestic No data Factors BOE production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural 22.61% Factors gas split, reserves (%) Other Operating Conditions Country oil/natural 99.90% Factors gas split, production (%) Other Operating Conditions Country BOE 200.73% Factors production as % of total country BOE consumption Other Trade Openness WTO Membership No Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 234 Russia: Gazprom Sources of Information Source Year of Source Description Links # Source 1 2006 Annual Report 2005 http://www.gazprom.ru/eng/articles/article20163.shtml 2 2003 Energy Strategy till 2020 (rus) www.minprom.gov.ru/docs/strateg/1/ 3 2008 Transparency International (through Brussels) http://www.transparency.org/regional_pages/europe_central_asia/ contact 4 2008 National Democratic Institute - Russia http://www.ndi.org/worldwide/eurasia/russianf/russianf.asp 5 2007 Annual Report http://www.gazprom.ru/eng/articles/article29001.shtml 6 2008 Ministry of Finance's web site. http://www1.minfin.ru/en/ 7 2008 Sovereign Wealth Funds Insitute. http://www.swfinstitute.org/aboutus.php 8 2008 Journal of World Energy Law and Business, 2008; 1: 224-238, Oxford Journals 9 2008 Gazprom web site (rus) http://www.gazprom.ru/ A Citizen's Guide to National Oil Companies Page 235 Russia: Rosneft Russia: Rosneft Summary Report Corporate Governance Highlights Corporate Organization and Ownership OJSC Oil Company Rosneft is a joint stock company incorporated in the Russian Federation. Shares Controlled by Government 88.32% Domestic, International Exchanges for Equity Listings LSE (UK), MISEX, RTS (Russian Federation) Board of Directors Structure 9 members Independent Board Members 3 out of 9 members of BOD are independent - heads of HR and Renumerating Committee, Audit Committee and Strategic Planning Committee ­ and elected at shareholders meeting. Directors can be re-elected. Is chairman also minister of energy or otherwise appointed by head of state? The chairman is appointed by majority vote at the shareholders meeting. Operations Highlights Upstream Oil Exploration licenses in Kazakhstan and Algeria, downstream JV in China. Rosneft does not have sole access to resources. Midstream Oil Some storage, two export oil terminals. Downstream Oil The total capacity of Rosneft seven refineries exceeds 45 million tons per annum. The Company's retail network as of end of 2006 consisted of 684 proprietary and leased service stations, as well as 83 service stations operating under the Rosneft brand on a franchising basis. Upstream Natural Gas Rosneft has an integrated gas strategy which covers both onshore and offshore gas fields. The main project in terms of onshore gas production is the development of the large Kharampur field in Western Siberia, which accounts for 55% of the Company's total proved gas reserves. Gas produced from this field and Rosneft's other onshore projects will be sold through an agreement with Gazprom to use Russia's existing gas infrastructure. Among Rosneft's main offshore gas projects are Sakhalin-1, where commercial oil and gas production has been underway since the end of 2005, as well as Sakhalin-3, Sakhalin-4 and Sakhalin-5 and the project to develop the West Kamchatka shelf. Midstream Natural Gas Rosneft does not operate in midstream natural gas. Downstream Natural Gas Rosneft does not operate in downstream natural gas. Other Power generation on associated gas for own use. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 15,237 Upstream: Average Proved Gas Reserves (BCF) 18,696 Upstream: Average Annual Oil Production (MM Barrels) 420 Upstream: Average Annual Natural Gas Production (BCF) 422 Downstream: Average Annual Refinery Production (MM Barrels) 333 A Citizen's Guide to National Oil Companies Page 236 Russia: Rosneft Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 20,741 Consolidated Average Total Assets ($Millions) 34,273 Consolidated Average EBIT ($Millions) 3,860 Consolidated Average Net Income ($Millions) 2,843 Categorization Indicators Categories: Scores: Corporate Corporate Governance 72 Governance 100 Public Sector Governance 71 Commercialization 100 Public Sector Oil Dependency 50 Governance Fiscal Regimes 100 Resource Endowment 65 0 Oil Dependency 87 Resource Commercializa Local Contribution 72 Endowment Sector and Trade Openness 48 Fiscal Regimes Average 82 Rosneft Average NOC Worldwide Governance Indicators Trends and Issues Being the largest oil company in Russia, Rosneft appears to be pressured to establish an equivalent status in natural gas production among its peers. Right now Rosneft produces mainly associated gas. The recent launch of Sakhalin 1 provided the first major source of unassociated gas for the company. Total natural gas reserves are estimated at 1.57 tcm in 2006. Major gas assets include Kharampur field (900 bcm of total reserves and planned production capacity of 27 bcm annually) and a 20 percent stake in Sakhalin 1. The company also holds 49% and 51% in the Sakhalin 4 and 5 projects respectively. A Citizen's Guide to National Oil Companies Page 237 Russia: Rosneft Database Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of cluster There are several non- Governance Its Organization of NOCs and other affiliated NOCs - upstream sovereign enterprises in downstream (Gazprom, country Rosneft, Tatneft) and midstream (Transneft) - operating in the Russian Federation. Corporate Ownership Structure and Number of NOCs of 4 Governance Its Organization country Corporate Ownership Structure and Description of OJSC Oil Company Rosneft is Governance Its Organization incorporation and a joint stock company ownership incorporated in the Russian Federation. Corporate Ownership Structure and % shares controlled by 2007 1 88.32 % Governance Its Organization government Corporate Ownership Structure and Domestic, international 2007 1 LSE (UK), MISEX, RTS Governance Its Organization exchanges where shares (Russian Federation) are listed Corporate Ownership Structure and Domestic, international 2007 1 LSE (UK) Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist Yes Governance Corporate Board of Directors (BOD) Description of BOD and 2007 1 9 members Governance structure Corporate Board of Directors (BOD) Is chairman also minister The chairman is appointed by Governance of energy or otherwise the major shareholder (the appointed by head of state Sovereign). Corporate Board of Directors (BOD) Are any BOD members 2007 1 3 out of 9 members of BOD Governance considered independent are independent - heads of HR (external) and, if so, how and Remunerating Committee, are they appointed Audit Committee and Strategic Planning Committee ­ and elected at shareholders meeting. Directors can be re- elected. Corporate Board of Directors (BOD) Term of service (years, No data Governance with re-appointment). Comment if they can be readily removed. A Citizen's Guide to National Oil Companies Page 238 Russia: Rosneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Role of BOD Description of role and 2006 3 "The Board of Directors shall Governance policy statements exercise general management of the Company's activities within the framework of its terms of reference stipulated by law and the Company's Charter. The Board of Directors is a key unit of the corporate conduct (governance) system of the Company providing not only efficient management of the Company, but also functioning of the system of control of the Company's executive bodies activities, as well as observance and protection of the shareholders' legitimate rights and interests." Corporate Role of BOD Based on available 2008 2 BOD has all major functions Governance information, does BOD and powers. have power, impact, decision making authority Corporate Recruitment/Replacement General process for Reportedly mostly by merit. Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget In principle, the BOD appears Governance Processes authority. Comment on to have considerable budget the general decision flow and decision making authority within NOC and between and autonomy. NOC and government for major projects. Corporate Decision Making Based on available 2008 6 Mostly predictable and Governance Processes, Budget information, is NOC separate, except for the Autonomy budget process predictable domestic pricing policies. and separate from "Rosneft is exposed to several government risks in connection with sales of the gas it produces. The Unified Gas Supply System (UGSS) is owned and operated by OJSC Gazprom and transports all gas in Russia. Under existing regulations, Gazprom should provide access to UGSS to all internal independent suppliers on an equal basis. However, these regulations may change or OJSC Gazprom may fail to observe the principle of equal access in the future. OJSC Gazprom is a monopolistic supplier of gas in Russia. The Russian Government regulates prices of gas sold by OJSC A Citizen's Guide to National Oil Companies Page 239 Russia: Rosneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Gazprom in Russia. Any increase of the regulated price at a slower-than-expected rate could adversely affect Rosneft's operating results and financial condition." "Rosneft depends on monopolistic providers for transportation of oil and oil products. The company has no control over the infrastructure that they use and tariffs which they set. OJSC Transneft (Transneft) is a governmental monopoly operating oil pipelines." Corporate Decision Making Does the NOC have Yes, the company has Governance Processes, Budget authority to partner with numerous partnerships both Autonomy other entities? internationally and domestically. Corporate Mission and Objectives Does NOC have a mission 2008 2 "Rosneft's strategic goal is to Governance statement and, if so, what become the leading Russian are key elements oil and gas company with the best production and financial indicators in the sector and to become one of the largest energy companies in the world." Corporate Sources of Capital Based on available No data. Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data 2007 1, 6 "The Audit Committee was Governance Policy and other indications of 2008 founded by order of the Board disclosure and of Directors of Rosneft in transparency June 2 006 and is headed by an independent director. It comprises only non-executive members of the Board of Directors." " Rosneft's policy regarding information disclosure is based on the principles of regularity, efficiency, accessibility, integrity and meaningfulness. In May 2 006, Rosneft's Board of Directors adopted an Information Policy Statute, based on which information is accessible to shareholders and individuals concerned, regardless of the reasons for obtaining such information, by following a procedure guaranteeing that it is made A Citizen's Guide to National Oil Companies Page 240 Russia: Rosneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data available.The main source for disclosure is Rosneft's website, which contains relevant information on substantial facts, events, management structure and the Company's financial and operational results. Rosneft's website contains the Company's Charter and internal regulations, annual and quarterly reports, financial statements (consolidated and interim), information on affiliates and other data that may affect the value of the Company's securities. Rosneft also provides information in the form of brochures, booklets, press conferences, meetings with shareholders and other concerned individuals. The company strictly complies with legislative requirements concerning shareholders' access to necessary information Rosneft's external auditor for 2005 to 2007 was Ernst & Young LLC. Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available 2007 1 Rosneft has extensive internal Governance Management information, HR and external training programs promotion and professional (short courses, MBA, etc.), for development policies employees of various levels.. Corporate Full Disclosure and Based on available The company reports Governance Measurement of Non- information, brief activities, but not in detail. commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available Insignificant outside of the Governance Measurement of Non- information, extent of non- company commercial Objectives commercial obligations Value Operating Performance Upstream oil E&P. Where 2007 1 Rosneft has exploration Creation does it operate (solely in licenses in Kazakhstan and Metrics the country or abroad- Algeria, and downstream JV name countries)? Does it in China. The company does have sole access to not have sole access to country's resources? resources. Value Operating Performance Does the NOC operate 2007 1 Yes Creation abroad? Metrics A Citizen's Guide to National Oil Companies Page 241 Russia: Rosneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Midstream oil pipelines, 2007 1 Some storage, and two export Creation storage, shipping oil terminals. Metrics Value Operating Performance Downstream oil refining & 2007 1 "The total capacity of Rosneft Creation marketing, petrochemicals seven refineries exceeds 45 Metrics million tons per annum. The Company's retail network as of end of 2006 consisted of 684 proprietary and leased service stations, as well as 83 service stations operating under the Rosneft brand on a franchising basis." Value Operating Performance Upstream natural gas E&P 2007 1 "Rosneft has an integrated gas Creation strategy which covers both Metrics onshore and offshore gas fields. The main project in terms of onshore gas production is the development of the large Kharampur field in Western Siberia, which accounts for 55% of the Company's total proved gas reserves. Gas produced from this field and Rosneft's other onshore projects will be sold through an agreement with Gazprom to use Russia's existing gas infrastructure. Among Rosneft's main offshore gas projects are Sakhalin-1, where commercial oil and gas production has been underway since the end of 2005, as well as Sakhalin-3, Sakhalin-4 and Sakhalin-5 and the project to develop the West Kamchatka shelf." Value Operating Performance Midstream natural gas 2007 1 Not active. Creation pipelines, storage, LNG Metrics Value Operating Performance Downstream natural gas 2007 1 Not active. Creation distribution, NGL sales, Metrics petrochemicals Value Operating Performance Other (power generation, 2007 1 Power generation using Creation etc) associated gas for own use. Metrics Value Operating Performance Avg reserve replacement 268% Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement $2.09 Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves 26% Creation (%) Metrics A Citizen's Guide to National Oil Companies Page 242 Russia: Rosneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Change in BOE production 221% Creation (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration $5.60 Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs $2.26 Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before $3.04 Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow vs No data Creation costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization 43% Creation rate (%) Metrics Value Operating Performance Change in total refining 242% Creation production (%) Metrics Value Operating Performance Change in refinery 468% Creation capacity (%) Metrics Value Operating Performance Avg income from $32.14 Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and 3,149% Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on 61% Creation assets (%) Metrics Value Financial Performance Avg total operating cash 100% Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) 19% Creation Metrics A Citizen's Guide to National Oil Companies Page 243 Russia: Rosneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg profit margin (%) 14% Creation Metrics Value Financial Performance Avg effective tax rate (%) 136% Creation Metrics Value Financial Performance Avg reinvestment risk (%) 100% Creation Metrics Value Financial Performance Avg debt profile (%) 48% Creation Metrics Value Financial Performance Avg return on assets (%) 8% Creation Metrics Value Financial Performance Avg return on total capital 10% Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to 28% Creation State (%) Metrics Other Public Sector Governance Based on available 2008 2 "A basis for economy Factors information, presence of a development and a instrument publicly articulated role of of domestic and foreign the hydrocarbon sector policy" with respect to national development objectives Other Public Sector Governance Based on available In principle, the separation of Factors information, clear policy, regulatory, and definition of the roles of commercial roles among policy, commercial government entities is operation and regulation defiened by law. and assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available 2007 1 Very detailed and ranked Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available No data Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available 2008 7, 8 The Stabilization fund of the Factors information, transparent Russian Federation was hydrocarbon sector established on January 1, 2004 revenue management as a part of the federal budget including revenue to balance the federal budget distribution within the when oil price falls below a country cut-off price defined for budget preparation purposes. The Fund is managed by the A Citizen's Guide to National Oil Companies Page 244 Russia: Rosneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Ministry of Finance, who delegates some asset management functions to the Central Bank. Accumulation, investment, and spending are reported regularly by the Ministry of Finance to the general public and to the Parliament. Since February 2008 the Stabilization fund has been split into two funds, one section managing official reserves, while the second part becomes the official sovereign wealth fund, National Welfare Fund. Transparency of the Fund has improved, but more needs to be done. Other Public Sector Governance NOC and/or country 2008 4,5 Russia does not participate or Factors participate in EITI and/or support EITI. Transparency other transparency International operates in initiatives Russia via Brussels, National Democratic Institute operates in Russia. Other Fiscal Sustainability Based on available Investment has been mostly Factors information, do sufficient; in response to hydrocarbon sector fiscal recent decline in production, regimes allow for tax code was amended to sufficient capital encourage investment in investment marginal fields, offshore and new fields in East Siberia. Other Fiscal Sustainability Based on available BB - S&P Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available Appropriate. Recent tax code Factors information, are changes are designed to hydrocarbon sector fiscal encourage new field regimes appropriate for the development in East Siberia development stage of the and offshore areas. domestic resource base Other Access to Reserves Hydrocarbon law to 2008 9 The PSA model was adopted Factors facilitate competitive by decree in the early 1990s to upstream investment attract foreign investment in upstream oil and gas. Four PSAs were signed with majority foreign participation between 1994 and 2002. This form of associatiation has had mixed fortune, and possibilities of future PSA projects with majority foreign share may be limited. Indeed the trend appears to move towards stronger national A Citizen's Guide to National Oil Companies Page 245 Russia: Rosneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data control over oil and gas operations. A new law on strategic sectors was introduced in May 2008, which restricts the foreign ownership in strategic companies or assets. Parallel changes were also introduced in the Law On Subsoil that together with the strategic sectors law now more clearly govern foreign investors' access to the oil and gas sector. Other Access to Reserves Based on available A handful ofPSAs and Factors information, existence of mulitple JVs, typically with negotiated majority control with NOCs. contracts/agreements for upstream investment Other Operating Strategy Based on available NOC dominates in JVs - Factors information, types of joint typically over 50% ventures, role of NOC(s) Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal Vertically integrated Factors integration Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company international No data Factors BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company international No data Factors refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company international No data Factors refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) A Citizen's Guide to National Oil Companies Page 246 Russia: Rosneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Non-NOC participants in Yes. Factors upstream Other Commercialization Competition level in Many companies are Factors upstream including non- interested in participating in NOC participants and the Russian gas sector but requirement to include Gazprom dominates the gas NOC as partner value chain (see the cell below). No formal requirement to include NOC as a partner except when the project is considered strategic in accordance with the law on strategic sectors. Other Commercialization Competition level in Moderate, except for gas Factors midstream, downstream export and transportation including non-NOC (monopolized). No formal participants and requirement to include NOC requirement to include as partner. NOC as partner Other Commercialization Based on available PSAs and JVs represent a Factors information, prevalence relatively small share of and success of NOC/non- operations. Reportedly these NOC alliances, joint projects have, not been very ventures successful. Other Commercialization Partial privatization of the 12% Factors NOC (as measured by ownership structure) Other Commercialization Based on available 2007 1 Exploration licenses in Factors information, level and Kazakhstan and Algeria, quality of NOC downstream JV in China international operations Other Commercialization Based on available Insignificant Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, Ministry has regulatory Factors well-funded and trained functions. Some level of regulatory agencies, HC influence exercised by the agency name, budget, NOCs. number of staff Other Regulation NOCs are compelled to Further reforms would be Factors adopt practices that would needed to move towards a provide results similar to regulatory envorionment that those in competitive supports the development of markets with price, access competitive markets. to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market No data Factors transparency and good quality, unbiased data and information. HC agency independence indicators A Citizen's Guide to National Oil Companies Page 247 Russia: Rosneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Regulation Regulators effectively No data. Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of See discussion related to Factors Objectives hydrocarbon price Gazprom subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of Mostly within the company. Factors Objectives direct NOC funding of Active sponsorship outside country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC $461.90 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations $3.46 Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance $279.53 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, 2007 6 "Rosneft is governed by Comments reliability of data provided requirements of the Federal by NOC(s) and Law on Securities, the Federal governments Law on Joint Stock Companies, the regulation on information disclosure by issuers of securities as approved by the Order of the Federal Service for the Financial Markets (FSFM) dated October 1 0, 2006 No 06-11 7/pz-n and other statutory acts." Other Longevity of NOC Based on available Established in 1993. Comments information, history and persistence of NOC(s) Other Country Status Trends and issues related Being the largest oil company Comments to country hydrocarbon in Russia, Rosneft appears to sector endowments and be pressured to establish an performance equivalent status in natural gas production among its peers. Right now Rosneft produces mainly associated gas. The recent launch of Sakhalin 1 provided the first major source of unassociated gas for the company. Total A Citizen's Guide to National Oil Companies Page 248 Russia: Rosneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data natural gas reserves are estimated at 1.57 tcm in 2006. Major gas assets include Kharampur field (900 bcm of total reserves and planned capacity of 27 bcm annually) and a 20 percent stake in Sakhalin 1. The company also holds 49% and 51% in the Sakhalin 4 and 5 projects respectively. Other Non-commercial Number of employees 74,200 Factors Objectives Other Non-commercial BOE production per 6,645 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency 47.86 Factors BOE R/P (years) Other Oil Dependency Net oil and gas export 44.50% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency 13.39% Factors Total oil and gas revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 79,432.08 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 1,576,753.11 Factors reserves (BCF) Other Resource Endowment 351,286.07 Factors Total all source BOE reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput A Citizen's Guide to National Oil Companies Page 249 Russia: Rosneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Operating Conditions Country oil/natural gas 22.61% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.90% Factors split, production (%) Other Operating Conditions Country BOE production 200.73% Factors as % of total country BOE consumption Other Trade Openness WTO Membership No Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 250 Russia: Rosneft Sources of Information Source # Year of Source Source Description Links 1 2007 Annual report 2006 http://www.rosneft.com/Investors/annual_reports/ 2 2008 Company web-site http://www.rosneft.com/ 3 2006 Corporate Governance Code of OJSC Oil Company Rosneft http://www.rosneft.com/Investors/Documents/ 4 2008 Transparency International (through Brussels) http://www.transparency.org/regional_pages/europ e_central_asia/contact 5 2008 National Democratic Institute - Russia http://www.ndi.org/worldwide/eurasia/russianf/rus sianf.asp 6 2008 Annual report 2007 http://www.rosneft.com/Investors/annual_reports/ 7 2008 Ministry of Finance's web site. http://www1.minfin.ru/en/ 8 2008 Sovereign Wealth Funds Insitute. http://www.swfinstitute.org/aboutus.php 9 2008 Journal of World Energy Law and Business, 2008; 1: 224-238, Oxford Journals A Citizen's Guide to National Oil Companies Page 251 Russia: Transneft Russia: Transneft Summary Report Corporate Governance Highlights Corporate Organization and Ownership OAO AK Transneft is a joint stock company incorporated in the Russian Federation. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings MMVB, RTS (Russian Federation) Board of Directors Structure 9 members, appointed at the shareholder's meeting. Directors can be re-elected Independent Board Members None Is chairman also minister of energy or otherwise appointed by head of state? The chairman is appointed by ministerial decree. Operations Highlights Upstream Oil The company does not operate in upstream. Midstream Oil The company operates the largest crude oil pipeline system in the world totaling approximately 47,865 km. The Group operates in midstream oil sector only . Downstream Oil Does not operate Upstream Natural Gas Does not operate Midstream Natural Gas Does not operate Downstream Natural Gas Does not operate Other Does not operate Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) No data Upstream: Average Annual Natural Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) No data Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 6,340 Consolidated Average Total Assets ($Millions) 16,827 Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) 4,722 A Citizen's Guide to National Oil Companies Page 252 Russia: Transneft Categorization Indicators Categories: Scores: Corporate Corporate Governance 66 Governance Public Sector Governance 64 100 Commercialization 50 Public Sector Oil Dependency 50 Governance Fiscal Regimes 50 Resource Endowment 65 0 Oil Dependency 87 Resource Commercializa Local Contribution 86 Endowment Sector and Trade Openness 11 Fiscal Regimes Average 64 Transneft Average NOC Worldwide Governance Indicators Trends and Issues Recent Russian oil production declines will negatively impact Transneft's cash position and perhaps profitability. As an oil pipeline operator, Transneft is most dependent upon actions taken by the Russian government to spur new upstream investment (and thus increase throughput). This means grappling with how to structure investment, including foreign and private participation in Russia's oil sector while still exerting the kind of state influence that seems to be preferred. A Citizen's Guide to National Oil Companies Page 253 Russia: Transneft Database Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of 2007 1 There are several non-affiliated Governance Its Organization cluster of NOCs and NOCs - upstream downstream other sovereign (Gazprom, Rosneft, Tatneft) and enterprises in country midstream (Transneft) - operating in the Russian Federation. Corporate Ownership Structure and Number of NOCs of 4 Governance Its Organization country Corporate Ownership Structure and Description of 1 "OAO AK Transneft is a joint Governance Its Organization incorporation and stock company incorporated in the ownership Russian federation and operates the largest crude oil pipeline system in the world totaling approximately 47,865 km." The Group operates in midstream oil sector only. Corporate Ownership Structure and % shares controlled by 100 % Governance Its Organization government Corporate Ownership Structure and Domestic, international Yes - MMVB, RTS (Russia) - Governance Its Organization exchanges where shares only preferred stock are listed Corporate Ownership Structure and Domestic, international None Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist Yes Governance Corporate Board of Directors (BOD) Description of BOD and 9 members. Governance structure Corporate Board of Directors (BOD) Is chairman also minister The chairman is appointed by the Governance of energy or otherwise major shareholder (the appointed by head of Sovereign). state Corporate Board of Directors (BOD) Are any BOD members None Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, BOD members are appointed at Governance with re-appointment). the shareholder's meeting. Comment if they can be Directors can be re-elected. readily removed. Corporate Role of BOD Description of role and The BOD develops company Governance policy statements strategy; decides on shareholder capital changes, buyback of shares & bonds; creates or terminates executive branches; decides on compensation for the auditor.. A Citizen's Guide to National Oil Companies Page 254 Russia: Transneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Role of BOD Based on available The BOD has limited decision- Governance information, does BOD making powers - affected by the have power, impact, government. decision making authority Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget The company budget decisions are Governance Processes authority. Comment on dominated by the government. the general decision flow The company budgets for smaller within NOC and between pipelines and system maintenance; NOC and government for bute larger projects are often major projects. brought forward by the government. Corporate Decision Making Based on available The company does its own Governance Processes, Budget information, is NOC budgets but project selection is Autonomy budget process impacted by government predictable and separate strategies as discussed above; and from government revenues of the company are based on tariffs set by the government. Corporate Decision Making Does the NOC have Yes Governance Processes, Budget authority to partner with Autonomy other entities? Corporate Mission and Objectives Does NOC have a None Governance mission statement and, if so, what are key elements Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited The company's auditor is ZAO Governance Policy data and other PricewaterhouseCoopers indications of disclosure (Moscow). Consolidated financial and transparency statements are prepared in accordance with International Financial Reporting Standards (IFRS). Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available No data Governance Management information, HR promotion and professional development policies A Citizen's Guide to National Oil Companies Page 255 Russia: Transneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Full Disclosure and Based on available Very limited Governance Measurement of Non- information, brief commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available Insignificant Governance Measurement of Non- information, extent of commercial Objectives non-commercial obligations Value Operating Performance Upstream oil E&P. Not active Creation Where does it operate Metrics (solely in the country or abroad-name countries)? Does it have sole access to country's resources? Value Operating Performance Does the NOC operate No Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, "Transneft operates the largest Creation storage, shipping crude oil pipeline system in the Metrics world totaling approximately 47,865 km. The Group is considered by management to have a single main activity and therefore one industry and geographic segment." Value Operating Performance Downstream oil refining Not active Creation & marketing, Metrics petrochemicals Value Operating Performance Upstream natural gas Not active Creation E&P Metrics Value Operating Performance Midstream natural gas Not active Creation pipelines, storage, LNG Metrics Value Operating Performance Downstream natural gas Not active Creation distribution, NGL sales, Metrics petrochemicals Value Operating Performance Other (power generation, Not active Creation etc) Metrics Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE No data Creation production (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream Metrics capital expenditures (%) A Citizen's Guide to National Oil Companies Page 256 Russia: Transneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg upstream No data Creation exploration and Metrics production expenses ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all No data Creation taxes ($/BOE) Metrics Value Operating Performance Avg effective tax rate No data Creation (%) Metrics Value Operating Performance Avg operating cash flow No data Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin No data Creation (%) Metrics Value Financial Performance Avg profit margin (%) 74% Creation Metrics Value Financial Performance Avg effective tax rate No data Creation (%) A Citizen's Guide to National Oil Companies Page 257 Russia: Transneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Metrics Value Financial Performance Avg reinvestment risk No data Creation (%) Metrics Value Financial Performance Avg debt profile (%) 19% Creation Metrics Value Financial Performance Avg return on assets (%) 28% Creation Metrics Value Financial Performance Avg return on total 29% Creation capital employed (%) Metrics Value Financial Performance Avg fiscal contribution 14% Creation to State (%) Metrics Other Public Sector Governance Based on available 2003 2 "A basis for economy Factors information, presence of development and a instrument of a publicly articulated role domestic an foreign policy" of the hydrocarbon sector with respect to national development objectives Other Public Sector Governance Based on available In principle, the separation of Factors information, clear policy, regulatory, and definition of the roles of commercial roles among policy, commercial government entities is defiened by operation and regulation law. and assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available 2007 1 Very detailed and ranked Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available No data Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available 2008 8, 9 The Stabilization fund of the Factors information, transparent Russian Federation was hydrocarbon sector established on January 1, 2004 as revenue management a part of the federal budget to including revenue balance the federal budget at the distribution within the time of when oil price falls below country a cut-off price defined for budget preparation purposes. The Fund is managed by the Ministry of Finance, who delegates some asset management functions to the Central Bank. Accumulation, investment, and spending are A Citizen's Guide to National Oil Companies Page 258 Russia: Transneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data reported regularly by the Ministry of Finance to the general public and to the Parliament. Since February 2008 the Stabilization fund has been split into two funds, one section managing official reserves, while the second part becomes the official sovereign wealth fund, National Welfare Fund. Transparency of the Fund has improved, but more needs to be done. Other Public Sector Governance NOC and/or country Russia does not participate in or Factors participate in EITI and/or support EITI. Transparency other transparency International operates in Russia initiatives via Brussels. National Democratic Institute operates in Russia. Other Fiscal Sustainability Based on available Investment has been mostly Factors information, do sufficient; in response to recent hydrocarbon sector fiscal decline in production, tax code regimes allow for was amended to encourage sufficient capital investment in marginal fields, investment offshore and new fields in East Siberia. Other Fiscal Sustainability Based on available Standard & Poor`s - + ; Factors information, do Moody's - 2, ; hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available Appropriate. Recent tax code Factors information, are changes are designed to encourage hydrocarbon sector fiscal new field development in East regimes appropriate for Siberia and offshore areas. the development stage of the domestic resource base Other Access to Reserves Hydrocarbon law to 2008 10 The PSA model was adopted by Factors facilitate competitive decree in the early 1990s to attract upstream investment foreign investment in upstream oil and gas. Four PSAs were signed with majority foreign participation between 1994 and 2002. This form of associatiation has had mixed fortune, and possibilities of future PSA projects with majority foreign share may be limited. Indeed the trend appears to move towards stronger national control over oil and gas operations. A new law on strategic sectors was introduced in May 2008, which restricts the foreign ownership in strategic companies or assets. Parallel changes were also introduced in the Law On Subsoil A Citizen's Guide to National Oil Companies Page 259 Russia: Transneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data that together with the strategic sectors law now more clearly govern foreign investors' access to the oil and gas sector. Other Access to Reserves Based on available Not applicable Factors information, existence of negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available No JVs Factors information, types of joint ventures, role of NOC(s) Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal Horizontal Factors integration Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in Yes Factors upstream A Citizen's Guide to National Oil Companies Page 260 Russia: Transneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Competition level in Many companies are interested in Factors upstream including non- participating in the Russian gas NOC participants and sector but Gazprom dominates the requirement to include gas value chain (see the cell NOC as partner below). No formal requirement to include NOC as a partner except when the project is considered strategic in accordance with the law on strategic sectors. Other Commercialization Competition level in None - monopoly on oil and oil Factors midstream, downstream products pipeline transportation including non-NOC participants and requirement to include NOC as partner Other Commercialization Based on available None Factors information, prevalence and success of NOC/non- NOC alliances, joint ventures Other Commercialization Partial privatization of 0% Factors the NOC (as measured by ownership structure) Other Commercialization Based on available None Factors information, level and quality of NOC international operations Other Commercialization Based on available Insignificant Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, Ministry has regulatory functions. Factors well-funded and trained Some level of influence exercised regulatory agencies, HC by the NOCs. agency name, budget, number of staff Other Regulation NOCs are compelled to Further reforms would be needed Factors adopt practices that to move towards a regulatory would provide results envorionment that supports the similar to those in development of competitive competitive markets with markets. price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market No data Factors transparency and good quality, unbiased data and information. HC agency independence indicators A Citizen's Guide to National Oil Companies Page 261 Russia: Transneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Regulation Regulators effectively No data Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of None - tariffs are set by the Factors Objectives hydrocarbon price government. subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of Mostly within the company. Factors Objectives direct NOC funding of Active sponsorship outside. country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC $265.76 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation $13.41 Factors Objectives obligations relative to workforce ($ M) Other Non-commercial Financial performance $100.13 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, 2006 1 Consolidated financial statements Comments reliability of data are prepared in accordance with provided by NOC(s) and International Financial Reporting governments Standards (IFRS). Other Longevity of NOC Based on available Russian oil pipeline transport is an Comments information, history and old business. Transneft was persistence of NOC(s) created in 1992 as the Russian transition unfolded. It was part of the decree that also separated Lukoil, Surgutneftegaz, Yukos and Rosneft. Other Country Status Trends and issues related Recent Russian oil production Comments to country hydrocarbon declines will negatively impact sector endowments and Transneft's cash position and performance perhaps profitability. As an oil pipeline operator, Transneft is most dependent upon actions taken by the Russian government to spur new upstream investment (and thus increase throughput). This means grappling with how to structure investment, including foreign and private participation, A Citizen's Guide to National Oil Companies Page 262 Russia: Transneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data in Russia's oil sector while still exerting the kind of state influence that seems to be preferred. Other Non-commercial Number of employees 63,316 Factors Objectives Other Non-commercial BOE production per No data Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 47.86 Factors Other Oil Dependency Net oil and gas export 44.50% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas 13.39% Factors revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 79,432.08 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 1,576,753.11 Factors reserves (BCF) Other Resource Endowment Total all source BOE 351,286.07 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 22.61% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.90% Factors split, production (%) A Citizen's Guide to National Oil Companies Page 263 Russia: Transneft Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Operating Conditions Country BOE production 200.73% Factors as % of total country BOE consumption Other Trade Openness WTO Membership No Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 264 Russia: Transneft Sources of Information Source # Year of Source Source Description Links 1 2007 IFRS 2006 http://www.transneft.ru/Finance/Default.asp?LANG=EN& RTYPE=4 2 2003 Energy Strategy till 2020 (rus) www.minprom.gov.ru/docs/strateg/1/ 3 2008 Company web-site http://www.transneft.ru/Default.asp?LANG=E 4 2008 Transparency International http://www.transparency.org/regional_pages/europe_central (through Brussels) _asia/contact 5 2008 National Democratic Institute http://www.ndi.org/worldwide/eurasia/russianf/russianf.asp - Russia 6 2000 Audited financial report, Rustocks http://www.rustocks.com/put.phtml/shACTR_2000_IAS- fs.pdf 7 2007 Datamonitor http://www.datamonitor.com/companies/company/?pid=74 9D43DE-795E-41EE-B4AB-8FA422200050 8 2008 Ministry of Finance's web site. http://www1.minfin.ru/en/ 9 2008 Sovereign Wealth Funds Insitute. http://www.swfinstitute.org/aboutus.php 10 2008 Journal of World Energy Law and Business, 2008; 1: 224-238, Oxford Journals A Citizen's Guide to National Oil Companies Page 265 Uzbekistan: Uzbekneftegaz Uzbekistan: Uzbekneftegaz Summary Report Corporate Governance Highlights Corporate Organization and Ownership Incorporated in 1998, 100% owned by the State, partial privatization plans for 2006-2008. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings None Board of Directors Structure 4 members, approved by the shareholders' meeting Independent Board Members No Is chairman also minister of energy or otherwise appointed by head of state? No Operations Highlights Upstream Oil Operates solely in the country; does not have sole access to resources. Upstream affiliate Uzneftegazdobicha does not report data. Midstream Oil Affiliate operates 23 oil tank farms Downstream Oil Affiliate operates 2 refineries Upstream Natural Gas Affiliate Uzneftegazdobicha does not report data Midstream Natural Gas N/A Downstream Natural Gas N/A Other N/A Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) No data Upstream: Average Annual Natural Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) No data Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 2,057 Consolidated Average Total Assets ($Millions) 749 Consolidated Average EBIT ($Millions) 4 Consolidated Average Net Income ($Millions) 3 A Citizen's Guide to National Oil Companies Page 266 Uzbekistan: Uzbekneftegaz Categorization Indicators Categories: Scores: Corporate Governance 50 Corporate Governance Public Sector Governance 36 100 Commercialization 58 Public Sector Oil Dependency 50 Fiscal Regimes 50 Governance Resource Endowment 2 0 Oil Dependency 100 Resource Commercializa Local Contribution 100 Endowment Sector and Trade Openness 44 Fiscal Regimes Average 49 Uzbekneftegaz Average NOC Worldwide Governance Indicators Trends and Issues With no access to the Caspian Sea, Uzbekistan has been constrained in building export strategies that would provide some independence from the Russian (Gazprom) transmission system. The Uzbeks have not been happy with prices offered for their natural gas supplies. Continuous tensions and shifting strategies related to pipeline transpiration through, around and from the Central Asia region generate considerable uncertainty regarding natural gas exports. The pipeline network in Uzbekistan does not support the current market or the prospective Uzbek natural gas sector. In February 2005 Gazprom and UztransGas signed an agreement for natural gas transportation for 2006-2010, which stipulates recovery and upgrades of the Central Asia-Center and Bukhara-Urals gas trunklines. Having control over these trunklines, Uzbekistan is strategically important for Russia, since it is responsible for transit of most of the Turkmen gas imports. A Citizen's Guide to National Oil Companies Page 267 Uzbekistan: Uzbekneftegaz Database Indicator Indicator Year of Category Indicator Description (Query) Source of Source Response Data Corporate Ownership Structure and Sole NOC or one of Uzbekneftegaz is a holding Governance Its Organization cluster of NOCs and company, controlling 6 other other sovereign NOCs (upstream, midstream, enterprises in country downstream, etc.) in Uzbekistan. Corporate Ownership Structure and Number of NOCs of 1 Governance Its Organization country Corporate Ownership Structure and Description of Incorporated in 1998, 100% Governance Its Organization incorporation and owned by the State, partial ownership privatization plans for 2006- 2008. Corporate Ownership Structure and % shares controlled by 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international None Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international None Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist 2008 1 Yes - since 2006 Governance Corporate Board of Directors (BOD) Description of BOD and 2008 1 4 members, approved by the Governance structure shareholders' meeting Corporate Board of Directors (BOD) Is chairman also minister 2008 1 No Governance of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members 2008 1 No Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, No data Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and 2008 2 "BOD defines strategy and Governance policy statements perspectives of the industry, as well as tactics and mid- term tasks" Corporate Role of BOD Based on available Very limited Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replacement General process for By the government Governance Key Executives recruitment, replacement of key execs and senior managers A Citizen's Guide to National Oil Companies Page 268 Uzbekistan: Uzbekneftegaz Indicator Indicator Year of Category Indicator Description (Query) Source of Source Response Data Corporate Decision Making Level of NOC budget No budget authority - Governance Processes authority. Comment on everything has to be the general decision flow approved by the government within NOC and between NOC and government for major projects. Corporate Decision Making Based on available Unpredictable and Governance Processes, Budget information, is NOC inseparable Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have Yes, yet with approval of the Governance Processes, Budget authority to partner with government Autonomy other entities? Corporate Mission and Objectives Does NOC have a No data Governance mission statement and, if so, what are key elements Corporate Sources of Capital Based on available Has to be approved by the Governance information, budgeting government process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited Audited by independent Governance Policy data and other indications domestic company, yet level of disclosure and of reporting is very low transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available No data Governance Management information, HR promotion and professional development policies Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, brief commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, extent of commercial Objectives non-commercial obligations Value Operating Performance Upstream oil E&P. Operates solely in the Creation Where does it operate country; does not have sole Metrics (solely in the country or access to resources. abroad-name countries)? Upstream affiliate Does it have sole access Uzneftegazdobicha does not to country's resources? report data Value Operating Performance Does the NOC operate No Creation abroad? Metrics A Citizen's Guide to National Oil Companies Page 269 Uzbekistan: Uzbekneftegaz Indicator Indicator Year of Category Indicator Description (Query) Source of Source Response Data Value Operating Performance Midstream oil pipelines, 2008 2 Affiliate operates 23 oil tank Creation storage, shipping farms Metrics Value Operating Performance Downstream oil refining 2008 2 Affiliate operates 2 refineries Creation & marketing, Metrics petrochemicals Value Operating Performance Upstream natural gas Affiliate Uzneftegazdobicha Creation E&P does not report data Metrics Value Operating Performance Midstream natural gas No data Creation pipelines, storage, LNG Metrics Value Operating Performance Downstream natural gas No data Creation distribution, NGL sales, Metrics petrochemicals Value Operating Performance Other (power generation, No data Creation etc) Metrics Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE No data Creation production (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream Metrics capital expenditures (%) Value Operating Performance Avg upstream No data Creation exploration and Metrics production expenses ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all No data Creation taxes ($/BOE) Metrics Value Operating Performance Avg effective tax rate No data Creation (%) Metrics Value Operating Performance Avg operating cash flow No data Creation vs costs incurred (%) Metrics A Citizen's Guide to National Oil Companies Page 270 Uzbekistan: Uzbekneftegaz Indicator Indicator Year of Category Indicator Description (Query) Source of Source Response Data Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on 29% Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin 0% Creation (%) Metrics Value Financial Performance Avg profit margin (%) 0% Creation Metrics Value Financial Performance Avg effective tax rate No data Creation (%) Metrics Value Financial Performance Avg reinvestment risk No data Creation (%) Metrics Value Financial Performance Avg debt profile (%) 47% Creation Metrics Value Financial Performance Avg return on assets (%) 0% Creation Metrics Value Financial Performance Avg return on total 1% Creation capital employed (%) Metrics Value Financial Performance Avg fiscal contribution to 0% Creation State (%) Metrics Other Public Sector Governance Based on available No data Factors information, presence of a publicly articulated role of the hydrocarbon sector with respect to national development objectives A Citizen's Guide to National Oil Companies Page 271 Uzbekistan: Uzbekneftegaz Indicator Indicator Year of Category Indicator Description (Query) Source of Source Response Data Other Public Sector Governance Based on available Clear in principle, yet Factors information, clear confusion in practice because definition of the roles of of formal prevalence of the policy, commercial government. operation and regulation and assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available No data Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available No data Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available The state budget is published Factors information, transparent on the Mnistry of Finance's hydrocarbon sector website, although in revenue management aggregated form. Overall low including revenue level of transparency. distribution within the country Other Public Sector Governance NOC and/or country 2008 6 Uzbekistan does not Factors participate in EITI and/or participate in EITI. other transparency Transparency International initiatives operates in the country via the Berlin office. Other Fiscal Sustainability Based on available Fiscal regime seems to be Factors information, do competitive, but Uzbekistan hydrocarbon sector fiscal has a limited resource base. regimes allow for sufficient capital investment Other Fiscal Sustainability Based on available No Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available Seems to be appropriate Factors information, are hydrocarbon sector fiscal regimes appropriate for the development stage of the domestic resource base A Citizen's Guide to National Oil Companies Page 272 Uzbekistan: Uzbekneftegaz Indicator Indicator Year of Category Indicator Description (Query) Source of Source Response Data Other Access to Reserves Hydrocarbon law to 2007 (2000) 3 Law of 2000; concessions for Factors facilitate competitive up to 25 years; tax upstream investment preferences - no taxes during exploration stage; no corporate income tax during first 7 production years and 50% afterwards if a JV). Other Access to Reserves Based on available PSA with Petronas (100% Factors information, existence of equity and operator) negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available JV with CNPC Factors information, types of joint ventures, role of NOC(s) Other Operating Strategy Based on available No data available Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal Vertically integrated holding Factors integration company Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in Yes Factors upstream A Citizen's Guide to National Oil Companies Page 273 Uzbekistan: Uzbekneftegaz Indicator Indicator Year of Category Indicator Description (Query) Source of Source Response Data Other Commercialization Competition level in Insignificant; no formal Factors upstream including non- requirement NOC participants and requirement to include NOC as partner Other Commercialization Competition level in Insignificant; no formal Factors midstream, downstream requirement including non-NOC participants and requirement to include NOC as partner Other Commercialization Based on available Several attempts; rate of Factors information, prevalence success was low and success of NOC/non- NOC alliances, joint ventures Other Commercialization Partial privatization of Plans to privatize affiliates Factors the NOC (as measured up to 49% by ownership structure) Other Commercialization Based on available Not applicable Factors information, level and quality of NOC international operations Other Commercialization Based on available No data available Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, Absent Factors well-funded and trained regulatory agencies, HC agency name, budget, number of staff Other Regulation NOCs are compelled to Not applicable Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market Not applicable Factors transparency and good quality, unbiased data and information. HC agency independence indicators A Citizen's Guide to National Oil Companies Page 274 Uzbekistan: Uzbekneftegaz Indicator Indicator Year of Category Indicator Description (Query) Source of Source Response Data Other Regulation Regulators effectively Not applicable Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of Energy fuels and other Factors Objectives hydrocarbon price necessities are subsidized in subsidies ($/BOE Uzbekistan. How costs are production) provided by managed is very unclear. NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of No data available Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC $10,554.41 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation No data Factors Objectives obligations relative to workforce ($ M) Other Non-commercial Financial performance $28,974.34 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Affiliates provide some Comments reliability of data independently audited data. provided by NOC(s) and NOC reports vary little, as governments does the government. Other Longevity of NOC Based on available 2008 1 Created in 1998. Comments information, history and persistence of NOC(s) A Citizen's Guide to National Oil Companies Page 275 Uzbekistan: Uzbekneftegaz Indicator Indicator Year of Category Indicator Description (Query) Source of Source Response Data Other Country Status Trends and issues related With no access to the Comments to country hydrocarbon Caspian Sea, Uzbekistan has sector endowments and been constrained in building performance export strategies that would provide some independence from the Russian (Gazprom) transmission system. The Uzbeks have not been happy with prices offered for their natural gas supplies. Continuous tensions and shifting strategies related to pipeline transportation through, around and from the Central Asia region generate considerable uncertainty regarding natural gas exports. The pipeline network in Uzbekistan does not support the current market or the prospective Uzbek natural gas sector. In February 2005 Gazprom and UztransGas signed an agreement for natural gas transportation for 2006-2010, which stipulates recovery and upgrades of the Central Asia-Center and Bukhara-Urals gas trunklines. Having control over these trunklines, Uzbekistan is strategically important for Russia, since it is responsible for transit of most of the Turkmen gas imports. Other Non-commercial Number of employees 71 Factors Objectives Other Non-commercial BOE production per No data Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency 28.20 Factors BOE R/P (years) Other Oil Dependency Net oil and gas export 0.00% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas 0.00% Factors revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 594.00 Factors (MM Barrels) A Citizen's Guide to National Oil Companies Page 276 Uzbekistan: Uzbekneftegaz Indicator Indicator Year of Category Indicator Description (Query) Source of Source Response Data Other Resource Endowment Avg EOY natural gas 61,602.99 Factors reserves (BCF) Other Resource Endowment 11,215.20 Factors Total all source BOE reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery 78% Factors throughput as % of total country refinery throughput Other Operating Conditions 5.30% Factors Country oil/natural gas split, reserves (%) Other Operating Conditions 99.15% Factors Country oil/natural gas split, production (%) Other Operating Conditions Country BOE production 123.80% Factors as % of total country BOE consumption Other Trade Openness No Factors WTO Membership Other Competition No Factors OPEC Membership A Citizen's Guide to National Oil Companies Page 277 Uzbekistan: Uzbekneftegaz Sources of Information Source # Year of Source Source Description Links 1 2008 Company web-site (rus) www.uzneftegaz.uz 2 2008 Uzaneftmakhsulot web- site (rus) http://www.uzoilproduct.uz/rus/otd.htm 3 2007 (2000) Decree "On arrangements to attract http://zakonuz.narod.ru/newpage220.htm foreign investment in oil and gas exploration and production" (rus) 4 2007 Company Report 2006 http://www.gazetabirja.uz/index.php?option=com_conten t&task=view&id=514&Itemid=31 5 2008 Company Report 2007 http://www.gazetabirja.uz/index.php?option=com_conten t&task=view&id=3551&Itemid=31 6 2008 Transparency International (through http://www.transparency.org/regional_pages/europe_cent Berlin) ral_asia/contact 7 2007 "Decision of General Meeting of http://www.gazetabirja.uz/index.php?option=com_conten Shareholders" (rus) t&task=view&id=232&Itemid=31 A Citizen's Guide to National Oil Companies Page 278 The NOCs in Latin America and the Carribean A Citizen's Guide to National Oil Companies Page 279 Argentina: Energía Argentina Sociedad Anónima (ENARSA) Argentina: Energía Argentina Sociedad Anónima (ENARSA) Summary Report Corporate Governance Highlights Corporate Organization and Ownership ENARSA was created in December 2004 through legislation. Class A Shares (53%) are owned by the state. Class B and C shares (12%) are owned by the provinces. Class D shares (35%) may be offered to the public. ENARSA replaces Argentina's prior NOC, YPFA. (YPFA, created in 1922, was privatized in 1993 and then acquired by Repsol in 1999). Shares Controlled by Government 53% to 88% depending upon share class. Domestic, International Exchanges for Equity Listings Not listed. Board of Directors Structure 5 directors representing Class A shares and up to 2 additional directors representing Class B and C shares. One of the Class A directors "must" have experience in capital markets. Independent Board Members Members of the BOD are not considered external directors. Is chairman also minister of energy or otherwise appointed by head of state? Since its inception, the company BOD has only had one President, appointed from the private sector. It is not clear how the position is to be filled in the future. Operations Highlights Upstream Oil "ENARSA was created, among other reasons, to have title to exploration and concession rights of all offshore areas that are not subject to previous concessions or contracts. In addition, it may participate on its own, in association with third parties or through them in any element of the energy value chains." Midstream Oil NA Downstream Oil In association with PDVSA, ENARSA owns the right to a limited number of fuel stations in Argentina. Given that Enarsa does not produce petroleum products, fuel supplies would need to be procured from third parties. Upstream Natural Gas ENARSA announced a bidding round for offshore exploration. In those rounds, ENARSA will likely have a majority interest (which will be carried by the partners). Midstream Natural Gas In May 2008 ENARSA signed a Memorandum of Understanding with PDVSA to build a pipeline and build and operate an LNG liquefaction facility for 4.5 million tons per annum. In addition, the gas that the pipeline will bring onshore is slated to feed the Great South American natural gas pipeline system proposed by PdVSA/Venezuela. Downstream Natural Gas ENARSA is entering into partnerships with PDVSA and others to build LNG regasification facilities in Argentina to provide natural gas during the winter heating season in the near future. Other ENARSA does not own or operate assets in the power sector, but it does manage licensing and bidding rounds for power generation. A Citizen's Guide to National Oil Companies Page 280 Argentina: Energía Argentina Sociedad Anónima (ENARSA) Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) No data Upstream: Average Annual Natural Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) No data Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) No data Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data Categorization Indicators Categories: Score Corporate Governance 34 Corporate Governance Public Sector Governance 43 100 Commercialization 25 Public Sector Fiscal Regimes 50 Oil Dependency 50 Governance Resource Endowment 1 0 Oil Dependency 99 Local Contribution 0 Resource Commercializa Endowment Sector and Trade Openness 54 Average 42 Fiscal Regimes Enarsa Average NOC Worldwide Governance Indicators Trends and Issues ENARSA seeks to be an important player in the energy sector in Argentina and the region as a whole. However, its upstream carried interests do not show any measure of performance to date. Argentina appears to be increasing state participation in the energy sector after decreasing such energy sector participation in the 1990s. Price controls continue to inhibit new, needed investment in both energy resources and infrastructure. The imposition of natural gas price controls following the financial crisis of 2002 led to natural gas shortages in Argentina. As a result, Argentina was unable to fulfill its natural gas supply obligations to Chile. These events had negative economic repercussions in Chile and strained gas and electricity supplies throughout the Southern Cone region. A Citizen's Guide to National Oil Companies Page 281 Argentina: Energía Argentina Sociedad Anónima (ENARSA) Data Table Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of 2008 1 Sole NOC Governance Its Organization cluster of NOCs and other sovereign enterprises in country Corporate Ownership Structure and Number of NOCs of 2005 1 1 Governance Its Organization country Corporate Ownership Structure and Description of 2008, 2, 3 ENARSA was created in Governance Its Organization incorporation and 2007 December 2004 through ownership legislation. Class A Shares (53%) are owned by the state. Class B and C shares (12%) are owned by the provinces. Class D shares (35%) may be offered to the public. ENARSA replaces Argentina's prior NOC, YPFA. (YPFA, created in 1922, was privatized in 1993 and then acquired by Repsol in 1999). Corporate Ownership Structure and % shares controlled by 2005 1 53% to 88% depending upon Governance Its Organization government share class. Corporate Ownership Structure and Domestic, international 2008 2 Not listed. Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international 2008 2 Not listed. Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist 2005 1 Yes Governance Corporate Board of Directors (BOD) Description of BOD and 2005 1 5 directors representing Class A Governance structure shares and up to 2 additional directors representing Class B and C shares. One of the Class A directors "must" have experience in capital markets. Corporate Board of Directors (BOD) Is chairman also minister Since its inception, the Governance of energy or otherwise company BOD has only had appointed by head of state one President, appointed from the private sector. It is not clear how the position is to be filled in the future. Corporate Board of Directors (BOD) Are any BOD members Members of the BOD are not Governance considered independent considered external directors. (external) and, if so, how are they appointed A Citizen's Guide to National Oil Companies Page 282 Argentina: Energía Argentina Sociedad Anónima (ENARSA) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Board of Directors (BOD) Term of service (years, Since its inception, the Governance with re-appointment). company has had only one Comment if they can be BOD. Despite for calls from readily removed. the Senate for the removal of the President of the Company due to potential conflicts, this has not taken place. Corporate Role of BOD Description of role and The BOD is responsible for the Governance policy statements day-to-day operations of the company while federal agencies perform audits and budget planning. Hiring of personnel is part of its duties. It may call upon other public employees to support its activities. Corporate Role of BOD Based on available ENARSA executes partnerships Governance information, does BOD proposed by the Federal have power, impact, Government. It is not clear yet decision making authority if the company can propose projects in addition to those that derive from the central government given the apparent lose ties of the BOD with the current administration. Corporate Recruitment/Replacement General process for BOD statements are that it Governance Key Executives recruitment, replacement recruits "ideal" personnel for its of key execs and senior operations. It may recruit from managers "other" federal agencies. Corporate Decision Making Level of NOC budget The budget for ENARSA is Governance Processes authority. Comment on approved by the federal the general decision flow government (Ministerio de within NOC and between Planificacion Federal, Inversion NOC and government for Publica y Servicios). major projects. Corporate Decision Making Based on available No. The budget for ENARSA Governance Processes, Budget information, is NOC is approved by the federal Autonomy budget process government (Ministerio de predictable and separate Planificacion Federal, Inversion from government Publica y Servicios). Corporate Decision Making Does the NOC have It may partner with third parties, Governance Processes, Budget authority to partner with always retaining majority Autonomy other entities? interest in any activity that is performed within Argentina. Associations must comply with the "hydrocarbon law". Corporate Mission and Objectives Does NOC have a Yes. (1) Collaboration in the Governance mission statement and, if supply of energy to help fuel the so, what are key elements country's growth and the public's well-being; (2) Promotion of the development of national industries; (3) Value creation for the shareholdersand (4) Participation in the Southern Cone region's energy integration efforts. A Citizen's Guide to National Oil Companies Page 283 Argentina: Energía Argentina Sociedad Anónima (ENARSA) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Sources of Capital Based on available The budget for ENARSA is Governance information, budgeting approved by the federal process and policy government (Ministerio de including % of cash Planificacion Federal, Inversion flow/revenue available Publica y Servicios). The for reinvestment executive branch created the necessary budget to form the company. Corporate Disclosure/Transparency Disclosure of audited data The company is subject to the Governance Policy and other indications of laws and controls of the disclosure and national public sector. In transparency addition, the company has a unit in charge of internal controls and auditing led by 5 members. Corporate Skill Base Based on available The company is new and had 35 Governance information, NOC reported employees in early demographics (% 2008, mostly in managerial management, % positions. technical, other descriptors) Corporate Incentives/Career Based on available No data Governance Management information, HR promotion and professional development policies Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, brief commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, extent of commercial Objectives non-commercial obligations Value Operating Performance Upstream oil E&P. "ENARSA was created, among Creation Where does it operate other reasons, to have title to Metrics (solely in the country or exploration and concession abroad-name countries)? rights of all offshore areas that Does it have sole access are not subject to previous to country's resources? concessions or contracts. In addition, it may participate on its own, in association with third parties or through them in any element of the energy value chains." ENARSA does not have sole access to Argentina's energy resources. Value Operating Performance Does the NOC operate No. However, it is entering into Creation abroad? partnerships with PDVSA and Metrics other companies abroad. This may eventually lead to outbound investment. Value Operating Performance Midstream oil pipelines, NA Creation storage, shipping Metrics A Citizen's Guide to National Oil Companies Page 284 Argentina: Energía Argentina Sociedad Anónima (ENARSA) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Downstream oil refining In association with PDVSA, Creation & marketing, ENARSA owns the right to a Metrics petrochemicals limited number of fuel stations in Argentina. At this time, it appears that third parties would have to be the fuel suppliers for these stations as ENARSA does not have its own supplies as yet. Value Operating Performance Upstream natural gas ENARSA announced a bidding Creation E&P round for offshore exploration. Metrics In those rounds, ENARSA will likely have a majority interest (which will be carried by the partners). Value Operating Performance Midstream natural gas In May 2008 ENARSA signed a Creation pipelines, storage, LNG Memorandum of Understanding Metrics with PDVSA to build a pipeline and build and operate an LNG liquefaction facility for 4.5 million tons per annum. In addition, the gas that the pipeline will bring onshore is slated to feed the Great South American natural gas pipeline system proposed by PdVSA/Venezuela. Value Operating Performance Downstream natural gas ENARSA is entering into Creation distribution, NGL sales, partnerships with PDVSA and Metrics petrochemicals others to build LNG regasification facilities in Argentina to provide natural gas during the winter heating season in the near future. Value Operating Performance Other (power generation, ENARSA does not own or Creation etc) operate assets in the power Metrics sector, but it does manage licensing and bidding rounds for power generation. Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE No data Creation production (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream Metrics capital expenditures (%) A Citizen's Guide to National Oil Companies Page 285 Argentina: Energía Argentina Sociedad Anónima (ENARSA) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all No data Creation taxes ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow No data Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin No data Creation (%) Metrics A Citizen's Guide to National Oil Companies Page 286 Argentina: Energía Argentina Sociedad Anónima (ENARSA) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg profit margin (%) No data Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk No data Creation (%) Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total No data Creation capital employed (%) Metrics Value Financial Performance Avg fiscal contribution to No data Creation State (%) Metrics Other Public Sector Governance Based on available Since the energy crisis during Factors information, presence of a winter of 2003 and the publicly articulated role interruption of exports to Chile, of the hydrocarbon sector energy has regained importance with respect to national in Argentinean affairs. development objectives ENARSA is the country's attempt to have a clear instrument to align the role of the hydrocarbon sector with the nation's general development objectives. Other Public Sector Governance Based on available The company acts as a Factors information, clear commercial entity as well as definition of the roles of regulator conducting upstream policy, commercial and power bidding rounds. It is operation and regulation responsible for all offshore and assignment to activity in areas not subject to specific entities avoiding previous concessions. conflicts of interest Other Public Sector Governance Based on available All publicly stated objectives Factors information, presence of are important and match the publicly stated objectives national development ranked by priority for objectives. Commercial NOC(s) objectives are limited to growing shareholder value. Other Public Sector Governance Based on available No strategy disclosed. Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available A Citizen's Guide to National Oil Companies Page 287 Argentina: Energía Argentina Sociedad Anónima (ENARSA) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available Class B and C shares are used Factors information, transparent as a mechanism to transfer hydrocarbon sector revenue to the provinces. This revenue management is limited to 12%. The rest is including revenue dominated by the 53% to 88% distribution within the owned by the State. Royalties country up to a maximum rate of 12% are paid to producing provinces. A Fondo de Regalias Petroleras (ley de Federalizacion de hidrocarburos) is used to distribute royalties between federal government and provinces, but no data is publicly available in this respect. Other Public Sector Governance NOC and/or country ENARSA is subject to Factors participate in EITI and/or legislation that governs state other transparency entities. Argentina is not a initiatives candidate country for EITI. The Transparency International chapter in Argentina, Poder Ciudadano, was one of the first in Latin America. Other Fiscal Sustainability Based on available Argentina's fiscal regime (taxes, Factors information, do royalties etc.) is not considered hydrocarbon sector fiscal to be the main obstacle for regimes allow for investment. The main issues sufficient capital surround the price controls investment imposed on energy products. Other Fiscal Sustainability Based on available Debt has been issued jointly Factors information, do with PDVSA and is part of hydrocarbon sector fiscal Argentina's national debt regimes allow for portfolio. In general, the rates investment grade NOC achieved are better than the credit ratings country's own due to the strength of PDVSA. Other Fiscal Sustainability Based on available A good test of suitability of Factors information, are fiscal regime for the stage of hydrocarbon sector fiscal hydrocarbon development in regimes appropriate for Argentina will be the offshore the development stage of licensing round that is the domestic resource scheduled for December 2008. base This is the next frontier open for exploitation in the country. Other Access to Reserves Hydrocarbon law to The law that created ENARSA Factors facilitate competitive allows for competition in the upstream investment bidding process for new offshore areas but requires that ENARSA be a majority partner in the ventures. In addition, ENARSA's interest is likely to be carried by the partners. A Citizen's Guide to National Oil Companies Page 288 Argentina: Energía Argentina Sociedad Anónima (ENARSA) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Access to Reserves Based on available New bidding round later this Factors information, existence of year for offshore exploration negotiated and production should result in contracts/agreements for contracts/agreements for upstream investment upstream. Other Operating Strategy Based on available ENARSA must maintain Factors information, types of joint majority ownership of assets in ventures, role of NOC(s) Argentina in its domain. It is free to partner with third parties. In addition, it has moved to partner with PDVSA abroad. Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal By design ENARSA may Factors integration participate in any element of the energy value chain. However current operations are limited to upstream offshore activities. There are MOUs in place for pipeline and LNG operations. Other International Presence Does NOC make Yes. Usually carried interest. Factors investments abroad Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in Yes. Factors upstream A Citizen's Guide to National Oil Companies Page 289 Argentina: Energía Argentina Sociedad Anónima (ENARSA) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Competition level in The law that created ENARSA Factors upstream including non- allows for competition in the NOC participants and bidding process for new requirement to include offshore areas but requires that NOC as partner ENARSA be a majority partner in the ventures. In addition, ENARSA's interest is likely to be carried by the partners. Other Commercialization Competition level in The law that created ENARSA Factors midstream, downstream allows ENARSA to participate including non-NOC in any activity of the energy participants and value chain but it must be a requirement to include majority partner. In addition, NOC as partner ENARSA's interest is likely to be carried by the partners. Other Commercialization Based on available ENARSA is partnering with Factors information, prevalence other NOCs extensively. and success of NOC/non- NOC alliances, joint ventures Other Commercialization Partial privatization of the Can be up to 35%. No readily Factors NOC (as measured by available information regarding ownership structure) ownership of Class D shares. Other Commercialization Based on available Carried interest in activities Factors information, level and with PDVSA. quality of NOC international operations Other Commercialization Based on available No data Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, ENARSA also acts as an energy Factors well-funded and trained regulator with respect to regulatory agencies, HC conducting bidding rounds for agency name, budget, offshore exploration blocks and number of staff electric power provisions. Overall, oversight is provided by the Secretaría de Energía. Other Regulation NOCs are compelled to In its regulatory role, ENARSA Factors adopt practices that is authorized to act against would provide results monopolies and other similar to those in concentrations of market power. competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers A Citizen's Guide to National Oil Companies Page 290 Argentina: Energía Argentina Sociedad Anónima (ENARSA) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Regulation Regulators assure market "ENARSA may create, Factors transparency and good administer, operate, maintain, quality, unbiased data and and manage an "Integrated Data information. HC agency Base" of information on the independence indicators hydrocarbons of Argentina. This database will be accessible by all participants in the market following as yet unspecified regulations." Other Regulation Regulators effectively No data Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of Fuel prices are regulated. Factors Objectives hydrocarbon price subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of No data Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, 2008, 2, 5 Not much data is readily Comments reliability of data Current available. provided by NOC(s) and governments Other Longevity of NOC Based on available ENARSA replaces Argentina's Comments information, history and prior NOC, YPFA. (YPFA, persistence of NOC(s) created in 1922, which was privatized in 1993 and then acquired by Repsol in 1999) A Citizen's Guide to National Oil Companies Page 291 Argentina: Energía Argentina Sociedad Anónima (ENARSA) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Country Status Trends and issues related ENARSA seeks to be an Comments to country hydrocarbon important player in the energy sector endowments and sector in Argentina and the performance region as a whole. However, its upstream carried interests do not show any measure of performance to date. Argentina appears to be increasing state participation in the energy sector after decreasing such energy sector participation in the 1990s. Price controls continue to inhibit new, needed investment in both energy resources and infrastructure. The imposition of natural gas price controls following the financial crisis of 2002 led to natural gas shortages in Argentina. As a result, Argentina was unable to fulfill its natural gas supply obligations to Chile. These events had negative economic repercussions in Chile and strained gas and electricity supplies throughout the Southern Cone region. Other Non-commercial Number of employees 35 Factors Objectives Other Non-commercial BOE production per No data Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency 9.98 Factors BOE R/P (years) Other Oil Dependency Net oil and gas export 5.77% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency 1.44% Factors Total oil and gas revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 2586.76 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 15538.45 Factors reserves (BCF) Other Resource Endowment 5265.81 Factors Total all source BOE reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Audited (protocol is not clear) Factors A Citizen's Guide to National Oil Companies Page 292 Argentina: Energía Argentina Sociedad Anónima (ENARSA) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary Not applicable Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery Not applicable Factors throughput as % of total country refinery throughput Other Operating Conditions 49.12% Factors Country oil/natural gas split, reserves (%) Other Operating Conditions 99.89% Factors Country oil/natural gas split, production (%) Other Operating Conditions Country BOE production 117.77% Factors as % of total country BOE consumption Other Trade Openness Yes Factors WTO Membership Other Competition No Factors OPEC Membership A Citizen's Guide to National Oil Companies Page 293 Argentina: Energía Argentina Sociedad Anónima (ENARSA) Souces of Information Source Year of Source Description Links # Source 1 2005 Global Legal Information Network - http://www.glin.gov/view.action?glinID=186287 Law creating Enarsa 2 2008 ENARSA website http://www.enarsa.com.ar/ 3 2007 Energy Cooperation in the Western http://www.csis.org/component/option,com_csis_pubs/task,view/id,3679/type,2/ Hemisphere, Ch 16 (Foss, Wainberg, Volkov), CSIS 4 Current Transparency International - http://www.poderciudadano.org/ Argentina 5 Current Secretaría de Energía http://energia3.mecon.gov.ar/home/ 6 Current Ministerío de Economía et http://www.mecon.gov.ar/default1.htm Producción A Citizen's Guide to National Oil Companies Page 294 Bolivia: Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) Bolivia: Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) Summary Report Corporate Governance Highlights Corporate Organization and Ownership Initially formed in 1937 with the nationalization of operations of foreign companies. Started operations in 1939 building its first refinery in 1946. Privatized ("capitalized") in 1996 along with several other state entities; proceeds used for national social security. With the Hydrocarbon Law of 2004 and the 2006 nationalization of foreign interests, YPFB was brought back into existence. As assets have been nationalized, they have been put under YPFB's administrative and operating control. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings No data Board of Directors Structure BOD is composed of an Executive President, two vice-presidents, two directors and the CFO. Independent Board Members Not by design. Is chairman also minister of energy or otherwise appointed by head of state? Company reports to the Minister of Energy. The President of YPFB is appointed by the head of state. Operations Highlights Upstream Oil YPFB has controlling interests in Bolivia's upstream oil operations. It operates in Boliviva only. It does not have sole access to the country's resources but has controlling interests in the resources. Foreign companies continue to have minority positions in Bolivia's upstream resources. Oil production is declining. Midstream Oil In May 2008, YPFB received a 97% interest in Transredes which handled considerable portions of mid-stream operations. Downstream Oil In 2007 the Bolivian government spent $112 million to acquire controlling interests in two refineries previously controlled by Petrobras. Upstream Natural Gas YPFB has controlling interests in Bolivia's upstream gas operations. It operates in Boliviva only. It does not have sole access to the country's resources but has controlling interests in the resources. Foreign companies continue to have minority positions in Bolivia's upstream resources. Gas production is not sufficient to meet export commitments. The country may have to restrict domestic natural gas consumption. Midstream Natural Gas In May 2008 YPFB received a 97% interest in Transredes which handled considerable portions of the mid-stream. Downstream Natural Gas YPFB is responsible for aggregating production, and sales of natural gas exports. Other YPFB does not participate in other businesses. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 883 Upstream: Average Proved Gas Reserves (BCF) 50,555 Upstream: Average Annual Oil Production (MM Barrels) 18 Upstream: Average Annual Natural Gas Production (BCF) 495 Downstream: Average Annual Refinery Production (MM Barrels) No data A Citizen's Guide to National Oil Companies Page 295 Bolivia: Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 702 Consolidated Average Total Assets ($Millions) 1,227 Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) 516 Categorization Indicators Categories: Scores: Corporate Public Sector Governance 34 Governance 100 Corporate Governance 40 Public Sector Fiscal Regimes 50 Oil Dependency 50 Governance Commercialization 25 Resource Endowment 1 0 Sector and Trade Openness 98 Resource Commercializa Local Contribution 89 Endowment Oil Dependency 50 Fiscal Regimes Average 41 YPFB Average NOC Worldwide Governance Indicators Trends and Issues Natural gas exports have been an important component of national income. A key question is whether production and export sales can be sustained. Bolivia has long hoped to diversify its natural gas customer base, currently dominated by Brazil. Plans to develop west-bound export rights, such as Pacific LNG, have failed as a result of territorial issues with Chile. A Citizen's Guide to National Oil Companies Page 296 Bolivia: Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) Database Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of 2006 1 NOC cluster. YPFB has Governance Its Organization cluster of NOCs and other controlling interests in other sovereign enterprises in upstream, midstream and country downstream companies (Petrolera Andina, Petrolera Chaco, Transredes and two refineries with Petrobras). Corporate Ownership Structure and Number of NOCs of 2006 1 NOC cluster. Governance Its Organization country Corporate Ownership Structure and Description of 2006, 1,4 Initially formed in 1937 with Governance Its Organization incorporation and 2007 the nationalization of operations ownership of foreign companies. Started operations in 1939 building its first refinery in 1946. Privatized ("capitalized") in 1996 along with several other state entities; proceeds used for national social security. With the Hydrocarbon Law of 2004 and the 2006 nationalization of foreign interests, YPFB was brought back into existence. As assets have been nationalized, they have been put under YPFB's administrative and operating control. Corporate Ownership Structure and % shares controlled by 2006 1 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international No data Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international No data Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist Yes Governance Corporate Board of Directors (BOD) Description of BOD and BOD is composed of an Governance structure Executive President, two vice- presidents, two directors and the CFO. Corporate Board of Directors (BOD) Is chairman also minister Company reports to the Governance of energy or otherwise Minister of Energy. The appointed by head of state President of YPFB is appointed by the head of state. Corporate Board of Directors (BOD) Are any BOD members No data. Governance considered independent (external) and, if so, how are they appointed A Citizen's Guide to National Oil Companies Page 297 Bolivia: Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Board of Directors (BOD) Term of service (years, The President and BOD can be Governance with re-appointment). readily removed as evidenced Comment if they can be by the rotation during the past readily removed. two years. Corporate Role of BOD Description of role and The BOD negotiates, approves Governance policy statements and manages all hydrocarbon contracts. It also oversees operations and production so as to protect reservoirs and maximize production. Corporate Role of BOD Based on available The BOD can initiate the Governance information, does BOD process of negotiation of new have power, impact, contracts. However, these need decision making authority to be ratified at other instances limiting the final authority. Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget YPFB reports to the Ministry of Governance Processes authority. Comment on Mines which provides the general decision flow budgetary and policy guidelines within NOC and between to the company. No NOC and government for information is publicly available major projects. on how the "re-founding" of YPFB has affected its autonomy and management decision- making power Corporate Decision Making Based on available No. YPFB reports to the Governance Processes, Budget information, is NOC Ministry of Mines which Autonomy budget process predictable provides budgetary and policy and separate from guidelines to the company. No government information is available in the public domain with respect to the company's budget process. Corporate Decision Making Does the NOC have 2008 10 NOC authority to partner with Governance Processes, Budget authority to partner with other entities is unclear. The Autonomy other entities? Ministry of Energy and Mines is developing a new hydrocarbon law which is expected to be presented to the Council of Ministers in early 2009. Corporate Mission and Objectives Does NOC have a mission YPFB is a state company run as Governance statement and, if so, what an autonomous commercial are key elements entity with a strategic focus to tackle all aspects of the hydrocarbon value chain, so as to adequately supply the country and guarantee its energy security. Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment A Citizen's Guide to National Oil Companies Page 298 Bolivia: Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Disclosure/Transparency Disclosure of audited data 2006 1 Commercial and financial data Governance Policy and other indications of is supplied as part of its annual disclosure and report. The annual report transparency (2006) does not indicate external auditors. Corporate Skill Base Based on available 2008 6 YPFB has yet to regain control Governance information, NOC of Bolivia's hydrocarbon sector. demographics (% One of its three prinicipal management, % technical, challenges is human resources. other descriptors) Corporate Incentives/Career Based on available No data Governance Management information, HR promotion and professional development policies Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, brief commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, extent of non- commercial Objectives commercial obligations Value Operating Performance Upstream oil E&P. Where YPFB has controlling interests Creation does it operate (solely in in Bolivia's upstream oil Metrics the country or abroad- operations. It operates in name countries)? Does it Boliviva only. It does not have have sole access to sole access to the country's country's resources? resources but has controlling interests in the resources. Foreign companies continue to have minority positions in Bolivia's upstream resources. Oil production is declining. Value Operating Performance Does the NOC operate No Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, In May 2008, YPFB received a Creation storage, shipping 97% interest in Transredes Metrics which handled considerable portions of mid-stream operations. Value Operating Performance Downstream oil refining & In 2007 the Bolivian Creation marketing, petrochemicals government spent $112 million Metrics to acquire controlling interests in two refineries previously controlled by Petrobras. Value Operating Performance Upstream natural gas E&P YPFB has controlling interests Creation in Bolivia's upstream gas Metrics operations. It operates in Boliviva only. It does not have sole access to the country's resources but has controlling interests in the resources. Foreign companies continue to have minority positions in Bolivia's upstream resources. Gas production is not sufficient A Citizen's Guide to National Oil Companies Page 299 Bolivia: Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data to meet export commitments. Value Operating Performance Midstream natural gas In May 2008 YPFB received a Creation pipelines, storage, LNG 97% interest in Transredes Metrics which handled considerable portions of the mid-stream. Value Operating Performance Downstream natural gas YPFB is responsible for Creation distribution, NGL sales, aggregating production, and Metrics petrochemicals sales of natural gas exports. Value Operating Performance Other (power generation, YPFB does not participate in Creation etc) other businesses. Metrics Value Operating Performance Avg reserve replacement -65% Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement ($3.16) Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves -7% Creation (%) Metrics Value Operating Performance Change in BOE 14% Creation production (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration $2.05 Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow No data Creation vs. costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics A Citizen's Guide to National Oil Companies Page 300 Bolivia: Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash 86% Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) No data Creation Metrics Value Financial Performance Avg profit margin (%) 74% Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) 86% Creation Metrics Value Financial Performance Avg debt profile (%) 0% Creation Metrics Value Financial Performance Avg return on assets (%) 42% Creation Metrics Value Financial Performance Avg return on total capital 1% Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to 11% Creation State (%) Metrics Other Public Sector Governance Based on available The hydrocarbon sector in Factors information, presence of a general and YPFB specifically publicly articulated role of are strategic assets that are used the hydrocarbon sector to further the development of with respect to national Bolivia, through the development objectives industrialization of natural gas in Bolivia and from the investment of proceeds from natural gas exports to neighbors. A Citizen's Guide to National Oil Companies Page 301 Bolivia: Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available The Ministry of Energy is Factors information, clear clearly in charge of policy. In definition of the roles of addition the regulator is policy, commercial responsible for the awarding of operation and regulation concessions, licenses and and assignment to specific contracts that are proposed by entities avoiding conflicts YPFB. of interest Other Public Sector Governance Based on available 2008 6 Objectives include: Assumption Factors information, presence of of the country's exploration and publicly stated objectives production activities as well as ranked by priority for all activities related to NOC(s) industrialization and commercialization of the country's hydrocarbons. Objectives are not ranked. Other Public Sector Governance Based on available There is no defined strategy to Factors information, presence of a transfer non-commercial strategy to transfer NOC objectives. non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available The Hydrocarbon Law Factors information, transparent stipulates that 2 to 4% of the hydrocarbon sector revenue from the direct tax on revenue management production will be assigned to including revenue non-producing and producing distribution within the provinces. No information country available on revenue flows. Other Public Sector Governance NOC and/or country 2007 5 Bolivia is not a candidate Factors participate in EITI and/or country for EITI. National other transparency Democratic Institute has initiatives operated there; other transparency programs do not appear to exist. Other Fiscal Sustainability Based on available Investment has been limited in Factors information, do recent years, as a consequence hydrocarbon sector fiscal of tighter fiscal terms and regimes allow for nationalization of assets. sufficient capital investment Other Fiscal Sustainability Based on available 2008 6 YPFB has not sought Factors information, do considerable debt in recent hydrocarbon sector fiscal years. However, there are regimes allow for reports that the company is investment grade NOC "cash strapped" and that the credit ratings government is considering three financing sources: bonds, the National Treasury and/or investments by third party companies. A Citizen's Guide to National Oil Companies Page 302 Bolivia: Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Fiscal Sustainability Based on available Flat to declining production in Factors information, are such a prolific hydrocarbon hydrocarbon sector fiscal province is an indication of regimes appropriate for the limitations of the fiscal regime development stage of the and commercial frameworks. domestic resource base Other Access to Reserves Hydrocarbon law to 2008 7 The hydrocarbons law (May 19, Factors facilitate competitive 2005) together with the upstream investment subsequent nationalizations have dampened new investments. Nevertheless, Bolivia expects non-YPFB entities to fund about 69% of near term required capital investment. Other Access to Reserves Based on available YPFB has controlling interests Factors information, existence of in all upstream companies in negotiated Bolivia with foreign companies contracts/agreements for as minority participants in some upstream investment of them. Other Operating Strategy Based on available YPFB may sign joint venture Factors information, types of joint agreements, service contracts ventures, role of NOC(s) and other partnering arrangements but must have a controlling interest. YPFB seeks to take control of production at the wellhead and market it locally and for export markets. Other Operating Strategy Based on available YPFB is offering for bids many Factors information, extent of turnkey contracts for much turnkey contracts used needed infrastructure directly by NOC(s) development. Other Business Integration Vertical, horizontal YPFB seeks to participate in all Factors integration elements of the hydrocarbon value chain, upstream, midstream and downstream. Other International Presence Does NOC make No. Factors investments abroad Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make No. Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput A Citizen's Guide to National Oil Companies Page 303 Bolivia: Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in Yes in minority positions. Factors upstream Other Commercialization Competition level in YPFB must be a partner with a Factors upstream including non- controlling equity interest. NOC participants and YPFB proposes contracts of requirement to include association/service that later NOC as partner need to be approved. Other Commercialization Competition level in YPFB may sign service Factors midstream, downstream contracts for midstream assets. including non-NOC participants and requirement to include NOC as partner Other Commercialization Based on available 2008 7 There are currently at least Factors information, prevalence twelve large non-Bolivian and success of NOC/non- companies operating in the NOC alliances, joint upstream sector with expected ventures investments accounting for about 69% of the near term required capital investment. NOC/NOC alliances may be the preference of the Government. The first alliance is one in which PDVSA owns 49% and YPFB owns 51% and it is slated to start operations. Other ventures are under discussion. Other Commercialization Partial privatization of the NOC is completely state owned. Factors NOC (as measured by ownership structure) Other Commercialization Based on available No international operations. Factors information, level and quality of NOC international operations Other Commercialization Based on available Non-commercial activities still Factors information, percent of not clearly reported. non-core commercial activities in overall operations A Citizen's Guide to National Oil Companies Page 304 Bolivia: Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Regulation Presence of independent, 2007 4 Superintendency de Factors well-funded and trained Hidrocarburos (SH). regulatory agencies, HC Regulatory agency predates the agency name, budget, current incarnation of YPFB. number of staff However, many of the contracting responsibilities have been taken over by YPFB. A plan was devised to create Petrobolivia as a new agency for NOC oversight but this has not materialized as yet. Other Regulation NOCs are compelled to NOC seeks to provide natural Factors adopt practices that would gas service to a greater portion provide results similar to of the population. It behaves those in competitive more like a regulated utility markets with price, access rather than a company to and quality of energy performing in a purely services. brief description: competitive market. HC agency enforcement powers Other Regulation Regulators assure market Data is collected by YPFB and Factors transparency and good the Hydrocarbon regulator. The quality, unbiased data and independence of either one is information. HC agency not clear. independence indicators Other Regulation Regulators effectively 2008 8 Disputes have been plentiful Factors resolve disputes and since 2005 and have required conflicts and address direct negotiations with the public concerns about Bolivian government. The development of and access government has paid $402 to hydrocarbon resources million to nationalize five and infrastructure. HC hydrocarbon companies. agency dispute resolution Procedures for dispute policy resolution going forward are not clear. Other Non-commercial Provision and level of No data Factors Objectives hydrocarbon price subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of No data Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC $848.84 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) A Citizen's Guide to National Oil Companies Page 305 Bolivia: Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Non-commercial Financial performance $485.57 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, YPFB provides an annual report Comments reliability of data provided which is quite comprehensive. by NOC(s) and In addition, the Ministry also governments provides information. Other Longevity of NOC Based on available Comments information, history and persistence of NOC(s) Other Country Status Trends and issues related Natural gas exports have been Comments to country hydrocarbon an important component of sector endowments and national income. A key performance question is whether production and export sales can be sustained. Bolivia has long hoped to diversify its natural gas customer base, currently dominated by Brazil. Plans to develop west-bound export rights, such as Pacific LNG, have failed as a result of territorial issues with Chile. Other Non-commercial Number of employees 1,445 Factors Objectives Other Non-commercial BOE production per 71,325 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 50.70 Factors Other Oil Dependency Net oil and gas export -4.90% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues -1.88% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 440.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 26,132.85 Factors reserves (BCF) Other Resource Endowment Total all source BOE 4,945.66 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Audited (stated, but protocol is Factors unclear) Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves A Citizen's Guide to National Oil Companies Page 306 Bolivia: Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions 8.90% Factors Country oil/natural gas split, reserves (%) Other Operating Conditions 99.46% Factors Country oil/natural gas split, production (%) Other Operating Conditions Country BOE production 474.85% Factors as % of total country BOE consumption Other Trade Openness Yes Factors WTO Membership Other Competition No Factors OPEC Membership A Citizen's Guide to National Oil Companies Page 307 Bolivia: Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) Sources of Information Source Year of Source Description Links # Source 1 2006 Memoria 2006 YPFB http://www.ypfb.gov.bo/memorias.shtml 2 2005 Ley de Nacionalizacion http://www.ypfb.gov.bo/leyes_ds.php 3 2008 MINYX news site http://hidrocarburosbol.blogspot.com/2008/03/ypfb-aumenta-su-personal-en- 175-y.html 4 2007 Energy Cooperation in the Western http://www.csis.org/component/option,com_csis_pubs/task,view/id,3679/type,2/ Hemisphere, Ch 16 (Foss, Wainberg, Volkov), CSIS 5 2007 National Democratic Institute - Bolivia http://www.ndi.org/worldwide/lac/bolivia/bolivia.asp 6 2008 Latin Petroleum Magazine "Government evaluates sources of funding for YPFB," by Chad Archey, www.latinpetroleum.com. 7 2008 Latin Petroleum Magazine "Hydrocarbon Sector CAPEX to approximate $1,266 million," by Pieto Stewart, www.latinpetroleum.com 8 2008 Latin Petroleum Magazine "Bolivia spends $401.8 million on hydrocarbon nationalizations," by Vinod Sreeharsha, www.latinpetroleum.com 9 2008 YPFB official website http://www.ypfb.gov.bo/ 10 2008 Prensa Latina "Bolivia: New 2009 Hydrocarbon Law" http://www.plenglish.com/article.asp?ID={44A7935D-DBE2-43F1-9F82- 472CCC5A9A3A})&language=EN A Citizen's Guide to National Oil Companies Page 308 Brazil: Petróleo Brasileiro S.A. (Petrobras) Brazil: Petróleo Brasileiro S.A. (Petrobras) Summary Report Corporate Governance Highlights Corporate Organization and Ownership Petrobras is a state-controlled company created pursuant to Law No.2,004. A majority of the voting capital must be owned by the Brazilian federal government, a state or a municipality. Shares Controlled by Government The Brazilian government controls 58% of Petrobras' shares. Domestic, International Exchanges for Equity Listings Petrobras is listed on the Bovespa (Brazilian Stock Exchange) and the New York Stock Exchange. Board of Directors Structure There are nine directors elected for one year terms who can be re-elected. The five company/government related directors are: the CEO of Petrobras who is appointed by the government; 3 government ministers appointed by the government and one military officer-appointment source not disclosed. In addition to the BOD Petrobras has a permanent Fiscal Council as required by Brazilian corporate law composed of up to 5 members. The council is independent of management and external auditors. The council monitors management's activities and reviews annual reports and financial statements. The Brazilian government has the right to appoint the majority of the members of the council, one of which is appointed by the Minister of Finance representing the Brazilian treasury. Preferred and minority shareholders are entitled to elect one member each. Independent Board Members Of the four "independent" directors, two are appointed by the government, one by the minority shareholder and one by the minority preferred shareholder. The minority shareholders are BNDES Bank and other Brazilian public sector entities. Is chairman also minister of energy or otherwise appointed by head of state? The Chairman of the BOD is appointed by the government. The current Chairman was Minister of Mines and Energy (2003- 2005) and Chief State Minister of the Civil Cabinet of the Presidency of the Republic of Brazil since 2005. Operations Highlights Upstream Oil At the end of 2006 Petrobras accounted for 74% of Brazil's BOE proved reserves and 97% of BOE production. 86% of oil production and 56% of gas production is offshore. Petrobras BOE production grew 17% between 2004 and 2006. Non-NOC participants are permitted in the upstream oil and gas exploration sectors (Petrobras was allowed to retain all producing properties). Although non-NOC participants are not required to partner with Petrobras most of them do so as Petrobras has had superior technical information on tendered exploration blocks. Petrobras operates internationally with upstream operations in Argentina, Bolivia, Venezuela, Ecuador, Peru, Colombia, US Gulf of Mexico, W. Africa, Iran and Turkey. International production accounted for 10% of total production in 2006. Midstream Oil Petrobras dominates this sector. Operations include 10,104 miles of oil and refined products pipelines; 24 marine terminals operating 5000 vessels per day and a shipping fleet of 51 vessels with deadweight tonnage of 2.6 million tons. Petrobras has preferential access to oil and product pipelines based on historical levels of usage which is assigned by regulator ANP. The remainder (not much in practicality) is available to third parties on a non-discriminatory basis. Downstream Oil Petrobras operates 11 of Brazil's 13 refineries with primary distillation capacity of close to 2 million B/D. Although 3rd parties, foreign and domestic, are permitted to own and operate refineries in Brazil, PBR accounts for 98% of Brazil's refinery production. In 2/2005 PBR signed an agreement with PDVSA to build a new refinery in northeastern Brazil. That project has reportedly suffered delays due to disagreements between the two countries. Refinery utilization has averaged 86% of capacity with 70% of feedstock coming from company production. 85% of refined products output goes to the domestic market. Operating income/total revenues in this segment is low (3%) due in part to price subsidies. The company supplies about 45% of the gasoline and diesel used in its owned/franchised service stations. The retail product segment is where Petrobras experiences the most competition domestically. A Citizen's Guide to National Oil Companies Page 309 Brazil: Petróleo Brasileiro S.A. (Petrobras) Upstream Natural Gas At the end of 2006 Petrobras accounted for 74% of Brazil's BOE proved reserves and 97% of BOE production. 86% of oil production and 56% of gas production is offshore. Petrobras BOE production grew 17% between 2004 and 2006. Non-NOC participants are permitted in the upstream oil and gas exploration sectors (Petrobras was allowed to retain all producing properties). Although non-NOC participants are not required to partner with Petrobras most of them do so as Petrobras has had superior technical information on tendered exploration blocks. Petrobras operates internationally with upstream operations in Argentina, Bolivia, Venezuela, Ecuador, Peru, Colombia, US Gulf of Mexico, W. Africa, Iran and Turkey. International production accounted for 10% of total production in 2006. Midstream Natural Gas Petrobras owns and operates 9,771 miles of gas pipelines including cross-border pipelines and gas processing capacity of 1083 MMCF/D. Although 3rd parties have the right to construct, operate and ship on gas pipelines (and facilities connected with their usage) PBR continues to be the dominant player. They have 3rd party partners in the Bolivia-Brazil Pipeline and a number of others. In June 2006 Sinopec began construction on the Gasene pipeline. Petrobras has preferential access to gas pipelines based on its historical level of usage which is formally assigned by the ANP. Excess capacity is made available to 3rd parties on a non-discriminatory basis. Downstream Natural Gas Petrobras' petrochemical operations consist of investment interests ranging from 8-85% in 9 petrochemical companies. It invests in projects integrated with its refineries. Petrobras also owns minority interests in 19 gas distribution companies located in 19 Brazilian states. Other Petrobras has significant investments in thermoelectric plants in Brazil which caused its Gas and Supply Segment to lose money in 2006. Petrobras has gas midstream assets in Argentina. It also has $2 billion of refining assets in Argentina and the US at the end of 2006. Petrobras has significant service station operations in Argentina, Bolivia, Uruguay, Paraguay and Colombia of which 70% is operated. It has petrochemical assets in Argentina and gas distribution assets in Uruguay. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 9,693 Upstream: Average Proved Gas Reserves (BCF) 11,788 Upstream: Average Annual Oil Production (MM Barrels) 629 Upstream: Average Annual Natural Gas Production (BCF) 724 Downstream: Average Annual Refinery Production (MM Barrels) 678 Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 73,304 Consolidated Average Total Assets ($Millions) 80,133 Consolidated Average EBIT ($Millions) 29,398 Consolidated Average Net Income ($Millions) 9,787 Categorization Indicators Categories: Scores: Corporate Governance 63 Corporate Governance Public Sector Governance 78 100 Commercialization 100 Public Sector Oil Dependency 50 Fiscal Regimes 88 Governance Resource Endowment 3 0 Oil Dependency 98 Resource Commercializa Local Contribution 76 Endowment Sector and Trade Openness 71 Fiscal Regimes Average 72 PETROBRAS Average NOC A Citizen's Guide to National Oil Companies Page 310 Brazil: Petróleo Brasileiro S.A. (Petrobras) Worldwide Governance Indicators 1998 Voice and Accountability 2002 Political Stability Government Effectiveness Regulatory Quality Rule of Law Control of Corruption 2004 2006 0 25 50 75 100 Trends and Issues Petrobras has had several significant oil and gas discoveries: oil in the Tupi field and gas in the Santos basin. However, the technology to develop these finds is not "on the shelf" and production is at least 5 years away (probably longer). Petrobras is expected to grow production about 6% p.a. over the next few years. Brazil has attained investment grade status and gasoline and diesel prices were recently raised 10%. The government is studying a tax rate increase for Petrobras. In addition the company is calling for a change in Brazil's commercial frameworks: it would like to move to production sharing contracts instead of the current concession system that allows investors to book reserves. The ANP removed pre-salt fields from its annual auction after the Tupi discovery was announced. A Citizen's Guide to National Oil Companies Page 311 Brazil: Petróleo Brasileiro S.A. (Petrobras) Database Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of 2006 1 Petrobras is Brazil's sole NOC in Governance Its Organization cluster of NOCs and other the oil and gas sector. sovereign enterprises in country Corporate Ownership Structure and Number of NOCs of 2006 1 1 Governance Its Organization country Corporate Ownership Structure and Description of 2006 1 Petrobras is a state-controlled Governance Its Organization incorporation and company created pursuant to ownership Law No.2,004. A majority of the voting capital must be owned by the Brazilian federal government, a state or a municipality. Corporate Ownership Structure and % shares controlled by 2006 1 The Brazilian government Governance Its Organization government controls 58% of Petrobras' shares. Corporate Ownership Structure and Domestic, international 2006 1 Petrobras is listed on the Governance Its Organization exchanges where shares Bovespa (Brazilian Stock are listed Exchange) and the New York Stock Exchange. Corporate Ownership Structure and Domestic, international 2006 1 Petrobras is listed on the Governance Its Organization exchanges where bonds Bovespa (Brazilian Stock are traded Exchange) and the New York Stock Exchange. Corporate Ownership Structure and Company files form 20-F 2006 1 Yes Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist 2006 1 Yes Governance Corporate Board of Directors (BOD) Description of BOD and 2006 1 There are nine directors elected Governance structure for one year terms who can be re-elected. The five company/government related directors are: the CEO of Petrobras who is appointed by the government; 3 government ministers appointed by the government and one military officer-appointment source not disclosed. In addition to the BOD Petrobras has a permanent Fiscal Council as required by Brazilian corporate law composed of up to 5 members. The council is independent of management and external auditors. The council monitors management's activities and reviews annual reports and financial statements. The Brazilian government has the right to appoint the majority of the members of the council, one of which is appointed by the Minister of Finance representing the Brazilian treasury. Preferred A Citizen's Guide to National Oil Companies Page 312 Brazil: Petróleo Brasileiro S.A. (Petrobras) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data and minority shareholders are entitled to elect one member each. Corporate Board of Directors (BOD) Is chairman also minister 2006 1 The Chairman of the BOD is Governance of energy or otherwise appointed by the government. appointed by head of state The current Chairman was Minister of Mines and Energy (2003-2005) and Chief State Minister of the Civil Cabinet of the Presidency of the Republic of Brazil since 2005. Corporate Board of Directors (BOD) Are any BOD members 2006 1 Of the four "independent" Governance considered independent directors, two are appointed by (external) and, if so, how the government, one by the are they appointed minority shareholder and one by the minority preferred shareholder. The minority shareholders are BNDES Bank and other Brazilian public sector entities. Corporate Board of Directors (BOD) Term of service (years, 2006 1 See BOD Structure above. Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and 2006 1 Elects one president and up to 6 Governance policy statements executive officers; Appoint independent auditors; Monitor code of ethics/business conduct policies compliance; formal processes for strategic and business planning, capital budgeting, financing overseen by BOD. Corporate Role of BOD Based on available 2006 1 BOD has limited authority as Governance information, does BOD important roles are shared with have power, impact, the Fiscal Council and other decision making authority government ministries and some major decisions are controlled by the shareholders. Shareholders approve financial statements (with Fiscal Council); Approve debt issuance; Declare dividends; Approve registration of securities and set the aggregate compensation payable to directors and executive officers. BOD allocates the compensation among the directors and executive officers. The Fiscal Council reviews financial and operating performance. The Ministry of Planning, Budget & Management, Ministry of Finance, Ministry of Mines and Energy and the Brazilian Congress (capital budget approval) participate in the A Citizen's Guide to National Oil Companies Page 313 Brazil: Petróleo Brasileiro S.A. (Petrobras) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data company's strategic/business planning and capital budgeting. Corporate Recruitment/Replacement General process for 2006 1 The BOD recruits and selects the Governance Key Executives recruitment, replacement chief executive officer/president of key execs and senior and senior management. managers Corporate Decision Making Level of NOC budget 2006 1 Petrobras has a predictable, Governance Processes authority. Comment on formal annual capital budgeting the general decision flow process. However, the Ministry within NOC and between of Planning, Budget & NOC and government for Management, Ministry of major projects. Finance, Ministry of Mines and Energy participate in the company's strategic/business planning and capital budgeting. The Brazilian Congress must approve the company's annual capital budget. Corporate Decision Making Based on available 2006 1 It is a predictable annual process Governance Processes, Budget information, is NOC but it is not separate from the Autonomy budget process national budget process. See predictable and separate above. from government Corporate Decision Making Does the NOC have 2006, 1, 8 About 80% of Petrobras' (PBR) Governance Processes, Budget authority to partner with 2007 domestic upstream exploration Autonomy other entities? activities are carried out with other third party entities pursuant to a regulator (ANP) conducted bidding process. Although third parties have the right to construct, operate and ship on oil pipelines (and facilities connected with their usage) PBR does not mention any partners in these activities or competitors. Although third parties have the right to construct, operate and ship on gas pipelines (and facilities connected with their usage) PBR continues to be the dominant player. They have third party partners in the Bolivia- Brazil Pipeline and a number of others. In June 2006 Sinopec began construction on the Gasene pipeline. Although third parties, foreign and domestic, are permitted to own and operate refineries in Brazil, PBR accounts for 98% of Brazil's refinery production. A Citizen's Guide to National Oil Companies Page 314 Brazil: Petróleo Brasileiro S.A. (Petrobras) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Mission and Objectives Does NOC have a 2006 1 Consolidate/increase competitive Governance mission statement and, if advantages in Brazilian/South so, what are key elements American oil and oil products market; selectively expand international activities in an integrative manner; develop/lead the domestic natural gas market and act in an integrated manner in the South American gas and power market; selectively expand petrochemicals activities; selectively perform in renewable energy market. Corporate Sources of Capital Based on available 2006 1 Historically PBR has had Governance information, budgeting sufficient cash flow from process and policy operations to fund its investment including % of cash portfolio and has reported oil and flow/revenue available for gas production increases and reinvestment increases in refinery throughput as it modifies its refineries to process heavier Brazilian crude oils. Corporate Disclosure/Transparency Disclosure of audited data 2006 1 The financial auditors are Ernst Governance Policy and other indications of & Young and KPMG; DeGolyer disclosure and & MacNaughton is the reserves transparency auditor. Corporate Skill Base Based on available 2006 1 In 2006 77% of PBR's Governance information, NOC employees were employed at the demographics (% parent company. Of parent management, % technical, company employees, 67% had other descriptors) mid-level positions related to operations and administrative support; 31% were upper-level engineers and administrators, and the remainder were maritime employees. There are two unions with which PBR negotiates annual collective bargaining agreements. There have been no major labor strikes since 1995. Corporate Incentives/Career Based on available 2,006 1 PBR has a formal human Governance Management information, HR resources department and promotion and emphasizes employee training professional development and development. It spent $151 policies million on employee training in 2006. It has merit based promotions and a profit-sharing plan with predetermined criteria. Employee profit sharing distributions were $560 million in 2006. Corporate Full Disclosure and Based on available 2008 4 On its web site Petrobras Governance Measurement of Non- information, brief provides quantitative data on its commercial Objectives description of reporting poverty relief and health on noncommercial contributions. These objectives contributions expanded significantly in 2007. A Citizen's Guide to National Oil Companies Page 315 Brazil: Petróleo Brasileiro S.A. (Petrobras) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Full Disclosure and Based on available 2006 1, 2, 3 In addition to taxes, dividends Governance Measurement of Non- information, extent of and payroll, PBR in 2006 spent commercial Objectives non-commercial $119 million on direct obligations social/economic programs in Brazil and about $1.4 billion in price subsidies. Value Operating Performance Upstream oil E&P. 2006 1 At the end of 2006 Petrobras Creation Where does it operate accounted for 74% of Brazil's Metrics (solely in the country or BOE proved reserves and 97% of abroad-name countries)? BOE production. 86% of oil Does it have sole access production and 56% of gas to country's resources? production is offshore. Petrobras BOE production grew 17% between 2004 and 2006. Non- NOC participants are permitted in the upstream oil and gas exploration sectors (Petrobras was allowed to retain all producing properties). Although non-NOC participants are not required to partner with Petrobras most of them do so as Petrobras has had superior technical information on tendered exploration blocks. Petrobras operates internationally with upstream operations in Argentina, Bolivia, Venezuela, Ecuador, Peru, Colombia, US Gulf of Mexico, W. Africa, Iran and Turkey. International production accounted for 10% of total production in 2006. Value Operating Performance Does the NOC operate 2006 1 Petrobras operates internationally Creation abroad? with upstream operations in Metrics Argentina, Bolivia, Venezuela, Ecuador, Peru, Colombia, US Gulf of Mexico, W. Africa, Iran and Turkey. International production accounted for 10% of total production in 2006. Value Operating Performance Midstream oil pipelines, 2006 1 Petrobras dominates this sector. Creation storage, shipping Operations include 10,104 miles Metrics of oil and refined products pipelines; 24 marine terminals operating 5000 vessels per day and a shipping fleet of 51 vessels with deadweight tonnage of 2.6 million tons. Petrobras has preferential access to oil and product pipelines based on historical levels of usage which is assigned by regulator ANP. The remainder (not much in practicality) is available to third parties on a non-discriminatory basis. A Citizen's Guide to National Oil Companies Page 316 Brazil: Petróleo Brasileiro S.A. (Petrobras) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Downstream oil refining 2006 1 Petrobras operates 11 of Brazil's Creation & marketing, 13 refineries with primary Metrics petrochemicals distillation capacity of close to 2 million B/D. Although 3rd parties, foreign and domestic, are permitted to own and operate refineries in Brazil, PBR accounts for 98% of Brazil's refinery production. In 2/2005 PBR signed an agreement with PDVSA to build a new refinery in northeastern Brazil. That project has reportedly suffered delays due to disagreements between the two countries. Refinery utilization has averaged 86% of capacity with 70% of feedstock coming from company production. 85% of refined products output goes to the domestic market. Operating income/total revenues in this segment is low (3%) due in part to price subsidies. The company supplies about 45% of the gasoline and diesel used in its owned/franchised service stations. The retail product segment is where Petrobras experiences the most competition domestically. Value Operating Performance Upstream natural gas 2006 1 At the end of 2006 Petrobras Creation E&P accounted for 74% of Brazil's Metrics BOE proved reserves and 97% of BOE production. 86% of oil production and 56% of gas production is offshore. Petrobras BOE production grew 17% between 2004 and 2006. Non- NOC participants are permitted in the upstream oil and gas exploration sectors (Petrobras was allowed to retain all producing properties). Although non-NOC participants are not required to partner with Petrobras most of them do so as Petrobras has had superior technical information on tendered exploration blocks. Petrobras operates internationally with upstream operations in Argentina, Bolivia, Venezuela, Ecuador, Peru, Colombia, US Gulf of Mexico, W. Africa, Iran and Turkey. International production accounted for 10% of total production in 2006. A Citizen's Guide to National Oil Companies Page 317 Brazil: Petróleo Brasileiro S.A. (Petrobras) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Midstream natural gas 2006 1 Petrobras owns and operates Creation pipelines, storage, LNG 9,771 miles of gas pipelines Metrics including cross-border pipelines and gas processing capacity of 1083 MMCF/D. Although 3rd parties have the right to construct, operate and ship on gas pipelines (and facilities connected with their usage) PBR continues to be the dominant player. They have 3rd party partners in the Bolivia-Brazil Pipeline and a number of others. In June 2006 Sinopec began construction on the Gasene pipeline. Petrobras has preferential access to gas pipelines based on its historical level of usage which is formally assigned by the ANP. Excess capacity is made available to 3rd parties on a non-discriminatory basis. Value Operating Performance Downstream natural gas 2006 1 Petrobras' petrochemical Creation distribution, NGL sales, operations consist of investment Metrics petrochemicals interests ranging from 8-85% in 9 petrochemical companies. It invests in projects integrated with its refineries. Petrobras also owns minority interests in 19 gas distribution companies located in 19 Brazilian states. Value Operating Performance Other (power generation, 2006 1 Petrobras has significant Creation etc) investments in thermoelectric Metrics plants in Brazil which caused its Gas and Supply Segment to lose money in 2006. These assets are IPPs that the Brazilian government took from operators as a consequence of disputes associated with pricing the dispatched electricity when Brazil's drought in the late 1990s ended and hydro facilities resumed operations. Petrobras has gas midstream assets in Argentina. It also has $2 billion of refining assets in Argentina and the US at the end of 2006. It has significant service station operations in Argentina, Bolivia, Uruguay, Paraguay and Colombia of which 70% is operated. It has petrochemical assets in Argentina and gas distribution assets in Uruguay. It also is a significant producer of biofuels utilizing sugarcane. A Citizen's Guide to National Oil Companies Page 318 Brazil: Petróleo Brasileiro S.A. (Petrobras) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg reserve replacement 89% Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement $11.51 Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves -4% Creation (%) Metrics Value Operating Performance Change in BOE 12% Creation production (%) Metrics Value Operating Performance Avg upstream operating 163% Creation cash flow/upstream Metrics capital expenditures (%) Value Operating Performance Avg upstream exploration $10.20 Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs $5.84 Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax 36% Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before $28.85 Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes $13.79 Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) 52% Creation Metrics Value Operating Performance Avg operating cash flow 163% Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on assets 26% Creation Metrics Value Operating Performance Avg refinery utilization 86% Creation rate (%) Metrics Value Operating Performance Change in total refining 7% Creation production (%) Metrics Value Operating Performance Change in refinery 5% Creation capacity (%) Metrics Value Operating Performance Avg income from $2.90 Creation operations per unit Metrics volume ($M/barrel) A Citizen's Guide to National Oil Companies Page 319 Brazil: Petróleo Brasileiro S.A. (Petrobras) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg refining and 148% Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash 130% Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) 40% Creation Metrics Value Financial Performance Avg profit margin (%) 13% Creation Metrics Value Financial Performance Avg effective tax rate (%) 65% Creation Metrics Value Financial Performance Avg reinvestment risk 130% Creation (%) Metrics Value Financial Performance Avg debt profile (%) 43% Creation Metrics Value Financial Performance Avg return on assets (%) 12% Creation Metrics Value Financial Performance Avg return on total capital 14% Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to 30% Creation State (%) Metrics Other Public Sector Governance Based on available 2006 1 Although not specifically related Factors information, presence of a to national development publicly articulated role objectives, Brazil has a of the hydrocarbon sector comprehensive hydrocarbon law with respect to national (Oil Law No. 9,478) enacted in development objectives 1995 which enabled competition in all aspects of the oil and gas industry in Brazil. Other Public Sector Governance Based on available 2006 1, 10 Commercial, regulatory and Factors information, clear policy functions are clearly definition of the roles of separated in the upstream oil and policy, commercial gas sector. In the midstream and operation and regulation downstream oil sector, and assignment to specific commercial functions are entities avoiding conflicts separate but policy and of interest regulatory functions are combined in ministries. With respect to the midstream and downstream natural gas sectors, debates are underway in Brazil regarding legislative bills that would define the regulatory A Citizen's Guide to National Oil Companies Page 320 Brazil: Petróleo Brasileiro S.A. (Petrobras) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data framework for the natural gas sector. Other Public Sector Governance Based on available 2006 1 Consolidate/increase competitive Factors information, presence of advantages in Brazilian/South publicly stated objectives American oil and oil products ranked by priority for market; selectively expand NOC(s) international activities in an integrative manner; develop/lead the domestic natural gas market and act in an integrated manner in the South American gas and power market; selectively expand petrochemicals activities; selectively perform in renewable energy market. Other Public Sector Governance Based on available 2006 1, 2 Oil, gas and refined products Factors information, presence of a prices were deregulated in 2002. strategy to transfer NOC However, from time to time the non-commercial government pressures PBR into objectives to government price subsidies which they hope or other agencies as to phase out at a later date. There capacity becomes are also various price controls on available gas. Other Public Sector Governance Based on available 2008 13 Law 9478, 1997 and Law 7990, Factors information, transparent 1989 regulate the sharing of hydrocarbon sector royalties between national and revenue management sub-national levels of including revenue government. Brazil does not distribution within the have a petroleum fund. The country Ministry of Finance publishes detailed accounts, but no break- down is given for petroleum revenue. Other Public Sector Governance NOC and/or country 2008 7 PBR supports the EITI initiative. Factors participate in EITI and/or other transparency initiatives Other Fiscal Sustainability Based on available 2006, 1, 8, 9 Historically PBR has been able Factors information, do 2007 to fund capital expenditures from hydrocarbon sector fiscal operating cash flow. With regimes allow for respect to non-NOC participants, sufficient capital the greatest level of participation investment is in the upstream sector. PBR continues to dominate all the other sectors with the exception of retail oil products distribution. Lack of a clear regulatory framework in the gas midstream sector is a disincentive to non- NOC investment in that sector. Other Fiscal Sustainability Based on available 2008 4 PBR is investment grade at Baa1 Factors information, do (Moody's). The Brazil sovereign hydrocarbon sector fiscal rating was recently raised to regimes allow for investment grade which could investment grade NOC prompt an increase in PBR's credit ratings rating. A Citizen's Guide to National Oil Companies Page 321 Brazil: Petróleo Brasileiro S.A. (Petrobras) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Fiscal Sustainability Based on available 2006 1 They appear to be adequate as Factors information, are there is significant non-NOC hydrocarbon sector fiscal interest and activity in the regimes appropriate for upstream sector. the development stage of the domestic resource base Other Access to Reserves Hydrocarbon law to 2006 1 Brazil has a comprehensive Factors facilitate competitive hydrocarbon law (Oil Law No. upstream investment 9,478) enacted in 1995 which enabled competition in all aspects of the oil and gas industry in Brazil. Other Access to Reserves Based on available 2008 10 Details of numerous upstream Factors information, existence of contracts entered into by non- negotiated NOCs are available at the contracts/agreements for regulator's (ANP) website. upstream investment Other Operating Strategy Based on available 2006 1 Concessions. Factors information, types of joint ventures, role of NOC(s) Other Operating Strategy Based on available No data. Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal 2006 1 PBR is a vertically integrated Factors integration company. Other International Presence Does NOC make 2006 1 Yes Factors investments abroad Other International Presence Avg company 12% Factors international BOE production as % avg total company BOE production Other International Presence Change in company BOE -19% Factors production from international operations (%) Other International Presence Does NOC make 2006 1 Yes Factors investments abroad Other International Presence Avg company 7% Factors international refinery throughput as % total refinery throughput Other International Presence Change in company 192% Factors refinery throughput from international operations (%) Other International Presence Avg company 8% Factors international refinery capacity as % company total refinery capacity A Citizen's Guide to National Oil Companies Page 322 Brazil: Petróleo Brasileiro S.A. (Petrobras) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other International Presence Change in company 186% Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in 2006 1,8 Numerous. Factors upstream Other Commercialization Competition level in 2006, 1, 11 Although non-NOC participants Factors upstream including non- 2007 are not required to partner with NOC participants and Petrobras most of them do so as requirement to include Petrobras has had superior NOC as partner technical information on tendered exploration blocks. Other Commercialization Competition level in 2006, 1, 2, 8, Dominated by Petrobras Factors midstream, downstream 2007 9 although third parties permitted including non-NOC in these sectors. Partnership with participants and PBR is not required. Lack of a requirement to include regulatory framework is a NOC as partner disincentive to investment in the gas midstream sector. Refined product price subsidies are a disincentive to investment in the downstream sector. Other Commercialization Based on available 2006 1 Highly prevalent in the upstream Factors information, prevalence and international sectors. and success of NOC/non- NOC alliances, joint ventures Other Commercialization Partial privatization of the 2006 1 Non-government shareholders Factors NOC (as measured by own 44% (voting) of PBR ownership structure) Other Commercialization Based on available 2006 1 Petrobras operates internationally Factors information, level and with upstream operations in quality of NOC Argentina, Bolivia, Venezuela, international operations Ecuador, Peru, Colombia, US Gulf of Mexico, W. Africa, Iran and Turkey. International production accounted for 10% of total production in 2006. Petrobras has gas midstream assets in Argentina. It also has $2 billion of refining assets in Argentina and the US at the end of 2006. It has significant service station operations in Argentina, Bolivia, Uruguay, Paraguay and Colombia of which 70% is operated. It has petrochemical assets in Argentina and gas distribution assets in Uruguay. Other Commercialization Based on available 2006 1 None. Factors information, percent of non-core commercial activities in overall operations A Citizen's Guide to National Oil Companies Page 323 Brazil: Petróleo Brasileiro S.A. (Petrobras) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Regulation Presence of independent, 2006, 1, 11 The upstream regulator is the Factors well-funded and trained 2007 ANP. Although its performance regulatory agencies, HC has been improving over time, agency name, budget, some observers believe it is number of staff understaffed and underfunded. Outside the ANP, regulatory functions are typically housed in ministries in the other sectors. Other Regulation NOCs are compelled to 2006 1 In the upstream partially; PBR Factors adopt practices that would still has an advantage over ANP provide results similar to with respect to technical those in competitive information. PBR dominates all markets with price, access other sectors except for retail oil to and quality of energy products distribution. services. brief description: HC agency enforcement powers Other Regulation Regulators assure market 2006, 1, 11 ANP data provision has Factors transparency and good 2007 improved and further quality, unbiased data and improvement efforts are information. HC agency continuing. Other data is independence indicators provided by relevant ministries. Other Regulation Regulators effectively No data. Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of 2006 2 About $1.4 billion annually in Factors Objectives hydrocarbon price recent years. subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of 2006 3 Disclosure on company website. Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC $1,429.19 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance $1,307.39 Factors Objectives relative to workforce ($ M) A Citizen's Guide to National Oil Companies Page 324 Brazil: Petróleo Brasileiro S.A. (Petrobras) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Quality of Data Availability, extent, 2006 1, 6 Good with respect to NOC SEC Comments reliability of data Form 20Fs. Country data is provided by NOC(s) and improving. governments Other Longevity of NOC Based on available 2006, 1 Petrobras was incorporated in Comments information, history and 2008 Brazil in 1953. In 1995 the persistence of NOC(s) government permitted competition in all sectors of the Brazilian oil and gas industry and PBR was partially privatized thereafter. Other Country Status Trends and issues related Petrobras has had several Comments to country hydrocarbon significant oil and gas sector endowments and discoveries: oil in the Tupi field performance and gas in the Santos basin. However, the technology to develop these finds is not "on the shelf" and production is at least 5 years away (probably longer). Petrobras is expected to grow production about 6% p.a. over the next few years. Brazil has attained investment grade status and gasoline and diesel prices were recently raised 10%. The government is studying a tax rate increase for Petrobras. In addition the company is calling for a change in Brazil's commercial frameworks: it would like to move to production sharing contracts instead of the current concession system that allows investors to book reserves. The ANP removed pre- salt fields from its annual auction after the Tupi discovery was announced. Finally, a major, and sensitive, issue for Brazil has been the shift in policies in Bolivia and impacts on natural gas deliveries through the Bolivia-Brazil pipeline. Bolivia's nationalization of upstream assets affected Petrobras but, more importantly, the lack of confidence associated with B-B deliveries has triggered a shift toward LNG. Bolivia is becoming less comfortable with Brazil's dominance of its natural gas sector. Other Non-commercial Number of employees 56,069 Factors Objectives A Citizen's Guide to National Oil Companies Page 325 Brazil: Petróleo Brasileiro S.A. (Petrobras) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Non-commercial BOE production per 25,535 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency 20.13 Factors BOE R/P (years) Other Oil Dependency Net oil and gas export -11.06% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency -1.55% Factors Total oil and gas revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 12,623.83 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 12,889.53 Factors reserves (BCF) Other Resource Endowment 14,846.16 Factors Total all source BOE reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Audited in part through PBR. Factors Other Operating Conditions Company domestic 77% Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic 91% Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE 107% Factors production as % of country BOE production Other Operating Conditions Company primary 100% Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions 85.03% Factors Country oil/natural gas split, reserves (%) Other Operating Conditions 99.99% Factors Country oil/natural gas split, production (%) A Citizen's Guide to National Oil Companies Page 326 Brazil: Petróleo Brasileiro S.A. (Petrobras) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Operating Conditions Country BOE production 78.97% Factors as % of total country BOE consumption Other Trade Openness Yes Factors WTO Membership Other Competition No Factors OPEC Membership A Citizen's Guide to National Oil Companies Page 327 Brazil: Petróleo Brasileiro S.A. (Petrobras) Sources of Information Source # Year of Source Description Links Source 1 2006 Petrobras SEC Form 20F 2006. www.sec.gov 2 2006 Estimates based on information provided in "Coping with Higher Oil Prices," ESM 323, ESMAP, World Bank, August 2006. 3 2006 Petrobras. See social responsibility. www.petrobras.com 4 2007 Petrobras www.petrobras.com 5 2008 WTO www.wto.org 6 2007 2008 BP Statistical Review of World Energy www.bp.com available at www.bp.com. 7 2008 EITI www.eitransparency.org 8 2007 USEIA Country Analysis Brief-Brazil, 9/20/07 www.eia.doe.gov available at www.eia.doe.gov. 9 2007 Marcelo Leandro Ferreira and Ernani Lustosa Kuhn, "Competition at National and International Levels: Energy," Brazilian Ministry of Finance presented at the Intergovernmental Group of Experts on Competition Law and Policy, Geneva, Switzerland, July 2007. 10 2008 Results of bidding rounds at www.anp.br. www.anp.br 11 2007 "Brazil," by Georges D. Landau in Energy Cooperation in the Western Hemisphere, Sidney Weintraub, editor. Center for Strategic and International Studies, Washington, D.C., 2007. 12 2008 "Petrobras wants Brazil to update producer rules," by Jonathan Wheatley, Financial Times, 6/23/08. 13 2008 Ministério da Fazenda www.fazenda.gov.br/ A Citizen's Guide to National Oil Companies Page 328 Colombia: Ecopetrol Colombia: Ecopetrol Summary Report Corporate Governance Highlights Corporate Organization and Ownership State- owned, public stock-holding corporation. Shares Controlled by Government 80% Domestic, International Exchanges for Equity Listings Bolsa de Valores de Colombia Board of Directors Structure Shareholders Assembly, Statutory Auditor, BOD, President, Support for President, Corporate Labor Director, Human Development Director, Internal Control Office, COO, Finance Vice-President, Planning and Risk Control General Director Independent Board Members Unclear. Some members may be independent and external to either Ecopetrol or government. Is chairman also minister of energy or otherwise appointed by head of state? Unclear. 2 members of the current BOD represent ministries (Mines and Energy and Finance). Operations Highlights Upstream Oil Ecopetrol operates only in Colombia, and, with recent bid rounds, Brazil and Peru. Access to the country's resources is provided to other companies such as BP, Occidental, Petrobras, Canada's Nexen, Canada's Petrobank through licensing arrangements. Midstream Oil Ecopetrol operates 5 major oil pipelines, 4 connecting production fields to the Caribbean export terminal. One pipeline transports oil from the Atlantic to the Pacific (and also carries oil produced in Ecuador). Downstream Oil 2 refineries are owned and operated by Ecopetrol. Upstream Natural Gas Ecopetrol can operate in upstream natural gas. Colombia has natural gas reserves in 18 basins, 7 of which have active production. Chevron is the largest natural gas producer in Colombia. In 2004 BP was awarded a natural gas production license. Midstream Natural Gas Ecopetrol does not appear to have asset positions in natural gas. Downstream Natural Gas Same as above. Other Ecopetrol does not engage in business outside of its core oil and gas operations. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 1,496 Upstream: Average Proved Gas Reserves (BCF) 3,994 Upstream: Average Annual Oil Production (MM Barrels) 543 Upstream: Average Annual Natural Gas Production (BCF) 246 Downstream: Average Annual Refinery Production (MM Barrels) 92 Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 6,487 Consolidated Average Total Assets ($Millions) 14,941 Consolidated Average EBIT ($Millions) 4,989 Consolidated Average Net Income ($Millions) 1,214 A Citizen's Guide to National Oil Companies Page 329 Colombia: Ecopetrol Categorization Indicators Scores: Categories: Corporate Governance Corporate Governance 56 100 Public Sector Governance 82 50 Public Sector Commercialization 83 Oil Dependency Governance Fiscal Regimes 88 0 Resource Endowment 0 Oil Dependency 96 Resource Commercializa Endowment Local Contribution 10 Sector and Trade Openness 73 Fiscal Regimes Average 68 ECOPETROL Average NOC Worldwide Governance Indicators Trends and Issues Columbia's internal political situation appears to be improving as efforts are made to resolve the long standing conflicts between FARC and ELN and the government. Following a peak in attacks against Colombia's oil installations in 2001, and a collapse in oil production by nearly 25%, stabilization efforts coupled with regional and community development efforts, coordinated security and deep improvements in the hydrocarbon fiscal regime, have resulted in a robust turnaround. Colombia's oil production has grown and investment flows have strengthened. Transparency has increased and revenues are invested more constructively in the country's development, in particular in locations where oil installations are operated. Still to be done are value creation around the country's natural gas resources, supported by a facilitating framework to include natural gas price discovery and additions to infrastructure. A Citizen's Guide to National Oil Companies Page 330 Colombia: Ecopetrol Database Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of 2007 1 Ecopetrol is 80% state-owned and Governance Its Organization cluster of NOCs and 20% owned by sovereign other sovereign companies and individuals. enterprises in country Corporate Ownership Structure and Number of NOCs of 1 Governance Its Organization country Corporate Ownership Structure and Description of 2007 1 State-owned, public stock-holding Governance Its Organization incorporation and corporation. ownership Corporate Ownership Structure and % shares controlled by 2007 3 80% Governance Its Organization government Corporate Ownership Structure and Domestic, international 2007 1 Bolsa de Valores de Colombia Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international No data Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20- 2007 1 No; however, Ecopetrol is slated to Governance Its Organization F with SEC? offer shares outside of Colombia as part of the privatization/capitalization program. Corporate Board of Directors (BOD) Does a BOD exist 2007 3 Yes Governance Corporate Board of Directors (BOD) Description of BOD and Shareholders Assembly, Statutory Governance structure Auditor, BOD, President, Support for President, Corporate Labor Director, Human Development Director, Internal Control Office, COO, Finance Vice-President, Planning and Risk Control General Director Corporate Board of Directors (BOD) Is chairman also Unclear. 2 members of the current Governance minister of energy or BOD represent ministries (Mines otherwise appointed by and Energy and Finance). head of state Corporate Board of Directors (BOD) Are any BOD members 2007 1 Unclear. Some members may be Governance considered independent independent and external to either (external) and, if so, Ecopetrol or government. how are they appointed Corporate Board of Directors (BOD) Term of service (years, 2007 1 The President of the BOD serves 1 Governance with re-appointment). year. Comment if they can be readily removed. Corporate Role of BOD Description of role and 2007 1 The BOD is responsible for Governance policy statements organization and supervision of the activities the company and its members are engaged in. Corporate Role of BOD Based on available 2007 1 The BOD has sufficient power to Governance information, does BOD enforce the codes of conduct, have power, impact, engage in high level decision decision making making, and has direct impact on A Citizen's Guide to National Oil Companies Page 331 Colombia: Ecopetrol Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data authority the activities of the company. Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget No data Governance Processes authority. Comment on the general decision flow within NOC and between NOC and government for major projects. Corporate Decision Making Based on available 2007 The government sets and Governance Processes, Budget information, is NOC announces the amounts of royalties Autonomy budget process and taxes. The company targets predictable and separate revenues and manages its budget from government independently. Corporate Decision Making Does the NOC have 2007 Ecopetrol partners with IOCs and Governance Processes, Budget authority to partner with other companies participating in Autonomy other entities? Colombia's upstream and associated oil and gas infrastructure. Ecopetrol also formed a joint venture with local palm oil producers to build a biodiesel plant. Corporate Mission and Objectives Does NOC have a 2007 "To discover new energy sources Governance mission statement and, if and to transform them into value so, what are key for their clients and shareholders elements by protecting the environment and ensuring processes safety and people's integrity". Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited 2007 1 There is some data available. Governance Policy data and other indications of disclosure and transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available 2007 1 HR promotion and professional Governance Management information, HR development opportunities are promotion and established and offered and professional applied equally among employees. development policies A Citizen's Guide to National Oil Companies Page 332 Colombia: Ecopetrol Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Full Disclosure and Based on available 2007 3 The NOC is committed to the Governance Measurement of Non- information, brief economic, social and commercial Objectives description of reporting environmental development of on noncommercial Colombia. Ecopetrol creates objectives targets and scorecards to measure the progress and attainability of such plans. Corporate Full Disclosure and Based on available 2007 1 No financial reporting available. Governance Measurement of Non- information, extent of Principles include: identification of commercial Objectives non-commercial groups of interests, creation of obligations solutions to these groups, support relevant programs of these groups, ethical behavior to gain credibility, and notification of results to the groups. Value Operating Performance Upstream oil E&P. 2007 3 Ecopetrol operates only in Creation Where does it operate Colombia and, with a recent bid Metrics (solely in the country or round, in Brazil and Peru. Access abroad-name countries)? to the country's resources is Does it have sole access provided to other companies such to country's resources? as BP, Occidental, Petrobras, Canada's Nexen, Canada's Petrobank through licensing arrangements. Value Operating Performance Does the NOC operate 2007 3 No Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, 2007 2 Ecopetrol operates 5 major oil Creation storage, shipping pipelines, 4 connecting production Metrics fields to the Caribbean export terminal. One pipeline transports oil from the Atlantic to the Pacific (and also carries oil produced in Ecuador). Value Operating Performance Downstream oil refining 2007 2 2 refineries are owned and Creation & marketing, operated by Ecopetrol. Metrics petrochemicals Value Operating Performance Upstream natural gas 2007 2 Ecopetrol can operate in upstream Creation E&P natural gas. Colombia has natural Metrics gas reserves in 18 basins, 7 of which have active production. Chevron is the largest natural gas producer in Colombia. In 2004 BP was awarded a natural gas production license. Value Operating Performance Midstream natural gas 2007 2 Ecopetrol does not appear to have Creation pipelines, storage, LNG asset positions in natural gas. Metrics Value Operating Performance Downstream natural gas 2007 2 Same as above. Creation distribution, NGL sales, Metrics petrochemicals Value Operating Performance Other (power 2007 2 Ecopetrol does not engage in Creation generation, etc) business outside of its core oil and Metrics gas operations. Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics A Citizen's Guide to National Oil Companies Page 333 Colombia: Ecopetrol Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE No data Creation production (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream Metrics capital expenditures (%) Value Operating Performance Avg upstream $9.09 Creation exploration and Metrics production expenses ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before $4.57 Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all No data Creation taxes ($/BOE) Metrics Value Operating Performance Avg effective tax rate No data Creation (%) Metrics Value Operating Performance Avg operating cash flow No data Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on No data Creation assets Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining 4% Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating Metrics cash flow/capital expenditures (%) A Citizen's Guide to National Oil Companies Page 334 Colombia: Ecopetrol Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin 77% Creation (%) Metrics Value Financial Performance Avg profit margin (%) 19% Creation Metrics Value Financial Performance Avg effective tax rate 57% Creation (%) Metrics Value Financial Performance Avg reinvestment risk No data Creation (%) Metrics Value Financial Performance Avg debt profile (%) 31% Creation Metrics Value Financial Performance Avg return on assets (%) 8% Creation Metrics Value Financial Performance Avg return on total 5% Creation capital employed (%) Metrics Value Financial Performance Avg fiscal contribution 90% Creation to State (%) Metrics Other Public Sector Governance Based on available 2007 3 The hydrocarbon sector in Factors information, presence of Colombia is managed and a publicly articulated regulated by Agencia Nacional de role of the hydrocarbon Hidrocarburos (National sector with respect to Hydrocarbons Agency or ANH) national development which was created to separate objectives Ecopetrol and the state from these activities. Other Public Sector Governance Based on available 2007 1 Policy making activities are Factors information, clear responsibilities of the president of definition of the roles of Ecopetrol and the Board of policy, commercial Directors; commercial operations operation and regulation are monitored by Ecopetrol's and assignment to Internal Control Management; and specific entities avoiding regulation is done by the Agencia conflicts of interest Nacional de Hidrocarburos. Other Public Sector Governance Based on available 2007 1 Ecopetrol's objectives are Factors information, presence of published but they are not ranked. publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available No data Factors information, presence of a strategy to transfer NOC non-commercial objectives to A Citizen's Guide to National Oil Companies Page 335 Colombia: Ecopetrol Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data government or other agencies as capacity becomes available Other Public Sector Governance Based on available 2007 3 Agencia Nacional de Factors information, transparent Hidrocarburos is responsible for hydrocarbon sector collecting hydrocarbon revenues revenue management belonging to the state and including revenue allocating them to the different distribution within the entities. Royalties are shared country among producing and transporting municipalities and a part is set aside in the Fondo Nacional de Regalias to be used for development projects. However detailed information on the financial flows does not appear to be publicly available. Other Public Sector Governance NOC and/or country 2007, 5,6 Colombia is not a candidate Factors participate in EITI Current country for EITI. National and/or other Democratic Institute has been transparency initiatives quite active, and Colombia has a highly acknowledged national chapter of Transparency International. Other Fiscal Sustainability Based on available 2007 3 According to ANH, Colombia Factors information, do signed 11 new contracts during the hydrocarbon sector first half of 2007, presenting a total fiscal regimes allow for of US$2 billion in foreign direct sufficient capital investment. investment Other Fiscal Sustainability Based on available 2007 1 The fiscal regime along with the Factors information, do modified Organic Structure of hydrocarbon sector Ecopetrol, allows for investment fiscal regimes allow for grade NOC credit ratings. investment grade NOC credit ratings Other Fiscal Sustainability Based on available 2007 1 Under the new fiscal regime in Factors information, are 2003, the incentives to attract hydrocarbon sector foreign direct investment have fiscal regimes increased. A modification to the appropriate for the Organic Structure of the development stage of Colombian Oil Company resulted the domestic resource in larger flows of FDI to the oil base sector activities. Other Access to Reserves Hydrocarbon law to 2007 3 The Colombian government has Factors facilitate competitive taken substantial measures to upstream investment attract more investment. It allows foreign oil companies to own 100% stakes in oil ventures, established a lower royalty rate, provided longer expiration licenses, and is forcing Ecopetrol to compete with private firms. The reforms enabled Colombia to attain a higher level of exploration and drilling. A Citizen's Guide to National Oil Companies Page 336 Colombia: Ecopetrol Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Access to Reserves Based on available 2007 3 Yes, in the first half of 2007, 11 Factors information, existence contracts were signed with foreign of negotiated oil companies to invest on contracts/agreements for exploration and production. upstream investment Other Operating Strategy Based on available 2007 3 Exploration, drilling, Factors information, types of transportation and refineries, joint ventures, role of Ecopetrol may be a partner, but it NOC(s) is not required. Other Operating Strategy Based on available 2007 3 11 new exploration and production Factors information, extent of contracts signed with foreign oil turnkey contracts used companies in the first half of 2007. directly by NOC(s) Other Business Integration Vertical, horizontal 2007 1 Vertical integration Factors integration Other International Presence Does NOC make 2007 3 No Factors investments abroad Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company No data Factors BOE production from international operations (%) Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants 2007 2 Yes. The Colombian government Factors in upstream would like more participation, and has particularly targeted smaller companies for marginal fields in attempts to increase diversity. A Citizen's Guide to National Oil Companies Page 337 Colombia: Ecopetrol Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Competition level in 2007 1 The government has allowed Factors upstream including non- foreign oil companies to NOC participants and participate in exploration and requirement to include production and reduced the royalty NOC as partner rates. Both foreign oil companies and the NOC are forced to become more competitive, or create alliances. Other Commercialization Competition level in 2007 1 Competition in mid- and Factors midstream, downstream downstream is open to non-NOC including non-NOC participants and they are not participants and required to partner with the NOC. requirement to include NOC as partner Other Commercialization Based on available 2007 1 Ecopetrol/BP, Ecopetrol/Chevron, Factors information, prevalence Ecopetrol/Petrobras, and success of Ecopetrol/PDVSA. All of the NOC/non-NOC alliances appear to be healthy and alliances, joint ventures successful following the changes implemented by the government through ANH. Other Commercialization Partial privatization of 2007 3 20% Factors the NOC (as measured by ownership structure) Other Commercialization Based on available No data Factors information, level and quality of NOC international operations Other Commercialization Based on available No data Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of 2007 3 Agencia Nacional de Factors independent, well- Hidrocarburos ANH (national funded and trained hydrocarbons regulatory agency). regulatory agencies, HC ANH is fairly well funded and agency name, budget, well staffed as a regulatory body. number of staff ANH personnel have received both international training and engaged in domestic professional and technical development programs. Other Regulation NOCs are compelled to 2007 3 ANH sets the prices at which Factors adopt practices that crude oil must be sold for internal would provide results refinery and domestic use. ANH similar to those in sets the production volumes that competitive markets are to be sold for domestic use. with price, access to and quality of energy services. brief description: HC agency enforcement powers A Citizen's Guide to National Oil Companies Page 338 Colombia: Ecopetrol Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Regulation Regulators assure 2007 3 ANH actively participates in the Factors market transparency and creation of energy policy directly good quality, unbiased with the federal/state government. data and information. ANH manages the participation of HC agency the State in all exploration and independence indicators production contracts. Other Regulation Regulators effectively 2007 3 ANH has established policies that Factors resolve disputes and enable an efficient course of action conflicts and address when issues regarding public concerns about development and access to development of and hydrocarbon resources are access to hydrocarbon presented. resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of No data Factors Objectives hydrocarbon price subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of No data Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC $2,459.83 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation No data Factors Objectives obligations relative to workforce ($ M) Other Non-commercial Financial performance $1,068.05 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Reasonably good data is provided. Comments reliability of data As Ecopetrol's share sales proceed, provided by NOC(s) and more data should be forthcoming. governments Other Longevity of NOC Based on available 2007 1 Ecopetrol was created on 1951 as Comments information, history and Empresa Colmbiana de Petroleos. persistence of NOC(s) In 1970 it was recognized as an industrial and commercial state enterprise. In 2003 the organic structure was modified and the company's name changed to Ecopetrol SA. A Citizen's Guide to National Oil Companies Page 339 Colombia: Ecopetrol Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Country Status Trends and issues Columbia's internal political Comments related to country situation appears to be improving hydrocarbon sector as efforts are made to resolve the endowments and long standing conflicts between performance FARC and ELN and the government. Following a peak in attacks against Colombia's oil installations in 2001, and a collapse in oil production by nearly 25%, stabilization efforts coupled with regional and community development efforts, coordinated security and deep improvements in the hydrocarbon fiscal regime, have resulted in a robust turnaround. Colombia's oil production has grown and investment flows have strengthened. Transparency has increased and revenues are invested more constructively in the country's development, in particular in locations where oil installations are operated. Still to be done is value creation around the country's natural gas resources, supported by a facilitating framework to include natural gas price discovery and additions to infrastructure. Other Non-commercial Number of employees 6,074 Factors Objectives Other Non-commercial BOE production per 111,571 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 9.03 Factors Other Oil Dependency Net oil and gas export 18.89% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas 3.70% Factors revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 1,510.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 4,414.33 Factors reserves (BCF) Other Resource Endowment Total all source BOE 2,271.09 Factors reserves (MM Barrels) A Citizen's Guide to National Oil Companies Page 340 Colombia: Ecopetrol Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 66.49% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.98% Factors split, production (%) Other Operating Conditions Country BOE 193.32% Factors production as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 341 Colombia: Ecopetrol Sources of Information Source # Year of Source Source Description Links 1 2007 Ecopetrol http://www.ecopetrol.com.co/ 2 2007 USEIA Country Analysis Brief - Colombia http://www.eia.doe.gov/emeu/cabs/Colombia/Background. html 3 2007 Agencia Nacional de Hidrocarburos http://www.anh.gov.co/es/index.php 4 2007 International Monetary Fund 5 2007 National Democratic Institute - Colombia http://www.ndi.org/worldwide/lac/colombia/colombia.asp 6 2008 Transparency International - Colombia http://www.transparenciacolombia.org.co/ 7 2007 Ecopetrol 2007 Annual Report (substantial data on http://www.ecopetrol.com.co/english/especiales/Annual_ workforce demographics) Report_2007/empleadosjubifami.htm 8 2005, 2006 Ecopetrol 2005 and 2006 Annual Reports http://www.ecopetrol.com.co/english/especiales/Annual_ Report_2006/inicio.htm 9 2005, 2007 Ecopetrol 2005 and 2006 Annual Reports http://www.ecopetrol.com.co/english/especiales/informe_ anual_2005/inicio.htm A Citizen's Guide to National Oil Companies Page 342 Ecuador: PetroEcuador Ecuador: PetroEcuador Summary Report Corporate Governance Highlights Corporate Organization and Ownership PetroEcuador is fully sovereign owned. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings Not listed Board of Directors Structure The BOD for PetroEcuador is called the Directorial and is formed by the Minister of Energy and Mines, the President of PetroEcuador appointed by the President of Ecuador, and the Minister of Economics and Finance. Independent Board Members No member of the BOD is external. They are all appointed by the President of Ecuador as part of the presidential administration team. Is chairman also minister of energy or otherwise appointed by head of state? No Operations Highlights Upstream Oil PetroEcuador only operates in its home country. Other international oil companies, such as Andes and Repsol, have access to Ecuador's resources. Midstream Oil Ecuador has three major pipelines. Oleducto Trans Ecuadorian is a 310-mile pipeline with 400,000 B/D capacity. Oleducto de Crudos Pesados is a 300-mile pipeline with 450,000 B/D capacity. Ecuador uses TransAndino pipeline (Colombia) to transport crude oil to/from Colombia. Downstream Oil Ecuador has three oil refineries with a total of 176,000 B/D combined capacity. The country is a net importer of products and is trying to increase domestic production of lighter products. Upstream Natural Gas "There is only one large scale natural gas project in Ecuador: Amistad, located in the Gulf of Guayaquil, which produces 30 million cf/d. Ecuador's oil operations release large amounts of natural gas, but this is mostly flared due to the lack of infrastructure for capture." Midstream Natural Gas No data Downstream Natural Gas All natural gas produced by Amistad flows to Noble's Machala facility, a 130 MW onshore gas-fired power plant that supplies electricity to the Guayaquil region. Other Electric power generation A Citizen's Guide to National Oil Companies Page 343 Ecuador: PetroEcuador Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) 90 Upstream: Average Annual Natural Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) 83 Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 6,055 Consolidated Average Total Assets ($Millions) 4,025 Consolidated Average EBIT ($Millions) 2,122 Consolidated Average Net Income ($Millions) -32 Categorization Indicators Categories: Scores: Corporate Governance Corporate Governance 41 100 Public Sector Governance 39 Public Sector Oil Dependency 50 Governance Commercialization 66 0 Fiscal Regimes 38 Resource Endowment 1 Resource Commercializa Endowment Oil Dependency 87 Local Contribution 56 Fiscal Regimes Sector and Trade Openness 39 PetroEcuador Average NOC Average 45 Worldwide Governance Indicator Trends and Issues Ecuador is trying to expand upstream activity and rejoined OPEC in 2007 after leaving it in 1992. Notwithstanding the improvements in the fiscal regime, investors' perception of political and economic risks remains moderately high. Investments in downstream petroleum are needed to lower the dependence on imported petroleum products. A Citizen's Guide to National Oil Companies Page 344 Ecuador: PetroEcuador PetroEcuador Data Table Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of cluster 2008 1 One NOC and other sovereign Governance Its Organization of NOCs and other enterprises in Ecuador. sovereign enterprises in country Corporate Ownership Structure and Number of NOCs of 2007 2 1 Governance Its Organization country Corporate Ownership Structure and Description of 2007 2 PetroEcuador is fully sovereign Governance Its Organization incorporation and owned. ownership Corporate Ownership Structure and % shares controlled by 2007 2 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international Not listed Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international Not listed Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F 2007 2 No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist 2007 2 Yes Governance Corporate Board of Directors (BOD) Description of BOD and 2007 2 The BOD for PetroEcuador is Governance structure called the Directorial and it is formed by the Minister of Energy and Mines, the President of PetroEcuador appointed by the President of Ecuador, and the Minister of Economics and Finance. Corporate Board of Directors (BOD) Is chairman also minister 2007 2 No Governance of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members 2007 2 No member of the BOD is Governance considered independent external. They are all appointed (external) and, if so, how by the President of Ecuador as are they appointed part of the presidential administration team. Corporate Board of Directors (BOD) Term of service (years, The term of service for the Governance with re-appointment). BOD is the same as the Comment if they can be President of Ecuador. Only the readily removed. Executive President of PetroEcuador can be re-elected after the expiration of the term. Corporate Role of BOD Description of role and 2007 2 The BOD is responsible for Governance policy statements establishing the corporate policies for PetroEcuador; approval of all functional processes; establishing wage policies; approval of projects and budgets; and evaluation and supervision of the company's guidelines. A Citizen's Guide to National Oil Companies Page 345 Ecuador: PetroEcuador Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Role of BOD Based on available 2007 2 The BOD has the power to Governance information, does BOD create the necessary policies have power, impact, and set required guidelines to decision making authority attain targets. The BOD members are appointed by the president since they are part of the presidential administration team. All decisions taken by the BOD directly impact employees and processes in their activities. High decision making authority. Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget No data Governance Processes authority. Comment on the general decision flow within NOC and between NOC and government for major projects. Corporate Decision Making Based on available 2007 2 Budget planning and forecasts Governance Processes, Budget information, is NOC are predictable. The BOD Autonomy budget process predictable administers all budget and separate from processes separate from the government government. Corporate Decision Making Does the NOC have 2007 2 Yes, it has the authority and Governance Processes, Budget authority to partner with ability to partner with other Autonomy other entities? entities for specialized works and projects. Corporate Mission and Objectives Does NOC have a mission 2007 2 Yes. Mission: "PetroEcuador is Governance statement and, if so, what a State-owned integrated are key elements company, whose purpose is to create resources for Ecuadorian development, through efficient exploitation of hydrocarbons within an environmental protection framework; following the policies established by the National Government and under a legal framework." Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data 2007 2 PetroEcuador follows a Governance Policy and other indications of Transparency Policy and disclosure and transparency discloses the following information: financial reports, contracts, current debt, auditing reports, and accounts payable. A Citizen's Guide to National Oil Companies Page 346 Ecuador: PetroEcuador Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available No data Governance Management information, HR promotion and professional development policies Corporate Full Disclosure and Based on available 2007 2 The main noncommercial Governance Measurement of Non- information, brief objective is preservation of the commercial Objectives description of reporting on environment, protecting people noncommercial objectives in communities where safe infrastructure has been placed. Corporate Full Disclosure and Based on available 2007 2 Environmental protection, Governance Measurement of Non- information, extent of non- social awareness, research, commercial Objectives commercial obligations communication to the communities, and cultural education. Value Operating Performance Upstream oil E&P. Where 2007 2 PetroEcuador only operates in Creation does it operate (solely in its home country. Other Metrics the country or abroad-name international oil companies, countries)? Does it have such as Andes (China National sole access to country's Petroleum Corp. and China resources? Petrochemical Corp.) and Repsol, have access to Ecuador's resources. Value Operating Performance Does the NOC operate 2007 1 No Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, 2008 3 Ecuador has three major Creation storage, shipping pipelines. Oleducto Trans Metrics Ecuadorian is a 310-mile pipeline with 400,000 B/D capacity. Oleducto de Crudos Pesados is a 300-mile pipeline with 450,000 B/D capacity. Ecuador uses TransAndino pipeline (Colombia) to transport crude oil to/from Colombia. Value Operating Performance Downstream oil refining & 2008 3 Ecuador has three oil refineries Creation marketing, petrochemicals with a total of 176,000 B/D Metrics combined capacity. The country is a net importer of products and is trying to increase domestic production of lighter products. Value Operating Performance Upstream natural gas E&P 2008 3 "There is only one large scale Creation natural gas project in Ecuador: Metrics Amistad, located in the Gulf of Guayaquil, which produces 30 million cf/d. Ecuador's oil operations release large amounts of natural gas, but this is mostly flared due to the lack of infrastructure for capture." A Citizen's Guide to National Oil Companies Page 347 Ecuador: PetroEcuador Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Midstream natural gas No data Creation pipelines, storage, LNG Metrics Value Operating Performance Downstream natural gas 2008 3 All natural gas produced by Creation distribution, NGL sales, Amistad flows to Noble's Metrics petrochemicals Machala facility, a 130 MW onshore gas-fired power plant that supplies electricity to the Guayaquil region. Value Operating Performance Other (power generation, 2008 3 Electric power generation Creation etc) Metrics Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE production No data Creation (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow vs No data Creation costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics A Citizen's Guide to National Oil Companies Page 348 Ecuador: PetroEcuador Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery capacity No data Creation (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and marketing No data Creation operating cash flow/capital Metrics expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) 35% Creation Metrics Value Financial Performance Avg profit margin (%) -1% Creation Metrics Value Financial Performance Avg effective tax rate (%) 5% Creation Metrics Value Financial Performance Avg reinvestment risk (%) No data Creation Metrics Value Financial Performance Avg debt profile (%) 0% Creation Metrics Value Financial Performance Avg return on assets (%) -1% Creation Metrics Value Financial Performance Avg return on total capital -4% Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to 44% Creation State (%) Metrics Other Public Sector Governance Based on available 2007, 1, 3 Ecuador's economy relies on its Factors information, presence of a 2008 oil production, since the oil publicly articulated role of sector is dominant, accounting the hydrocarbon sector for one-half of total exports with respect to national earnings and one-third of tax development objectives revenues. In addition, Ecuadorian oil production satisfies 80% of domestic energy demand. The government has modified the legal framework which enables PetroEcuador to perform at a more efficient level. A Citizen's Guide to National Oil Companies Page 349 Ecuador: PetroEcuador Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available No data Factors information, clear definition of the roles of policy, commercial operation and regulation and assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available 2007 2 Although noncommercial Factors information, presence of objectives are listed, publicly stated objectives PetroEcuador does not rank ranked by priority for them. NOC(s) Other Public Sector Governance Based on available 2007 2 Through its transparency Factors information, presence of a policy, PetroEcuador displays strategy to transfer NOC information on social, non-commercial objectives noncommercial objectives as to government or other well as the strategies to achieve agencies as capacity them and outcomes. becomes available Other Public Sector Governance Based on available 2007 1 In accordance with Law 18 on Factors information, transparent 2008 8 public sector budget and its hydrocarbon sector revenue amendment law, oil revenue management including are deposited into the Treasury revenue distribution within account - after deduction of the country charges and costs defined in the law which include the costs incurred by Petroecuador for the production, refining, transport and sale of oil and products. The Contraloria General del Estado is responsible for esuring compliance with the law. An Oil Stabilization Fund was created in 1998 to smooth the impact on expenditure of oil price volatility. Several other "funds' exists which use is earmarked to particular investments or sectors. Other Public Sector Governance NOC and/or country 2001, 1,4 No participation in EITI; Factors participate in EITI and/or 2007 transparency initiatives are other transparency controlled by the government. initiatives Some transparency programs operate or have operated in Ecuador (e.g., National Democratic Institute). Other Fiscal Sustainability Based on available 2008 1 Capital investment from Factors information, do private companies will only be hydrocarbon sector fiscal allocated to risk activities. The regimes allow for sufficient NOC will be responsible for capital investment capital investment for the remainder. No information is provided regarding the NOC's strategy to raise capital for exploration and production. A Citizen's Guide to National Oil Companies Page 350 Ecuador: PetroEcuador Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Fiscal Sustainability Based on available No data Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available 2008 1 The fiscal regime allows the Factors information, are development stage of the hydrocarbon sector fiscal domestic resource base. regimes appropriate for the Targeted goals are addressed development stage of the with specific strategies and domestic resource base lines of action such as: renewal of oil refineries; increased support for planning, budgeting and control; modernized technology to perform processes more efficiently; greater transparency and information access; as well as consolidation of bilateral relations with other states in South America. Other Access to Reserves Hydrocarbon law to 2008 1 2006 law. Upstream activities Factors facilitate competitive are managed by PetroEcuador. upstream investment Other Access to Reserves Based on available 2007 2 Current negotiated contracts Factors information, existence of are valid with Andes, Repsol negotiated and Agip. contracts/agreements for upstream investment Other Operating Strategy Based on available 2007 2 Join ventures with other NOCs Factors information, types of joint are in place for some activities, ventures, role of NOC(s) such as pipeline transportation with the Colombian government. Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal 2007 2 Vertical integration. Factors integration Other International Presence Does NOC make 2007 2 No Factors investments abroad Other International Presence Avg company international No data Factors BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make No Factors investments abroad A Citizen's Guide to National Oil Companies Page 351 Ecuador: PetroEcuador Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other International Presence Avg company international No data Factors refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company international No data Factors refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in 2008 1 Yes Factors upstream Other Commercialization Competition level in 2007 2 All participants are required to Factors upstream including non- follow the same standards in NOC participants and order to file for a concession, requirement to include making competition fair under NOC as partner the same legal framework. Other Commercialization Competition level in 2007 2 The NOC is not required to be Factors midstream, downstream a partner in midstream including non-NOC activities. Concessions are participants and granted under different requirement to include schemes and competition is NOC as partner more open. Other Commercialization Based on available 2008 3 There are currently successful Factors information, prevalence alliances with non-NOCs: and success of NOC/non- Repsol, Andes, and Agip. NOC alliances, joint ventures Other Commercialization Partial privatization of the No data Factors NOC (as measured by ownership structure) Other Commercialization Based on available 2007 2 PetroEcuador does not perform Factors information, level and any international activity. quality of NOC international operations Other Commercialization Based on available No data Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, 2008 1 Hydrocarbon sector agency is Factors well-funded and trained the Ministry of Energy and regulatory agencies, HC Mines-National Hydrocarbons agency name, budget, Directorate. At time of writing, number of staff budget and staffing information is not available. A Citizen's Guide to National Oil Companies Page 352 Ecuador: PetroEcuador Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Regulation NOCs are compelled to 2008, 1, 5 The Ministry of Energy and Factors adopt practices that would 2007 Mines-National Hydrocarbons provide results similar to Directorate is responsible for those in competitive supervision of domestic energy markets with price, access prices as well as ensuring to and quality of energy constitutional and legal services. brief description: compliance and the protection HC agency enforcement of rights. powers Other Regulation Regulators assure market 2008 1 The Ministry of Energy and Factors transparency and good Mines-National Hydrocarbons quality, unbiased data and Directorate ensures all information. HC agency participants in the energy independence indicators sectors perform their activities under a transparent legal scheme. Other Regulation Regulators effectively 2008 1 "The Ministry of Energy and Factors resolve disputes and Mines-National Hydrocarbons conflicts and address public Directorate is a technical and concerns about administrative agency which development of and access inspects and audits all energy to hydrocarbon resources operations to ensure the social and infrastructure. HC well being and protection of agency dispute resolution the environment, while policy promoting efficient exploitation of natural resources." Other Non-commercial Provision and level of No data Factors Objectives hydrocarbon price subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of No data Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, 2007 2 Data provided by the NOC is Comments reliability of data provided available and reliable. by NOC(s) and However, it is not extensive governments and fails to reveal important information on budget, strategies and policies, organizational structure, and A Citizen's Guide to National Oil Companies Page 353 Ecuador: PetroEcuador Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data financial performance, among others. Other Longevity of NOC Based on available 2008 1 PetroEcuador was founded on Comments information, history and September 26th 1989 and it is persistence of NOC(s) the successor to Corporacion Estatal Petrolera Ecuatoriana (CEPE) which was formed in 1972. PetroEcuador operates in 3 divisions: Petroproduccion (Exploration and Production), Petroindustrial (Refining), and Petrocomercial (Transportation and Marketing). The NOC has been subject of controversy regarding the impact of exploration and pipelines operations in the Amazon. In 1998 there was an explosion of one of the main pipelines in Esmeraldas, a port city in Northwest Ecuador. Ecuador was an OPEC member from 1973 until 1992, and rejoined in November 2007. Other Country Status Trends and issues related to Ecuador is trying to expand Comments country hydrocarbon sector upstream activity and rejoined endowments and OPEC in 2007 after leaving it performance in 1992. Notwithstanding the improvements in the fiscal regime, investors' perception of political and economic risks remains moderately high. Investments in downstream petroleum are needed to lower the dependence on imported petroleum products. satisfy internal demand. Other Non-commercial Number of employees No data Factors Objectives Other Non-commercial BOE production per No data Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 22.60 Factors Other Oil Dependency 36.03% Factors Net oil and gas export revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues 12.68% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 4,269.28 Factors (MM Barrels) A Citizen's Guide to National Oil Companies Page 354 Ecuador: PetroEcuador Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Resource Endowment Avg EOY natural gas 345.00 Factors reserves (BCF) Other Resource Endowment Total all source BOE 4,328.76 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 98.63% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 100.00% Factors split, production (%) Other Operating Conditions Country BOE production 282.64% Factors as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership Yes Factors A Citizen's Guide to National Oil Companies Page 355 Ecuador: PetroEcuador Sources of Information Source # Year of Source Description Links Source 1 2008 Ministry of Energy & Mines, Ecuador http://www.menergia.gov.ec/ 2 2007 PetroEcuador web site http://www.petroecuador.com.ec/index.htm 3 2008 USEIA Country Analysis Brief - Ecuador www.eia.doe.gov 4 2007 National Democratic Institute - Ecuador http://www.ndi.org/worldwide/lac/ecuador/ecuador. asp 5 2007 Energy Cooperation in the Western Hemisphere, Ch 16 (Foss, http://www.csis.org/component/option,com_csis_pu Wainberg, Volkov), CSIS bs/task,view/id,3679/type,2/ 6 2008 Annual Report 2007 (sp) 7 2007 Annual Report 2006 (sp) 8 2008 Ministry of Economy and Finance http://mef.gov.ec/portal/page?_pageid=37,1&_dad= portal&_schema=PORTAL A Citizen's Guide to National Oil Companies Page 356 Mexico: Petroleos Mexicanos (PEMEX) Mexico: Petroleos Mexicanos (PEMEX) Summary Report Corporate Governance Highlights Corporate Organization and Ownership Petroleos Mexicanos is a decentralized public entity of the Mexican government. Shares Controlled by Government The Mexican government owns 100% of PEMEX. The company is a decentralized entity of the federal government. Domestic, International Exchanges for Equity Listings None Board of Directors Structure There are eleven directors of which the President of Mexico appoints 6 directors and the Petroleum Workers Union appoints 5 directors. Presidential appointees include the Secretary of Energy, Secretary of the Environment, General Coordinator of Cabinets and Special Projects of the Presidential Office, Secretary of Economy, Secretary of Communications and Secretary of Finance. No specific term. The Union selected directors are chosen from among PEMEX employees. All directors, except those appointed by the Union, serve subject to the discretion of the President of Mexico. Each subsidiary has an eight member BOD. These include the 4 Director Generals of the subsidiaries and 4 additional directors appointed by the President of Mexico. Independent Board Members None Is chairman also minister of energy or otherwise appointed by head of state? Mexican President appoints the Chairman of the BOD (Secretary of Energy) and the Director General of PEMEX. Operations Highlights Upstream Oil PEMEX is the only commercial participant permitted in the oil and gas upstream sector. 74% of oil production comes from offshore and total oil production has been declining from 2004-2006. 55% of gas production come from onshore sources and has been growing but is not sufficient to meet growing demand. As a result Mexican gas imports are growing. Proved BOE reserves declined 12% from 2004 to 2006. Reserve replacement and reserve replacement costs have been very poor. Midstream Oil PEMEX is the only commercial participant permitted in the midstream oil sector. The company operates 34,865 kilometers of oil and refined product pipelines most of which are in the southern part of the country. There are no cross-border oil/product pipelines. Exports, most of which go to the US, leave Mexico via tanker from three export terminals in the south of Mexico. Downstream Oil PEMEX is the sole participant in refining operating six refineries with primary distillation capacity of 1.5 million B/D which has not grown over the period 2004-2006. The refinery utilization rate has averaged 85%. The refining segment lost $8.6 billion over the same period in part due to price subsidies. Mexico is a net importer of refined products with gasoline representing 60% of product imports. Its refineries are not configured to produce more light products like gasoline and diesel. Light products production averaged 55% of total production 2004-2006. PEMEX also owns 50% of the Deer Park refinery in Texas. Upstream Natural Gas PEMEX is the only commercial participant permitted in the oil and gas upstream sector. Non-PEMEX participants in the gas upstream operate pursuant to services contracts for fees, not equity participation in reserves or production. 55% of gas production come from onshore sources and has been growing but is not sufficient to meet growing demand. As a result Mexican gas imports are growing. A Citizen's Guide to National Oil Companies Page 357 Mexico: Petroleos Mexicanos (PEMEX) Midstream Natural Gas PEMEX operates 5,700 miles of gas pipelines with 10 active import/export connections with the US. It also operates 12 gas processing plants and produces natural gas liquids and LPGs for domestic consumption. Although third parties have the right to construct, operate and ship on gas pipelines (and facilities connected with their usage) PEMEX continues to be the dominant player. (TransCanada has an 80 mile pipeline and Gas Natural has a 34 mile pipeline.) PEMEX dominance is a result of its exclusive authority over the first hand sales of natural gas as well as the transportation and storage linked with this function and as such has preferential access. The Energy Regulatory Commission (CRE) regulates the gas midstream sector. Participants cannot operate in all sectors simultaneously (transportation, storage, distribution) of the midstream gas industry. Downstream Natural Gas PEMEX is the sole participant in petrochemicals averaging 6.6 million tons per year production 2004-2006. Petrochemicals lost $3.5 billion over the same period. Gas distribution resides in the private sector (largely foreign companies), subject to regulation by the CRE, except for assets held in trust and those located within Veracruz. Mexico has one operating LNG regasification terminal (Altamira-500,000 MCF/D capacity) and one under construction (Costa Azul- 1 BCF/D capacity). Both terminals are owned by foreign company consortiums subject to regulation by the CRE. Gas supply contracts are between foreign suppliers and Mexico's state-owned electricity company, CFE. PEMEX does not participate in the LNG sector. Other None. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 13,774 Upstream: Average Proved Gas Reserves (BCF) 14,407 Upstream: Average Annual Oil Production (MM Barrels) 1,353 Upstream: Average Annual Natural Gas Production (BCF) 1,341 Downstream: Average Annual Refinery Production (MM Barrels) 467 Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 89,502 Consolidated Average Total Assets ($Millions) 105,122 Consolidated Average EBIT ($Millions) 50,984 Consolidated Average Net Income ($Millions) -1,850 Categorization Indicators Categories: Scores: Corporate Governance Corporate Governance 38 100 Public Sector Governance 75 Public Sector Oil Dependency 50 Commercialization 59 Governance Fiscal Regimes 50 0 Resource Endowment 3 Resource Oil Dependency 98 Commercializa Endowment Local Contribution 38 Sector and Trade Openness 37 Fiscal Regimes Average 54 PEMEX Average NOC A Citizen's Guide to National Oil Companies Page 358 Mexico: Petroleos Mexicanos (PEMEX) Worldwide Governance Indicators Trends and Issues Many industry observers have highlighted PEMEX's sustainability risks. The company has upstream potential in the deepwater Gulf of Mexico but reportedly lacks access to international-class technology and management skills. Its oil resource base is declining and gas imports continue to grow. The Mexican government relies on PEMEX for 40% of its budget and as such the tax regime for PEMEX has been punitive. As a result, the company cannot meet its capital budget without incurring debt and debt levels are extremely high at 99% (gross debt/total capital employed) in 2006. Its access to capital is explicitly based on the support of the Mexican government. In 2008 the government enacted reforms to improve Pemex governance and access to capital and technology, but industry observers fear that the breath and pace of reform may not be sufficient to improve Pemex performance and sustainability. A Citizen's Guide to National Oil Companies Page 359 Mexico: Petroleos Mexicanos (PEMEX) Database Year Indicator Indicator Indicator of Category Description (Query) Source Source Response of Data Corporate Ownership Sole NOC or one of 2006 1 PEMEX is the sole NOC in the oil and Governance Structure and Its cluster of NOCs and gas sector. Organization other sovereign enterprises in country Corporate Ownership Number of NOCs of 2006 1 1 Governance Structure and Its country Organization Corporate Ownership Description of 2006 1 Petroleos Mexicanos is a decentralized Governance Structure and Its incorporation and public entity of the Mexican government. Organization ownership Corporate Ownership % shares controlled by 2006 1 The Mexican government owns 100% of Governance Structure and Its government PEMEX as the company is part of the Organization government itself. Corporate Ownership Domestic, international 2006 1 None. Governance Structure and Its exchanges where shares Organization are listed Corporate Ownership Domestic, international 2006 1 New York Stock Exchange Governance Structure and Its exchanges where bonds Organization are traded Corporate Ownership Company files form 20-F 2006 1 Yes Governance Structure and Its with SEC? Organization Corporate Board of Does a BOD exist 2006 1 Yes Governance Directors (BOD) Corporate Board of Description of BOD and 2006 1 There are eleven directors of which the Governance Directors (BOD) structure President of Mexico appoints 6 directors and the Petroleum Workers Union appoints 5 directors. Presidential appointees include the Secretary of Energy, Secretary of the Environment, General Coordinator of Cabinets and Special Projects of the Presidential Office, Secretary of Economy, Secretary of Communications and Secretary of Finance. No specific term. The Union selected directors are chosen from among PEMEX employees. All directors, except those appointed by the Union, serve subject to the discretion of the President of Mexico. Each subsidiary has an eight member BOD. These include the 4 Director Generals of the subsidiaries and 4 additional directors appointed by the President of Mexico. Corporate Board of Is chairman also minister 2006 1 Mexican President appoints the Chairman Governance Directors (BOD) of energy or otherwise of the BOD (Secretary of Energy) and the appointed by head of Director General of PEMEX. state Corporate Board of Are any BOD members 2006 1 There are no independent board Governance Directors (BOD) considered independent members. (external) and, if so, how are they appointed A Citizen's Guide to National Oil Companies Page 360 Mexico: Petroleos Mexicanos (PEMEX) Year Indicator Indicator Indicator of Category Description (Query) Source Source Response of Data Corporate Board of Term of service (years, 2006 1 See BOD Structure above. Governance Directors (BOD) with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and 2006, 1, 6, 8 The role of the BOD is unclear. There is Governance policy statements 2008 no audit committee of the BOD so the entire board performs that role. The company is voluntarily considering the establishment of an independent audit committee as part of an effort to implement best practices in corporate governance. In 2006 PEMEX remediated a material weakness in its internal control over financial reporting identified in 2005. President Calderon's proposed legislation regarding PEMEX submitted to the Mexican Congress in April 2008 envisions adding four outside experts to PEMEX's board to "make the company's workings more transparent and to stem corruption." In a presentation in May 2008, the PEMEX Director General indicated that corporate governance needed improvement. Corporate Role of BOD Based on available 2006, 1, 6, 8 See above. Governance information, does BOD 2008 have power, impact, decision making authority Corporate Recruitment/Repl General process for 2006 1 Presidential prerogative. See BOD Governance acement Key recruitment, replacement Structure above. Executives of key execs and senior managers Corporate Decision Making Level of NOC budget 2006 1 PEMEX has a predictable, formal annual Governance Processes authority. Comment on capital budgeting process. The Ministry the general decision flow of Finance and Public Credit approves the within NOC and between annual budget and financing program. NOC and government for However, their budget is part of the major projects. national budget (and competes with other claims on public funds) and must be approved annually by Congress. Corporate Decision Making Based on available 2006 1 See above. Governance Processes, information, is NOC Budget budget process Autonomy predictable and separate from government A Citizen's Guide to National Oil Companies Page 361 Mexico: Petroleos Mexicanos (PEMEX) Year Indicator Indicator Indicator of Category Description (Query) Source Source Response of Data Corporate Decision Making Does the NOC have 2006, 1, 2 Only PEMEX can operate in the oil Governance Processes, authority to partner with 2007 upstream, midstream and downstream Budget other entities? sectors. There are non-NOC upstream gas Autonomy operators which are governed by fee based service contracts. Private sector participation is permitted in natural gas pipelines, storage and distribution. PEMEX has largely divested itself of gas distribution activities which are now in the hands of private companies. PEMEX continued dominance in gas transportation is a result of its exclusive authority over the first hand sales of natural gas as well as the transportation and storage linked with this function and as such has preferential access. This situation is a disincentive to non-NOC investment. PEMEX has a refining joint venture with Shell Oil in Texas. Corporate Mission and Does NOC have a 2008 8 Maintain oil production at 3.1mmbd until Governance Objectives mission statement and, if 2012; 100% reserve replacement ratio by so, what are key 2012/2013; achieve R/P ratio of 10 years; elements maintain gas production increases above demand growth; reduce gasoline imports; enact crucial operational upgrades in refining and petrochemicals and reduce investment leverage. In order to meet these goals PEMEX needs: greater flexibility, enhanced execution capacity and sufficient resources. Corporate Sources of Based on available 2006 1 Over the three years ended 2006 PEMEX Governance Capital information, budgeting could fund only 60% of its capital process and policy expenditures from operating cash flow including % of cash resulting in a consolidated gross flow/revenue available debt/total capital employed ratio of 99%. for reinvestment In 2005 legislation was enacted to give a limited reduction in PEMEX's fiscal burden and as a result PEMEX reported a small net profit in 2006 and was able to fund 2006 capital expenditures from operating cash flow. Corporate Disclosure/Trans Disclosure of audited 2006 1 The financial auditor is Governance parency Policy data and other PricewaterhouseCoopers; 2005 reserves indications of disclosure were audited by Ryder Scott, Netherland and transparency Sewell and DeGolyer & MacNaughton. 2006 reserves are unaudited. Corporate Skill Base Based on available 2006 1 In 2006 34% of PEMEX's employees Governance information, NOC were employed in exploration and demographics (% production; 32% in refining; 15% in management, % corporate; 10% in petrochemicals and 9% technical, other in gas and basic petrochemicals. 80% of descriptors) the workforce is unionized. There have been no material work stoppages or strikes since 1938. A Citizen's Guide to National Oil Companies Page 362 Mexico: Petroleos Mexicanos (PEMEX) Year Indicator Indicator Indicator of Category Description (Query) Source Source Response of Data Corporate Incentives/Career Based on available 2,006 1 Undisclosed Governance Management information, HR promotion and professional development policies Corporate Full Disclosure Based on available 2008 3 On its web site PEMEX provides Governance and Measurement information, brief quantitative data on social and economic of Non- description of reporting contributions to Mexico. commercial on noncommercial Objectives objectives Corporate Full Disclosure Based on available 2006 1, 2, 3 In addition to taxes, dividends and Governance and Measurement information, extent of payroll, PEMEX in 2006 spent $166 of Non- non-commercial million on direct social/economic commercial obligations programs in Mexico and reported refining Objectives losses of $2.3 billion which are in part due to price subsidies. Value Operating Upstream oil E&P. 2006 1 PEMEX is the only commercial Creation Performance Where does it operate participant permitted in the oil and gas Metrics (solely in the country or upstream sector. 74% of oil production abroad-name countries)? comes from offshore and total oil Does it have sole access production has been declining from 2004- to country's resources? 2006. 55% of gas production come from onshore sources and has been growing but is not sufficient to meet growing demand. As a result Mexican gas imports are growing. Proved BOE reserves declined 12% from 2004 to 2006. Reserve replacement and reserve replacement costs have been very poor. Value Operating Does the NOC operate 2006 1 PEMEX owns 50% of Deer Park Creation Performance abroad? Refinery (340,000 B/D capacity) in Texas Metrics with Shell Oil. Value Operating Midstream oil pipelines, 2006 1 PEMEX is the only commercial Creation Performance storage, shipping participant permitted in the midstream oil Metrics sector. The company operates 34,865 kilometers of oil and refined product pipelines most of which are in the southern part of the country. There are no cross-border oil/product pipelines. Exports, most of which go to the US, leave Mexico via tanker from three export terminals in the south of Mexico. A Citizen's Guide to National Oil Companies Page 363 Mexico: Petroleos Mexicanos (PEMEX) Year Indicator Indicator Indicator of Category Description (Query) Source Source Response of Data Value Operating Downstream oil refining 2006 1, 2 PEMEX is the sole participant in refining Creation Performance & marketing, operating six refineries with primary Metrics petrochemicals distillation capacity of 1.5 million B/D which has not grown over the period 2004-2006. The refinery utilization rate has averaged 85%. The refining segment lost $8.6 billion over the same period in part due to price subsidies. Mexico is a net importer of refined products with gasoline representing 60% of product imports. Its refineries are not configured to produce more light products like gasoline and diesel. Light products production averaged 55% of total production 2004-2006. PEMEX also owns 50% of the Deer Park refinery in Texas. Value Operating Upstream natural gas 2006 1 PEMEX is the only commercial Creation Performance E&P participant permitted in the oil and gas Metrics upstream sector. Non-PEMEX participants in the gas upstream operate pursuant to services contracts for fees, not equity participation in reserves or production. 55% of gas production come from onshore sources and has been growing but is not sufficient to meet growing demand. As a result Mexican gas imports are growing. Value Operating Midstream natural gas 2006 1 PEMEX operates 5,700 miles of gas Creation Performance pipelines, storage, LNG pipelines with 10 active import/export Metrics connections with the US. It also operates 12 gas processing plants and produces natural gas liquids and LPGs for domestic consumption. Although third parties have the right to construct, operate and ship on gas pipelines (and facilities connected with their usage) PEMEX continues to be the dominant player. (TransCanada has an 80 mile pipeline and Gas Natural has a 34 mile pipeline.) PEMEX dominance is a result of its exclusive authority over the first hand sales of natural gas as well as the transportation and storage linked with this function and as such has preferential access. The Energy Regulatory Commission (CRE) regulates the gas midstream sector. Participants cannot operate in all sectors simultaneously (transportation, storage, distribution) of the midstream gas industry. A Citizen's Guide to National Oil Companies Page 364 Mexico: Petroleos Mexicanos (PEMEX) Year Indicator Indicator Indicator of Category Description (Query) Source Source Response of Data Value Operating Downstream natural gas 2006 1 PEMEX is the sole participant in basic Creation Performance distribution, NGL sales, petrochemicals averaging 6.6 million tons Metrics petrochemicals per year production 2004-2006. Petrochemicals lost $3.5 billion over the same period. Gas distribution resides in the private sector (largely foreign companies), subject to regulation by the CRE, except for assets held in trust and those located within Veracruz. Mexico has one operating LNG regasification terminal (Altamira-500,000 MCF/D capacity) and one under construction (Costa Azul- 1 BCF/D capacity). Both terminals are owned by foreign company consortiums subject to regulation by the CRE. Gas supply contracts are between foreign suppliers and Mexico's state- owned electricity company, CFE. PEMEX does not participate in the LNG sector. Value Operating Other (power generation, 2006 1 None. Creation Performance etc) Metrics Value Operating Avg reserve replacement 29% Creation Performance rate (BOE, %) Metrics Value Operating Avg reserve replacement $18.58 Creation Performance cost ($/BOE) Metrics Value Operating Change in BOE reserves -12% Creation Performance (%) Metrics Value Operating Change in BOE 0% Creation Performance production (%) Metrics Value Operating Avg upstream operating 91% Creation Performance cash flow/upstream Metrics capital expenditures (%) Value Operating Avg upstream $5.44 Creation Performance exploration and Metrics production expenses ($/BOE) Value Operating Avg production costs $4.12 Creation Performance excluding production Metrics taxes ($/BOE) Value Operating Avg upstream after-tax No data Creation Performance income/revenues (%) Metrics A Citizen's Guide to National Oil Companies Page 365 Mexico: Petroleos Mexicanos (PEMEX) Year Indicator Indicator Indicator of Category Description (Query) Source Source Response of Data Value Operating Avg earnings before $33.18 Creation Performance interest & taxes ($/BOE) Metrics Value Operating Avg income after all No data Creation Performance taxes ($/BOE) Metrics Value Operating Avg effective tax rate No data Creation Performance (%) Metrics Value Operating Avg operating cash flow 91% Creation Performance vs costs incurred (%) Metrics Value Operating After tax return on assets 5% Creation Performance Metrics Value Operating Avg refinery utilization 84% Creation Performance rate (%) Metrics Value Operating Change in total refining -3% Creation Performance production (%) Metrics Value Operating Change in refinery 0% Creation Performance capacity (%) Metrics Value Operating Avg income from $ (0.01) Creation Performance operations per unit Metrics volume ($M/barrel) Value Operating Avg refining and -240% Creation Performance marketing operating cash Metrics flow/capital expenditures (%) Value Operating Avg pre-tax return on -7% Creation Performance assets (%) Metrics Value Financial Avg total operating cash 60% Creation Performance flow/total capital Metrics expenditures (%) Value Financial Avg operating margin 57% Creation Performance (%) Metrics Value Financial Avg profit margin (%) -2% Creation Performance Metrics Value Financial Avg effective tax rate 101% Creation Performance (%) Metrics Value Financial Avg reinvestment risk 60% Creation Performance (%) Metrics Value Financial Avg debt profile (%) 99% Creation Performance Metrics Value Financial Avg return on assets (%) -2% Creation Performance Metrics A Citizen's Guide to National Oil Companies Page 366 Mexico: Petroleos Mexicanos (PEMEX) Year Indicator Indicator Indicator of Category Description (Query) Source Source Response of Data Value Financial Avg return on total -2% Creation Performance capital employed (%) Metrics Value Financial Avg fiscal contribution 62% Creation Performance to State (%) Metrics Other Public Sector Based on available 2006 1 Although not specifically related to Factors Governance information, presence of national development objectives, Mexico a publicly articulated role has three major hydrocarbon laws: (1) of the hydrocarbon sector The Regulatory Law to Article 27 of the with respect to national Political Constitution of the United development objectives Mexican States Concerning Petroleum Affairs; (2) The Organic Law of PEMEX and Subsidiary Entities and (3) The 1995 Regulatory Law which opened natural gas transportation, storage and distribution to non-NOC entities. Other Public Sector Based on available 2006 1, 6, 8 Commercial functions are separated from Factors Governance information, clear policy and regulatory functions in the definition of the roles of hydrocarbon sector: they reside in policy, commercial PEMEX, non-NOC service contractors in operation and regulation upstream natural gas and non-NOC and assignment to participants in mid and downstream specific entities avoiding natural gas authorized by the 1995 conflicts of interest Regulatory Law. Aside from the independent regulator for the mid and downstream natural gas sectors, the Energy Regulatory Commission (CRE), policy and regulatory functions reside in multiple ministries and the office of the President. Other Public Sector Based on available 2006 1 Maintain oil production at 3.1 MMB/D Factors Governance information, presence of until 2012; 100% reserve replacement publicly stated objectives ratio by 2012/2013; achieve R/P ratio of ranked by priority for 10 years; maintain gas production NOC(s) increases above demand growth; reduce gasoline imports; enact crucial operational upgrades in refining and petrochemicals and reduce investment leverage. In order to meet these goals PEMEX needs: greater flexibility, enhanced execution capacity and sufficient resources. Other Public Sector Based on available 2006 1 None disclosed. Factors Governance information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available A Citizen's Guide to National Oil Companies Page 367 Mexico: Petroleos Mexicanos (PEMEX) Year Indicator Indicator Indicator of Category Description (Query) Source Source Response of Data Other Public Sector Based on available A stabilization fund - Fondo de Factors Governance information, transparent Estabilización de los Ingresos Petroleros hydrocarbon sector (FEIP) ­ was created in 2000 with the revenue management intention of smoothing the impact on including revenue public expenditure of changes in the oil distribution within the prices and other factors, but specific data country on its assests and flows are not publicly available. Other Public Sector NOC and/or country 2008 7 PEMEX supports the EITI initiative. Factors Governance participate in EITI and/or other transparency initiatives Other Fiscal Based on available 2006, 1, 2, 6, There has been significant Factors Sustainability information, do 2007 9 underinvestment in all sectors of the hydrocarbon sector fiscal Mexican hydrocarbon industry. Non- regimes allow for NOC investment has been extremely sufficient capital limited in permitted sectors due to investment contract structures and PEMEX dominance. Over the three years ended 2006 PEMEX funded only 60% of its capital expenditures from operating cash flow, incurring a gross debt/total capital employed ration of 99%. Other Fiscal Based on available PEMEX is investment grade. That rating Factors Sustainability information, do is conditioned upon the support of the hydrocarbon sector fiscal Mexican government. regimes allow for investment grade NOC credit ratings Other Fiscal Based on available 2006 1 The hydrocarbon fiscal regime (taxes, Factors Sustainability information, are dividends) with respect to PEMEX is hydrocarbon sector fiscal punitive with a three year average regimes appropriate for effective tax rate of 101%. the development stage of the domestic resource base Other Access to Hydrocarbon law to 2006 1 None except for limited service Factors Reserves facilitate competitive contractor participation in upstream upstream investment natural gas production. Other Access to Based on available 2008 10 See above. Factors Reserves information, existence of negotiated contracts/agreements for upstream investment Other Operating Based on available 2006 1 Fee-based service contracts in upstream Factors Strategy information, types of natural gas production. Joint venture in joint ventures, role of Texas refinery. NOC(s) Other Operating Based on available No data. Factors Strategy information, extent of turnkey contracts used directly by NOC(s) Other Business Vertical, horizontal 2006 1 PEMEX is a vertically integrated Factors Integration integration company. A Citizen's Guide to National Oil Companies Page 368 Mexico: Petroleos Mexicanos (PEMEX) Year Indicator Indicator Indicator of Category Description (Query) Source Source Response of Data Other International Does NOC make 2006 1 No except for one refinery in Texas. Factors Presence investments abroad PEMEX formerly operated MexPetro which sought positions in international ventures. The Mexican Congress forced PEMEX to shut down MexPetro some years ago. PEMEX International (PMI) engages in international trading. Other International Avg company No data Factors Presence international BOE production as % avg total company BOE production Other International Change in company BOE No data Factors Presence production from international operations (%) Other International Does NOC make 2006 1 No Factors Presence investments abroad Other International Avg company No data Factors Presence international refinery throughput as % total refinery throughput Other International Change in company No data Factors Presence refinery throughput from international operations (%) Other International Avg company 11% Factors Presence international refinery capacity as % company total refinery capacity Other International Change in company 0% Factors Presence refinery capacity from international operations (%) Other Commercializatio Non-NOC participants in 2006 1 No except for fee-based service Factors n upstream contractors to PEMEX in upstream gas production. Other Commercializatio Competition level in 2006, 1 See above. Factors n upstream including non- 2007 NOC participants and requirement to include NOC as partner Other Commercializatio Competition level in 2006 1 PEMEX is the sole participant in oil Factors n midstream, downstream midstream and downstream. In gas including non-NOC midstream, PEMEX dominates although participants and third party participants permitted. In gas requirement to include distribution, non-NOC participants NOC as partner dominate. PEMEX is the sole participant in petrochemicals. Other Commercializatio Competition level in 2006 1 See above. Factors n midstream and downstream sectors A Citizen's Guide to National Oil Companies Page 369 Mexico: Petroleos Mexicanos (PEMEX) Year Indicator Indicator Indicator of Category Description (Query) Source Source Response of Data Other Commercializatio Based on available 2006 1 Limited to service contracts and one Factors n information, prevalence refining joint venture. and success of NOC/non- NOC alliances, joint ventures Other Commercializatio Partial privatization of 2006 1 None. Factors n the NOC (as measured by ownership structure) Other Commercializatio Based on available 2006 1 The Deer Park refinery in Texas was Factors n information, level and successfully expanded. quality of NOC international operations Other Commercializatio Based on available 2006 1 None. Factors n information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, 2003, 1, 9 There is only one independent regulator, Factors well-funded and trained 2007 the Energy Regulatory Commission regulatory agencies, HC (CRE) in the midstream and downstream agency name, budget, gas sectors; regulation resides in number of staff ministries and the President's office for other sectors. The CRE does not have the authority to establish tariffs and end-use prices of natural gas. It "participates" in tariff setting with the Ministry of Finance. Other Regulation NOCs are compelled to 2006 1 PEMEX is not compelled to adopt Factors adopt practices that competitive market practices. In addition, would provide results oil products and natural gas price similar to those in subsidies and controls are not competitive markets with characteristic of a competitive market. price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market 2006 10 CRE data provision has improved and Factors transparency and good further improvement efforts are quality, unbiased data continuing. Other data is provided by and information. HC relevant ministries and is generally agency independence comprehensive and good quality. indicators Other Regulation Regulators effectively No data. Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy A Citizen's Guide to National Oil Companies Page 370 Mexico: Petroleos Mexicanos (PEMEX) Year Indicator Indicator Indicator of Category Description (Query) Source Source Response of Data Other Non-commercial Provision and level of 2006 1 About $2.3 billion in 2006. Factors Objectives hydrocarbon price subsidies ($/BOE production) provided by NOC and/or government. Brief description of subsidy program, approach, cost Other Non-commercial Provision and level of 2006 3 Disclosure on company website. Factors Objectives direct NOC funding of country social and economic programs. Brief description of programs and support Other Non-commercial Measure of NOC $752.47 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation No data Factors Objectives obligations relative to workforce ($ M) Other Non-commercial Financial performance $640.66 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, 2006 1, 10 Good with respect to NOC SEC Form Comments reliability of data 20Fs and hydrocarbon sector data provided by NOC(s) and provided by the Mexican government. governments Other Longevity of Based on available 2006 1 The Mexican Congress established Comments NOC information, history and PEMEX in 1938 and it has remained a persistence of NOC(s) decentralized entity of the Mexican government. In April 2008 President Calderon proposed legislation which would provide limited reforms to PEMEX and its commercial frameworks. The legislation is pending in Congress and is politically controversial in the country. Other Country Status Trends and issues related Many industry observers have Comments to country hydrocarbon highlighted PEMEX's sustainability sector endowments and risks. The company has upstream performance potential in the deepwater Gulf of Mexico but reportedly lacks access to international-class technology and management skills. Its oil resource base is declining and gas imports continue to grow. The Mexican government relies on PEMEX for 40% of its budget and as such the tax regime for PEMEX has been punitive. As a result, the company cannot meet its capital budget without incurring debt and debt levels are extremely high at 99% (gross debt/total capital employed) in 2006. Its access to capital is explicitly based on the support of the Mexican government. In 2008 the government enacted reforms to improve Pemex governance and access to capital and A Citizen's Guide to National Oil Companies Page 371 Mexico: Petroleos Mexicanos (PEMEX) Year Indicator Indicator Indicator of Category Description (Query) Source Source Response of Data technology, but industry observers fear that the breath and pace of reform may not be sufficient to improve Pemex performance and sustainability. Other Non-commercial Number of employees 139,702 Factors Objectives Other Non-commercial BOE production per 14,687 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 9.31 Factors Other Oil Dependency Net oil and gas export 6.57% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas 2.13% Factors revenues as a share of GDP (%) Other Resource Avg EOY oil reserves 12,186.50 Factors Endowment (MM Barrels) Other Resource Avg EOY natural gas 13,014.53 Factors Endowment reserves (BCF) Other Resource Total all source BOE 14,430.38 Factors Endowment reserves (MM Barrels) Other Resource Audited or unaudited? Audited through PEMEX 2005. Factors Endowment Other Operating Company domestic No data Factors Conditions reserves as % of country BOE reserves Other Operating Company domestic No data Factors Conditions reserves as % of total company reserves Other Operating Company domestic BOE No data Factors Conditions production as % of country BOE production Other Operating Company primary 105% Factors Conditions distillation capacity as % of total country primary distillation capacity Other Operating Company refinery 91% Factors Conditions throughput as % of total country refinery throughput Other Operating Country oil/natural gas 84.45% Factors Conditions split, reserves (%) Other Operating Country oil/natural gas 99.98% Factors Conditions split, production (%) A Citizen's Guide to National Oil Companies Page 372 Mexico: Petroleos Mexicanos (PEMEX) Year Indicator Indicator Indicator of Category Description (Query) Source Source Response of Data Other Operating Country BOE production 145.18% Factors Conditions as % of total country BOE consumption Other Trade Openness WTO Membership No Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 373 Mexico: Petroleos Mexicanos (PEMEX) Sources of Information Source # Year of Source Description Links Source 1 2006 PEMEX SEC Form 20F 2006. www.sec.gov 2 2006 USEIA Country Analysis Brief- Mexico, 12/19/07 available at www.eia.doe.gov www.eia.doe.gov. 3 2006 PEMEX. See social responsibility. www.pemex.com 4 2008 WTO www.wto.org 5 2006 2007 BP Statistical Review of World Energy available at www.bp.com. www.bp.com 6 2008 "Mexico Proposes Limited Overhaul of State Oil Monopoly," by Elisabeth Malkin, New York Times, 4/10/08. 7 2008 EITI www.eitransparency.org 8 2008 "PEMEX: Situation and Prospects in a Changing Environment," OTC Awards Luncheon, Houston, 6/6/08. 9 2006 Guide to Electric Power in Mexico, Center for Energy Economics, http://www.beg.utexas.edu/energyecon/documents/Gui University of Texas at Austin and de_To_Electric_Power_in_Mexico.pdf Instituto Tecnologico y de Estudios Superiores de Monterrey, September, 2006 available at www.beg.utexas.edu/energyecon. 10 2008 Ministry of Energy website at www.sener.gov.mx. www.sener.gob.mx A Citizen's Guide to National Oil Companies Page 374 Peru: PetroPeru Peru: PetroPeru Summary Report Corporate Governance Highlights Corporate Organization and Ownership PetroPeru was incorporated in 1969. The laws that govern Petroperu's activities have been modified in subsequent years. The last modification came about in 1999 with the creation of the "Fondo Nacional de Financiamiento de la Actividad Empresarial del Estado" (FONAFE) which governs and coordinates the activities of state-owned companies. In 2006, PetroPeru was granted additional autonomy by removing it from the supervision of the FONAFE. It engages in downstream and midstream activities. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings No data Board of Directors Structure The BOD is formed by the President and 4 directors. Independent Board Members No Is chairman also minister of energy or otherwise appointed by head of state? The BOD and the chair are named by the "Fondo Nacional de Financiamiento de la Actividad Empresarial del Estado". Since 2006, additional autonomy has been given to the company with the intent of leaving it out of the supervision of the FONAFE. Operations Highlights Upstream Oil PetroPeru has been granted opportunities to engage in E&P activities in Peru. No ventures in this regard were found to date. E&P activities in Peru are subject to competition and have multiple companies actively participating. Midstream Oil PetroPeru owns and operates the sole pipelines that connect the northern producing areas with cabotage and export ports. These have been in operation for 30 years and will need to be expanded in capacity as production in the region is expected to increase beyond current pipeline capacity. Downstream Oil PetroPeru meets approximately 50% of the country's demand for petroleum products. Repsol is the largest supplier (20-35%) while the rest is supplied by several smaller participants. PetroPeru sells 70,000 B/D domestically and exports about 6,000 B/D of products. PetroPeru also imports about 11,000 B/D of crude and products. Upstream Natural Gas The Camisea project is the country's largest natural gas venture. In general, PetroPeru does not participate in the natural gas value chain. Midstream Natural Gas In general, PetroPeru does not participate in the natural gas value chain. Downstream Natural Gas In general, PetroPeru does not participate in the natural gas value chain. Other Though granted additional autonomy, PetroPeru does not participate in other activities other than its core. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) No data Upstream: Average Annual Natural Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) No data A Citizen's Guide to National Oil Companies Page 375 Peru: PetroPeru Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 2,581 Consolidated Average Total Assets ($Millions) 854 Consolidated Average EBIT ($Millions) 198 Consolidated Average Net Income ($Millions) 42 Categorization Indicators Categories: Scores: Corporate Governance 59 Corporate Governance Public Sector Governance 81 100 Commercialization 17 Public Sector Oil Dependency 50 Fiscal Regimes 13 Governance Resource Endowment 1 0 Oil Dependency 99 Resource Commercializa Local Contribution 99 Endowment Sector and Trade Openness 67 Fiscal Regimes Average 45 PetroPeru Average NOC Worldwide Governance Indicators Trends and Issues The development of the Camisea project will have important effects on Peru's economy and strategic position. The project is designed to exploit a huge gas field in the Amazonian region that could save the country some $4 billion in energy costs and earn it several billion dollars more in the form of exports. Achieving this goal would add a significant new revenue stream to the country's hydrocarbon sector and national budget, and will help addressing rising internal demand for natural gas for power generation. Concerns have been voiced by some civil society organizations with respect to the project's impact on the environment and local communities. A Citizen's Guide to National Oil Companies Page 376 Peru: PetroPeru Database Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of 2008 1 PetroPeru is the only NOC in Governance Its Organization cluster of NOCs and other Peru. sovereign enterprises in country Corporate Ownership Structure and Number of NOCs of 1 Governance Its Organization country Corporate Ownership Structure and Description of PetroPeru was incorporated in Governance Its Organization incorporation and 1969. The laws that govern ownership PetroPeru's activities have been modified in subsequent years. The last modification came about in 1999 with the creation of the "Fondo Nacional de Financiamiento de la Actividad Empresarial del Estado" which governs and coordinates the activities of state owned companies. In 2006, PetroPeru was granted additional autonomy by removing it from the supervision of the FONAFE. It engages in downstream and midstream activities. Corporate Ownership Structure and % shares controlled by 100 % Governance Its Organization government Corporate Ownership Structure and Domestic, international No data Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international No data Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist 2008 1 Yes Governance Corporate Board of Directors (BOD) Description of BOD and 2008 1 The BOD is formed by the Governance structure President and 4 directors. Corporate Board of Directors (BOD) Is chairman also minister 2004 4 The BOD and the chair are Governance of energy or otherwise named by the "Fondo appointed by head of state Nacional de Financiamiento de la Actividad Empresarial del Estado". Since 2006, additional autonomy has been given to the company with the intent of leaving it out of the supervision of the FONAFE. Corporate Board of Directors (BOD) Are any BOD members No Governance considered independent (external) and, if so, how are they appointed A Citizen's Guide to National Oil Companies Page 377 Peru: PetroPeru Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Board of Directors (BOD) Term of service (years, No data Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and 2004 4 The BOD develops the Governance policy statements strategic plan for PetroPeru and approves the budget as well as the organization. The BOD is responsible for the annual reporting to shareholders. Corporate Role of BOD Based on available Yes. The BOD defines the Governance information, does BOD strategies and budgets for have power, impact, specific goals of the decision making authority company. Corporate Recruitment/Replacement General process for PetroPeru has a specific Governance Key Executives recruitment, replacement board-approved document of key execs and senior which defines procedures and managers strategies for hiring of executives and the BOD. Corporate Decision Making Level of NOC budget PetroPeru has sufficient Governance Processes authority. Comment on budget authority for the general decision flow operations. The company has within NOC and between substantial autonomy within NOC and government for the guidelines issued by the major projects. Ministry of Energy. PetroPeru's budget autonomy was enhanced by recent amendments to the regulatory framework. Corporate Decision Making Based on available PetroPeru's budget is part of Governance Processes, Budget information, is NOC the national budget and is Autonomy budget process predictable approved as part of the and separate from country's budget law. government Corporate Decision Making Does the NOC have The NOC has the authority to Governance Processes, Budget authority to partner with partner with other entities Autonomy other entities? although there is not much evidence of this having taken place. Corporate Mission and Objectives Does NOC have a mission 2008 1 The mission of PetroPeru is to Governance statement and, if so, what satisfy the energy needs of the are key elements Peruvian domestic market at competitive prices, generating and promoting competition in the marketplace. Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment A Citizen's Guide to National Oil Companies Page 378 Peru: PetroPeru Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Disclosure/Transparency Disclosure of audited data 2008 1 The company adopted a Governance Policy and other indications of directive that seeks to disclosure and increase transparency through transparency the availability of information on the company's operations. Information is readily available. Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available 2008 1 Salary scales and promotion Governance Management information, HR policies are publicly available promotion and as part of PetroPeru's professional development transparency directive. The policies information includes pay raises for all types of personnel and their pay scales. Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, brief commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, extent of non- commercial Objectives commercial obligations Value Operating Performance Upstream oil E&P. Where PetroPeru has been granted Creation does it operate (solely in opportunities to engage in Metrics the country or abroad- E&P activities in Peru. No name countries)? Does it ventures in this regard were have sole access to found to date. E&P activities country's resources? in Peru are subject to competition and have multiple companies actively participating. Value Operating Performance Does the NOC operate No Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, PetroPeru owns and operates Creation storage, shipping the sole pipelines that connect Metrics the northern producing areas with cabotage and export ports. These have been in operation for 30 years and will need to be expanded in capacity as production in the region is expected to increase beyond current pipeline capacity. A Citizen's Guide to National Oil Companies Page 379 Peru: PetroPeru Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Downstream oil refining & PetroPeru meets Creation marketing, petrochemicals approximately 50% of the Metrics country's demand for petroleum products. Repsol is the largest supplier (20- 35%) while the rest is supplied by several smaller participants. PetroPeru sells 70,000 B/D domestically and exports about 6,000 B/D of products. Petroperu also imports about 11,000 B/D of crude and products. Value Operating Performance Upstream natural gas E&P PetroPeru does not participate Creation in the natural gas value chain. Metrics Value Operating Performance Midstream natural gas PetroPeru does not participate Creation pipelines, storage, LNG in the natural gas value chain. Metrics Value Operating Performance Downstream natural gas PetroPeru does not participate Creation distribution, NGL sales, in the natural gas value chain. Metrics petrochemicals Value Operating Performance Other (power generation, Though granted additional Creation etc) autonomy, PetroPeru does not Metrics participate in other activities other than its core business. Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE No data Creation production (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics A Citizen's Guide to National Oil Companies Page 380 Peru: PetroPeru Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow No data Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total after-tax 2% Creation income/revenues (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg gross debt/after-tax 70% Creation capital employed (%) Metrics Value Financial Performance Avg operating margin (%) 8% Creation Metrics Value Financial Performance Avg profit margin (%) 2% Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) No data Creation Metrics Value Financial Performance Avg debt profile (%) 70% Creation Metrics A Citizen's Guide to National Oil Companies Page 381 Peru: PetroPeru Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg return on assets (%) 5% Creation Metrics Value Financial Performance Avg return on total capital 5% Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to 1% Creation State (%) Metrics Other Public Sector Governance Based on available The hydrocarbon sector is Factors information, presence of a seen as a tool to help foster publicly articulated role of national development, both the hydrocarbon sector through increased energy with respect to national supply locally and through development objectives increased revenues from exports. Other Public Sector Governance Based on available The separation of roles Factors information, clear between policy (Ministry of definition of the roles of Energy), regulation policy, commercial (Perupetro, Osinerg), and operation and regulation commercial activities and assignment to specific (Petroperu) is defined by law. entities avoiding conflicts of interest Other Public Sector Governance Based on available PetroPeru has the clear Factors information, presence of objective of meeting domestic publicly stated objectives demand for energy in general ranked by priority for and petroleum products NOC(s) specifically. Other Public Sector Governance Based on available PetroPeru does not engage in Factors information, presence of a considerable non-commercial strategy to transfer NOC activities other than a series non-commercial objectives of cultural and educational to government or other activities. agencies as capacity becomes available Other Public Sector Governance Based on available 2008 1, 12 In accordance with the law Factors information, transparent petroleum revenues, included hydrocarbon sector royalties collected by revenue management PeruPetro on behalf of the including revenue state, are shared among the distribution within the central government and the country producing regions and localities (Ley Complementaria del Canon y Sobrecanon para Petróleo y Gas en Piura y Tumbes, Ley Nº 27763-2002, as amended by Decreto de Urgencia Nº 002-2003). Perupetro provides regular disclose of royalty payments on its website. Vigila Peru, also publishes detailed analysis of oil revenue and their distribution among level of government. A Citizen's Guide to National Oil Companies Page 382 Peru: PetroPeru Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance NOC and/or country Current, 5,6,7,8 Peru was admitted as an EITI Factors participate in EITI and/or 2007 candidate country in other transparency September 2007. An action initiatives plan has been prepared and a working committee formed to meet the 2010 validation target. Various transparency organizations operate or have operated in Peru, such as Transparency International (Proetica); Revenue Watch; National Democratic Institute (NDI), and Vigila Peru. Other Fiscal Sustainability Based on available Current 11 New investments in Factors information, do exploration activity, field hydrocarbon sector fiscal development and production regimes allow for are commonplace. sufficient capital investment Other Fiscal Sustainability Based on available The fiscal regime appears to Factors information, do be attractive for upstream hydrocarbon sector fiscal activities. regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available Investment is taking place Factors information, are both in mature and new areas, hydrocarbon sector fiscal which suggests that the regimes appropriate for the current fiscal regime is development stage of the considered adequate by domestic resource base investors. Other Access to Reserves Hydrocarbon law to Yes. Considerable private Factors facilitate competitive investment is taking place in upstream investment the upstream. Other Access to Reserves Based on available Recent bidding rounds for Factors information, existence of new exploration areas appear negotiated to have attracted considerable contracts/agreements for attention. upstream investment Other Operating Strategy Based on available No data Factors information, types of joint ventures, role of NOC(s) Other Operating Strategy Based on available EPC contracts have been used Factors information, extent of by PetroPeru for specific turnkey contracts used infrastructure developments. directly by NOC(s) Other Business Integration Vertical, horizontal PetroPeru is mostly dedicated Factors integration to the midstream and downstream aspects of the business. PetroPeru is the owner of the northern pipeline, which it manages like a regulated open access pipeline. Other International Presence Does NOC make No Factors investments abroad A Citizen's Guide to National Oil Companies Page 383 Peru: PetroPeru Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in Yes Factors upstream Other Commercialization Competition level in Upstream competition is open Factors upstream including non- and there is no legal NOC participants and requirement to include requirement to include PetroPeru as a partner. NOC as partner Other Commercialization Competition level in PetroPeru owns and operates Factors midstream, downstream the Northern pipeline, which including non-NOC functions as an open access participants and pipeline. requirement to include NOC as partner Other Commercialization Competition level in No real competition in the Factors midstream and midstream sector. downstream sectors Other Commercialization Based on available The company is free to Factors information, prevalence contract and partner to pursue and success of NOC/non- its mission. No reporting of NOC alliances, joint such ventures is available. ventures Other Commercialization Partial privatization of the No. Factors NOC (as measured by ownership structure) A Citizen's Guide to National Oil Companies Page 384 Peru: PetroPeru Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Based on available No data Factors information, level and quality of NOC international operations Other Commercialization Based on available Non-commercial obligations Factors information, percent of appear to be only a minor non-core commercial portion of overall operations. activities in overall operations Other Regulation Presence of independent, 2007, 10, 11 Perupetro was created to Factors well-funded and trained Current promote investment in regulatory agencies, HC hydrocarbons exploration and agency name, budget, production, and to negotiate, number of staff enter into and supervise hydrocarbon contracts on behalf of the state. Other regulatory functions are carried out by the Ministry of Energy and Mines. Other Regulation NOCs are compelled to No data Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market No data Factors transparency and good quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively No data Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of No data Factors Objectives hydrocarbon price subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of No data Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support A Citizen's Guide to National Oil Companies Page 385 Peru: PetroPeru Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Non-commercial Measure of NOC $499.95 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance $1,510.50 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, A limited amount of Comments reliability of data provided information is made publicly by NOC(s) and available. governments Other Longevity of NOC Based on available 2007 10 PetroPeru was created in Comments information, history and response to the need to persistence of NOC(s) separate upstream from downstream activities as mandated in the 1993 hydrocarbon law. PetroPeru was to focus on the downsteam, while Perupetro was created to promote investment in hydrocarbons exploration and production, to negotiate, enter into and supervise hydrocarbon contracts on behalf of the state, and to market the hydrocarbons obtained from areas under contract. Other Country Status Trends and issues related The development of the Comments to country hydrocarbon Camisea project will have sector endowments and important effects on Peru's performance economy and strategic position. The project is designed to exploit a huge gas field in the Amazonian region that could save the country some $4 billion in energy costs and earn it several billion dollars more in the form of exports. Achieving this goal would add a significant new revenue stream to the country's hydrocarbon sector and national budget, and will help addressing rising internal demand for natural gas for power generation. Concerns have been voiced by some civil society organizations with respect to the project's impact on the environment and local communities. Other Non-commercial Number of employees 1,709 Factors Objectives A Citizen's Guide to National Oil Companies Page 386 Peru: PetroPeru Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Non-commercial BOE production per No data Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 62.16 Factors Other Oil Dependency Net oil and gas export -2.63% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues -0.75% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 1,097.29 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 12,536.71 Factors reserves (BCF) Other Resource Endowment Total all source BOE 3,258.79 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Audited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 33.67% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.97% Factors split, production (%) Other Operating Conditions Country BOE production 75.62% Factors as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 387 Peru: PetroPeru Sources of Information Source # Year of Source Source Description Links 1 2008 Petroperu web site http://www.petroperu.com.pe 2 2006 Memoria Petroperu 2006 http://www.petroperu.com.pe 3 2008 CIA World Factbook - Peru https://www.cia.gov/library/publications/the-world- factbook/geos/pe.html 4 2008 USEIA Peru Country Analysis Brief http://www.eia.doe.gov/emeu/cabs/Peru/Background.html 5 Current Extractive Industries Transparency Initiative http://eitransparency.org/Peru 6 Current EITI Peru http://www.minem.gob.pe/eiti/default.asp 7 Current Revenue Watch Peru http://www.revenuewatch.org/our-work/countries/peru.php 8 2007 National Democratic Institute - Peru http://www.ndi.org/worldwide/lac/peru/peru.asp 9 Current Transparency International - Proetica http://www.proetica.org.pe/Index.html (Peru) 10 2007 Energy Cooperation in the Western http://www.csis.org/component/option,com_csis_pubs/task Hemisphere, Ch 16 ,view/id,3679/type,2/ (Foss, Wainberg, Volkov), CSIS 11 Current Ministry of Energy and Mines - Camisea link http://www.minem.gob.pe/default.htm 12 2008 Vigila Peru http://www.propuestaciudadana.org.pe/vigilaperu- industriasextractivas.shtml A Citizen's Guide to National Oil Companies Page 388 Venezuela: Petroleos de Venezuela S.A. (PDVSA) Venezuela: Petroleos de Venezuela S.A. (PDVSA) Summary Report Corporate Governance Highlights Corporate Organization and Ownership All shares are owned by the Venezuelan people as stated in the constitution. The Minister of Energy acts as the agent for the Venezuelan people and represents them in the shareholders meeting. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings Company is not listed. Board of Directors Structure The Board of Directors is chaired by the president of PDVSA. In addition there are two vice-presidents, 4 internal directors and 3 external directors, all of whom are appointed by the President of Venezuela. Independent Board Members Though in name there are three external directors, they are appointed using the same criteria for appointment of internal directors. Is chairman also minister of energy or otherwise appointed by head of state? Yes Operations Highlights Upstream Oil PDVSA operates E&P related activities solely in Venezuela. It is required by law to have a majority interest in any hydrocarbon producing activity in Venezuela. Midstream Oil Domestically PDVSA operates all pipelines, storage and cabotage operations. It also has interest in storage facilities and pipelines abroad. In recent years, as part of its program to divest assets in the US or that serve the US, it has moved to sell its interest in several pipelines in the US (Colonial) and is moving to sell its terminal and storage facilities in the Bahamas. Downstream Oil As a consequence of a program to invest downstream in the 1980s, PDVSA created CITGO and other international subsidiaries. The current focus is one of divestiture of assets in the US (or rationalization) and to focus on developing assets in regional markets more in line with the new strategic focus of the company. In addition, it has entered into small joint ventures in countries in the Caribbean and South America for retail sales of petroleum products tied to the PetroCaribe and PetroAmerica initiatives. PDVSA supplies the domestic market with about 1.2 MMB/D of refining capacity. Upstream Natural Gas PDVSA operates E&P related activities solely in Venezuela. There was no legal requirement for PDVSA to have a majority interest in any natural gas producing activity in Venezuela. Considerable exploration activity is taking place offshore Venezuela led by IOCs. Midstream Natural Gas Domestically PDVSA operates all pipelines and natural gas related activities (compression had been partially outsourced but those contracts were eliminated). There are no natural gas storage facilities in Venezuela. Opportunities for LNG are available in the future once the market of new natural gas discoveries is determined. LNG is not the main outlet for natural gas. Several natural gas pipeline projects have been considered, but a decision has yet to be made. Downstream Natural Gas Natural gas is distributed directly within the main cities while LPG and propane is distributed to those not served directly via natural gas distribution systems. A petrochemical affiliate that provides a limited number of products also exists. Other With the expropriation/nationalization of power generation assets by the government, these have now become part of the patrimony of PDVSA (Electricidad de Caracas). In addition, PDVSA has indicated its intention to provide electricity to various locations that are currently undersupplied. Although some of these projects have been on the chart for almost a decade; implementation has been very slow. A Citizen's Guide to National Oil Companies Page 389 Venezuela: Petroleos de Venezuela S.A. (PDVSA) Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 17,343 Upstream: Average Proved Gas Reserves (BCF) 107,006 Upstream: Average Annual Oil Production (MM Barrels) 1,054 Upstream: Average Annual Natural Gas Production (BCF) 2,519 Downstream: Average Annual Refinery Production (MM Barrels) 1,041 Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 85,163 Consolidated Average Total Assets ($Millions) 80,103 Consolidated Average EBIT ($Millions) 35,579 Consolidated Average Net Income ($Millions) 5,904 Categorization Indicators Categories: Scores: Corporate Governance 50 Corporate Governance Public Sector Governance 43 100 Commercialization 67 Public Sector Oil Dependency 50 Governance Fiscal Regimes 50 0 Resource Endowment 22 Oil Dependency 75 Resource Commercializa Endowment Local Contribution 55 Sector and Trade Openness 36 Fiscal Regimes Average 51 PDVSA Average NOC Worldwide Governance Indicators Trends and Issues While high oil prices have led to historically high revenues in recent years, Venezuela's production and export volumes have declined. According to industry experts PDVSA would need to make substantial investments to maintain production levels at existing fields, as many of these fields suffer annual decline rates of at least 25 percent. Harsher fiscal regimes and the broad mission of PDVSA may hinder its ability to meet this goal. The recent strengthening of alliances with other petroleum producers in Europe, Asia and the Middle East may help PDVSA to address this problem. A Citizen's Guide to National Oil Companies Page 390 Venezuela: Petroleos de Venezuela S.A. (PDVSA) Database Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Ownership Structure and Sole NOC or one of 2004 2 PDVSA is a holding company of a Governance Its Organization cluster of NOCs and large number of affiliates. The other sovereign affiliates tackle different aspects of enterprises in country the oil and gas business as well as other government directed programs such as PDVSA Agricola which targets food production. PDVSA was formed by the Venezuelan government in 1975 pursuant to the Organic Law that reserves for the state the industry and trade of hydrocarbons (the "Nationalization Law"). PDVSA's operations are supervised by Venezuela's Ministry of Energy and Petroleum. The Minister now also serves as the President of PDVSA. Corporate Ownership Structure and Number of NOCs of 2007 1 1 Governance Its Organization country Corporate Ownership Structure and Description of 2004 2 All shares are owned by the Governance Its Organization incorporation and Venezuelan people as stated in the ownership constitution. The Minister of Energy acts as the agent for the Venezuelan people and represents them in the shareholders meeting. Corporate Ownership Structure and % shares controlled by 2007 1 100 % Governance Its Organization government Corporate Ownership Structure and Domestic, 2007 1 Company is not listed. Governance Its Organization international exchanges where shares are listed A Citizen's Guide to National Oil Companies Page 391 Venezuela: Petroleos de Venezuela S.A. (PDVSA) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Ownership Structure and Domestic, 2007 1 After 2004, all bonds that required Governance Its Organization international reporting to the SEC were exchanges where repurchased by PDVSA. In bonds are traded addition, most of the project financing debt tied to the four heavy oil joint ventures in Venezuela was repurchased by PDVSA and the remaining partners according to the new levels of participation in the Joint Ventures. Debt that was not repaid has now become part of the debt of PDVSA. Considerable new debt was issued in 2007: $7.5 billion with maturities of 2017, 2027 and 2037. The debt was sold in Venezuela in order to reduce liquidity following instructions from the Ministry of Finance. $3.5 billion was provided by JBIC payable in 15 years. BNP Paribas led a consortium that provided $1.124 Billion in a new short term line of credit. PDVSA's affiliate CITGO also entered into a short term line of credit for $1 billion led by BNP Paribas and UBS. Most debt covenants do not impose restrictions on PDVSA dividend issuance. Corporate Ownership Structure and Company files form 2007 1 No Governance Its Organization 20-F with SEC? Corporate Board of Directors (BOD) Does a BOD exist 2007 1 Yes Governance Corporate Board of Directors (BOD) Description of BOD 2007 1 The Board of Directors is led by Governance and structure the President of PDVSA. In addition there are two vice- presidents, 4 internal directors and 3 external directors all appointed by the President of Venezuela. Corporate Board of Directors (BOD) Is chairman also 2007 1 Yes Governance minister of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD 2007 1 There are three external directors. Governance members considered They are appointed using the same independent (external) criteria for appointment of internal and, if so, how are they directors. appointed Corporate Board of Directors (BOD) Term of service (years, 2007 1 The members of the Board of Governance with re-appointment). Directors are initially appointed for Comment if they can a period of 2 years through a be readily removed. Presidential Decree. They can be removed at any moment and can be reappointed indefinitely until removed by the President of Venezuela. A Citizen's Guide to National Oil Companies Page 392 Venezuela: Petroleos de Venezuela S.A. (PDVSA) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Role of BOD Description of role and 2007 1 The Board of Directors is Governance policy statements responsible for calling the annual and special meetings of shareholders; preparing and presenting the operational results of the company at the end of the fiscal year; and formulating and executing the operational, economic, financial and social strategies of the company. Corporate Role of BOD Based on available 2007 1 Yes, the Board of Directors does Governance information, does have decision making authority. BOD have power, For example, it can assign budgets impact, decision to different divisions of the making authority corporation. Corporate Recruitment/Replacement General process for 2007 1 Clearly stated policies of support Governance Key Executives recruitment, for the "socialist revolution" for all replacement of key key executives and managers. execs and senior Reported dismissals of midlevel managers personnel for political reasons. Corporate Decision Making Level of NOC budget 2007 1 The company generates the budget Governance Processes authority. Comment proposal which is first approved at on the general decision the shareholder meeting. Since the flow within NOC and Minister of Energy acts as the sole between NOC and agent for all shareholders, the government for major overall budget is aligned with projects. government objectives. Special dividends are routinely declared in order to meet cash flow demands of the government. Corporate Decision Making Based on available 2007 1 It is predictable but it is influenced Governance Processes, Budget information, is NOC by the government. In addition, Autonomy budget process the President of the company is a predictable and member of the cabinet. The separate from Ministry of Energy and Petroleum government establishes general policies and approves production levels, capital expenditures and operating budgets annually, while the board of directors is responsible for implementing the policies established by the government of Venezuela. Corporate Decision Making Does the NOC have 2007 1 The company may propose to Governance Processes, Budget authority to partner partner with other entities but this Autonomy with other entities? must be approved by the national assembly. Corporate Mission and Objectives Does NOC have a 2007 1 PDVSA is responsible, in Governance mission statement and, Venezuela, for the development of if so, what are key the hydrocarbon industry; it also elements plans, coordinates, supervises and controls activities related to the exploration, exploitation, manufacture, refining, transportation and sales of hydrocarbons and products both in Venezuela and abroad. A Citizen's Guide to National Oil Companies Page 393 Venezuela: Petroleos de Venezuela S.A. (PDVSA) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Sources of Capital Based on available 2007 1 The company generates the budget Governance information, budgeting proposal which is first approved at process and policy the shareholder meeting. Since the including % of cash Minister of Energy acts as the sole flow/revenue available agent for all shareholders overall for reinvestment budget is aligned with government objectives. Special dividends are routinely declared to meet cash flow demands of the government. Investment budget is assigned during this budget generation process. It is not preestablished. Corporate Disclosure/Transparency Disclosure of audited 2007 1 Since 2005, audited data is no Governance Policy data and other longer submitted to the SEC. indications of Rather, annual reports are now disclosure and issued by the company and audited transparency by KPMG without the need to prepare the SEC form 20-F. Some of the affiliates/JVs have independent auditors such as PriceWaterhouseCoopers, Ernst & Young, and Deloitte. Corporate Skill Base Based on available 2007 1 Total employee base has grown Governance information, NOC consistently in the past 3 years demographics (% reaching almost 80,000. Only total management, % employees are reported. technical, other descriptors) Corporate Incentives/Career Based on available 2007 1 Agreements were signed with Governance Management information, HR Venezuelan institutions for higher promotion and education to provide 2 year professional undergraduate degrees for workers. development policies English programs are contracted with Universities in Jamaica and Barbados. Corporate Full Disclosure and Based on available 2007 1 Reporting non-commercial Governance Measurement of Non- information, brief activities has become an important commercial Objectives description of priority for the company as reporting on reflected in its annual report. noncommercial objectives Corporate Full Disclosure and Based on available 2007 1 Non-commercial obligations are Governance Measurement of Non- information, extent of estimated in the most recent annual commercial Objectives non-commercial report to be in the order of $14 obligations billion annually. Value Operating Performance Upstream oil E&P. 2007 1 PDVSA operates E&P related Creation Where does it operate activities solely in Venezuela. It is Metrics (solely in the country required by law to have a majority or abroad-name of interest in any hydrocarbon countries)? Does it producing activity in Venezuela. have sole access to country's resources? Value Operating Performance Does the NOC operate 2007 1 Yes Creation abroad? Metrics Value Operating Performance Midstream oil 2007 1 Domestically PDVSA operates all Creation pipelines, storage, pipelines, storage and cabotage Metrics shipping operations. It also has interest in A Citizen's Guide to National Oil Companies Page 394 Venezuela: Petroleos de Venezuela S.A. (PDVSA) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data storage facilities and pipelines abroad. In recent years, as part of its program to divest assets in the US or that serve the US, it has moved to sell its interest in several pipelines in the US (Colonial) and is moving to sell its terminal and storage facilities in the Bahamas. Value Operating Performance Downstream oil 2007 1 As a consequence of a program to Creation refining & marketing, invest downstream in the 1980s, Metrics petrochemicals PDVSA owns CITGO and many other downstream assets abroad. The current focus is the divestiture of assets in the US (or rationalization) and the development of assets in regional markets. In addition, it has entered into small joint ventures in countries in the Caribbean and South America for retail sales of petroleum products tied to the PetroCaribe and PetroAmerica initiatives. PDVSA supplies the domestic market with about 1.2 MMB/D of refining capacity. Value Operating Performance Upstream natural gas 2007 1 PDVSA operates E&P related Creation E&P activities solely in Venezuela. It Metrics was not required by law to have a majority interest in any natural gas producing activity in Venezuela. Considerable exploration activity is taking place offshore Venezuela led by IOCs. Value Operating Performance Midstream natural gas 2007 1 Domestically PDVSA operates all Creation pipelines, storage, pipelines and natural gas related Metrics LNG activities (compression had been partially outsourced but those contracts were eliminated). There are no natural gas storage facilities in Venezuela. Opportunities for LNG are available in the future once the market of new natural gas discoveries is determined. LNG is not the main outlet for natural gas. To the contrary, the government is pushing for natural gas pipelines as outlets for natural gas, but none have been developed. Value Operating Performance Downstream natural 2007 1 Natural gas is distributed directly Creation gas distribution, NGL within the main cities while LPG Metrics sales, petrochemicals and propane is distributed to those not served directly via natural gas distribution systems. A petrochemical affiliate that provides a limited number of products has been in existence for decades. A Citizen's Guide to National Oil Companies Page 395 Venezuela: Petroleos de Venezuela S.A. (PDVSA) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Value Operating Performance Other (power 2007 1 With the expropriation / Creation generation, etc) nationalization of power generation Metrics assets by the government, these have now become part of the patrimony of PDVSA (Electricidad de Caracas). In addition, PDVSA has indicated its intention to provide electricity to areas that are currently undersupplied. These projects have been in the making for more than a decade, but the pace of implementation has been very slow. Value Operating Performance Avg reserve 59% Creation replacement rate Metrics (BOE, %) Value Operating Performance Avg reserve No data Creation replacement cost Metrics ($/BOE) Value Operating Performance Change in BOE 9% Creation reserves (%) Metrics Value Operating Performance Change in BOE 4% Creation production (%) Metrics Value Operating Performance Avg upstream No data Creation operating cash Metrics flow/upstream capital expenditures (%) Value Operating Performance Avg upstream No data Creation exploration and Metrics production expenses ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes Metrics ($/BOE) Value Operating Performance Avg income after all No data Creation taxes ($/BOE) Metrics Value Operating Performance Avg effective tax rate No data Creation (%) Metrics Value Operating Performance Avg operating cash No data Creation flow vs costs incurred Metrics (%) A Citizen's Guide to National Oil Companies Page 396 Venezuela: Petroleos de Venezuela S.A. (PDVSA) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Value Operating Performance After tax return on No data Creation assets Metrics Value Operating Performance Avg refinery 92% Creation utilization rate (%) Metrics Value Operating Performance Change in total 0% Creation refining production Metrics (%) Value Operating Performance Change in refinery 0% Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating Metrics cash flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating 51% Creation cash flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin 42% Creation (%) Metrics Value Financial Performance Avg profit margin (%) 7% Creation Metrics Value Financial Performance Avg effective tax rate 84% Creation (%) Metrics Value Financial Performance Avg reinvestment risk 51% Creation (%) Metrics Value Financial Performance Avg debt profile (%) 25% Creation Metrics Value Financial Performance Avg return on assets 7% Creation (%) Metrics Value Financial Performance Avg return on total 9% Creation capital employed (%) Metrics Value Financial Performance Avg fiscal contribution 45% Creation to State (%) Metrics Other Public Sector Governance Based on available 2008 8 "The new PDVSA is a national Factors information, presence Venezuelan state-owned of a publicly corporation, committed to serving articulated role of the the interests of the Venezuelan hydrocarbon sector public; constitutionally, the rightful with respect to national owner of the countries oil reserves. development This company has developed ever objectives closer links with the Venezuelan State that will allow a coherent A Citizen's Guide to National Oil Companies Page 397 Venezuela: Petroleos de Venezuela S.A. (PDVSA) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data connection with the present national project guidelines, set down by the Ministry of Energy and Petroleum (MEP)." "Social development in PDVSA is a process of formulating and executing projects in alignment with the Community Development plans of the State. In order to put oil resources to the service of the wider population and create a new economic model, putting an end to the social inequalities so apparent in Venezuela in the last decades." Other Public Sector Governance Based on available Hydrocarbon laws address roles of Factors information, clear Ministry of Energy and Petroleum definition of the roles (MEP) and PDVSA. Institutional of policy, commercial arrangements are designed to operation and ensure a strict link between the two regulation and institutions. assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available 2008 8 Objectives are clearly stated but do Factors information, presence not appear to be ranked. of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available 2008 8 "PDVSA promotes Fondespa (The Factors information, presence Fund for Social and Economic of a strategy to transfer Development within the Country), NOC non-commercial which has the task of promoting objectives to social development through a government or other transparent and fair distribution of agencies as capacity oil revenues." "PDVSA is 100% becomes available committed to the eradication of both rural and urban poverty. The company promotes an extensive network of endogenous development projects throughout the country. It also actively discourages every kind of discrimination and is dedicated to supporting minority groups within Venezuela, through a wide range of different programs." Other Public Sector Governance Based on available Nearly 15% of the revenue is spent Factors information, by PDVSA on social programs, transparent which are not part of the state hydrocarbon sector budget (not subject to revenue management Parliamentary oversight). In 1999 including revenue Venezuela established the distribution within the Macroeconomic Stabilization Fund country (FIEM). FIEM receives revenues above a reference price -based on the average oil price of the last five years, and transfers revenues to the Treasury when the oil price falls below the reference price. FIEM A Citizen's Guide to National Oil Companies Page 398 Venezuela: Petroleos de Venezuela S.A. (PDVSA) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data was created by the authority of the Presidency of the Republic. The Board of the Central Bank of Venezuela (BCV) governs FIEM and ensures compliance, approves annual operating budgets, approves annual fund reports, issues internal regulations, approves expenditures, establishes policies, and ensures that the fund functions as they desire. Approved annual fund reports are submitted to congress. The leadership of the BCV is appointed by the President. The legislative has limited involvement with any decision-making and oversight with respect to FIEM. Expediture from FIEM can be authorized by presidential decree. The operating rules of the FIEM have been changed several times since its creation and suspended its operation for an extended period. Due to its institutional arrangements compared to other sovereign wealth funds, the FIEM is considered to have especially low levels of effective governance. Other Public Sector Governance NOC and/or country 2007, 4,5 Venezuela is not a candidate Factors participate in EITI Current country for EITI. Transparency and/or other International and National transparency initiatives Democratic Institute operate in the country. Other Fiscal Sustainability Based on available The fiscal regime limits investment Factors information, do in certain high cost areas or areas hydrocarbon sector that require large investments with fiscal regimes allow long payout periods. The for sufficient capital imposition of new windfall taxes is investment creating additional limitations. Other Fiscal Sustainability Based on available PDVSA debt is rated BB-. Factors information, do However, this does not seem to be hydrocarbon sector tied to the fiscal regime since it has fiscal regimes allow not changed much even as the for investment grade fiscal regime has changed in recent NOC credit ratings years. Other Fiscal Sustainability Based on available The vast amount of the resource Factors information, are base is extra-heavy crude or hydrocarbon sector offshore natural gas. In both cases, fiscal regimes industry observers believe that the appropriate for the current fiscal regime does not development stage of adequately take into account their the domestic resource complexity or the very large base investments that they require. Under the current fiscal regime, no new projects requiring significant investments appear to have been proposed by PDVSA or third A Citizen's Guide to National Oil Companies Page 399 Venezuela: Petroleos de Venezuela S.A. (PDVSA) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data parties. Other Access to Reserves Hydrocarbon law to Current law allows for joint Factors facilitate competitive ventures in which the national oil upstream investment company has to have at least 60% ownership and control of operations. Other Access to Reserves Based on available Most joint ventures are negotiated Factors information, existence contracts/agreements that are of negotiated approved by the National contracts/agreements Assembly. for upstream investment Other Operating Strategy Based on available Current law allows for joint Factors information, types of ventures in which the national oil joint ventures, role of company has to have at least 60% NOC(s) ownership and control of operations. Other Operating Strategy Based on available Large investments have not taken Factors information, extent of place in recent years. Small turnkey contracts used projects have been undertaken and directly by NOC(s) have mostly been managed by PDVSA. Other Business Integration Vertical, horizontal Complete integration in the oil Factors integration sector. Natural gas exports and LNG operations are nonexistent at present. Other International Presence Does NOC make 2006 3 Yes. Investments are minor but Factors investments abroad strategic. Partnerships with other regional National Oil Companies in which it assumes a minority role. Examples are upstream activities in partnership with YPFB. Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company No data Factors BOE production from international operations (%) Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company 58% Factors international refinery capacity as % company total refinery capacity A Citizen's Guide to National Oil Companies Page 400 Venezuela: Petroleos de Venezuela S.A. (PDVSA) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other International Presence Change in company -1 Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants Yes. Factors in upstream Other Commercialization Competition level in Non-NOC participants do not Factors upstream including compete against PDVSA. Deals non-NOC participants are negotiated with PDVSA which and requirement to has to be the majority owner of any include NOC as joint venture. partner Other Commercialization Competition level in In the midstream most if not all Factors midstream, assets are owned by PDVSA. downstream including non-NOC participants and requirement to include NOC as partner Other Commercialization Based on available Old ventures exist between Factors information, PDVSA and privately held prevalence and success companies. All new ventures are of NOC/non-NOC slated to be with foreign NOCs. alliances, joint To date only minor investments ventures have taken place. Other Commercialization Partial privatization of Not applicable Factors the NOC (as measured by ownership structure) Other Commercialization Based on available The NOC owns downstream assets Factors information, level and abroad that meet international quality of NOC standards of quality and operation. international operations Other Commercialization Based on available Expenses associated with non-core Factors information, percent of commercial activities are reported non-core commercial to be $14.9 billion while a total of activities in overall $14.1 billion were dedicated to operations government directed programs. Other Regulation Presence of 2007 6 There is no independent regulatory Factors independent, well- body for the oil sector. There was funded and trained an attempt to develop a regulator regulatory agencies, for the natural gas sector which HC agency name, ultimately was incorporated into budget, number of the MEP. staff Other Regulation NOCs are compelled 1-50 Market price for oil products sold Factors to adopt practices that and 74 in the domestic market is on the would provide results order of $7.29 per barrel while the similar to those in average price of a barrel of oil competitive markets resulted in a price of $64.7. The with price, access to average production cost is reported and quality of energy to be $4.93. services. brief description: HC agency enforcement powers A Citizen's Guide to National Oil Companies Page 401 Venezuela: Petroleos de Venezuela S.A. (PDVSA) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Regulation Regulators assure No data Factors market transparency and good quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively No separate regulator. Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of Prices for petroleum products are Factors Objectives hydrocarbon price centrally regulated. Subsidy subsidies ($/BOE estimate is based on the production) provided opportunity cost of exporting crude by NOC and/or to markets minus average domestic government. brief price. description of subsidy program, approach, cost Other Non-commercial Provision and level of 2008 8 The company specifically manages Factors Objectives direct NOC funding of and operates programs directed by country social and the government that are called economic programs. social in nature. "The Ministry of brief description of Energy and Petroleum and PDVSA programs and support contribute to the creation of a national model of development where communities with lower incomes can improve the social welfare conditions available in their own neighborhoods, and achieve an improvement in their standard of living" Other Non-commercial Measure of NOC $1,188.81 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation No data Factors Objectives obligations relative to workforce ($ M) Other Non-commercial Financial performance $1,263.89 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Company provides complete Comments reliability of data audited statements that are reported provided by NOC(s) to be compatible with international and governments standards. The company does not need to comply with SEC requirements. A Citizen's Guide to National Oil Companies Page 402 Venezuela: Petroleos de Venezuela S.A. (PDVSA) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Longevity of NOC Based on available PDVSA was created in 1975 and Comments information, history has been granted constitutional and persistence of status since then. That status has NOC(s) evolved as the constitution and the relevant laws have been replaced over time. In general, the NOC is a key element of the government's strategy and will persist. Other Country Status Trends and issues While high oil prices have led to Comments related to country historically high revenues in recent hydrocarbon sector years, Venezuela's production and endowments and export volumes have declined. performance According to industry experts PDVSA would need to make substantial investments to maintain production levels at existing fields, as many of these fields suffer annual decline rates of at least 25 percent. Harsher fiscal regimes and the broad mission of PDVSA may hinder its ability to meet this goal. The recent strengthening of alliances with other petroleum producers in Europe, Asia and the Middle East may help PDVSA to address this problem. Other Non-commercial Number of employees 67,381 Factors Objectives Other Non-commercial BOE production per 37,547 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 105.07 Factors Other Oil Dependency Net oil and gas export 84.33% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas 25.42% Factors revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 87,035.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 181,870.51 Factors reserves (BCF) Other Resource Endowment Total all source BOE 118,391.98 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors A Citizen's Guide to National Oil Companies Page 403 Venezuela: Petroleos de Venezuela S.A. (PDVSA) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic No data Factors BOE production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 73.51% oil? Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.98% oil? Factors split, production (%) Other Operating Conditions Country BOE 288.29% Factors production as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership Yes Factors A Citizen's Guide to National Oil Companies Page 404 Venezuela: Petroleos de Venezuela S.A. (PDVSA) Sources of Information Source # Year of Source Source Description Links 1 2007 PDVSA Información Financiera y http://www.pdvsa.com/interface.sp/database/fichero/free/31 Operacional 25/238.PDF 12/31/2007 2 2004 PDVSA 2004 20-F http://www.pdvsa.com/interface.sp/database/fichero/free/28 56/209.PDF 3 2006 Memoria YPFB http://www.ypfb.gov.bo/memorias.shtml 4 2007 National Democratic Institute - Venezuela http://www.ndi.org/worldwide/lac/venezuela/venezuela.asp 5 2008 Transparency International - http://www.transparencia.org.ve/ Venezuela 6 2007 Energy Cooperation in the Western http://www.csis.org/component/option,com_csis_pubs/task, Hemisphere, Ch 16 view/id,3679/type,2/ (Foss, Wainberg, Volkov), CSIS 7 2008 Ministry of Energy and Mines http://www.mem.gob.ve/index.php 8 2008 PDVSA website http://www.pdvsa.com A Citizen's Guide to National Oil Companies Page 405 The NOCs in the Middle East and North Africa A Citizen's Guide to National Oil Companies Page 406 Algeria: Sonatrach Algeria: Sonatrach Summary Report Corporate Governance Highlights Corporate Organization and Ownership The company's shareholder is the Algerian state. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings None Board of Directors Structure The board of directors includes 12 members and the chairman/CEO. Many board members are representatives of various ministries, including Ministry of Finance, Bank of Algeria, Ministry of Hydrocarbons; other members include representatives of Sonatrach and employee representatives. Independent Board Members Because of their affiliation with the Algerian ministries, it does not appear that BOD members are independent. Is chairman also minister of energy or otherwise appointed by head of state? Yes Operations Highlights Upstream Oil Sonatrach operates internationally; with partnerships in Egypt (offshore), Mauritania, Mali., Libya, Egypt and Peru. Midstream Oil Sonatrach operates 14 oil pipelines, with transport capacity of 79.44 million tons of crude oil and condensate. Downstream Oil Naftec, a subsidiary of Sonatrach, operates Algeria's four refineries, which supply most of the country's refined oil product needs. Upstream Natural Gas Sonatrach has more than 10 natural gas fields. The largest, the Hassi R'Mel field accounts for 63% of its natural gas production (94 bcm). In 2006, 5 gas discoveries were made. Upstream subsidiaries include: ENAGEO (geophysics company); ENTP (well engineering company); GCB (civil engineering and construction company); ENSP (well services company); ENAFOR (drilling company); ENGTP (major oil projects company). Midstream Natural Gas Sonatrach's natural gas network is 16,197 km. Sonatrach Pipeline Transportation is responsible for carrying Sonatrach crude oil, gas and condensate to oil terminal ports, the Group's storage facilities and export countries. Sonatrach is engaged in 3 new pipeline projects: Medgaz (construction launched in July 2007), Galsi (as of 2007, in process of intergovernmental discussions between Algeria and Italy) and TransSahara Gas Pipeline (TSGP, technical viability confirmed; in process of drafting management document for the project's development phase). Algeria is the earliest entrant to the global LNG industry: the first commercial scale natural gas liquefaction facility was built in Algeria in 1964. LNG remains a large component of Sonatrach's activities. Algeria is the second largest LNG exporter worldwide. As of 2006, Sonatrach had 4 LNG facilities which supplied 27 bcm of LNG. Downstream Natural Gas Sonatrach's downstream natural gas businesses include LPG separation and sales, petrochemicals and industrial gas production, mainly helium and nitrogen. Other As reported, Skikda power plant operated by Sonatrach subsidiary AEC supplied total generated electricity of 3,386,000 MWh, with and availability rate of 8%. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) 472 Upstream: Average Annual Natural Gas Production (BCF) 5,295 A Citizen's Guide to National Oil Companies Page 407 Algeria: Sonatrach Downstream: Average Annual Refinery Production (MM Barrels) 51 Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 51,167 Consolidated Average Total Assets ($Millions) 44,137 Consolidated Average EBIT ($Millions) 27,171 Consolidated Average Net Income ($Millions) 7,639 Categorization Indicators Categories: Scores: Corporate Governance 66 Corporate Governance Public Sector Governance 64 100 Commercialization 100 Public Sector Oil Dependency 50 Governance Fiscal Regimes 75 Resource Endowment 7 0 Oil Dependency 55 Resource Commercializa Local Contribution 60 Endowment Sector and Trade Openness 33 Fiscal Regimes Average 61 Sonatrach Average NOC Worldwide Governance Indicators Trends and Issues Hydrocarbons play a crucial role in Algeria's economy, accounting for roughly 60% of budget revenues and over 95% of export earnings. Algeria faces a number of internal security issues associated with the country's sociopolitical context, the civil war and related conflicts over the years. A relative peace has enabled stronger economic growth, fueled by higher prices for Algeria's oil and gas commodities. Algeria is an active member of OPEC and, with Russia and Qatar, has pushed engagement in the Gas Exporting Countries Forum. Algeria's fiscal regime creep may affect its attractiveness to investors. Internal security issues are associated with continued social tensions. These pose considerable risks to Sonatrach's infrastructure systems. Although Algeria's prominent position as a key European energy supplier provides it with a great opportunity to strengthen its international role, the greatest challenge for Algeria is to diversify its economy that remains reliant on hydrocarbons. A Citizen's Guide to National Oil Companies Page 408 Algeria: Sonatrach Database Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of Algeria's Sonatrach (through its Governance Its Organization cluster of NOCs and subsidiaries) has a monopoly on other sovereign oil production, refining and enterprises in country transportation. It is responsible for oil and gas exploration and production, transport, refining, transport, distribution and marketing. Corporate Ownership Structure and Number of NOCs of 2008 2 7 Governance Its Organization country Corporate Ownership Structure and Description of The company's shareholder is the Governance Its Organization incorporation and Algerian state. ownership Corporate Ownership Structure and % shares controlled by 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international None Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international None Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20- No Governance Its Organization F with SEC? Corporate Board of Directors (BOD) Does a BOD exist Yes Governance Corporate Board of Directors (BOD) Description of BOD and 2006 1 The board of directors includes 12 Governance structure members and the chairman/CEO. Many board members are representatives of various ministries, including Ministry of Finance, Bank of Algeria, Ministry of Hydrocarbons; other members include representatives of Sonatrach and employee representatives. Corporate Board of Directors (BOD) Is chairman also Yes Governance minister of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members No independent Board member. Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, No data. Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and No data. Governance policy statements A Citizen's Guide to National Oil Companies Page 409 Algeria: Sonatrach Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Role of BOD Based on available No data. Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replacement General process for No data. Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget 2006 3-17 Project/budget/investment Governance Processes authority. Comment on decisions made by the BOD are the general decision submitted to the General flow within NOC and Assembly for information. between NOC and government for major projects. Corporate Decision Making Based on available 2006 3-17 Sonatrach's budget and strategies Governance Processes, Budget information, is NOC are heavily influenced by the the Autonomy budget process Government, and by the General predictable and separate Assembly. Because of the from government country's political reality and its reliance on Sonatrach's revenue streams, the NOC's budget may be unpredictable. Corporate Decision Making Does the NOC have Yes, Sonatrach may partner with Governance Processes, Budget authority to partner with other entities. Many foreign gas Autonomy other entities? producers have entered into numerous partnership agreements with Sonatrach. Corporate Mission and Objectives Does NOC have a 2006 4-2 Sonatrach's mission is: "to meet Governance mission statement and, if Algeria's present and future needs; so, what are key to maximize the long-term value elements of Algeria's hydrocarbon resources; and to contribute to national development, primarily by providing the required hard currency revenues." Corporate Sources of Capital Based on available 2006 3-17 Project/budget/investment Governance information, budgeting decisions made by the BOD are process and policy sent to the General Assembly for including % of cash information. But, company budget flow/revenue available is influenced by the GA due to for reinvestment importance of Sonatrach's revenues for the country. Corporate Disclosure/Transparency Disclosure of audited No data. Governance Policy data and other indications of disclosure and transparency Corporate Skill Base Based on available 2006 1-83- Company employees number Governance information, NOC 84 40,252 (94% permanent and 6% demographics (% temporary). There are 15,082 management, % engineers, executives and senior technical, other technicians, representing 40% of descriptors) the workforce. Female staff accounts for 4,572. Among permanent staff, executives make 37% of employees; supervisory A Citizen's Guide to National Oil Companies Page 410 Algeria: Sonatrach Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data staff - 46%, and execution staff - 17%. Corporate Incentives/Career Based on available 2006 1-3 "Human resources is a top priority Governance Management information, HR for us and in 2006, we solemnly promotion and adopted the Sonatrach human professional resource policy and gave a new development policies impulse to our Group's personal and professional development projects, the development of skills, the recognition of merit and reward of performance." The company has extensive training and development programs. Corporate Full Disclosure and Based on available 2006 3-28 No non-commercial activities Governance Measurement of Non- information, brief reported in the 2006 Annual commercial Objectives description of reporting Report. However, the Minister's on noncommercial presentation in 2006 names objectives Sonatrach "a Citizen Company" and mentions a "special budget" which includes Tassili Foundation, support to scientific research, professional training, solidarity, culture, sport and health. Corporate Full Disclosure and Based on available No data. Governance Measurement of Non- information, extent of commercial Objectives non-commercial obligations Value Operating Performance Upstream oil E&P. Sonatrach operates internationally; Creation Where does it operate with partnerships in Egypt Metrics (solely in the country or (offshore), Mauritania, Mali., abroad-name countries)? Libya, Egypt and Peru. Does it have sole access to country's resources? Value Operating Performance Does the NOC operate Yes Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, Sonatrach operates 14 oil Creation storage, shipping pipelines, with transport capacity Metrics of 79.44 million tons of crude oil and condensate. Value Operating Performance Downstream oil refining Naftec, a subsidiary of Sonatrach, Creation & marketing, operates Algeria's four refineries, Metrics petrochemicals which supply most of the country's refined oil product needs. Value Operating Performance Upstream natural gas 2006 1-27 Sonatrach has more than 10 Creation E&P natural gas fields. The largest, the Metrics Hassi R'Mel field brings 63% to natural gas production (94 bcm). In 2006, 5 gas discoveries were made. Upstream subsidiaries include: ENAGEO (geophysics company); ENTP (well engineering company); GCB (civil engineering and construction company); ENSP (well services A Citizen's Guide to National Oil Companies Page 411 Algeria: Sonatrach Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data company); ENAFOR (drilling company); ENGTP (major oil projects company). Value Operating Performance Midstream natural gas 2006, 1-34; Sonatrach's natural gas network is Creation pipelines, storage, LNG Current 1-14; 9 16,197 km. Sonatrach Pipeline Metrics Transportation is responsible for carrying Sonatrach crude oil, gas and condensate to oil terminal ports, the Group's storage facilities and export countries. Sonatrach is engaged in 3 new pipeline projects: Medgaz (construction launched in July 2007), Galsi (as of 2007, in process of intergovernmental discussions between Algeria and Italy) and TransSahara Gas Pipeline (TSGP, technical viability confirmed; in process of drafting management document for the project's development phase).. Algeria is the earliest entrant to the global LNG industry: the first commercial scale natural gas liquefaction facility was built in Algeria in 1964. LNG remains a large component of Sonatrach's activities. Algeria is the second largest LNG exporter worldwide. As of 2006, Sonatrach had 4 LNG facilities which supplied 27 bcm of LNG. Value Operating Performance Downstream natural gas Sonatrach's downstream natural Creation distribution, NGL sales, gas businesses include LPG Metrics petrochemicals separation and sales, petrochemicals and industrial gas production, mainly helium and nitrogen. Value Operating Performance Other (power As reported, Skikda power plant Creation generation, etc) operated by Sonatrach subsidiary Metrics AEC supplied total generated electricity of 3,386,000 MWh, with and availability rate of 8%. Value Operating Performance Avg reserve replacement 56% Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE No data Creation production (%) Metrics A Citizen's Guide to National Oil Companies Page 412 Algeria: Sonatrach Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg upstream operating No data Creation cash flow/upstream Metrics capital expenditures (%) Value Operating Performance Avg upstream No data Creation exploration and Metrics production expenses ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all No data Creation taxes ($/BOE) Metrics Value Operating Performance Avg effective tax rate No data Creation (%) Metrics Value Operating Performance Avg operating cash flow No data Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation throughput (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating Metrics cash flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin 53% Creation (%) Metrics A Citizen's Guide to National Oil Companies Page 413 Algeria: Sonatrach Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg profit margin (%) 15% Creation Metrics Value Financial Performance Avg effective tax rate No data Creation (%) Metrics Value Financial Performance Avg reinvestment risk No data Creation (%) Metrics Value Financial Performance Avg debt profile (%) 0% Creation Metrics Value Financial Performance Avg return on assets (%) 17% Creation Metrics Value Financial Performance Avg return on total 29% Creation capital employed (%) Metrics Value Financial Performance Avg fiscal contribution 40% Creation to State (%) Metrics Other Public Sector Governance Based on available 2007 7 Algerian economic growth is Factors information, presence of mainly driven by oil and natural a publicly articulated gas exports (98 percent of role of the hydrocarbon Algerian exports (by value) in sector with respect to 2006). national development objectives Other Public Sector Governance Based on available 2005 8 The 2005 Hydrocarbon Law Factors information, clear established a clear separation definition of the roles of between policy, regulatory, and policy, commercial commercial roles. Two regulatory operation and regulation agencies were created, ANH and and assignment to ALNAFT, and Sonatrach's role specific entities avoiding was redefined to release its conflicts of interest regulatory functions. In addition, the Hydrocarbon Law provided access to petroleum exploration and production rights to companies other than Sonatrach, although it granted Sonatrach the option to participate into the exploitation phase up to a maximum 30% but no lower than 20%. The implementation of the Law suffered several delays and modifications. In 2006 the Law was amended by a Presidential Decree that restored the quasi- monopoly of state-owned Sonatrach over hydrocarbons upstream activities, transport, and refinery and reduced the autonomy of the regulatory and contract award agencies of the hydrocarbons sector. A Citizen's Guide to National Oil Companies Page 414 Algeria: Sonatrach Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available No data. Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available No data. Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available 2006 3-18 The Fund for the Regulation of Factors information, transparent Receipts (FRR) was set up in 2000 hydrocarbon sector to insulate the Algerian economy revenue management from price volatility in gas & oil including revenue commodity prices. The FRR distribution within the accumulates revenues above a country reference price defined for budget preparation purposes, and provide funds to finance the Budget when the oil price falls below the reference price. The Fund does not issue statistics of its holdings. Other Public Sector Governance NOC and/or country 2006, 3-4, Sonatrach representatives have Factors participate in EITI Current 10, 11 participated in EITI workshops in and/or other 2003, 2005, and 2006. Algeria is transparency initiatives not a candidate country. National Democratic Institute operates in the country. Transparency International maintains a national chapter in Algeria but has no web site. Other Fiscal Sustainability Based on available 2005 8 The Hydrocarbon Law 2005 Factors information, do brought some positive changes to hydrocarbon sector the fiscal regime, including the fiscal regimes allow for elimination of the requirement to sufficient capital participate in all projects). Later investment amendment to the Law however granted Sonatrach the option to participate, at least 51%, in all competitive bids for exploitation and development contracts. Tax payments are now made directly by the IOCs to the Treasury (in the past taxes were calculated and paid by Sonatrach on behalf of the IOCs without the intervention of the tax administration. A windfall tax on IOC profits were added in an effort to capture projects' upsides at rising oil prices (a surcharge ranging from 5 to 50% is applied to "exceptional profits" whenever the average monthly oil A Citizen's Guide to National Oil Companies Page 415 Algeria: Sonatrach Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data price exceeds $30 per barrel.). Notwithstanding the foregoing, the high oil prices in recent years have contributed to keep IOCs interest in Algeria's oil and gas sector high. Other Fiscal Sustainability Based on available No data. Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available Algeria is a maturing oil and gas Factors information, are province. The fiscal regime may hydrocarbon sector need to become more flexible in fiscal regimes order to attract foreign investment appropriate for the at the level and pace that would be development stage of the needed to sustain production and domestic resource base expand/improve infrastructure, especially if the oil price should fall. Other Access to Reserves Hydrocarbon law to 2006 3 The institutional and fiscal Factors facilitate competitive reforms introduced by the upstream investment Hydrocarbon Law 2005 have greatly enhanced the governance and attractivess of Algeria's petroleum sector to investors. Although some of the most innovative reforms introduced by the law were later smoothed or eliminated, Algeria was able to maintain its competitive appeal on the market. Other Access to Reserves Based on available Bidding process, agreements Factors information, existence of information is available for negotiated investors. contracts/agreements for upstream investment Other Operating Strategy Based on available There are many joint ventures. Factors information, types of Sonatrach is required to bid for joint ventures, role of projects just like other IOCs. NOC(s) Other Operating Strategy Based on available Sonatrach uses turnkey contracts Factors information, extent of for various projects, such as turnkey contracts used refinery upgrades, recovery directly by NOC(s) enhancement, etc. Other Business Integration Vertical, horizontal Vertically integrated company Factors integration specializing in natural gas, oil and power generation. Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company No data Factors international BOE production as % avg total company BOE A Citizen's Guide to National Oil Companies Page 416 Algeria: Sonatrach Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data production Other International Presence Change in company No data Factors BOE production from international operations (%) Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants Yes Factors in upstream Other Commercialization Competition level in 2005 8 Prior to the 2005 hydrocarbons Factors upstream including non- law, companies were required to NOC participants and partner with Sonatrach through requirement to include PSAs. That requirement was lifted NOC as partner by the 2005 law. Later amendments to the law introduced Sonatrach's right to obtain a minimum of 51% participation in all competitive bids for exploration and development contracts.. Other Commercialization Competition level in The new Hydrocarbon Law Factors midstream, downstream encourages midstream including non-NOC competition. However, later participants and amendments to the Law requirement to include backtracked on the role of NOC as partner Sonatrach in the transportation via pipelines and the refineries, making the national oil company a de facto monopoly. Other Commercialization Based on available There are many successful joint Factors information, prevalence ventures. and success of NOC/non-NOC alliances, joint ventures Other Commercialization Partial privatization of There are no plans to privatize Factors the NOC (as measured Sonatrach. by ownership structure) A Citizen's Guide to National Oil Companies Page 417 Algeria: Sonatrach Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Based on available 2006 1-94, Many successful international Factors information, level and 95 ventures. quality of NOC international operations Other Commercialization Based on available There appears to be no non-core Factors information, percent of commercial activities. non-core commercial activities in overall operations Other Regulation Presence of independent, The National Agency for the Factors well-funded and trained Development of Hydrocarbon regulatory agencies, HC Resources (Alnaft) is a regulatory agency name, budget, agency, but it is not clear if it is number of staff fully autonomous or is part of the Ministry of Energy and Mining. Other Regulation NOCs are compelled to No data. Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure No data. Factors market transparency and good quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively Appeals to international arbitration Factors resolve disputes and are allowed if conciliation with conflicts and address Alnaft has failed, per Hydrocarbon public concerns about Act. development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of Downstream prices are set directly Factors Objectives hydrocarbon price by the government, and fuel subsidies ($/BOE subsidies are provided. production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of Sonatrach is clearly the major Factors Objectives direct NOC funding of contributor to Algerian country social and socioeconomic programs but the economic programs. extent of its obligations is brief description of unknown. programs and support A Citizen's Guide to National Oil Companies Page 418 Algeria: Sonatrach Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Non-commercial Measure of NOC $947.66 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation $16.31 Factors Objectives obligations relative to workforce ($ M) Other Non-commercial Financial performance $1,098.61 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Operating and financial data are Comments reliability of data quite extensive. Overall provided by NOC(s) and transparency with regard to governments country financial flows is low. Other Longevity of NOC Based on available Sonatrach was established in 1963 Comments information, history and and is likely to remain in place persistence of NOC(s) well into the future. Other Country Status Trends and issues Hydrocarbons play a crucial role Comments related to country in Algeria's economy, accounting hydrocarbon sector for roughly 60% of budget endowments and revenues and over 95% of export performance earnings. Algeria faces a number of internal security issues associated with the country's sociopolitical context, the civil war and related conflicts over the years. A relative peace has enabled stronger economic growth, fueled by higher prices for Algeria's oil and gas commodities. Algeria is an active member of OPEC and, with Russia and Qatar, has pushed engagement in the Gas Exporting Countries Forum. Algeria's fiscal regime creep may affect its attractiveness to investors. Internal security issues are associated with continued social tensions. These pose considerable risks to Sonatrach's infrastructure systems. Although Algeria's prominent position as a key European energy supplier provides it with a great opportunity to strengthen its international role, the greatest challenge for Algeria is to diversify its economy that remains reliant on hydrocarbons. Other Non-commercial Number of employees 46,574 Factors Objectives Other Non-commercial BOE production per 30,827 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) A Citizen's Guide to National Oil Companies Page 419 Algeria: Sonatrach Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Oil Dependency BOE R/P (years) 32.18 Factors Other Oil Dependency Net oil and gas export 94.35% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas 44.67% Factors revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 12,270.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 159,445.70 Factors reserves (BCF) Other Resource Endowment Total all source BOE 39,760.64 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? No data. Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 30.86% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.93% Factors split, production (%) Other Operating Conditions Country BOE 500.23% Factors production as % of total country BOE consumption Other Trade Openness WTO Membership No Factors Other Competition OPEC Membership Yes Factors A Citizen's Guide to National Oil Companies Page 420 Algeria: Sonatrach Sources of Information Source # Year of Source Description Links Source 1 2006 Sonatrach 2006 Annual Report http://www.sonatrach-dz.com/rapanu-2006uk.pdf 2 2008 Ministry of Energy and Mining Website http://www.mem-algeria.org/companies/index.htm 3 2006 Presentation by Minister of Energy and Mining http://www.mem- algeria.org/actu/ministre/Good_Gouvernance_11- juillet-06.pps 4 2006 Speech by the Minister of Energy and Mines at Africa Oil & Gas http://www.africacncl.org/Events/downloads/Hon.%2 Forum 0Chakib%20Khelil,%20Minister%20of%20Energy% 20&%20Mining,%20Algeria%20II.pdf 5 2004 Sonatrach 2004 Annual Report http://www.sonatrach-dz.com/rapanu-2004uk.pdf 6 2005 Sonatrach 2005 Annual Report http://www.sonatrach-dz.com/rapanu-2005uk.pdf 7 2007 USEIA Country Analysis Brief - Algeria http://www.eia.doe.gov/emeu/cabs/Algeria/Full.html 8 2005 The new 2005 Algerian Hydrocarbons Law http://www.gide.com/front/files/EuromoneyYearbook _GLN_AlgerianHydrocarbonsLaw_oct2005.pdf 9 Current Introduction to LNG, CEE-UT http://www.beg.utexas.edu/energyecon/lng/document s/CEE_INTRODUCTION_TO_LNG_FINAL.pdf 10 Current National Democratic Institute - Algeria http://www.ndi.org/worldwide/mena/algeria/algeria.as p 11 Current Transparency International http://www.transparency.org/regional_pages/africa_m iddle_east/contact 12 2007 Sonatrach 2007 Annual Report http://www.sonatrach-dz.com/annual%20report2007- uk.pdf A Citizen's Guide to National Oil Companies Page 421 Egypt: Egyptian General Petroleum Corporation (EGPC) Egypt: Egyptian General Petroleum Corporation (EGPC) Summary Report Corporate Governance Highlights Corporate Organization and Ownership EGPC was incorporated in Egypt according to the Law no. 135 of 1956 under the name of "The General Corporation of Petroleum Affairs". EGPC Group comprises the holding, and 12 public sector companies. In addition, there are over 50 joint venture companies with foreign partners. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings None Board of Directors Structure The EGPC BOD has 13 members. Independent Board Members No Is chairman also minister of energy or otherwise appointed by head of state? No Operations Highlights Upstream Oil EGPC operates solely in Egypt and has sole access to resources. Midstream Oil EGPC operates mainly on PSA and JV basis; it also has production affiliates. Downstream Oil El Nasr Petroleum Company, an EGPC subsidiary, operates 9 refineries with a combined crude oil processing capacity of 761,700 B/D. Upstream Natural Gas EGPC acts mostly as a JV partner and state representative. Midstream Natural Gas The company participates in two LNG projects, with 20% in each. Downstream Natural Gas The company does not participate in downstream gas. Other Does not participate Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 10,750 Upstream: Average Proved Gas Reserves (BCF) 47,917 Upstream: Average Annual Oil Production (MM Barrels) 0.047 Upstream: Average Annual Natural Gas Production (BCF) 1,100 Downstream: Average Annual Refinery Production (MM Barrels) No data Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues($Millions) No data Consolidated Average Total Assets($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) -1,850 A Citizen's Guide to National Oil Companies Page 422 Egypt: Egyptian General Petroleum Corporation (EGPC) Categorization Indicators Categories: Scores: Corporate Governance 38 CorporateGovernance 100 Public Sector Governance 45 PublicSector Commercialization 50 OilDependency 50 Governance Fiscal Regimes 50 0 Resource Endowment 3 Oil Dependency 97 ResourceEndowment Commercialization Local Contribution 0 Sector and Trade Openness 50 FiscalRegimes Average 47 EGPC Average NOC Worldwide Governance Indicators Trends and Issues Egypt has been pursuing an aggressive programme of reform in recent years, with the opening of both political and economic arenas. Changes to economic policies are underway to minimize the role of the state and make it easier to open a business. The privatization of state-owned firms has already brought in almost $3bn, and according to the IMF, GDP growth is expected to remain at around 7% or 8% for 2008. A reorganisation of the oil and gas sector in 2000 has led to a greater emphasis on efficiency and attracting international investment. Hydrocarbons are among Egypt's most valuable resources, with particular emphasis on natural gas. However, there are concerns that declining oil production and increasing energy demand may turn the country into a net importer. So far, improvements in the tax regime and investment environment have been sufficient to encourage new discoveries and better recovery techniques but the pace of investment has been somewhat slower than needed. Although Egypt has gone a long way to restructure its economy, much remains to be done, including the strengthening of economic efficiency of the remaining public enterprises, the improvement of the transport systems, and the introduction of further reforms to reduce social inequalities. A Citizen's Guide to National Oil Companies Page 423 Egypt: Egyptian General Petroleum Corporation (EGPC) Database Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of cluster 2008 1 The petroleum sector in Governance Its Organization of NOCs and other Egypt consists of 5 strong sovereign enterprises in state-owned entities. These country are: Egyptian General petroleum Corporation (EGPC), Egyptian Natural Gas Holding Company (EGAS), Egyptian Petrochemicals Holding Company (ECHEM), Ganoub El Wadi Petroleum Holding Company (GANOPE), and Egyptian General Authority for Mineral Resources. Corporate Ownership Structure and Number of NOCs of 2008 1 5 major in each sector (over Governance Its Organization country 15 overall including JV's between NOCs etc) Corporate Ownership Structure and Description of 2008 1 EGPC was established in Governance Its Organization incorporation and 1962 as an evolution from the ownership General Petroleum Authority which was created in 1956. It grew rapidly as it became in charge of 50-50 E&P ventures with Amoco (now part of BP), Agip and many other foreign companies. The government in 1964 nationalised the sole oil concessionaire, Anglo- Egyptian Oilfields (Shell- BP). The assets of this company were taken over by General Petroleum Company (GPC), which was also created in 1956 and is now one of EGPC's operating subsidiaries. As a result of the reform of the oil sector in 2000 natural gas and petrochemicals activities were transferred to other state owned companies and an independent entity was created for oil and gas activities in the Upper Egypt. Corporate Ownership Structure and % shares controlled by 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international None Governance Its Organization exchanges where shares are listed A Citizen's Guide to National Oil Companies Page 424 Egypt: Egyptian General Petroleum Corporation (EGPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Domestic, international Current 12 Egyptian General Petroleum Governance Its Organization exchanges where bonds are Export Notes (Preliminary traded Ratings) S&P AAA (A-1 and A-2 Notes) and BBB (A-3 Notes) Egyptian General Petroleum Export Notes (Provisional Ratings) Moody's Aaa (A-1 and a-2 Notes) and Baa1 (a-3 Notes) Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist Yes Governance Corporate Board of Directors (BOD) Description of BOD and Current 13 The EGPC BOD has 13 Governance structure members. Corporate Board of Directors (BOD) Is chairman also minister 2007 14 No Governance of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members No Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, Could be reappointed, and Governance with re-appointment). can probably be removed by Comment if they can be the Sovereign. readily removed. Corporate Role of BOD Description of role and No data Governance policy statements Corporate Role of BOD Based on available No data Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget EGPC has some budget Governance Processes authority. Comment on the authority but authority is general decision flow shared with the Ministry of within NOC and between Petroleum. NOC and government for major projects. Corporate Decision Making Based on available No data Governance Processes, Budget information, is NOC Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have Yes, but with approval of the Governance Processes, Budget authority to partner with Ministry. Autonomy other entities? Corporate Mission and Objectives Does NOC have a mission No data Governance statement and, if so, what are key elements A Citizen's Guide to National Oil Companies Page 425 Egypt: Egyptian General Petroleum Corporation (EGPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data No data Governance Policy and other indications of disclosure and transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available No data Governance Management information, HR promotion and professional development policies Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, brief commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, extent of non- commercial Objectives commercial obligations Value Operating Performance Upstream oil E&P. Where EGPC operates solely in Creation does it operate (solely in Egypt and has sole access to Metrics the country or abroad-name resources. Private countries)? Does it have participation is encouraged sole access to country's yet EGPC participation in resources? JVs is legally required Value Operating Performance Does the NOC operate No Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, 2006 8 EGPC operates mainly on Creation storage, shipping PSA and JV basis; it also has Metrics production affiliates. Value Operating Performance Downstream oil refining & Current 9 El Nasr Petroleum Company, Creation marketing, petrochemicals an EGPC subsidiary, operates Metrics 9 refineries with a combined crude oil processing capacity of 761,700 B/D. Value Operating Performance Upstream natural gas E&P 2006 8 EGPC does not participate in Creation upstream natural gas. A Metrics separate NOC - EGAS (separated from EGPC in 2001) manages Egypt's natural gas resource exploitation. Value Operating Performance Midstream natural gas Does not participate Creation pipelines, storage, LNG Metrics Value Operating Performance Downstream natural gas Does not participate Creation distribution, NGL sales, Metrics petrochemicals A Citizen's Guide to National Oil Companies Page 426 Egypt: Egyptian General Petroleum Corporation (EGPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Other (power generation, Does not participate Creation etc) Metrics Value Operating Performance Avg reserve replacement 168% Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves 12% Creation (%) Metrics Value Operating Performance Change in BOE production 10% Creation (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow No data Creation vs. costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization 87% Creation rate (%) Metrics Value Operating Performance Change in total refining 9% Creation production (%) Metrics Value Operating Performance Change in refinery capacity 17% Creation (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures A Citizen's Guide to National Oil Companies Page 427 Egypt: Egyptian General Petroleum Corporation (EGPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) No data Creation Metrics Value Financial Performance Avg profit margin (%) No data Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) No data Creation Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total capital No data Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to No data Creation State (%) Metrics Other Public Sector Governance Based on available 2008 1 "Any petroleum project that Factors information, presence of a takes place in Egypt should publicly articulated role of be value added to the the hydrocarbon sector Egyptian economy and with respect to national should affect investment development objectives distinctively. It should also contribute to providing direct and indirect job opportunities whether during the construction or the operation phases." Other Public Sector Governance Based on available 2008 1 The hydrocarbon sector is Factors information, clear governed by a Ministry of definition of the roles of Petroleum and Mineral policy, commercial Resources. The Egyptian operation and regulation General Authority for and assignment to specific Mineral Resources was entities avoiding conflicts created in 2000, and EGPC of interest was broken down in 5 NOCs with distinct areas of responsibility and governing structures. The specific roles and responsibilities of the Ministry, the Authority, and the NOCs are not publicly A Citizen's Guide to National Oil Companies Page 428 Egypt: Egyptian General Petroleum Corporation (EGPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data available. Other Public Sector Governance Based on available No data Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available No data Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available No data Factors information, transparent hydrocarbon sector revenue management including revenue distribution within the country Other Public Sector Governance NOC and/or country Current 9, 10 Egypt is not a candidate Factors participate in EITI and/or country for EITI. The other transparency National Democratic Institute initiatives has operated there, and Transparency International established a chapter; however, there is no local contact. Other Fiscal Sustainability Based on available 2008 1 No data. Crude oil production Factors information, do has been in decline for hydrocarbon sector fiscal several years since its peak regimes allow for sufficient level in 1993. Internal capital investment demand has been growing steadily and projections show that Egypt could turn into a net importer in the very near future. For this reason, the government has been encouraging the exploration, production and domestic consumption of natural gas. On the other hand, natural gas output continues to increase. Natural gas is among Egypt's key exports, and it is expected to more than meet its domestic demand for many years to come. Expanding the Egyptian petrochemical industry and increasing exports of natural gas are considered strategic objectives by the Ministry of Petroleum and Mineral Resources. A Citizen's Guide to National Oil Companies Page 429 Egypt: Egyptian General Petroleum Corporation (EGPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Fiscal Sustainability Based on available No data. Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available The fiscal regime is Factors information, are considered adequate, given hydrocarbon sector fiscal the medium sovereign risk regimes appropriate for the and the good prospectivity. development stage of the domestic resource base Other Access to Reserves Hydrocarbon law to 2008 7 Hydrocarbon laws appear to Factors facilitate competitive be rather attractive with upstream investment regard to contractual terms and conditions. Other Access to Reserves Based on available PSAs and JV's are both Factors information, existence of actively used. negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available PSAs and JV's Factors information, types of joint ventures, role of NOC(s) Other Operating Strategy Based on available EGPC partners utilize turnkey Factors information, extent of contracts. turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal No data Factors integration Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company international 5% Factors BOE production as % avg total company BOE production Other International Presence Change in company BOE -2% Factors production from international operations (%) Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company international No data Factors refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company international No data Factors refinery capacity as % company total refinery capacity A Citizen's Guide to National Oil Companies Page 430 Egypt: Egyptian General Petroleum Corporation (EGPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in Yes Factors upstream Other Commercialization Competition level in 2008 1,7 At least 57 private Factors upstream including non- companies, including 6 from NOC participants and Egypt, operate in the requirement to include country's upstream segment. NOC as partner Concessions are exclusive to the NOCs. Other Commercialization Competition level in 2007 6 At least 29 companies with Factors midstream, downstream foreign participation and 39 including non-NOC Egyptian companies. In participants and general, investors are requirement to include required to have an NOC as a NOC as partner partner. Other Commercialization Based on available Mainly PSAs and JV's Factors information, prevalence and success of NOC/non- NOC alliances, joint ventures Other Commercialization Partial privatization of the None Factors NOC (as measured by ownership structure) Other Commercialization Based on available Not applicable Factors information, level and quality of NOC international operations Other Commercialization Based on available No data Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, The Ministry of Petroleum Factors well-funded and trained and Mineral Resources and regulatory agencies, HC the Egyptian General agency name, budget, Authority for Mineral number of staff Resources hold the regulatory function. Respective responsibility, staffing, budgeting and capabilities are not clear. Other Regulation NOCs are compelled to No Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers A Citizen's Guide to National Oil Companies Page 431 Egypt: Egyptian General Petroleum Corporation (EGPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Regulation Regulators assure market There appears to be a low Factors transparency and good level of independence with quality, unbiased data and regard to hydrocarbon information. HC agency regulation and oversight. independence indicators Other Regulation Regulators effectively No data Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of Current 11, 15 Fuel subsidies are widely Factors Objectives hydrocarbon price used in Egypt. Attempts have subsidies ($/BOE been made to reduce production) provided by subsidies for energy and other NOC and/or government. needs but they are still a drain brief description of subsidy on the government's budget program, approach, cost (more than 7% of GDP). The lack of cost recovery for refined products, and under- investment, have resulted in chronic shortages. Egypt's NOCs are not as prominent in their revenue contributions as in other countries although higher commodity prices in recent years have certainly helped. Other Non-commercial Provision and level of No data Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Public domain data is Comments reliability of data provided essentially non-existent. by NOC(s) and governments Other Longevity of NOC Based on available 2008 1 Given the overall Comments information, history and organization of Egypt's persistence of NOC(s) economy, the company is likely to remain in place for the long term. A Citizen's Guide to National Oil Companies Page 432 Egypt: Egyptian General Petroleum Corporation (EGPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Country Status Trends and issues related Egypt has been pursuing an Comments to country hydrocarbon aggressive programme of sector endowments and reform in recent years, with performance the opening of both political and economic arenas. Changes to economic policies are underway to minimize the role of the state and make it easier to open a business. The privatization of state-owned firms has already brought in almost $3bn, and according to the IMF, GDP growth is expected to remain at around 7% or 8% for 2008. A reorganisation of the oil and gas sector in 2000 has led to a greater emphasis on efficiency and attracting international investment. Hydrocarbons are among Egypt's most valuable resources, with particular emphasis on natural gas. There are however concerns that declining oil production and increasing energy demand may turn the country into a net importer. So far, improvements in the tax regime and investment environment have been sufficient to encourage new discoveries and better recovery techniques, but the pace of investment has been somewhat slower than needed. Although Egypt has gone a long way to restructure its economy, much remains to be done, including the strengthening of economic efficiency of the remaining public enterprises, the improvement of the transport systems, and the introduction of further reforms to reduce social inequalities. Other Non-commercial Number of employees 436,585 Factors Objectives Other Non-commercial BOE production per 3,741.84 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 30.66 A Citizen's Guide to National Oil Companies Page 433 Egypt: Egyptian General Petroleum Corporation (EGPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Factors Other Oil Dependency Net oil and gas export 8.5% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues 2.6% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 4,070.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 72,854.15 Factors reserves (BCF) Other Resource Endowment Total all source BOE 16,631.06 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic 96% Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 24.5% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 47% Factors split, production (%) Other Operating Conditions Country BOE production 125.3% Factors as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 434 Egypt: Egyptian General Petroleum Corporation (EGPC) Sources of Information Source # Year of Source Source Description Links 1 2008 Web-site Ministry of Petroleum http://www.petroleum.gov.eg/main.htm 2 2008 EGAS web-site http://www.egas.com.eg/docs/allnews.asp 3 2007 EGPC web-site http://www.egpc.com.eg/ 4 2008 Tharwa Petroleum web- site http://www.tharwa.com.eg/ 5 2006 Annual Report 2006 - Central Bank of Egypt http://www.cbe.org.eg/public/All%20Monthly%20Statistic al%20Bulletin%20PDF/PDF%20Monthly%20statistical%2 0Oct.%202006/36- %20Consolidated%C2%A0Fiscal%C2%A0Operations%C 2%A0of%20General%20Government%C2%A0.pdf 6 2007 Gas Regulation 2007 http://www.iclg.co.uk/khadmin/Publications/pdf/1045.pdf 7 2008 North African Oil and Foreign Investment in http://www.oxfordenergy.org/presentations/North_African Changing Market _Oil.pdf Conditions, Dr Bassam Fattouh SOAS & Oxford Institute for Energy Studies, 30 April 2008 8 2006 USEIA Country Analysis Brief - Egypt http://www.eia.doe.gov/emeu/cabs/Egypt/Background.htm l 9 Current National Democratic Institute - Egypt http://www.ndi.org/worldwide/mena/egypt/egypt.asp 10 Current Transparency International - Egypt http://www.transparency.org/content/view/full/229/(filter)/ e 11 Current CIA World Factbook - Egypt https://www.cia.gov/library/publications/the-world- factbook/geos/eg.html#Econ 12 Current Middle East Economic Survey http://www.mees.com/Energy_Tables/ratings.htm 13 Current Dun & Bradstreet http://www.allbusiness.com/mining/oil-gas-extraction- crude-petroleum-natural/411750-1.html 14 2007 Oil Voice http://www.oilvoice.com/n/HELLENIC_PETROLEUM_Si gns_Contract_Granting_Exploration_and_Exploitation_Ri ghts_in_the_West_Obayed_Region_of_Egypt/0b8eed69.as px 15 Current Egypt's Information Portal http://www.idsc.gov.eg/ A Citizen's Guide to National Oil Companies Page 435 Iran: National Iranian Oil Company (NIOC) Iran: National Iranian Oil Company (NIOC) Summary Report Corporate Governance Highlights Corporate Organization and Ownership The National Iranian Oil Company is the only NOC operating in the upstream petroleum sector under the responsibility of the Ministry of Petroleum. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings Not listed Board of Directors Structure Managing Director, Director Corporate Planning, Managing Director South Oil Company, Director of Finance, Director Exploration, Director Administration, Head Legal Affairs, Director Research and Development, Head Pension Fund. Independent Board Members No, all of them are internal and in some cases, part of the Iranian Ministry of Petroleum Is chairman also minister of energy or otherwise appointed by head of state? Yes Operations Highlights Upstream Oil NIOC is responsible for all oil and gas E&P in Iran. Among NIOC's subsidiaries, the National Iranian South Oil Company (NISOC) and Petroleum Development & Engineering Company (PEDEC) are the most relevant. NISOC accounts for 80% of local oil production, and PEDEC is responsible for all buy-back projects under operation, study or negotiation. Midstream Oil The National Iranian Oil Refining and Distribution Company (NIORDC) is a state-owned company under the responsibility of the Ministyr of Petroleum. Among its responsibilities, NIORDC owns and operates approximately fourteen thousand kilometers of crude oil and oil product transfer pipelines. Downstream Oil Since 1992, NIOC does not engage in downstream activities. The National Iranian Oil Refining and Distribution Company (NIORDC) is a state-owned company under the responsibility of the Ministyr of Petroleum. Upstream Natural Gas NIOC operates in the upstream natural gas segment. Midstream Natural Gas National Iranian Gas Company operates the internal market and conducts research and services related to natural gas utilization. Downstream Natural Gas National Iranian Petrochemical Company develops petrochemical applications. Other Does not have other activities. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 137,000 Upstream: Average Proved Gas Reserves (BCF) 994,401 Upstream: Average Annual Oil Production (MM Barrels) 1,460 Upstream: Average Annual Natural Gas Production (BCF) 15 Downstream: Average Annual Refinery Production (MM Barrels) 592 Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) No data Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data A Citizen's Guide to National Oil Companies Page 436 Iran: National Iranian Oil Company (NIOC) Categorization Indicators Categories: Scores: Corporate Corporate Governance 31 Governance 100 Public Sector Governance 26 Public Sector Commercialization 67 Oil Dependency 50 Governance Fiscal Regimes 50 0 Resource Endowment 57 Oil Dependency 76 Resource Commercializa Local Contribution 0 Endowment Sector and Trade Openness 33 Fiscal Regimes Average 51 NIOC Average NOC Worldwide Governance Indicators Trends and Issues Iran is one of the most geopolitically sensitive locations. It is heavily dependent upon its hydrocarbon sector for national economic development. International sanctions and pressures have limited development of the Iranian oil and gas businesses and resources. A number of alliances have developed between Iran and other governments with sympathetic views. Large scale projects are under consideration, such as the Iran-Pakistan-India pipeline, but these are also highly sensitive and high risk projects. A Citizen's Guide to National Oil Companies Page 437 Iran: National Iranian Oil Company (NIOC) Database Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of cluster Current 1 The National Iranian Oil Governance Its Organization of NOCs and other Company (NIOC) is the sole sovereign enterprises in upstream NOC in Iran. It is country organized in 11 subsidiaries with specific regional and functional responsibility. Corporate Ownership Structure and Number of NOCs of Current 1 1 Governance Its Organization country Corporate Ownership Structure and Description of Current 1 The National Iranian Oil Governance Its Organization incorporation and Company (NIOC) was ownership established in February 1948 with the objective of exploration, development, production, marketing of crude oil and natural gas. There are three other state owned companies under the responsibility of the Ministry of Petroleum: the National Iranian Gas Company performs advisory, engineering and study services; the National Iranian Petrochemical Company is responsible for the development and operation of the country's petrochemical sector; and the National Iranian Oil Refining and Distribution Company performs refining and distribution activities. Corporate Ownership Structure and % shares controlled by Current 1 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international Current 1 Not listed Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international Current 1 No bonds are traded for NIOC Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F Current 1 No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist Current 1 Yes Governance Corporate Board of Directors (BOD) Description of BOD and Current 1 Managing Director, Director Governance structure Corporate Planning, Managing Director South Oil Company, Director of Finance, Director Exploration, Director Administration, Head Legal Affairs, Director Research and Development, Head Pension A Citizen's Guide to National Oil Companies Page 438 Iran: National Iranian Oil Company (NIOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Fund. Corporate Board of Directors (BOD) Is chairman also minister Current 1 Yes Governance of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members Current 1 No, all of them are internal Governance considered independent and in some cases, part of the (external) and, if so, how Iranian Ministry of Petroleum are they appointed Corporate Board of Directors (BOD) Term of service (years, No data Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and No data Governance policy statements Corporate Role of BOD Based on available No data Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget Current 1 Given the composition of Governance Processes authority. Comment on the NIOC's General Assembly general decision flow (the President of the Republic, within NOC and between the Vice President, the Oil NOC and government for Minister, the Labor and Social major projects. Affairs Minister, the Industries and Mining Minister, and the Director of Planning and Administration), the level of budgetary autonomy is likely to be low. Corporate Decision Making Based on available Current 1 Budget process is not separate Governance Processes, Budget information, is NOC from the government and can Autonomy budget process predictable be unpredictable. The Supreme and separate from Economic Council was government founded to centralize economic decision making. It is also responsible for ensuring that state subsidies are appropriately administrated. All NIOC-proposed budgets and contracts must be previously evaluated and approved by this council. Corporate Decision Making Does the NOC have 2006 2 Yes. NIOC has looked into the Governance Processes, Budget authority to partner with Asian market to strengthen Autonomy other entities? relationships. Both Chinese and Japanese have been brought into the Iranian oil sector. A Citizen's Guide to National Oil Companies Page 439 Iran: National Iranian Oil Company (NIOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Mission and Objectives Does NOC have a mission Current 1 No mission statement is Governance statement and, if so, what provided, but it is clear that are key elements NIOC is critical to exploitation of Iran's resource endowments. Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data No disclosed information or Governance Policy and other indications of audited data disclosure and transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available No data Governance Management information, HR promotion and professional development policies Corporate Full Disclosure and Based on available Current 1 Noncommercial objectives Governance Measurement of Non- information, brief appear to be the domain of the commercial Objectives description of reporting on Ministry of Petroleum that noncommercial objectives reports 378 social development projects as being underway. Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, extent of non- commercial Objectives commercial obligations Value Operating Performance Upstream oil E&P. Where Current, 1, 3 NIOC is responsible for all oil Creation does it operate (solely in 2007 and gas E&P in Iran. Among Metrics the country or abroad- NIOC's subsidiaries, the name countries)? Does it National Iranian South Oil have sole access to Company (NISOC) and country's resources? Petroleum Development & Engineering Company (PEDEC) are the most relevant. NISOC accounts for 80% of local oil production, and PEDEC is responsible for all buy-back projects under operation, study or negotiation. Value Operating Performance Does the NOC operate Yes Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, The National Iranian Oil Creation storage, shipping Refining and Distribution Metrics Company (NIORDC) is a state-owned company under the responsibility of the Ministyr of Petroleum. Among its responsibilities, NIORDC A Citizen's Guide to National Oil Companies Page 440 Iran: National Iranian Oil Company (NIOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data owns and operates approximately fourteen thousand kilometers of crude oil and oil product transfer pipelines. Value Operating Performance Downstream oil refining & Since 1992, NIOC does not Creation marketing, petrochemicals engage in downstream Metrics activities. The National Iranian Oil Refining and Distribution Company (NIORDC) is a state-owned company under the responsibility of the Ministyr of Petroleum. Value Operating Performance Upstream natural gas E&P NIOC operates the upstream Creation natural gas segment. Metrics Value Operating Performance Midstream natural gas National Iranian Gas Company Creation pipelines, storage, LNG operates the internal market Metrics and conducts research and services related to natural gas utilization. Value Operating Performance Downstream natural gas The National Iranian Creation distribution, NGL sales, Petrochemical Company Metrics petrochemicals develops petrochemical applications. Value Operating Performance Other (power generation, NIOC does not have other Creation etc) activities. Metrics Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE production No data Creation (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics A Citizen's Guide to National Oil Companies Page 441 Iran: National Iranian Oil Company (NIOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow vs No data Creation costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) No data Creation Metrics Value Financial Performance Avg profit margin (%) No data Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) No data Creation Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total capital No data Creation employed (%) Metrics A Citizen's Guide to National Oil Companies Page 442 Iran: National Iranian Oil Company (NIOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg fiscal contribution to No data Creation State (%) Metrics Other Public Sector Governance Based on available Revenues from export sales of Factors information, presence of a crude oil constitute 85% of publicly articulated role of government revenues; the hydrocarbon sector consequently, the hydrocarbon with respect to national sector is considered strategic development objectives for the national economy. Other Public Sector Governance Based on available The oil and gas sector in Iran Factors information, clear operates under the full definition of the roles of supervision of the Ministry of policy, commercial Petroleum (MoP), which operation and regulation covers a myriad of activities and assignment to specific such as exploration, entities avoiding conflicts engineering and construction, of interest refining, transportation, distribution, services and research. The Oil Act of 1987 placed all oil-related operations under government authority and specifies the MoP's functions. Commercial activities are carried out by NIOC and the other state- owned companies operating under the responsibility of the Ministry of Petroleum. Other Public Sector Governance Based on available No data. Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available The oil ministry appears to Factors information, presence of a have always had responsibility strategy to transfer NOC for many non-commercial non-commercial objectives obligations funded through to government or other Iran's hydrocarbon revenue agencies as capacity stream. becomes available Other Public Sector Governance Based on available There is no transparency Factors information, transparent related to revenue flows within hydrocarbon sector the Iranian government. The revenue management Iran Oil Stabilization Fund including revenue was created in 1998 to invest distribution within the Iran's oil revenue abroad. Its country investment arm, the Iran Foreign Investment Company provides financing and financial services and makes investments around the world. Other Public Sector Governance NOC and/or country Iran is not a candidate country Factors participate in EITI and/or for EITI. No other other transparency transparency programs operate initiatives in the country. A Citizen's Guide to National Oil Companies Page 443 Iran: National Iranian Oil Company (NIOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Fiscal Sustainability Based on available The primary issue appears to Factors information, do be the heavy subsidies applied hydrocarbon sector fiscal to energy fuels. This burdens regimes allow for NIOC and the other state sufficient capital owned companies in the investment hydrocarbons sector, in particular with respect to downstream (refining) investments to address critical capacity shortages in the country. Other Fiscal Sustainability Based on available No Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available Certainly, there is activity in Factors information, are Iran, and various relationships hydrocarbon sector fiscal surrounding oil and natural gas regimes appropriate for the exploitation. The extent to development stage of the which these are indicative of domestic resource base accommodating fiscal regimes is not known. Other Access to Reserves Hydrocarbon law to 6 2000 "The Iranian constitution Factors facilitate competitive prohibits the granting of upstream investment petroleum rights on a concessionary basis. However, the 1987 Petroleum Law permits the establishment of contracts between the Ministry of Petroleum, state companies and "local and foreign natural persons and legal entities." Other Access to Reserves Based on available NIOC indicates tenders are Factors information, existence of available, but no information negotiated is publicly available. A contracts/agreements for number of quasi-governmental upstream investment companies often act as the main local partner with foreign oil companies: NIOC awards projects to these firms who are then free to take on international partners. Other Operating Strategy Based on available Contracts are negotiated by Factors information, types of joint NIOC and subject to approval ventures, role of NOC(s) by the Iranian government. Other Operating Strategy Based on available NIOC and its partners manage Factors information, extent of turnkey contracts. NIOC also turnkey contracts used has its own services. directly by NOC(s) Other Business Integration Vertical, horizontal All of the oil and gas value Factors integration chains are controlled through the oil ministry. Other International Presence Does NOC make Yes. Factors investments abroad A Citizen's Guide to National Oil Companies Page 444 Iran: National Iranian Oil Company (NIOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other International Presence Avg company international No data Factors BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company international No data Factors refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company international No data Factors refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in There are joint activities Factors upstream between NIOC and Lukoil but relationships are dominated by NOC-NOC alliances and partnerships. Other Commercialization Competition level in Iran's upstream is dominanted Factors upstream including non- by its own NOC and state NOC participants and owned companiess. requirement to include NOC as partner Other Commercialization Competition level in Managed by the Iranian Factors midstream, downstream companies. including non-NOC participants and requirement to include NOC as partner Other Commercialization Based on available No data Factors information, prevalence and success of NOC/non- NOC alliances, joint ventures Other Commercialization Partial privatization of the None Factors NOC (as measured by ownership structure) Other Commercialization Based on available Little information is available, Factors information, level and save for what appears quality of NOC occasionally in the international operations international and trade press. A Citizen's Guide to National Oil Companies Page 445 Iran: National Iranian Oil Company (NIOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Based on available None of the NOCs appear to Factors information, percent of engage in activities outside of non-core commercial their core segments. activities in overall operations Other Regulation Presence of independent, None Factors well-funded and trained regulatory agencies, HC agency name, budget, number of staff Other Regulation NOCs are compelled to No data Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market No data Factors transparency and good quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively No data Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of Fuels are heavily subsidized in Factors Objectives hydrocarbon price Iran. Resulting capacity subsidies ($/BOE constraints associated with production) provided by strong demand growth and NOC and/or government. underinvestment because of brief description of subsidy lack of cost recovery and program, approach, cost internal transfers resulted in fierce shortages. NIORDC has been administering a fuel rationing program as the Iranian government seeks to smooth disruptions. Other Non-commercial Provision and level of The Ministry of Petroleum Factors Objectives direct NOC funding of appears to absorb these country social and obligations. economic programs. brief description of programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) A Citizen's Guide to National Oil Companies Page 446 Iran: National Iranian Oil Company (NIOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Information is sparse and Comments reliability of data provided inconsistent. by NOC(s) and governments Other Longevity of NOC Based on available 2003 1 Drilling for oil started in Iran Comments information, history and in 1901 under the concession persistence of NOC(s) of Mozafaroll din, shah of the Qajar, for production of crude oil across Iran. Iran became the first country of the oil-rich Middle East region to begin oil operations. Oil nationalization in 1950, substitution of foreign workers with Iranians by 1979. National Oil Company of Iran was founded on 1948 when the Anglo-Iranian Company was nationalized. In 1953 it became a conglomerate of different companies 40% owned by the Anglo-Iranian holing, 5 American companies holding 40% and Royal Dutch Shell & Compagnie Francaise de Petroles holding 10% each. Other Country Status Trends and issues related Iran is one of the most Comments to country hydrocarbon geopolitically sensitive sector endowments and locations. It is heavily performance dependent upon its hydrocarbon sector for national economic development. International sanctions and pressures have limited development of the Iranian oil and gas businesses and resources. A number of alliances have developed between Iran and other governments with sympathetic views. Large scale projects are under consideration, such as the Iran-Pakistan-India pipeline, but these are also highly sensitive and high risk projects. Fuel subsidies have created an artificially high internal demand. Although some rationalization has occurred, subsidies remain a heavy burden for the state. Other Non-commercial Number of employees 125,000 Factors Objectives A Citizen's Guide to National Oil Companies Page 447 Iran: National Iranian Oil Company (NIOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Non-commercial BOE production per 16,434 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 134.49 Factors Other Oil Dependency Net oil and gas export 72.94% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues 24.47% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 138,400.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 981,747.62 Factors reserves (BCF) Other Resource Endowment Total all source BOE 307,666.83 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 44.98% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.96% Factors split, production (%) Other Operating Conditions Country BOE production 179.78% Factors as % of total country BOE consumption Other Trade Openness WTO Membership No Factors Other Competition OPEC Membership Yes Factors A Citizen's Guide to National Oil Companies Page 448 Iran: National Iranian Oil Company (NIOC) Sources of Information Source # Year of Source Source Description Links 1 2008 NIOC web site www.nioc.ir 2 2006 www.japanfocus.org www.japanfocus.org 3 2007 USEIA Country Analysis Brief - Iran http://www.eia.doe.gov/emeu/cabs/Iran/Oil.html 4 2008 Ministry of Petroleum http://www.nioc.org/subcompanies/nioc/index.as p 5 2008 Zawya Middle East Business Information http://www.zawya.com/cm/profile.cfm/cid10023 85 6 2000 USEIA http://web.macam.ac.il/~arnon/Int- ME/oil/Iran%20energy%20oil%20information.ht m A Citizen's Guide to National Oil Companies Page 449 Kuwait: Kuwait Petroleum Corporation (KPC) Kuwait: Kuwait Petroleum Corporation (KPC) Summary Report Corporate Governance Highlights Corporate Organization and Ownership Incorporated in Kuwait, 1980 Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings None Board of Directors Structure There are 10 members on the KPC BOD. Independent Board Members Yes Is chairman also minister of energy or otherwise appointed by head of state? Yes Operations Highlights Upstream Oil Through its affiliate, Kuwait Foreign Petroleum Exploration Company (KUFPEC), KPC operates in 16 countries: Indonesia, Malaysia, Pakistan, Yemen, Qatar, Syria, Australia, China, Philippines, Tunisia, Egypt, Ivory Coast, Sudan, Algeria, Mauritania. It does not have sole access to country's resources. Affiliates Kuwait Gulf Oil Company (KGOC) and Kuwait Oil Company (KOC) engage in domestic oil and gas E&P with partners. Affiliate Oil Development Company was established in 2005 specifically to engage with IOCs for development of 4 oil fields in northern Kuwait. Midstream Oil KOC transports and stores oil production for export. Affiliate Kuwait Oil Tanker Company (KOTC) has a fleet of 24 tankers with total deadweight over 3 million tons. Kuwait Aviation Fueling Company specifically handles jet fuel storage and supply. Downstream Oil Affiliate Kuwait National Petroleum Company (KNPC) operates 3 refineries domestically and the domestic gasoline station network. Retail outlets are both owned and franchised with and ongoing privatization process. Through affiliate Petrochemical Industries Company (PIC), KPC owns 4 plants for production of liquid ammonia, 2 of which operate at present with a total annual capacity of 620,000 metric tons and 3 plants for urea production with a total annual capacity of 104,000 metric tons. Also, KPC established in 1997 two plants for polypropylene with a production capacity of 100,000 tons annually. Kuwait Petroleum International Ltd (KPI) manages downstream refining and marketing interests abroad (the Q8 brand). Upstream Natural Gas Kuwait Oil Company (KOC) produces domestic natural gas as part of its upstream portfolio. KUFPEC participates in natural gas E&P abroad. Midstream Natural Gas KOC handles all infrastructure requirements as the country moves to increase production of natural gas, including captured flared gas, and to deploy natural gas for power generation, desalination and other applications. Downstream Natural Gas KOC operates a natural gas processing as part of surface facilities development for natural gas exploitation. Other None Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) 2,360 Upstream: Average Annual Natural Gas Production (BCF) 1,141 Downstream: Average Annual Refinery Production (MM Barrels) 330 A Citizen's Guide to National Oil Companies Page 450 Kuwait: Kuwait Petroleum Corporation (KPC) Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues($Millions) 56,410 Consolidated Average Total Assets($Millions) 47,968 Consolidated Average EBIT ($Millions) 4,990 Consolidated Average Net Income ($Millions) 4,792 Categorization Indicators Categories: Scores: Corporate Corporate Governance 69 Governance 100 Public Sector Governance 62 Commercialization 100 Public Sector Oil Dependency 50 Governance Fiscal Regimes 75 0 Resource Endowment 21 Oil Dependency 46 Resource Commercializ Local Contribution 95 Endowment Sector and Trade Openness 56 Fiscal Regimes Average 62 KPC Average NOC Worldwide Governance Indicators Trends and Issues Kuwait's economy is almost completely dependent on revenues from its hydrocarbon sector and operations. The country and its companies are recognized for their commercial savvy and construction of international business networks. Kuwait is also recognized as having distinct possibilities with regard to political liberalization. Of interest is whether the close control and opaqueness of Kuwait's hydrocarbons businesses are compatible with apparent (or potential) trends in this regard. Kuwait's indigenous population is small and thus the country has traditional relied on an extensive foreign workforce for its core industries. A number of sensitivities reside around this reality. A Citizen's Guide to National Oil Companies Page 451 Kuwait: Kuwait Petroleum Corporation (KPC) Database Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of cluster 2008 1 Kuwait Petroleum Corporation Governance Its Organization of NOCs and other (KPC) is a holding combining sovereign enterprises in various oil & gas and country petrochemical companies. Corporate Ownership Structure and Number of NOCs of 1 ­ KPC is the umbrella for Governance Its Organization country about 10 subsidiaries and affiliates. Corporate Ownership Structure and Description of Incorporated in Kuwait, 1980 Governance Its Organization incorporation and ownership Corporate Ownership Structure and % shares controlled by 100 Governance Its Organization government Corporate Ownership Structure and Domestic, international None Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international None Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist Yes Governance Corporate Board of Directors (BOD) Description of BOD and There are 10 members on the Governance structure KPC BOD. Corporate Board of Directors (BOD) Is chairman also minister of Yes Governance energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members Yes Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, with 3 years Governance re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and No data Governance policy statements Corporate Role of BOD Based on available Yes. The Board of Directors Governance information, does BOD reports to the Supreme have power, impact, Petroleum Council (SPC). The decision making authority chairman of the BOD is Kuwait's Minister of Oil. Mr. Saad Al Shuwaib, serves currently as the Chief Executive Officer. Corporate Recruitment/Replacement General process for 2005 14 Recruitment is performed by Governance Key Executives recruitment, replacement of the KPC board and minister. key execs and senior managers A Citizen's Guide to National Oil Companies Page 452 Kuwait: Kuwait Petroleum Corporation (KPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Decision Making Level of NOC budget 2005 14 The board has the following Governance Processes authority. Comment on the authorities: "Approval of general decision flow general policy; Approval for within NOC and between capital expenditures; Approval NOC and government for of administrative and financial major projects. bylaws; Discussion and endorsement of annual report, financial results, budget, and profit allocation." Corporate Decision Making Based on available 2005 14 The SPC, headed by the Governance Processes, Budget information, is NOC budget prime-minister, controls the Autonomy process predictable and capital budget process. separate from government Operating expenditures are decided by Parliament. Corporate Decision Making Does the NOC have 2005 14 No - the SPC regulates all Governance Processes, Budget authority to partner with KPC partnerships. Autonomy other entities? Corporate Mission and Objectives Does NOC have a mission 2006 12 "To manage and operate oil Governance statement and, if so, what and gas activities worldwide in are key elements a most efficient manner; increase shareholder value; contribute to development of economy and manpower". Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data Most affiliates have annual Governance Policy and other indications of reports, audited by Deloitte & disclosure and transparency Touche. The Ministry of Oil is the only entity allowed to sanction release of information. Corporate Skill Base Based on available Difficult to estimate - different Governance information, NOC affiliates have different demographics (% metrics. However, as of 2007, management, % technical, metrics have been other descriptors) standardized. Corporate Incentives/Career Based on available KPC as well as its affiliates Governance Management information, HR promotion have a wide range of training and professional programs and incentives for development policies employees, future leadership program. Corporate Full Disclosure and Based on available Some affiliates report specific Governance Measurement of Non- information, brief objectives. commercial Objectives description of reporting on noncommercial objectives A Citizen's Guide to National Oil Companies Page 453 Kuwait: Kuwait Petroleum Corporation (KPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Full Disclosure and Based on available Are not quantified, yet present Governance Measurement of Non- information, extent of non- for all affiliates (infrastructure, commercial Objectives commercial obligations health care, etc.). Value Operating Performance Upstream oil E&P. Where Through its affiliate, Kuwait Creation does it operate (solely in the Foreign Petroleum Exploration Metrics country or abroad-name Company (KUFPEC), KPC countries)? Does it have operates in 16 countries: sole access to country's Indonesia, Malaysia, Pakistan, resources? Yemen, Qatar, Syria, Australia, China, Philippines, Tunisia, Egypt, Ivory Coast, Sudan, Algeria, Mauritania. It does not have sole access to country's resources. Affiliates Kuwait Gulf Oil Company (KGOC) and Kuwait Oil Company (KOC) engage in domestic oil and gas E&P with partners. Affiliate Oil Development Company was established in 2005 specifically to engage with IOCs for development of 4 oil fields in northern Kuwait. Value Operating Performance Does the NOC operate Yes Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, 2006 12 KOC transports and stores oil Creation storage, shipping production for export. Metrics Affiliate Kuwait Oil Tanker Company (KOTC) has a fleet of 24 tankers with total deadweight over 3 million tons. Kuwait Aviation Fueling Company specifically handles jet fuel storage and supply. A Citizen's Guide to National Oil Companies Page 454 Kuwait: Kuwait Petroleum Corporation (KPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Downstream oil refining & Affiliate Kuwait National Creation marketing, petrochemicals Petroleum Company (KNPC) Metrics operates 3 refineries domestically and the domestic gasoline station network. Retail outlets are both owned and franchised with and ongoing privatization process. Through affiliate Petrochemical Industries Company (PIC), KPC owns 4 plants for production of liquid ammonia, 2 of which operate at present with a total annual capacity of 620,000 metric tons and 3 plants for urea production with a total annual capacity of 104,000 metric tons. Also, KPC established in 1997 two plants for polypropylene with a production capacity of 100,000 tons annually. Kuwait Petroleum International Ltd (KPI) manages downstream refining and marketing interests abroad (the Q8 brand). Value Operating Performance Upstream natural gas E&P Kuwait Oil Company (KOC) Creation produces domestic natural gas Metrics as part of its upstream portfolio. KUFPEC participates in natural gas E&P abroad. Value Operating Performance Midstream natural gas KOC handles all infrastructure Creation pipelines, storage, LNG requirements as the country Metrics moves to increase production of natural gas, including captured flared gas, and to deploy natural gas for power generation, desalination and other applications. Value Operating Performance Downstream natural gas 2007 3 KOC operates a natural gas Creation distribution, NGL sales, processing as part of surface Metrics petrochemicals facilities development for natural gas exploitation. Value Operating Performance Other (power generation, None Creation etc) Metrics Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics A Citizen's Guide to National Oil Companies Page 455 Kuwait: Kuwait Petroleum Corporation (KPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE production No data Creation (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow vs No data Creation costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization rate 101% Creation (%) Metrics Value Operating Performance Change in total refining 0% Creation production (%) Metrics Value Operating Performance Change in refinery capacity -7% Creation (%) Metrics Value Operating Performance Avg income from $0.01 Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and marketing 706% Creation operating cash flow/capital Metrics expenditures (%) Value Operating Performance Avg pre-tax return on assets 47% Creation (%) Metrics Value Financial Performance Avg total operating cash 149% Creation flow/total capital Metrics expenditures (%) A Citizen's Guide to National Oil Companies Page 456 Kuwait: Kuwait Petroleum Corporation (KPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg operating margin (%) 9% Creation Metrics Value Financial Performance Avg profit margin (%) 8% Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) 149% Creation Metrics Value Financial Performance Avg debt profile (%) 10% Creation Metrics Value Financial Performance Avg return on assets (%) 10% Creation Metrics Value Financial Performance Avg return on total capital 13% Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to 5% Creation State (%) Metrics Other Public Sector Governance Based on available 2005 11 "Contributing in the growth Factors information, presence of a and development of the local publicly articulated role of economy by involving the the hydrocarbon sector with private sector in certain respect to national productive projects of sound development objectives feasibility." "Protecting the petroleum resources, exploiting and developing it in accordance with the best method and in a way that secures the growth of the country's resources, increasing its national income and securing the safety of workers, environment and structures in accordance with the provisions of the Amiri Decree delivered on 12th August 1986." Other Public Sector Governance Based on available There is a high potential for Factors information, clear definition conflict of interest given the of the roles of policy, Minister of Oil's presence on commercial operation and the boards of all three major regulation and assignment entities: the Supreme to specific entities avoiding Petroleum Council, Ministry conflicts of interest of Oil and KPC. There are no apparent controls for avoiding conflict of interest. Other Public Sector Governance Based on available 2008 1 Present Factors information, presence of publicly stated objectives ranked by priority for NOC(s) A Citizen's Guide to National Oil Companies Page 457 Kuwait: Kuwait Petroleum Corporation (KPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available None disclosed. While the Factors information, presence of a various affiliates report some strategy to transfer NOC non-commercial obligations, non-commercial objectives the government of Kuwait to government or other appears to have the major agencies as capacity responsibility for these becomes available activities. Other Public Sector Governance Based on available No information available Factors information, transparent hydrocarbon sector revenue management including revenue distribution within the country Other Public Sector Governance NOC and/or country 2008 15, 16 Kuwait is not a candidate Factors participate in EITI and/or country for EITI. Petroleum other transparency operations are very closely initiatives held. National Democratic Institute has operated in Kuwait and Transparency International has an active national chapter. Other Fiscal Sustainability Based on available Yes Factors information, do hydrocarbon sector fiscal regimes allow for sufficient capital investment Other Fiscal Sustainability Based on available S&P: BBB+ (long-term), A-2 Factors information, do (short-term) for KIPCO. hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available Yes Factors information, are hydrocarbon sector fiscal regimes appropriate for the development stage of the domestic resource base Other Access to Reserves Hydrocarbon law to A legal regime for Factors facilitate competitive hydrocarbons is present, but is upstream investment inadequate. Other Access to Reserves Based on available Foreign companies participate Factors information, existence of in the upstream with technical negotiated service agreements; JVs are contracts/agreements for used in all other sectors. upstream investment Other Operating Strategy Based on available Foreign companies participate Factors information, types of joint in the upstream with service ventures, role of NOC(s) contracts; JVs are used in all other sectors. A Citizen's Guide to National Oil Companies Page 458 Kuwait: Kuwait Petroleum Corporation (KPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Operating Strategy Based on available 2005 14 Most affiliates have a Factors information, extent of transparent tender process and turnkey contracts used electronic platform for these directly by NOC(s) purposes, although SPC regulates purchase contracts. A KPC affiliate, Oil Sector Services Company, provides some engineering and services support for the KPC organizations. Other Business Integration Vertical, horizontal The company is fully Factors integration vertically and horizontally integrated. Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company international 1% Factors BOE production as % avg total company BOE production Other International Presence Change in company BOE 34% Factors production from international operations (%) Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company international No data Factors refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company international 13% Factors refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in In the form of JV's and service Factors upstream contracts. Other Commercialization Competition level in Foreign companies participate Factors upstream including non- in the upstream with service NOC participants and contracts. requirement to include NOC as partner Other Commercialization Competition level in 2006 12 Private companies in retail and Factors midstream, downstream petrochemicals were launched including non-NOC in 2005. JV's and private participants and participation constitute 30- requirement to include 40%. NOC as partner A Citizen's Guide to National Oil Companies Page 459 Kuwait: Kuwait Petroleum Corporation (KPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Based on available Existing arrangements appear Factors information, prevalence and to be successful. Kuwait success of NOC/non-NOC would like to attract additional alliances, joint ventures partners; witness creation of Oil Development Company for that express purposed. Other Commercialization Partial privatization of the 0%; some affiliates have stock Factors NOC (as measured by floating on major exchanges. ownership structure) For example, Qurain Petrochemical Industries Company (QPIC) went public in 2005 with 90% free float. 10% is still owned by Petrochemical Industries Company K.S.C (PIC), where KPC owns 100%. Other Commercialization Based on available 2008 2 KUFPEC is an international Factors information, level and oil company, engaged in quality of NOC exploration and production of international operations crude oil and natural gas outside Kuwait; active in Africa, Middle East, Asia, and Australia; participates in joint ventures with similar companies in E&P of Oil and Gas both as an operator and partner. KPI has downstream operations in Italy, Germany, Sweden, Denmark, Holland, Belgium and Luxemburg (more then 4000 gas stations), the Europoort Refinery in Rotterdam (NL) and refinery in Milazzo (Italy), distribution and sales of gasoline, diesel, jet fuel, lubricants. Other Commercialization Based on available Approx. one-fifth to one-sixth. Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, The Ministry of Oil officially Factors well-funded and trained provides this function, but regulatory agencies, HC shares it with the NOC. agency name, budget, number of staff Other Regulation NOCs are compelled to 2005 14, 11 New legislation is in place to Factors adopt practices that would separate and clarify regulatory provide results similar to oversight, but it is yet to be those in competitive implemented. markets with price, access to and quality of energy services. brief description: HC agency enforcement powers A Citizen's Guide to National Oil Companies Page 460 Kuwait: Kuwait Petroleum Corporation (KPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Regulation Regulators assure market Regulatory functions are Factors transparency and good dispersed between SPC, the quality, unbiased data and Ministry and KPC. Thus, information. HC agency independence is nominal. independence indicators Other Regulation Regulators effectively Regulatory functions are Factors resolve disputes and dispersed between SPC, the conflicts and address public Ministry and KPC. Thus, concerns about effectiveness is questionable. development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of Appears to be funded from the Factors Objectives hydrocarbon price subsidies State budget directly, ($/BOE production) supported by KPC revenue provided by NOC and/or streams. government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of Significant - infrastructure, Factors Objectives direct NOC funding of housing etc. Much of this country social and support serves to house the economic programs. brief extensive foreign workforce description of programs and required for all of KPC's support operations. Other Non-commercial Measure of NOC $3,288.38 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations $135.63 Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance $3,867.17 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Rather detailed reports are Comments reliability of data provided provided by KPC and its by NOC(s) and affiliates, audited by E&Y governments (IFRS). Other Longevity of NOC Based on available 2008 1 KPC was established in 1980. Comments information, history and The original predecessor - persistence of NOC(s) Kuwait National Petroleum Company (KNPC) - was formed in 1960 as a joint venture between the government and private sector. A Citizen's Guide to National Oil Companies Page 461 Kuwait: Kuwait Petroleum Corporation (KPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Country Status Trends and issues related to Kuwait's economy is almost Comments country hydrocarbon sector completely dependent on endowments and revenues from its hydrocarbon performance sector and operations. The country and its companies are recognized for their commercial savvy and construction of international business networks. Kuwait is also recognized as having distinct possibilities with regard to political liberalization. Of interest is whether the close control and opaqueness of Kuwait's hydrocarbons businesses are compatible with apparent (or potential) trends in this regard. Kuwait's indigenous population is small and thus the country has traditional relied on an extensive foreign workforce for its core industries. A number of sensitivities reside around this reality. Other Non-commercial Number of employees 14,587 Factors Objectives Other Non-commercial BOE production per 197,924.85 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency 108.55 Factors BOE R/P (years) Other Oil Dependency 79.38% Factors Net oil and gas export revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency 53.63% Factors Total oil and gas revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves (MM 101,500.00 Factors Barrels) Other Resource Endowment Avg EOY natural gas 63,001.36 Factors reserves (BCF) Other Resource Endowment 112,362.30 Factors Total all source BOE reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic reserves 100% Factors as % of country BOE reserves A Citizen's Guide to National Oil Companies Page 462 Kuwait: Kuwait Petroleum Corporation (KPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Operating Conditions Company domestic reserves 100% Factors as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 90.33% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.99% Factors split, production (%) Other Operating Conditions Country BOE production as 583.32% Factors % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership Yes Factors A Citizen's Guide to National Oil Companies Page 463 Kuwait: Kuwait Petroleum Corporation (KPC) Sources of Information Source # Year of Source Description Links Source 1 2008 KPC http://www.kpc.com.kw/ 2 2008 KPI web-site http://www.kpi.com.kw/ 3 2007 Kuwait National Petroleum Co. Annual report 2005 / 2006 http://www.knpc.com.kw/ 4 2008 KUFPEC Annual Report 2007 http://www.kufpec.com/Kufpec/en-US 5 2007 KUFPEC Annual Report 2006 http://www.kufpec.com/Kufpec/en-US 6 2006 KUFPEC Annual Report 2005 http://www.kufpec.com/Kufpec/en-US 7 2005 KUFPEC Annual Report 2004 http://www.kufpec.com/Kufpec/en-US 8 2008 Average exchange rates by Central Bank of Kuwait http://www.cbk.gov.kw/WWW/index.html 9 2006 Kuwait National Petroleum Co. Annual report 2004 / 2005 http://www.knpc.com/knpc/Linked_Files/en_04_05 .pdf 10 2008 KNPC web-site http://www.knpc.com.kw/knpc/ 11 2005 Ministry of Oil web-site http://www.moo.gov.kw/facts/en/index.asp?More= yes&NewsID=20&mode=0&day=2&page=1 12 2006 KPC Annual Report 2005 http://www.kpc.com.kw/ 13 2007 KPC Annual Report 2007 http://www.kpc.com.kw/ 14 2005 Supreme Petroleum Council, Ministry of Energy and Kuwait http://www.chathamhouse.org.uk/files/6387_ggku Petroleum Corporation: Issues of a wait.pdf trilateral organization By Prof. Imad M. Al-Atiqi 15 2008 National Democratic Institute - Kuwait http://www.ndi.org/worldwide/mena/kuwait/kuwait .asp 16 2008 Transparency International - Kuwait http://shafafeyah.org/ A Citizen's Guide to National Oil Companies Page 464 Libya: Libyan National Oil Corporation (LNOC) Libya: Libyan National Oil Corporation (LNOC) Summary Report Corporate Governance Highlights Corporate Organization and Ownership Owned 100% by the State Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings None Board of Directors Structure Not applicable Independent Board Members Not applicable Is chairman also minister of energy or otherwise appointed by head of state? Yes (chairman of the management committee) Operations Highlights Upstream Oil Operates solely in the country and has sole access to resources. Has several E&P affiliates and manages shares in JV's. Midstream Oil Affiliate company exists Downstream Oil NOC refines about 380,000 B/D of crude; 5 refineries are operated by subsidiary companies. About 60% of production is exported. Upstream Natural Gas Has several E&P affiliates and manages shares in JV's Midstream Natural Gas Affiliates exist Downstream Natural Gas Ethylene plant with an annual capacity of 1.2 MM tons par year, gas liquefaction plant with as annual operational Capacity of 1,565 MMCF/D of natural gas, two ammonia plants with an annual capacity of 733,000 t/year, two methanol plants with an annual capacity of 660,000 t/year, two urea plants with an annual capacity of 916,000 t/year. Other No data Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) 673 Upstream: Average Annual Natural Gas Production (BCF) 946 Downstream: Average Annual Refinery Production (MM Barrels) 116 A Citizen's Guide to National Oil Companies Page 465 Libya: Libyan National Oil Corporation (LNOC) Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 33,474 Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) 3,301 Categorization Indicators Categories: Scores Corporate Corporate Governance 38 Governance 100 Public Sector Governance 57 Commercialization 66 Public Sector Oil Dependency 50 Governance Fiscal Regimes 63 Resource Endowment 10 0 Oil Dependency 30 Resource Local Contribution 61 Commercializ Endowment Sector and Trade Openness 33 Average 44 Fiscal Regimes LNOC Average NOC Worldwide Governance Indicators Trends and Issues Libya has been witnessing a spurt in business activities after UN sanctions were lifted in 2003 opening up its substantially unexplored hydrocarbons territory with large oil and gas potential. Libya has very low production costs and the oilfields are close to the refineries and markets of Europe. Investment in Libya's oil infrastructure is very strong, and will support future sector and economic growth at least in the medium term. Improvement in the institutional and regulatory environment will further enhance Libya's growth and economic diversification opportunities. A Citizen's Guide to National Oil Companies Page 466 Libya: Libyan National Oil Corporation (LNOC) Database Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of cluster 2008 3 The Libyan National Oil Governance Its Organization of NOCs and other Corporation (NOC) was sovereign enterprises in formed on 12 November country 1970, under Law No: 24/1970 and represents the State in the oil sector. Corporate Ownership Structure and Number of NOCs of 1 Governance Its Organization country Corporate Ownership Structure and Description of The Libyan National Oil Governance Its Organization incorporation and Corporation was formed in ownership 1970 as part of a program of reforms aimed at ensuring that all productive units and workplaces be directly governed by popular congresses. Under its articles of incorporation, NOC was legally restricted to Production sharing agreements (PSA) with international oil companies (IOCs) where the latter assumed all risks associated with exploration. In July 1970, further legislation made NOC responsible for marketing all domestic oil products. The elimination of the Ministry of Energy in 2000 strengthened LNOC's control over the oil sector. However, the creation in 2006 of the Council for Oil and Gas Affairs (chaired by the Prime Minister alongside the Ministers of Trade, Employment, Industry and Finance, the Central Bank Governor, and the head of LNOC) demonstrated a desire to bring oil policy back into the government sphere. Corporate Ownership Structure and % shares controlled by 100 % Governance Its Organization government Corporate Ownership Structure and Domestic, international None Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international Only promissory notes Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? A Citizen's Guide to National Oil Companies Page 467 Libya: Libyan National Oil Corporation (LNOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Board of Directors (BOD) Does a BOD exist No. Management Committee Governance is often reported as the BOD. Corporate Board of Directors (BOD) Description of BOD and Not applicable Governance structure Corporate Board of Directors (BOD) Is chairman also minister The chairman of the Governance of energy or otherwise Management Committee is appointed by head of state appointed by the General People's Committee Corporate Board of Directors (BOD) Are any BOD members Not applicable Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, Not applicable Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and Not applicable Governance policy statements Corporate Role of BOD Based on available 2008 10 Management Committee's Governance information, does BOD power and authority is shared have power, impact, with the General People's decision making authority Committee (government) and Council for Oil and Gas Affairs. COGA is in charge of "oversight of the NOC, as well as other aspects of hydrocarbon policy, including the basis for new contracts and pricing, and relations with foreign oil companies". The General People's Committee functions as a Council of Ministers. Corporate Recruitment/Replacement General process for Both by merit and political Governance Key Executives recruitment, replacement of appointments. key execs and senior managers Corporate Decision Making Level of NOC budget Low authority; function is Governance Processes authority. Comment on the shared the General People's general decision flow Committee (government) and within NOC and between Council for Oil and Gas NOC and government for Affairs. major projects. Corporate Decision Making Based on available 1979 4 Unpredictable and Governance Processes, Budget information, is NOC inseparable. Salary pool, for Autonomy budget process predictable example is a separate line in a and separate from national budget government Corporate Decision Making Does the NOC have 2008 3 Yes Governance Processes, Budget authority to partner with Autonomy other entities? A Citizen's Guide to National Oil Companies Page 468 Libya: Libyan National Oil Corporation (LNOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Mission and Objectives Does NOC have a mission 1979 4 "Conduct exploration, Governance statement and, if so, what discovery, drilling and are key elements production; follow the best methods to maintain oil wealth." Corporate Sources of Capital Based on available 2006, 1,2 Part of the state budget Governance information, budgeting 2007 (employees payroll) process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data Unaudited and sporadic Governance Policy and other indications of disclosure and transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available 2007 2 Adequate according to Governance Management information, HR promotion government sources. and professional development policies Corporate Full Disclosure and Based on available Fuel subsidies are disclosed Governance Measurement of Non- information, brief commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, extent of non- commercial Objectives commercial obligations Value Operating Performance Upstream oil E&P. Where Operates solely in the country Creation does it operate (solely in and has sole access to Metrics the country or abroad-name resources. Has several E&P countries)? Does it have affiliates and manages shares sole access to country's in JV's. resources? Value Operating Performance Does the NOC operate Yes Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, Affiliate company exists Creation storage, shipping Metrics Value Operating Performance Downstream oil refining & 2008 3 NOC refines about 380,000 Creation marketing, petrochemicals B/D of crude; 5 refineries are Metrics operated by subsidiary companies. About 60% of production is exported. Value Operating Performance Upstream natural gas E&P Has several E&P affiliates Creation and manages shares in JV's Metrics Value Operating Performance Midstream natural gas Affiliates exist Creation pipelines, storage, LNG Metrics A Citizen's Guide to National Oil Companies Page 469 Libya: Libyan National Oil Corporation (LNOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Downstream natural gas 2008 3 Ethylene plant with an annual Creation distribution, NGL sales, capacity of 1.2 MM tons par Metrics petrochemicals year, gas liquefaction plant with as annual operational Capacity of 1565 MMCF/D of natural gas, two ammonia plants with an annual capacity of 733,000 t/year, two methanol plants with an annual capacity of 660,000 t/year, two urea plants with an annual capacity of 916,000 t/year. Value Operating Performance Other (power generation, No data Creation etc) Metrics Value Operating Performance Avg reserve replacement 153% Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement $0.85 Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE production No data Creation (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration $1.29 Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow vs No data Creation costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics A Citizen's Guide to National Oil Companies Page 470 Libya: Libyan National Oil Corporation (LNOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg refinery utilization 50% Creation rate (%) Metrics Value Operating Performance Change in total refining 8% Creation production (%) Metrics Value Operating Performance Change in refinery capacity No data Creation (%) Metrics Value Operating Performance Avg income from $2.16 Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and marketing No data Creation operating cash flow/capital Metrics expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total after-tax 10% Creation income/revenues (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg gross debt/after-tax 100% Creation capital employed (%) Metrics Value Financial Performance Avg operating margin (%) No data Creation Metrics Value Financial Performance Avg profit margin (%) 10% Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) No data Creation Metrics Value Financial Performance Avg debt profile (%) 100% Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total capital 143% Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to 39% Creation State (%) Metrics Other Public Sector Governance Based on available 1979 4 "NOC supports national Factors information, presence of a economy by means of publicly articulated role of developing, managing and the hydrocarbon sector investing in oil." with respect to national development objectives A Citizen's Guide to National Oil Companies Page 471 Libya: Libyan National Oil Corporation (LNOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available 2007 8 "The Council was established Factors information, clear by General People's definition of the roles of Committee Decision No. policy, commercial 211/2006, giving the Council operation and regulation the role of monitoring, and assignment to specific maintaining, developing, and entities avoiding conflicts protecting the Libyan oil and of interest gas sector for the benefit of the country, as well as giving it a supervisory role over the NOC with respect to financial, organizational, and other such issues affecting the NOC. This decision was later amended in November 2006 (GPC Decision No. 250/2006), changing the name of the Council, and further clarifying and delineating the role of the NOC by giving it the most flexibility to address concerns over time." Other Public Sector Governance Based on available Present and ranked Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available No data Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available Low transparency. The Factors information, transparent Libyan Investment Authority hydrocarbon sector revenue was established in August management including 2006. It includes the assets of revenue distribution within the Libyan Arab Foreign the country Investment Company, the Libyan African Investment Portfolio, and Oilinvest Company. In addition, excess oil revenues are transferred to the Libyan Investment Authority. The fund invests through a number of external managers. Other Public Sector Governance NOC and/or country Libya is not a candidate Factors participate in EITI and/or country for EITI. No other other transparency major transparency programs initiatives exist in the country. A Citizen's Guide to National Oil Companies Page 472 Libya: Libyan National Oil Corporation (LNOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Fiscal Sustainability Based on available 2007 9 No data on fiscal terms is Factors information, do made publicly available by hydrocarbon sector fiscal the government. Industry regimes allow for sufficient sources indicate that, in the capital investment upstream, LNOC has a 50% working interest fully carried through exploration (in other words, LNOC does not pay for exploration costs). In addition, LNOC, regardless of its production share, pays 50% of development costs. LNOC's production share varies between 65% and 87.6% - depending on the vintage of the PSC. According to industry sources, the aggressive offers made by some IOCs during the 2006 licensing round (competition from Chinese and Russian companies drove the average production allocation companies to around 14%, with China Petroleum Corp. (SNP) accepting less than 8%) later led to contract termination or renegotiation, as the self imposed harsh terms substantially prevented these companies from fulfilling their contractual obligations. This appears to have been corrected. Other Fiscal Sustainability Based on available The impact of the fiscal Factors information, do regime on LNOC credit rating hydrocarbon sector fiscal is unclear. regimes allow for investment grade NOC credit ratings A Citizen's Guide to National Oil Companies Page 473 Libya: Libyan National Oil Corporation (LNOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Fiscal Sustainability Based on available 2007 8 Since the lifting of the Factors information, are sanctions, several reforms hydrocarbon sector fiscal have taken place to encourage regimes appropriate for the foreign investment. A development stage of the significant change relates to domestic resource base foreign ownership of Libyan companies: in July 2006 the General People Council passed decision 18 that provides for the creation of a new type of Libyan company - the Mushtarika - that allows foreigners to participate in up to 65 percent of the share capital (the oil Joint Stock Company limited foreign capital to 49%). Furthermore, the board of directors may be comprised of a majority of foreign directors. Amendments to the Foreign Investment Law reduced the minimum start-up capital for foreign investors and introduced the ability to borrow at least half of the capital from Libyan banks. This paved the way for smaller investors. Other Access to Reserves Hydrocarbon law to PETROLEUM LAW NO. 25 Factors facilitate competitive OF 1955 upstream investment AS AMENDED THROUGH 12 FEBRUARY 1970 Other Access to Reserves Based on available PSAs mostly. Very active in Factors information, existence of recent years. negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available PSAs mostly. Factors information, types of joint ventures, role of NOC(s) Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal Vertical Factors integration Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company international No data Factors BOE production as % avg total company BOE production A Citizen's Guide to National Oil Companies Page 474 Libya: Libyan National Oil Corporation (LNOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company international No data Factors refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company international No data Factors refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in JV's and PSAs are used. Factors upstream Other Commercialization Competition level in 1979 4 Very active license tenders Factors upstream including non- after opening of the sector in NOC participants and 2005 ­ still booming.; current requirement to include NOC participation level is no NOC as partner less than 51% Other Commercialization Competition level in 1979 4 Very low, not less than 51%. Factors midstream, downstream This is a current LNOC including non-NOC participation level. participants and requirement to include NOC as partner Other Commercialization Based on available Successful, JVs account for Factors information, prevalence about 40% of domestic and success of NOC/non- production. NOC alliances, joint ventures Other Commercialization Partial privatization of the 0 Factors NOC (as measured by ownership structure) Other Commercialization Based on available Libya has operations (mainly Factors information, level and distribution of refined quality of NOC products) in Italy, Germany, international operations Switzerland, and Egypt through its overseas subsidiary, Tamoil. Other Commercialization Based on available No data Factors information, percent of non-core commercial activities in overall operations A Citizen's Guide to National Oil Companies Page 475 Libya: Libyan National Oil Corporation (LNOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Regulation Presence of independent, Does not exist Factors well-funded and trained regulatory agencies, HC agency name, budget, number of staff Other Regulation NOCs are compelled to Not applicable Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market Not applicable Factors transparency and good quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively Not applicable Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of Significant and funded Factors Objectives hydrocarbon price through LNOC's revenue subsidies ($/BOE contributions. production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of No data Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance $76.67 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Very limited and unaudited. Comments reliability of data provided by NOC(s) and governments A Citizen's Guide to National Oil Companies Page 476 Libya: Libyan National Oil Corporation (LNOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Longevity of NOC Based on available Established in 1970 and likely Comments information, history and to persist. persistence of NOC(s) Other Country Status Trends and issues related to 2008 7 Libya has been witnessing a Comments country hydrocarbon sector spurt in business activities endowments and after UN sanctions were lifted performance in 2003 opening up its substantially unexplored hydrocarbons territory with large oil and gas potential. Libya has very low production costs and the oilfields are close to the refineries and markets of Europe. Investment in Libya's oil infrastructure is very strong, and will support future sector and economic growth at least in the medium term. Improvement in the institutional and regulatory environment will further enhance Libya's growth and economic diversification opportunities. Other Non-commercial Number of employees 436,585 Factors Objectives Other Non-commercial BOE production per 2,183 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency 65.93 Factors BOE R/P (years) Other Oil Dependency 87.43% Factors Net oil and gas export revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency 70.06% Factors Total oil and gas revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 41,464.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 52,795.42 Factors reserves (BCF) Other Resource Endowment 50,566.66 Factors Total all source BOE reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves A Citizen's Guide to National Oil Companies Page 477 Libya: Libyan National Oil Corporation (LNOC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 82.00% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.99% Factors split, production (%) Other Operating Conditions Country BOE production 557.04% Factors as % of total country BOE consumption Other Trade Openness WTO Membership No Factors Other Competition OPEC Membership Yes Factors A Citizen's Guide to National Oil Companies Page 478 Libya: Libyan National Oil Corporation (LNOC) Sources of Information Source # Year of Source Description Links Source 1 2006 Central Bank of Lybia. AR2005 http://cbl.gov.ly/en/listview/index.php?cid=113 2 2007 Central Bank of Lybia. AR2006 http://cbl.gov.ly/en/listview/index.php?cid=113 3 2008 LNOC web-site http://en.noclibya.com.ly 4 1979 Decision no 10-1979 concerning the reorganisation of NOC http://en.noclibya.com.ly/index.php?option=com_doc man&task=cat_view&gid=23&Itemid=34 5 2007 LNOC Annual Report 2006 (ar) http://www.lpilibya.org/web/index.php?option=com_ docman&task=cat_view&gid=30&Itemid=48 6 1955 (1970) The Libyan Petroleum Law and Petroleum Regulations OGEL (subscription) 7 2008 Wall Street Journal coverage of daily commodity market news (and http://online.wsj.com/article/SB12144881118520705 all major news sources) 1.html?mod=Leader-US 8 2007 Libya: Recent Developments Impacting Foreign Investment www.bilateralchamber.org/pdfs/Ferasarticle.pdf 9 2007 Rigzone news http://reports.rigzone.com/ReportServer?%2fRigzone %2fRZNewsArticle&rs%3aCommand=Render&rs% 3aFormat=PDF¶mArticle_ID=42515 10 2008 Global Insight http://www.globalinsight.com/SDA/SDADetail6848. htm A Citizen's Guide to National Oil Companies Page 479 Oman: Petroleum Development Oman (PDO) Oman: Petroleum Development Oman (PDO) Summary Report Corporate Governance Highlights Corporate Organization and Ownership In 1974 the Government of Oman acquired a 60% shareholding in PDO, the remaining interest in the Company being shared amongst Royal Dutch Shell (34%), Total (4%) and the Partex Corporation (2%). On 1 January 1980 PDO was registered by Royal Decree as a limited liability company in the Sultanate. The company is controlled by the state through Oman's oil ministry. Shares Controlled by Government 60% Domestic, International Exchanges for Equity Listings No Board of Directors Structure The Board consists of twelve members; seven "including the Chairman, who is the Minister of Oil & Gas His Excellency Dr. Mohammed bin Hamad al Rumhy" represent the Government of Oman, and five represent PDO's private shareholders (Royal Dutch Shell, Total and Partex). Independent Board Members No Is chairman also minister of energy or otherwise appointed by head of state? Yes, Minister of Oil & Gas. Operations Highlights Upstream Oil Operates in the country. Does not have sole access to resources. Midstream Oil Operates pipelines Downstream Oil Does not operate Upstream Natural Gas Does not operate Midstream Natural Gas Operates pipelines Downstream Natural Gas Does not operate Other Does not operate Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) 891 Upstream: Average Annual Natural Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) No data Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) No data Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data A Citizen's Guide to National Oil Companies Page 480 Oman: Petroleum Development Oman (PDO) Categorization Indicators Categories: Scores: Corporate Governance 53 CorporateGovernance 100 Public Sector Governance 59 Commercialization 50 PublicSector OilDependency 50 Gover nance Fiscal Regimes 38 0 Resource Endowment 2 Oil Dependency 53 Resour ceEndowment Commercialization Local Contribution 0 Sector and Trade Openness 80 FiscalRegimes Average 42 PDO Average NOC Worldwide Governance Indicators Trends and Issues Oman is strongly dependent upon its petro-economy for national development. With declining production, the government is attempting to spur new investment, including frontier resource (enhanced oil recovery and other) and seek ways of diversifying the economic base. A Citizen's Guide to National Oil Companies Page 481 Oman: Petroleum Development Oman (PDO) Database Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of cluster Petroleum Development Oman Governance Its Organization of NOCs and other (PDO) is one of 4 NOCs in sovereign enterprises in Oman. country Corporate Ownership Structure and Number of NOCs of 4 Governance Its Organization country Corporate Ownership Structure and Description of 2008 1 In 1974 the Government of Governance Its Organization incorporation and Oman acquired a 60% ownership shareholding in PDO, the remaining interest in the Company being shared amongst Royal Dutch Shell (34%), Total (4%) and the Partex Corporation (2%). On 1 January 1980 PDO was registered by Royal Decree as a limited liability company in the Sultanate. The company is controlled by the state through Oman's oil ministry. Corporate Ownership Structure and % shares controlled by 2008 1 60% Governance Its Organization government Corporate Ownership Structure and Domestic, international No Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international No Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist 2008 1 Yes Governance Corporate Board of Directors (BOD) Description of BOD and 2008 2 The Board consists of twelve Governance structure members; seven "including the Chairman, who is the Minister of Oil & Gas His Excellency Dr. Mohammed bin Hamad al Rumhy" represent the Government of Oman, and five represent PDO's private shareholders (Royal Dutch Shell, Total and Partex). Corporate Board of Directors (BOD) Is chairman also minister 2008 1 Yes, Minister of Oil & Gas. Governance of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members 2008 1 No Governance considered independent (external) and, if so, how are they appointed A Citizen's Guide to National Oil Companies Page 482 Oman: Petroleum Development Oman (PDO) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Board of Directors (BOD) Term of service (years, No data Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and 2008 2 Board of Directors provides Governance policy statements objectives and guidelines to the Managing Director. Corporate Role of BOD Based on available Has to consult with the Governance information, does BOD Ministry have power, impact, decision making authority Corporate Recruitment/Replacement General process for 2008 1 Competitive basis. Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget Has to be approved by the Governance Processes authority. Comment on Ministry the general decision flow within NOC and between NOC and government for major projects. Corporate Decision Making Based on available Has to be approved by the Governance Processes, Budget information, is NOC Ministry Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have No data Governance Processes, Budget authority to partner with Autonomy other entities? Corporate Mission and Objectives Does NOC have a mission 2008 2 "The objective of PDO is to Governance statement and, if so, what engage efficiently, responsibly are key elements and safely in the exploration, production, development, storage and transportation of hydrocarbons in the Sultanate of Oman. The Company seeks a high standard of performance with the aim to further the long term benefits of its Shareholders, its Employees and the society of the Sultanate of Oman at large." Corporate Sources of Capital Based on available Appears to be approved by the Governance information, budgeting Ministry process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data Does not disclose Governance Policy and other indications of disclosure and transparency A Citizen's Guide to National Oil Companies Page 483 Oman: Petroleum Development Oman (PDO) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available 2008 1 Specialist learning events and Governance Management information, HR imported learning programmes. promotion and professional The Chairman's Award for development policies Excellence. Corporate Full Disclosure and Based on available 2008 1, 2 Detailed reporting on social Governance Measurement of Non- information, brief performance in % but not in commercial Objectives description of reporting on monetary terms: community noncommercial objectives grants, healthcare, educational, sports and general. "A total of 11 Memoranda of Understanding (MoUs), whose combined value amounts to more than RO 1.7 million, were signed with various Government ministries for a range of social-investment initiatives" (for 2007; RO 1.5 for 2006). Corporate Full Disclosure and Based on available 2008 1 Some, not very extensive. Governance Measurement of Non- information, extent of non- commercial Objectives commercial obligations Value Operating Performance Upstream oil E&P. Where The company operates solely in Creation does it operate (solely in the country; and does not have Metrics the country or abroad- sole access to resources. name countries)? Does it have sole access to country's resources? Value Operating Performance Does the NOC operate No Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, Operates pipelines Creation storage, shipping Metrics Value Operating Performance Downstream oil refining & Does not operate Creation marketing, petrochemicals Metrics Value Operating Performance Upstream natural gas E&P Does not operate Creation Metrics Value Operating Performance Midstream natural gas Operates pipelines Creation pipelines, storage, LNG Metrics Value Operating Performance Downstream natural gas Does not operate Creation distribution, NGL sales, Metrics petrochemicals Value Operating Performance Other (power generation, Does not operate Creation etc) Metrics Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) A Citizen's Guide to National Oil Companies Page 484 Oman: Petroleum Development Oman (PDO) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE production 20% Creation (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration $6.11 Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs $0.55 Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow vs No data Creation costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics A Citizen's Guide to National Oil Companies Page 485 Oman: Petroleum Development Oman (PDO) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) No data Creation Metrics Value Financial Performance Avg profit margin (%) No data Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) No data Creation Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total capital No data Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to No data Creation State (%) Metrics Other Public Sector Governance Based on available No data Factors information, presence of a publicly articulated role of the hydrocarbon sector with respect to national development objectives Other Public Sector Governance Based on available No data Factors information, clear definition of the roles of policy, commercial operation and regulation and assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available Yes. See mission statement Factors information, presence of above. publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available Absent Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available A Citizen's Guide to National Oil Companies Page 486 Oman: Petroleum Development Oman (PDO) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available Established in 1980, the State Factors information, transparent General Reserve Fund of the hydrocarbon sector Sultanate of Oman was revenue management established to manage including revenue hydrocarbon resources in distribution within the excess of budgetary needs. The country transfers to the budget are discretionary. The holdings and operations of the Fund are not publicly disclosed. The Oman Oil Fund was created in 1993 to invest in the oil sector. It is managed by the Ministry of Finance. Its holdings and operations are not publicly disclosed. Other Public Sector Governance NOC and/or country Oman is not a candidate Factors participate in EITI and/or country for EITI nor do they other transparency support the effort. No other initiatives major transparency program operates in the country. Other Fiscal Sustainability Based on available Oman oil production has Factors information, do declined in recent years. The hydrocarbon sector fiscal resource endowment is regimes allow for relatively small and more sufficient capital challenging to develop investment compared to Oman's peer group, but insufficient capital may be available for new investment, either through PDO or IOCs as a consequence of the fiscal regime. Other Fiscal Sustainability Based on available No data Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available No data Factors information, are hydrocarbon sector fiscal regimes appropriate for the development stage of the domestic resource base Other Access to Reserves Hydrocarbon law to None apparent Factors facilitate competitive upstream investment Other Access to Reserves Based on available PSAs Factors information, existence of negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available PSAs Factors information, types of joint ventures, role of NOC(s) A Citizen's Guide to National Oil Companies Page 487 Oman: Petroleum Development Oman (PDO) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Operating Strategy Based on available 2008 1 100% outsourced. "In 1998 Factors information, extent of PDO launched the Local turnkey contracts used Community Contractors (LCC) directly by NOC(s) initiative to give people living in the Company's concession area opportunities to establish their own companies, which could then provide services to PDO." Other Business Integration Vertical, horizontal Pure upstream Factors integration Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company international No data Factors BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company international No data Factors refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company international No data Factors refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in 2007 5 Several foreign companies are Factors upstream also involved in upstream activities, with Occidental Petroleum holding the largest market share. Other Commercialization Competition level in Several foreign companies are Factors upstream including non- also involved in upstream NOC participants and activities, with Occidental requirement to include Petroleum holding the largest NOC as partner market share. Other Commercialization Competition level in Very little, if any Factors midstream, downstream including non-NOC participants and requirement to include NOC as partner A Citizen's Guide to National Oil Companies Page 488 Oman: Petroleum Development Oman (PDO) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Based on available No data Factors information, prevalence and success of NOC/non- NOC alliances, joint ventures Other Commercialization Partial privatization of the 40 Factors NOC (as measured by ownership structure) Other Commercialization Based on available Not applicable Factors information, level and quality of NOC international operations Other Commercialization Based on available PDO only operates in its core Factors information, percent of businesses. non-core commercial activities in overall operations Other Regulation Presence of independent, The Ministry of Oil and Gas Factors well-funded and trained regulatory agencies, HC agency name, budget, number of staff Other Regulation NOCs are compelled to To a certain extent by private Factors adopt practices that would shareholders provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market No data Factors transparency and good quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively No data Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of No data is available, but fuel Factors Objectives hydrocarbon price subsidies almost certainly subsidies ($/BOE provided with support from production) provided by PDO and other NOC revenue NOC and/or government. streams as well as associated brief description of subsidy transfers for loss coverage. program, approach, cost A Citizen's Guide to National Oil Companies Page 489 Oman: Petroleum Development Oman (PDO) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Non-commercial Provision and level of Detailed reporting on social Factors Objectives direct NOC funding of performance in % but not in country social and monetary terms: community economic programs. brief grants, healthcare, educational, description of programs sports and general. "A total of and support 11 Memoranda of Understanding (MoUs), whose combined value amounts to more than RO 1.7 million, were signed with various Government ministries for a range of social-investment initiatives" (for 2007; RO 1.5 for 2006). Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Almost no audited\unaudited Comments reliability of data provided data is publicly available. by NOC(s) and governments Other Longevity of NOC Based on available 2008 2 In existence since 1925 with Comments information, history and State participation beginning in persistence of NOC(s) 1974. Other Country Status Trends and issues related Oman is strongly dependent Comments to country hydrocarbon upon its petro-economy for sector endowments and national development. With performance declining production, the government is attempting to spur new investment, including frontier resource (enhanced oil recovery and other) and seek ways of diversifying the economic base. Other Non-commercial Number of employees 4,086 Factors Objectives Other Non-commercial BOE production per 262,900 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 23.91 Factors Other Oil Dependency Net oil and gas export 0.75 Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues 0.47 Factors as a share of GDP (%) A Citizen's Guide to National Oil Companies Page 490 Oman: Petroleum Development Oman (PDO) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Resource Endowment Avg EOY oil reserves 5,572.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 24,367.12 Factors reserves (BCF) Other Resource Endowment Total all source BOE 9,773.23 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 0.57 Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 1.00 Factors split, production (%) Other Operating Conditions Country BOE production 5.32 Factors as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 491 Oman: Petroleum Development Oman (PDO) Sources of Information Source Year of Source Description Links # Source 1 2008 AR2007 http://www.pdo.co.om/pdoweb/tabid/161/Default.aspx 2 2008 Petroleum Development Oman web-site http://www.pdo.co.om 3 2006 AR2005 http://www.pdo.co.om/pdoweb/tabid/161/Default.aspx 4 2005 AR2004 http://www.pdo.co.om/pdoweb/tabid/161/Default.aspx 5 2007 USEIA Country Analysis Brief - Oman http://www.eia.doe.gov/emeu/cabs/Oman/Background.html A Citizen's Guide to National Oil Companies Page 492 Qatar: Qatar Petroleum (QP) Qatar: Qatar Petroleum (QP) Summary Report Corporate Governance Highlights Corporate Organization and Ownership Qatar Petroleum (QP) is a state-owned corporation, formed by Emiri Decree No 10, in 1974. QP is engaged in all sectors of oil and gas industry in the country. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings Not applicable Board of Directors Structure 7 members Independent Board Members None Is chairman also minister of energy or otherwise appointed by head of state? Yes Operations Highlights Upstream Oil Solely in the country. QP has sole access to resources. Midstream Oil Operates exclusively Downstream Oil Operates exclusively Upstream Natural Gas North Field; the Dolphin Project will supply the UAE and Oman with 2 billion cubic feet per day of North Field gas after processing at Dolphin's dedicated new plant at Ras Laffan Industrial City. The resulting lean natural gas will then be transported by a 48 inch, 370 km long undersea pipeline. Midstream Natural Gas LNG - 25 million tons per year; Qatar Gas Transport Company (Nakilat); GTL plant - 34,000 barrels per day; network of over 2000km long pipelines, associated manifolds and distribution stations. Downstream Natural Gas QAPCO's facilities consist of an ethylene plant producing 525,000 metric tons per annum (MTPA), two low density polyethylene (LDPE) plants with 360,000 MTPA and a sulfur plant with 70,000 MTPA (QP owns 80%). QAFAC plant is designed to produce 832,500 MTPA of methanol and 610,000 TPA of MTBE (QP 50%). Other QAFCO total annual production capacity now is 2.0 MMT of ammonia and 2.8 MMT of urea (QP owns 75%); steel company. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) 325 Upstream: Average Annual Natural Gas Production (BCF) 1,571 Downstream: Average Annual Refinery Production (MM Barrels) 50 A Citizen's Guide to National Oil Companies Page 493 Qatar: Qatar Petroleum (QP) Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 17,765 Consolidated Average Total Assets ($Millions) 24,761 Consolidated Average EBIT ($Millions) 14,916 Consolidated Average Net Income ($Millions) 5,145 Categorization Indicators Categories: Scores: Corporate Governance 66 Public Sector Governance 62 CorporateGovernance 100 Commercialization 58 PublicSector Fiscal Regimes 100 OilDependency 50 Governance Resource Endowment 34 0 Oil Dependency 38 Local Contribution 46 ResourceEndowment Commercialization Sector and Trade Openness 39 Average 60 FiscalRegimes QP Average NOC Worldwide Governance Indicators Trends and Issues Qatar has been the dominant new entrant to the global LNG industry, enjoying a privileged position with respect to inbound investment flows, project financing leverage and international partnerships. In recent years, the Qatari government has postponed additional new investment because of the difficulties managing the large cash flows relative to the country's small population. A number of nation-building activities are underway. In spite of the restrictions imposed on foreign participation in the hydrocarbon sector, the government has been successful in attracting investors. Further liberalization may be possible. A Citizen's Guide to National Oil Companies Page 494 Qatar: Qatar Petroleum (QP) Database Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of cluster 2008 1 Qatar Petroleum (QP) the sole Governance Its Organization of NOCs and other NOC in the country. sovereign enterprises in country Corporate Ownership Structure and Number of NOCs of 1 Governance Its Organization country Corporate Ownership Structure and Description of Qatar Petroleum (QP) is a Governance Its Organization incorporation and state-owned corporation, ownership established by Emiri Decree No 10, in 1974. QP is engaged in all sectors of oil and gas industry in the country. Corporate Ownership Structure and % shares controlled by 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international Not applicable Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international 2008 4 Ras Laffan LNG ­ First Governance Its Organization exchanges where bonds are Mortgage Bonds, Moody's traded Aa2 Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist 2006 2 Yes Governance Corporate Board of Directors (BOD) Description of BOD and 7 members Governance structure Corporate Board of Directors (BOD) Is chairman also minister of 2006 2 Yes Governance energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members No Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, No data Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and No data Governance policy statements Corporate Role of BOD Based on available No data Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers A Citizen's Guide to National Oil Companies Page 495 Qatar: Qatar Petroleum (QP) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Decision Making Level of NOC budget No data Governance Processes authority. Comment on the general decision flow within NOC and between NOC and government for major projects. Corporate Decision Making Based on available No data Governance Processes, Budget information, is NOC Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have Yes Governance Processes, Budget authority to partner with Autonomy other entities? Corporate Mission and Objectives Does NOC have a mission 2008 1 "Our mission is to ensure the Governance statement and, if so, what State gets maximum benefit are key elements from its petroleum resources by engaging directly or indirectly in all activities that would add value to these resources." Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data 2006 2 Audited by D&T, IFRS Governance Policy and other indications of disclosure and transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available 2008 1 Several initiatives were made Governance Management information, HR promotion for the enhanced service and professional delivery in Doha and locations development policies for recruitment of nationals and non-nationals, Qatari development, staff appraisal, compensation, job analysis and evaluation, policy development, employee grievance and disciplinary process and employee record management system. Corporate Full Disclosure and Based on available General description of selected Governance Measurement of Non- information, brief projects commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available Significant Governance Measurement of Non- information, extent of non- commercial Objectives commercial obligations A Citizen's Guide to National Oil Companies Page 496 Qatar: Qatar Petroleum (QP) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Upstream oil E&P. Where Solely in the country. Has sole Creation does it operate (solely in access to resources. Metrics the country or abroad-name countries)? Does it have sole access to country's resources? Value Operating Performance Does the NOC operate No Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, Operates exclusively Creation storage, shipping Metrics Value Operating Performance Downstream oil refining & Operates exclusively Creation marketing, petrochemicals Metrics Value Operating Performance Upstream natural gas E&P North Field; the Dolphin Creation Project will supply the UAE Metrics and Oman with 2 billion cubic feet per day of North Field gas after processing at Dolphin's dedicated new plant at Ras Laffan Industrial City. The resulting lean natural gas will then be transported by a 48 inch, 370 km long undersea pipeline. Value Operating Performance Midstream natural gas 2006 2 LNG - 25 million tons per Creation pipelines, storage, LNG year; Qatar Gas Transport Metrics Company (Nakilat); GTL plant - 34,000 barrels per day; network of over 2000km long pipelines, associated manifolds and distribution stations. Value Operating Performance Downstream natural gas 2006 2 QAPCO's facilities consist of Creation distribution, NGL sales, an ethylene plant producing Metrics petrochemicals 525,000 metric tons per annum (TPA), two low density polyethylene (LDPE) plants with 360,000 MTPA and a sulfur plant with 70,000 TPA (QP owns 80%). QAFAC plant is designed to produce 832,500 TPA of methanol and 610,000 TPA of MTBE (QP 50%). Value Operating Performance Other (power generation, 2006 2 QAFCO total annual Creation etc) production capacity now is 2.0 Metrics MMT of ammonia and 2.8 MMT of urea (QP owns 75%); steel company. Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics A Citizen's Guide to National Oil Companies Page 497 Qatar: Qatar Petroleum (QP) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE production No data Creation (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow vs No data Creation costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery capacity 0 Creation (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and marketing No data Creation operating cash flow/capital Metrics expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash 142.12% Creation flow/total capital Metrics expenditures (%) A Citizen's Guide to National Oil Companies Page 498 Qatar: Qatar Petroleum (QP) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg operating margin (%) 83.96% Creation Metrics Value Financial Performance Avg profit margin (%) 28.96% Creation Metrics Value Financial Performance Avg effective tax rate (%) 63.91% Creation Metrics Value Financial Performance Avg reinvestment risk (%) 142.12% Creation Metrics Value Financial Performance Avg debt profile (%) 49.95% Creation Metrics Value Financial Performance Avg return on assets (%) 20.78% Creation Metrics Value Financial Performance Avg return on total capital 23.75% Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to 53.65% Creation State (%) Metrics Other Public Sector Governance Based on available 2008 5 "Building solid industrial Factors information, presence of a foundations to achieve publicly articulated role of balanced economic growth the hydrocarbon sector apart from oil revenues, as a with respect to national single income source, and development objectives substitution of industrial products imports." Other Public Sector Governance Based on available Not available Factors information, clear definition of the roles of policy, commercial operation and regulation and assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available 2008 1 "Our overall objective is to Factors information, presence of maximize our contribution to publicly stated objectives the national wealth of the State ranked by priority for of Qatar, through the safe, NOC(s) efficient and environmentally acceptable exploitation of Qatar's hydrocarbon reserves and through related activities. Specifically we seek: To provide the state with a reliable cash flow, of maximum value, from diversified business interests; To build an organization with internationally competitive business and technical expertise; To maximize the employment of capable Qatari A Citizen's Guide to National Oil Companies Page 499 Qatar: Qatar Petroleum (QP) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data nationals, and develop them to the competence level of the leading International Oil Company employees; To meet National oil and gas demand in a cost-effective way." Other Public Sector Governance Based on available 2006 2 Absent Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available 2008 8 The Qatar Investment Factors information, transparent Authority is a sovereign wealth hydrocarbon sector revenue fund created to manage excess management including oil and natural gas revenue. revenue distribution within "The QIA was founded by the the country State of Qatar in 2005 to strengthen the country's economy by diversifying into new asset classes. Building on the heritage of Qatar investments dating back more than three decades, its growing portfolio of long-term strategic investments help complement the state's huge wealth in natural resources." The holdings and operations of the QIA are not publicly disclosed. Other Public Sector Governance NOC and/or country 2008 6 Qatar is neither a candidate Factors participate in EITI and/or country nor supporter of EITI. other transparency National Democratic Institute initiatives operates in the country. Other Fiscal Sustainability Based on available No data Factors information, do hydrocarbon sector fiscal regimes allow for sufficient capital investment Other Fiscal Sustainability Based on available 2008 4 E&P AA-, Moody's Aa2 Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available Qatar has enjoyed prominence Factors information, are for the large investment flows hydrocarbon sector fiscal related to natural gas/LNG regimes appropriate for the development, a consequence of development stage of the resource endowment, domestic resource base negotiated terms, and achievement of investment grade ratings for project financings. A Citizen's Guide to National Oil Companies Page 500 Qatar: Qatar Petroleum (QP) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Access to Reserves Hydrocarbon law to No data Factors facilitate competitive upstream investment Other Access to Reserves Based on available 2007 3 QP cooperates with foreign Factors information, existence of companies through production negotiated sharing contracts (PSAs) (QP contracts/agreements for typically takes a majority upstream investment stake, although this practice could be abandoned in some cases). Other Operating Strategy Based on available 2006 2 "Qatar Petroleum's strategy of Factors information, types of joint conducting hydrocarbon ventures, role of NOC(s) exploration and new projects is through Exploration and Production Sharing Agreements (EPSA) and Development and Production Sharing Agreements (DPSA) concluded with major international oil and gas companies." Other Operating Strategy Based on available Not available Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal Vertically integrated Factors integration Other International Presence Does NOC make Yes, taking LNG value chain Factors investments abroad positions. Other International Presence Avg company international No data Factors BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company international No data Factors refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company international No data Factors refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations A Citizen's Guide to National Oil Companies Page 501 Qatar: Qatar Petroleum (QP) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data (%) Other Commercialization Non-NOC participants in PSAs Factors upstream Other Commercialization Competition level in QP cooperates with foreign Factors upstream including non- companies through production NOC participants and sharing contracts (PSAs) (QP requirement to include typically takes a majority NOC as partner stake, although this practice could be abandoned in some cases). Other Commercialization Competition level in None Factors midstream, downstream including non-NOC participants and requirement to include NOC as partner Other Commercialization Based on available Brief Description Factors information, prevalence and success of NOC/non- NOC alliances, joint ventures Other Commercialization Partial privatization of the 0 Factors NOC (as measured by ownership structure) Other Commercialization Based on available Not applicable Factors information, level and quality of NOC international operations Other Commercialization Based on available 2006 2 Cities, infrastructure, steel Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, Regulatory function is shared Factors well-funded and trained between the Ministry of regulatory agencies, HC Energy and Industry and QP agency name, budget, number of staff Other Regulation NOCs are compelled to No data Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market None Factors transparency and good quality, unbiased data and information. HC agency independence indicators A Citizen's Guide to National Oil Companies Page 502 Qatar: Qatar Petroleum (QP) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Regulation Regulators effectively No data Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of The government of Qatar Factors Objectives hydrocarbon price subsidisizes many basic subsidies ($/BOE necessities financed through production) provided by the country's huge hydrocarbon NOC and/or government. export revenues. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of Appears to be significant Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC $2,476.11 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance $1,776.54 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Data is fragmented and mostly Comments reliability of data provided unavailable by NOC(s) and governments Other Longevity of NOC Based on available 2008 1 In existence since 1958 and Comments information, history and unlikely to disappear. persistence of NOC(s) Other Country Status Trends and issues related to Qatar has been the dominant Comments country hydrocarbon sector new entrant to the global LNG endowments and industry, enjoying a privileged performance position with respect to inbound investment flows, project financing leverage and international partnerships. In recent years, the Qatari government has postponed additional new investment because of the difficulties managing the large cash flows relative to the small population. A number of nation-building activities have been underway. In spite of the closely held nature of the hydrocarbon sector, indications are that the Qatar government is receptive to some A Citizen's Guide to National Oil Companies Page 503 Qatar: Qatar Petroleum (QP) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data sociopolitical liberalization. Other Non-commercial Number of employees 10,000 Factors Objectives Other Non-commercial BOE production per 64,554.03 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 200 Factors Other Oil Dependency Net oil and gas export 80.89% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues 62.32% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 8,073.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 904,055.36 Factors reserves (BCF) Other Resource Endowment Total all source BOE 183,307.81 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 14.97% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.92% Factors split, production (%) Other Operating Conditions Country BOE production 502.42% Factors as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership Yes Factors A Citizen's Guide to National Oil Companies Page 504 Qatar: Qatar Petroleum (QP) Sources of Information Source # Year of Source Description Links Source 1 2008 Company web-site http://www.qp.com.qa 2 2006 AR2005 http://www.qp.com.qa/qp.nsf/web/md_annual_reports 3 2007 USEIA Country Analysis Brief - Qatar http://www.eia.doe.gov/emeu/cabs/Qatar/Background .html 4 2008 Middle East Economic Survey http://www.mees.com/Energy_Tables/ratings.htm 5 2008 Ministry of Energy and Industry http://www.mei.gov.qa/portal/page?_pageid=36,2499 61&_dad=portal&_schema=PORTAL 6 2008 National Democratic Institute - Qatar http://www.ndi.org/worldwide/mena/qatar/qatar.asp 7 2008 Zawya Middle East Business Info http://www.zawya.com/cm/profile.cfm/cid897367 8 2008 Qatar Investment Authority http://www.qia.qa/QIA/index.html A Citizen's Guide to National Oil Companies Page 505 Saudi Arabia: Saudi Aramco Saudi Arabia: Saudi Aramco Summary Report Corporate Governance Highlights Corporate Organization and Ownership Established in Saudi Arabia, 100% government owned. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings None Board of Directors Structure Twelve members. Chairman of BOD is the Minister of Petroleum & Mineral Resources. BOD also includes the CEO of Saudi Aramco and 3 other Aramco officers. Five members have positions in the Saudi government (such as the Ministry of Finance, Supreme Economic Council, etc.). Three members are independent. Independent Board Members Three independent members; appointment process No data. In 2004, Al-Naimi said an independent BOD selected by merit and professional expertise was important for NOC governance. Is chairman also minister of energy or otherwise appointed by head of state? Yes, Minister of Petroleum & Mineral Resources. Operations Highlights Upstream Oil Aramco's upstream operations are in Saudi Arabia only. It has sole access to oil resources. Midstream Oil Midstream assets include 9,000+ miles oil pipelines, 14.1 million B/D export terminal capacity and one of world's largest fleets of supertankers including 20 VLCCs operated by Aramco. Downstream Oil Downstream assets include 2.1 million B/D refining capacity in Saudi Arabia and 1.75 million B/D overseas; new petrochemical facilities are under construction. Upstream Natural Gas For development of non-associated gas Aramco participates with foreign companies in consortiums. Midstream Natural Gas Midstream natural gas assets include 7 gas processing plants with 8 BCF/D capacity. Produces NGLs and sulfur. Has 1,400 miles gas pipeline with expansions in process. Downstream Natural Gas Has a 7.8 MMCF/D Master Gas System distribution network. Other Electricity sector is the purview of state-owned Saudi Electricity Co. (SEC). Future water and power projects funded 60% by private sector, 20% by Public Investment Fund and 20% by SEC. $8 billion in investment for 4 projects approved with 7,000 MW plus power capacity. In 2006, 2,500 MW new generation capacity tendered by SEC to IPPs. Aramco is constructing cogeneration plants at oil and gas installations throughout the country. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 259,800 Upstream: Average Proved Gas Reserves (BCF) 241,667 Upstream: Average Annual Oil Production (MM Barrels) 3,237 Upstream: Average Annual Natural Gas Production (BCF) 2,853 Downstream: Average Annual Refinery Production (MM Barrels) 583 A Citizen's Guide to National Oil Companies Page 506 Saudi Arabia: Saudi Aramco Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) No data Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data Categorization Indicators Categories: Scores: Corporate Governance 56 Corporate Governance Public Sector Governance 57 100 Commercialization 67 Public Sector Oil Dependency 50 Governance Fiscal Regimes 88 Resource Endowment 58 0 Oil Dependency 46 Resource Commercializa Local Contribution 0 Endowment Sector and Trade Openness 34 Fiscal Regimes Average 62 Saudi Aramco Average NOC Worldwide Governance Indicators 1998 Voice and Accountability 2002 Political Stability Government Effectiveness Regulatory Quality Rule of Law Control of Corruption 2004 2006 0 25 50 75 100 Trends and Issues Aramco has an $18 billion plan to increase crude oil production capacity to 12 million B/D by 2009. Aramco development plans call for a $20 billion investment in refining capacity, increasing domestic capacity to 3 million B/D and international holdings by 1-2 million B/D by 2011. Aramco plans a $9 billion investment in natural gas in order to free up oil for export. Gas production is earmarked for use domestically. Gas processing capacity will be expanded from 8 to 15 BCF/D by 2009. Expansion of the Master Gas System is in progress. A Citizen's Guide to National Oil Companies Page 507 Saudi Arabia: Saudi Aramco Database Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of 2008 10 One NOC, Saudi Aramco, with Governance Its Organization cluster of NOCs and multiple subsidiaries/associated other sovereign companies. enterprises in country Corporate Ownership Structure and Number of NOCs of 2008 10 Saudi Aramco has 9 subsidiary or Governance Its Organization country associated companies. Corporate Ownership Structure and Description of 2008 10 Established in Saudi Arabia, Governance Its Organization incorporation and 100% government owned. ownership Corporate Ownership Structure and % shares controlled by 2008 10 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international 2008 None Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international 2008 None Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20- 2008 11 No Governance Its Organization F with SEC? Corporate Board of Directors (BOD) Does a BOD exist 12 Yes Governance Corporate Board of Directors (BOD) Description of BOD 12 Twelve members. Chairman of Governance and structure BOD is the Minister of Petroleum & Mineral Resources. BOD also includes the CEO of Saudi Aramco and 3 other Aramco officers. Five members have positions in the Saudi government (such as the Ministry of Finance, Supreme Economic Council, etc.). Three members are independent. Corporate Board of Directors (BOD) Is chairman also 12 Yes Governance minister of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members 2007, 12, 14 Three independent members; Governance considered independent 2008 appointment process No data. In (external) and, if so, 2004, Al-Naimi said an how are they appointed independent BOD selected by merit and professional expertise was important for NOC governance. Corporate Board of Directors (BOD) Term of service (years, No data Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and 2007, 12 High level planning, budgeting Governance policy statements 2008 and project decisions. A Citizen's Guide to National Oil Companies Page 508 Saudi Arabia: Saudi Aramco Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Role of BOD Based on available 2008 13, 16 Supreme Council for Petroleum Governance information, does BOD & Mineral Affairs (SCPMA) has have power, impact, the ultimate authority over decision making planning, strategies, policy, authority budgets and projects for Aramco. However, the Ministry of Petroleum & Mineral Resources says that the BOD is the primary channel between the government and Aramco and that the SCPMA plays a secondary role with respect to Aramco and a primary role in the country's petroleum plans. Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget 2007, 12, 13 Aramco establishes its budget Governance Processes authority. Comment on 2008 subject to the "endorsement" of the general decision SCPMA. flow within NOC and between NOC and government for major projects. Corporate Decision Making Based on available 2007, 12, 13 Budget is subject to the Governance Processes, Budget information, is NOC 2008 "endorsement" of SCPMA. Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have 2007, 12,13 Yes, subject to the participation Governance Processes, Budget authority to partner 2008 of SCPMA in negotiations with Autonomy with other entities? international oil companies. Corporate Mission and Objectives Does NOC have a 2006 15 Yes. Elements include: operating Governance mission statement and, in the hydrocarbon sector on a if so, what are key commercial basis and for the elements purpose of profit; developing the local economy and increasing its contribution to the Kingdom's revenues; providing reliable, stable energy supplies to global markets. Corporate Sources of Capital Based on available 2004 14 Aramco has formal planning Governance information, budgeting processes that include process and policy establishing detailed operating including % of cash plans for the coming year, for the flow/revenue available next five years and scenario for reinvestment planning that spans decades. Reservoir management and production strategies have a 50+ year timeline. In 2004, Al-Naimi said, "the fiscal regime for the NOC allows for net cash flow retention adequate to meet its objectives and plan over a reasonable time horizon." A Citizen's Guide to National Oil Companies Page 509 Saudi Arabia: Saudi Aramco Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Disclosure/Transparency Disclosure of audited 2008 13 SCPMA appoints a financial Governance Policy data and other auditor and reviews the auditor's indications of reports but there is no public disclosure and disclosure. transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available 2007 12,15 Aramco has extensive education Governance Management information, HR and employee development promotion and programs in science, technology professional and management. Heavily development policies emphasized and reported on in company publications. Corporate Full Disclosure and Based on available 2007 12,4 In its Annual Review, Aramco Governance Measurement of Non- information, brief provides qualitative information commercial Objectives description of reporting on social/economic development on noncommercial activities including traffic safety, objectives recycling, subsidized home loans, school construction, renovation and maintenance, school supplies, health care access and diabetes prevention. Price subsidies not disclosed by Aramco but other sources indicate they are significant. Corporate Full Disclosure and Based on available 2007 12, 4 See above. Governance Measurement of Non- information, extent of commercial Objectives non-commercial obligations Value Operating Performance Upstream oil E&P. 2008 12, 16 Aramco's upstream operations Creation Where does it operate are in Saudi Arabia only. It has Metrics (solely in the country or sole access to oil resources. abroad-name countries)? Does it have sole access to country's resources? Value Operating Performance Does the NOC operate 2008 12, 16 Yes, in refining, oil product Creation abroad? distribution and oil pipelines. Metrics Value Operating Performance Midstream oil 2007 12, 4 Midstream assets include 9,000+ Creation pipelines, storage, miles oil pipelines, 14.1 million Metrics shipping B/D export terminal capacity and one of world's largest fleets of supertankers including 20 Very Large Crude Carriers (VLCCs) operated by Aramco. Value Operating Performance Downstream oil 2007, 16, 4 Downstream assets include 2.1 Creation refining & marketing, 2008 million B/D refining capacity in Metrics petrochemicals Saudi Arabia and 1.75 million B/D overseas; new petrochemical facilities are under construction. Value Operating Performance Upstream natural gas 2007, 12, 16, For development of non- Creation E&P 2008 4 associated gas Aramco Metrics participates with foreign A Citizen's Guide to National Oil Companies Page 510 Saudi Arabia: Saudi Aramco Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data companies in consortiums. Value Operating Performance Midstream natural gas 2007 4 Midstream natural gas assets Creation pipelines, storage, LNG include 7 gas processing plants Metrics with 8 BCF/D capacity. Produces NGLs and sulfur. Has 1,400 miles gas pipeline with expansions in process. Value Operating Performance Downstream natural 2007 4 Has a 7.8 MMCF/D Master Gas Creation gas distribution, NGL System distribution network. Metrics sales, petrochemicals Value Operating Performance Other (power 2007 4 Electricity sector is the purview Creation generation, etc) of state-owned Saudi Electricity Metrics Co. (SEC). Future water and power projects funded 60% by private sector, 20% by Public Investment Fund and 20% by SEC. $8 billion in investment for 4 projects approved with 7,000 MW plus power capacity. In 2006, 2,500 MW new generation capacity tendered by SEC to IPPs. Aramco is constructing cogeneration plants at oil and gas installations throughout the country. Value Operating Performance Avg reserve 126% Creation replacement rate (BOE, Metrics %) Value Operating Performance Avg reserve No data Creation replacement cost Metrics ($/BOE) Value Operating Performance Change in BOE 1% Creation reserves (%) Metrics Value Operating Performance Change in BOE 4% Creation production (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream Metrics capital expenditures (%) Value Operating Performance Avg upstream No data Creation exploration and Metrics production expenses ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes Metrics ($/BOE) Value Operating Performance Avg income after all No data Creation taxes ($/BOE) Metrics A Citizen's Guide to National Oil Companies Page 511 Saudi Arabia: Saudi Aramco Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg effective tax rate No data Creation (%) Metrics Value Operating Performance Avg operating cash No data Creation flow vs costs incurred Metrics (%) Value Operating Performance After tax return on No data Creation assets Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining 4% Creation production (%) Metrics Value Operating Performance Change in refinery 32% Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating Metrics cash flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating No data Creation cash flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin No data Creation (%) Metrics Value Financial Performance Avg profit margin (%) No data Creation Metrics Value Financial Performance Avg effective tax rate No data Creation (%) Metrics Value Financial Performance Avg reinvestment risk No data Creation (%) Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets No data Creation (%) Metrics Value Financial Performance Avg return on total No data Creation capital employed (%) Metrics Value Financial Performance Avg fiscal contribution No data Creation to State (%) Metrics A Citizen's Guide to National Oil Companies Page 512 Saudi Arabia: Saudi Aramco Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available 2008 17 Expand energy intensive Factors information, presence industries such as petrochemicals of a publicly articulated and contribute to establishing role of the hydrocarbon other industries such as sector with respect to electricity, water desalination and national development energy-intensive heavy objectives industries. Manufacture aluminum and fertilizers. Decrease the economy's dependence on oil by encouraging other productive sectors and implementing required reforms. Other Public Sector Governance Based on available 2008 16, 17, Commercial functions reside with Factors information, clear 18 Aramco and other permitted definition of the roles participants in the hydrocarbon of policy, commercial sector subject to the review of operation and SCPMA. Policy and regulatory regulation and functions are not separated and assignment to specific reside primarily in the SCPMA entities avoiding and to a lesser extent in the conflicts of interest Ministry of Petroleum and Minerals (licenses and regulations). Other Public Sector Governance Based on available 2006, 15, 16, Yes. Elements include: operating Factors information, presence 2008 17 in the hydrocarbon sector on a of publicly stated commercial basis and for the objectives ranked by purpose of profit; developing the priority for NOC(s) local economy and increasing its contribution to the Kingdom's revenues; providing reliable, stable energy supplies to global markets. Other Public Sector Governance Based on available None disclosed. Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available 2008 20, 21 "The Public Investment Fund Factors information, transparent (PIF) was established by Royal hydrocarbon sector Decree No. (M/24), dated 25-6- revenue management 1391H. The motive behind the including revenue establishment of PIF was to distribution within the provide financing for certain country productive projects that are of a commercial nature and are having a significant importance in developing the national economy, which the private sector lacks as the ability to under take alone, either because of insufficient experience or inadequate capital or both." Saudi Arabian Monetary Agency appears to be responsible for investing the larger share of the A Citizen's Guide to National Oil Companies Page 513 Saudi Arabia: Saudi Aramco Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data excess oil and gas revenue. The holdings and operations of the PIF are not publicly disclosed. Other Public Sector Governance NOC and/or country Saudi Arabia is not a candidate Factors participate in EITI country for EITI. No other and/or other transparency programs appear to transparency initiatives operate in the Kingdom. Other Fiscal Sustainability Based on available No data Factors information, do hydrocarbon sector fiscal regimes allow for sufficient capital investment Other Fiscal Sustainability Based on available No data, NOCs unrated. Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available No data Factors information, are hydrocarbon sector fiscal regimes appropriate for the development stage of the domestic resource base Other Access to Reserves Hydrocarbon law to 2000, 4, 16- There is not a comprehensive Factors facilitate competitive 2007, 19 hydrocarbon law. Non-Aramco upstream investment 2008 participants are permitted in the non-associated gas upstream sector. Other Access to Reserves Based on available 2000, 4, 16- Yes, but only in the non- Factors information, existence 2007, 19 associated gas upstream sector. 4 of negotiated 2008 major Aramco consortiums contracts/agreements including Shell, Total, Lukoil, for upstream Sinopec, ENI, Repsol. investment Other Operating Strategy Based on available 2008 16, 17 Arrangements for participation in Factors information, types of the non-associated gas sector are joint ventures, role of through the establishment of joint NOC(s) venture companies where Aramco has 20-30% equity interests. Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal 2008 16, 17 Aramco is fully-integrated in the Factors integration upstream, midstream and downstream sectors. Other International Presence Does NOC make 2008 16, 17 Yes Factors investments abroad A Citizen's Guide to National Oil Companies Page 514 Saudi Arabia: Saudi Aramco Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company No data Factors BOE production from international operations (%) Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company 131% Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company 0% Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants 2008 16, 17 Yes, but only in the non- Factors in upstream associated gas upstream sector. See above. Other Commercialization Competition level in 2008 16, 17 See above. Aramco has a Factors upstream including minority equity interest in all the non-NOC participants non-associated gas joint venture and requirement to companies. include NOC as partner Other Commercialization Competition level in 2008 16, 17 There are non-Aramco Factors midstream, downstream participants in: refining, including non-NOC petrochemicals and product participants and marketing such as Shell, requirement to include ExxonMobil, Sumitomo NOC as partner Chemical. Except for the petrochemical venture with Sumitomo, the others have an Aramco executive as President and CEO and 80-85% of the workforce is Saudi. Other Commercialization Competition level in 2008 16, 17 See above. Factors midstream and downstream sectors Other Commercialization Based on available 2008 10 There are numerous Aramco/non- Factors information, prevalence NOC joint ventures in upstream and success of non-associated gas, refining, NOC/non-NOC product marketing and alliances, joint ventures petrochemicals as described above. A Citizen's Guide to National Oil Companies Page 515 Saudi Arabia: Saudi Aramco Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Partial privatization of None. No plans in process. Factors the NOC (as measured by ownership structure) Other Commercialization Based on available 2008 16, 17 Aramco has four international Factors information, level and refining and marketing joint quality of NOC ventures in the US, South Korea, international operations Philippines and Greece. Aramco also has a 15% interest in the Arab Pipeline Company (crude oil pipeline). Other Commercialization Based on available 2007 12 No data: appear extensive but Factors information, percent of qualitative disclosures only. non-core commercial activities in overall operations Other Regulation Presence of 2000, 16, 17, The Ministry of Petroleum and Factors independent, well- 2008 18 Minerals appears to have funded and trained regulatory responsibilities but regulatory agencies, some observers view its role as HC agency name, advisory only. There are no other budget, number of staff regulatory agencies. Other Regulation NOCs are compelled to No data Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure No data Factors market transparency and good quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively No data Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of 2007 4 Significant price subsidies are Factors Objectives hydrocarbon price attributed to Saudi Arabia but subsidies ($/BOE quantitative information is not production) provided available. by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of 2007 12 No data; qualitative disclosure Factors Objectives direct NOC funding of only. A Citizen's Guide to National Oil Companies Page 516 Saudi Arabia: Saudi Aramco Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation No data Factors Objectives obligations relative to workforce ($ M) Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Very limited data provided but Comments reliability of data reliability is generally good. No provided by NOC(s) operating/financial performance and governments data available. Other Longevity of NOC Based on available 2007 12 The Saudi government acquired a Comments information, history 25% interest in Aramco in 1973 and persistence of and in 1980 purchased almost all NOC(s) of its assets giving it 100% ownership. Other Country Status Trends and issues 2006, 4, 12, Aramco has an $18 billion plan Comments related to country 2007 15 to increase crude oil production hydrocarbon sector capacity to 12 million B/D by endowments and 2009. Aramco development plans performance call for a $20 billion investment in refining capacity, increasing domestic capacity to 3 million B/D and international holdings by 1-2 million B/D by 2011. Aramco plans a $9 billion investment in natural gas in order to free up oil for export. Gas production is earmarked for use domestically. Gas processing capacity will be expanded from 8 to 15 BCF/D by 2009. Expansion of the Master Gas System is in progress. Other Non-commercial Number of employees 51,906 Factors Objectives Other Non-commercial BOE production per 83,070 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency 72.21 Factors BOE R/P (years) Other Oil Dependency Net oil and gas export 86.84% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) A Citizen's Guide to National Oil Companies Page 517 Saudi Arabia: Saudi Aramco Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Oil Dependency Total oil and gas 54.07% Factors revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 264,209.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 253,029.56 Factors reserves (BCF) Other Resource Endowment 307,834.79 Factors Total all source BOE reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic No data Factors BOE production as % of country BOE production Other Operating Conditions Company primary 71% Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions 85.83% Factors Country oil/natural gas split, reserves (%) Other Operating Conditions 99.99% Factors Country oil/natural gas split, production (%) Other Operating Conditions Country BOE 341.52% Factors production as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership Yes Factors A Citizen's Guide to National Oil Companies Page 518 Saudi Arabia: Saudi Aramco Sources of Information Source Year Source Description Links # of Source 1 2007 Saudi Aramco Facts and Figures 2006 available on www.saudiaramco.com web site. Aramco does not report proved reserves; it reports "recoverable" reserves 2 2008 CEE Estimate based on following formula: Reserve Additions Year 2=EOY Recoverable Reserves Year 2- (EOY Reserves Year 1-Production Year 2) 3 2007 Exports include crude oil but not natural gas liquids. Saudi Aramco Facts and Figures 2006 4 2007 Saudi Aramco Facts and Figures 2006. USEIA http://www.eia.doe.gov/emeu/cabs/Saudi_Arabia/Ba Country Analysis Brief-Saudi Arabia, 10/11/07 ckground.html 5 2005- Saudi Aramco Facts and Figures 2006, 2005, 2004 http://www.eia.doe.gov/emeu/cabs/Saudi_Arabia/Ba 2007 ckground.html 6 2008 CIA World Factbook-Saudi Arabia, 5/15/08 https://www.cia.gov/library/publications/the-world- factbook/geos/sa.html 7 2007 "Saudi Arabia Economic & Strategic Outlook," Global www.globalinv.net Investment House KSCC, Feb. 2007 8 2007 World Bank Governance Indicators 2007 http://info.worldbank.org/governance/wgi/index.asp 9 2008 WTO www.wto.org 10 2008 Ministry of Petroleum and Mineral Resources www.mopm.gov.sa 11 2008 US Securities and Exchange Commission www.sec.gov 12 2008 Saudi Aramco Annual Review 2007 www.saudiaramco.com 13 2008 Supreme Council for Petroleum & Mineral Affairs http://www.saudinf.com/main/c551.htm 14 2004 Al-Naimi, Ale, "The Role of the National Oil http://www.saudiembassy.net/2004News/Statements/ Companies in a Changing World's Economic and SpeechDetail.asp?cIndex=471 Energy Relations," Speech at the OPEC International Seminar, Vienna, Austria, 9/16/04 15 2006 "Saudi Aramco's Long Term Strategies," Dr. Ibrahim www.saudiaramco.com/speeches S. Mishari, 9/06 16 2008 "Saudi Arabia's Petroleum Policy and Oil Industry," www.mopm.gov.sa USEIA CAB-Saudi Arabia, 10/11/07 17 2008 "The Role of Oil and Gas in the National Economy" www.mopm.gov.sa 18 2000 "The Oil Market, the Middle East and Saudi Policy," www.thewashingtoninstitute.com Policy Watch #449, Special Forum Report, 4/5/00 19 2000 "Financing Petroleum Development and the http://www.world-petroleum.org/docs/faisal.doc Experience of Saudi Arabia," HRH Price Faisal Bin Turki Bain Abdul Aziz Al-Sa'ud, World Petroleum Congress, 6/13/00 20 2008 Ministry of Finance http://www.mof.gov.sa/en/docs/ests/sub_invbox.htm 21 2008 Saudi Arabian Monetary Agency http://www.sama.gov.sa/en/publications/annualrep/ A Citizen's Guide to National Oil Companies Page 519 Syria: Syrian Petroleum Company (SPC) Syria: Syrian Petroleum Company (SPC) Summary Report Corporate Governance Highlights Corporate Organization and Ownership The Syrian Petroleum Co. is an arm of the Ministry of Petroleum and Mineral Resources. Al-Furat is a joint venture. The Syrian government is the sole owner of all companies except Al-Furat where their interest is undisclosed. Al-Furat is a Syrian joint stock company with a service contract for production operations. Shares Controlled by Government 100%. Domestic, International Exchanges for Equity Listings None Board of Directors Structure No data Independent Board Members No data Is chairman also minister of energy or otherwise appointed by head of state? No data Operations Highlights Upstream Oil SPC operates only in Syria. Syria has tendered exploration blocks to private and foreign companies with production sharing agreements which include the participation of SPC and the government. It also has the Al-Furat joint venture which is focused on oil production operations pursuant to a service contract. Midstream Oil SPC assets include a 250,000 B/D oil pipeline; most oil transported by trucks and tankers. Downstream Oil SPC operates two refineries at Baniyas (132,725 B/D) and Homs (107,140 B/D) which produce a surplus of heavier products, including fuel oil, but fail to meet demand for lighter products such as distillates. The Syrian Company for Distribution of Petroleum Products markets oil products and controls the majority of gasoline retail outlets. Sytrol markets oil products including exports. There is a substantial black market in the resale of smuggled subsidized Syrian petroleum products to other countries, principally Iraq. Upstream Natural Gas 75% of gas reserves in Syria are owned by Syrian Gas Company. 50% of reserves are non-associated gas. Two finds were reported in 2006/2007 totaling 2 TCF but reserves are unconfirmed, development plans unannounced. Marathon Oil and Soyuzneftegas have gas projects totaling $977 million in investment. Midstream Natural Gas SPC has 1,250 miles of domestic gas pipelines and 5 gas processing plants with 1.1 BCF/D capacity. The 53 MMCF/D Syria- Lebanon pipeline is not operating. Several export/import gas pipeline projects have been announced. Syria wants to be a regional gas hub and transit country bringing gas to Europe. Downstream Natural Gas None disclosed. Other SPC does not operate in the Syrian power sector. Installed generation capacity in Syria is 6.5 GW. There are 11 natural gas and fuel oil thermal plants and one 1.5 GW hydroelectric facility. Syria wants to replace fuel oil generation with natural gas by 2014; currently 50% of generation is from gas. Prices are subsidized resulting in 7% p.a. demand growth. The sector is open to independent power plant project developers; 3 gas-fired IPPs are underway totaling 1,950 MW. Financing is provided by Europe and Arab funds. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 2,925 Upstream: Average Proved Gas Reserves (BCF) 9,796 Upstream: Average Annual Oil Production (MM Barrels) 161 A Citizen's Guide to National Oil Companies Page 520 Syria: Syrian Petroleum Company (SPC) Upstream: Average Annual Natural Gas Production (BCF) 183 Downstream: Average Annual Refinery Production (MM Barrels) 31 Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) No data Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data Categorization Indicators Categories: Scores: Corporate Governance Corporate Governance 16 100 Public Sector Governance 30 Public Sector Commercialization 33 Oil Dependency 50 Governance Fiscal Regimes 50 0 Resource Endowment 1 Oil Dependency 98 Resource Commercializa Endowment Local Contribution 0 Sector and Trade Openness 36 Fiscal Regimes Average 38 SPC Average NOC Worldwide Governance Indicators Trends and Issues Since 2001 Syria has attempted to reverse declining oil reserves and production by attracting foreign upstream investment. Investor interest has been limited and generally confined to small and medium size companies. US economic sanctions under the Syria Accountability Act since 2004 have also dampened investor interest. Although US companies were not required to divest their Syrian interests some chose to do so. Development of natural gas reserves is active and by 2010 Syria plans to bring an additional 194 BCF of gas production online and is actively developing import and export pipelines and gas-fired electric generation. Three new refineries are planned with the participation of China (CNPC), Iran (NIOC), Venezuela (PDVSA) and Malaysia (Petronas). In June 2008 the government raised diesel prices by 350% although they still remain below global and regional levels. As a result, active smuggling of Syrian oil products to neighboring countries, especially Iraq, continues to be a significant problem. A Citizen's Guide to National Oil Companies Page 521 Syria: Syrian Petroleum Company (SPC) Database Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of 2008 6 There are 8 wholly or partially Governance Its Organization cluster of NOCs and state owned hydrocarbon other sovereign sector companies in Syria. The enterprises in country wholly-owned companies are Syrian Petroleum Company (upstream oil); Syrian Gas Company (upstream gas); the Baniyas and Homs refineries; Syrian Company for the Distribution of Petroleum Products, Syrian Company for Oil Transportation and Sytrol, the oil marketing company. The partially owned company is oil producer Al-Furat Petroleum Company, a joint venture between Syrian Petroleum Co., Shell (37.5%), Oil and Natural Gas Corporation (ONGC) of India, and China National Petroleum Corp. (CNPC) which operates about 36 fields in northeastern Syria. Corporate Ownership Structure and Number of NOCs of 2008 6, 9 8 Governance Its Organization country Corporate Ownership Structure and Description of 2008 6, 9 The Syrian Petroleum Co. is an Governance Its Organization incorporation and arm of the Ministry of ownership Petroleum and Mineral Resources. Al-Furat is a joint venture. The Syrian government is the sole owner of all companies except Al- Furat where their interest is undisclosed. Al-Furat is a Syrian joint stock company with a service contract for production operations. Corporate Ownership Structure and % shares controlled by 2008 6 See above. Governance Its Organization government Corporate Ownership Structure and Domestic, international 2008 10 None Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international 2008 10 None Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F 2008 11 No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist No data Governance Corporate Board of Directors (BOD) Description of BOD and No data Governance structure A Citizen's Guide to National Oil Companies Page 522 Syria: Syrian Petroleum Company (SPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Board of Directors (BOD) Is chairman also minister No data Governance of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members No data Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, No data Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and No data Governance policy statements Corporate Role of BOD Based on available No data Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget No data Governance Processes authority. Comment on the general decision flow within NOC and between NOC and government for major projects. Corporate Decision Making Based on available No data Governance Processes, Budget information, is NOC Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have 2008 6 Yes Governance Processes, Budget authority to partner with Autonomy other entities? Corporate Mission and Objectives Does NOC have a 9 Al-Furat has a mission Governance mission statement and, if statement: develop discovered so, what are key elements fields using latest technologies; maximize economic recovery of hydrocarbons; maintain high production rates; train national staff to replace expatriates and support the Syrian economy and the development of social services in the country. Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment A Citizen's Guide to National Oil Companies Page 523 Syria: Syrian Petroleum Company (SPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Disclosure/Transparency Disclosure of audited No disclosure of Governance Policy data and other indications financial/operating data of disclosure and transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available No data Governance Management information, HR promotion and professional development policies Corporate Full Disclosure and Based on available None Governance Measurement of Non- information, brief commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, extent of commercial Objectives non-commercial obligations Value Operating Performance Upstream oil E&P. 2008 6, 9 SPC operates only in Syria. Creation Where does it operate Syria has tendered exploration Metrics (solely in the country or blocks to private and foreign abroad-name countries)? companies with production Does it have sole access sharing agreements which to country's resources? include the participation of SPC and the government. It also has the Al-Furat joint venture which is focused on oil production operations pursuant to a service contract. Value Operating Performance Does the NOC operate No Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, 2008 6 SPC assets include a 250,000 Creation storage, shipping B/D oil pipeline; most oil Metrics transported by trucks and tankers. Value Operating Performance Downstream oil refining 2008 6 SPC operates two refineries at Creation & marketing, Baniyas (132,725 B/D) and Metrics petrochemicals Homs (107,140 B/D) which produce a surplus of heavier products, including fuel oil, but fail to meet demand for lighter products such as distillates. The Syrian Company for Distribution of Petroleum Products markets oil products and controls the majority of gasoline retail outlets. Sytrol markets oil products including exports. There is a substantial black market in the resale of smuggled subsidized Syrian A Citizen's Guide to National Oil Companies Page 524 Syria: Syrian Petroleum Company (SPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data petroleum products to other countries, principally Iraq. Value Operating Performance Upstream natural gas 2008 6 75% of gas reserves in Syria Creation E&P are owned by Syrian Gas Metrics Company. 50% of reserves are non-associated gas. Two finds were reported in 2006/2007 totaling 2 TCF but reserves are unconfirmed, development plans unannounced. Marathon Oil and Soyuzneftegas have gas projects totaling $977 million in investment. Value Operating Performance Midstream natural gas 2008 6 SPC has 1,250 miles of Creation pipelines, storage, LNG domestic gas pipelines and 5 Metrics gas processing plants with 1.1 BCF/D capacity. The 53 MMCF/D Syria-Lebanon pipeline is not operating. Several export/import gas pipeline projects have been announced. Syria wants to be a regional gas hub and transit country bringing gas to Europe. Value Operating Performance Downstream natural gas None disclosed. Creation distribution, NGL sales, Metrics petrochemicals Value Operating Performance Other (power generation, 2008 6 SPC does not operate in the Creation etc) Syrian power sector. Installed Metrics generation capacity in Syria is 6.5 GW. There are 11 natural gas and fuel oil thermal plants and one 1.5 GW hydroelectric facility. Syria wants to replace fuel oil generation with natural gas by 2014; currently 50% of generation is from gas. Prices are subsidized resulting in 7% p.a. demand growth. The sector is open to independent power plant project developers; 3 gas- fired IPPs are underway totaling 1,950 MW. Financing is provided by Europe and Arab funds. Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves -20% Creation (%) Metrics Value Operating Performance Change in BOE -17% Creation production (%) Metrics A Citizen's Guide to National Oil Companies Page 525 Syria: Syrian Petroleum Company (SPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg upstream operating No data Creation cash flow/upstream Metrics capital expenditures (%) Value Operating Performance Avg upstream No data Creation exploration and Metrics production expenses ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all No data Creation taxes ($/BOE) Metrics Value Operating Performance Avg effective tax rate No data Creation (%) Metrics Value Operating Performance Avg operating cash flow No data Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization 36% Creation rate (%) Metrics Value Operating Performance Change in total refining -21% Creation production (%) Metrics Value Operating Performance Change in refinery 0% Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin No data Creation (%) Metrics A Citizen's Guide to National Oil Companies Page 526 Syria: Syrian Petroleum Company (SPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg profit margin (%) No data Creation Metrics Value Financial Performance Avg effective tax rate No data Creation (%) Metrics Value Financial Performance Avg reinvestment risk No data Creation (%) Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total No data Creation capital employed (%) Metrics Value Financial Performance Avg fiscal contribution to No data Creation State (%) Metrics Other Public Sector Governance Based on available None disclosed. Factors information, presence of a publicly articulated role of the hydrocarbon sector with respect to national development objectives Other Public Sector Governance Based on available No clear definition. Syrian Factors information, clear Petroleum Co. is part of the definition of the roles of Ministry of Petroleum and policy, commercial Mineral Resources. Absence of operation and regulation independent regulators. and assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available None disclosed. Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available None disclosed. Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available None disclosed. Factors information, transparent hydrocarbon sector revenue management including revenue distribution within the country A Citizen's Guide to National Oil Companies Page 527 Syria: Syrian Petroleum Company (SPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance NOC and/or country Syria is not a candidate country Factors participate in EITI and/or for EITI. Other transparency other transparency initiatives appear not to operate initiatives there. Other Fiscal Sustainability Based on available No data Factors information, do hydrocarbon sector fiscal regimes allow for sufficient capital investment Other Fiscal Sustainability Based on available No data, NOCs unrated. Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available No data Factors information, are hydrocarbon sector fiscal regimes appropriate for the development stage of the domestic resource base Other Access to Reserves Hydrocarbon law to 2008 5, 9 There are specific laws/decrees Factors facilitate competitive addressing non-NOC upstream investment participation in various sectors. There is no comprehensive hydrocarbon law. Other Access to Reserves Based on available 2008 5,6,9 Yes. PSAs are used in the Factors information, existence of upstream sector. JVs and negotiated partnerships are used in the contracts/agreements for midstream and downstream upstream investment sectors. Other Operating Strategy Based on available 2008 5, 6, 9 PSAs in the upstream sector. Factors information, types of JVs and partnerships in the joint ventures, role of midstream and downstream NOC(s) sectors. Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal Syrian NOCs operate in all Factors integration sectors but they are separate, not integrated companies. Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) A Citizen's Guide to National Oil Companies Page 528 Syria: Syrian Petroleum Company (SPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in 2008 5, 6, 9 Yes via PSAs that include Factors upstream participation by Syrian Petroleum Co. and the government. Other Commercialization Competition level in 2008 5, 6, 9 Still limited due to limited Factors upstream including non- investor interest. Participating NOC participants and non-NOCs are small to requirement to include medium size companies with NOC as partner corresponding investment levels. Syrian Petroleum Co. and government must be participants in PSAs. Other Commercialization Competition level in 2008 6 Almost non-existent at present Factors midstream, downstream but significant projects in including non-NOC midstream and downstream participants and with non-domestic NOC requirement to include participants announced and/or NOC as partner in process. Syrian NOCs participate in these projects. Other Commercialization Based on available 2008 9 Al-Furat is viewed as a Factors information, prevalence successful service contract and success of NOC/non- arrangement operating since NOC alliances, joint 1985. ventures Other Commercialization Partial privatization of None. No plans in process. Factors the NOC (as measured by ownership structure) Other Commercialization Based on available Not applicable Factors information, level and quality of NOC international operations Other Commercialization Based on available No data except for price Factors information, percent of subsidies non-core commercial activities in overall operations A Citizen's Guide to National Oil Companies Page 529 Syria: Syrian Petroleum Company (SPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Regulation Presence of independent, 2008 17 None. Syrian institutional Factors well-funded and trained capacity in the sector is regulatory agencies, HC regarded as low. agency name, budget, number of staff Other Regulation NOCs are compelled to No Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market No Factors transparency and good quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively No Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of 2008 18 Price subsidies reported in the Factors Objectives hydrocarbon price press. subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of No data outside price Factors Objectives direct NOC funding of subsidies. country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation No data Factors Objectives obligations relative to workforce ($ M) Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Very limited data provided but Comments reliability of data reliability is generally good. provided by NOC(s) and No operating/financial governments performance data available. A Citizen's Guide to National Oil Companies Page 530 Syria: Syrian Petroleum Company (SPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Longevity of NOC Based on available Foreign companies controlled Comments information, history and E&P operations until 1958. In persistence of NOC(s) 1964 Decree No. 133 granted E&P licenses to the Syrian government only. Syrian Petroleum Co. was established in 1974 pursuant to Decree No. 9. In 1975 permission was granted to international oil companies to explore and invest pursuant to PSAs which include Syrian Petroleum Co. and the government. Other Country Status Trends and issues related 2008 6, 18 Since 2001 Syria has attempted Comments to country hydrocarbon to reverse declining oil sector endowments and reserves and production by performance attracting foreign upstream investment. Investor interest has been limited and generally confined to small and medium size companies. US economic sanctions under the Syria Accountability Act since 2004 have also dampened investor interest. Although US companies were not required to divest their Syrian interests some chose to do so. Development of natural gas reserves is active and by 2010 Syria plans to bring an additional 194 BCF of gas production online and is actively developing import and export pipelines and gas-fired electric generation. Three new refineries are planned with the participation of China (CNPC), Iran (NIOC), Venezuela (PDVSA) and Malaysia (Petronas). In June 2008 the government raised diesel prices by 350% although they still remain below global and regional levels. As a result, active smuggling of Syrian oil products to neighboring countries, especially Iraq, continues to be a significant problem. Other Non-commercial Number of employees 16,000 Factors Objectives Other Non-commercial BOE production per 13,981 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) A Citizen's Guide to National Oil Companies Page 531 Syria: Syrian Petroleum Company (SPC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Oil Dependency BOE R/P (years) 24.19 Factors Other Oil Dependency Net oil and gas export 6.12% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas 2.43% Factors revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 2,500.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 10,170.62 Factors reserves (BCF) Other Resource Endowment Total all source BOE 4,253.56 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary 100% Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery 100% Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 58.77% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.98% Factors split, production (%) Other Operating Conditions Country BOE production 12.10% Factors as % of total country BOE consumption Other Trade Openness WTO Membership No Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 532 Syria: Syrian Petroleum Company (SPC) Source of Information Source # Year of Source Description Links Source 1 2008 The Syrian National Petroleum Company does not http://www.eia.doe.gov/emeu/cabs/Syria/Back report reserves, production or changes in either. ground.html Figures reported here are total Syria reserves from the USEIA-Country Analysis Brief Syria 3/28/08 and the BP Statistical Review of Energy 2008. 2 2008 2007 export estimate from USEIA-CAB Syria http://www.eia.doe.gov/emeu/cabs/Syria/Back 3/28/08. Previous years are CEE estimates based on ground.html 2007 exports as percent of total production. 3 2008 USEIA CAB Syria 3/28/08. Refinery throughput is http://www.eia.doe.gov/emeu/cabs/Syria/Back estimated to be 100% of production for domestic ground.html markets based on the report: "The Mineral Industry of Syria," Thomas R. Yager, 2005 Minerals Yearbook, U.S. Geological Survey, August 2007. 4 2008 Syrian companies do not operate outside of Syria. http://www.eia.doe.gov/emeu/cabs/Syria/Back USEIA-CAB-Syria 3/28/08, www.spc-sy.com. ground.html 5 2008 SPC web site www.spc-sy.com 6 2008 USEIA-CAB Syria 3/28/08. http://www.eia.doe.gov/emeu/cabs/Syria/Back ground.html 7 2007 World Bank, Syrian Arab Republic at a glance, http://devdata.worldbank.org/AAG/syr_aag.pd 9/28/07. f 8 2008 World Bank, Syrian Arab Republic, Country Brief, http://ddp- 6/12/08. ext.worldbank.org/ext/ddpreports/ViewShared Report?&CF=1&REPORT_ID=9147&REQU EST_TYPE=VIEWADVANCED&HF=N&W SP=N 9 2008 Al Furat Petroleum www.afpc-sy.com 10 2005 Inheriting Syria, Flynt Leverett, Brookings Institute Press, Washington, D.C., 2005. 11 2008 US SEC www.sec.gov 12 2008 CIA World Factbook-Syria https://www.cia.gov/library/publications/the- world-factbook/geos/sy.html 13 2008 World Bank Syria Data Profile www.worldbank.org 14 2008 World Bank Millennium Development Goals-Syria. http://ddp- ext.worldbank.org/ext/ddpreports/ViewShared Report?&CF=&REPORT_ID=1336&REQUE ST_TYPE=VIEWADVANCED 15 2007 World Bank Governance Indicators Over Time. http://info.worldbank.org/governance/wgi/sc_ chart.asp 16 2008 WTO www.wto.org 17 2008 Private conversation with UNDP representative in Damascus, June 2008. 18 2008 "The 350% Increase," by Mustapha al-Sayyed, www.fw-magazine.com Forward Magazine, June 2008 A Citizen's Guide to National Oil Companies Page 533 Tunisia: Entreprise Tunisienne d'Activités Pétrolières (ETAP) Tunisia: Entreprise Tunisienne d'Activités Pétrolières (ETAP) Summary Report Corporate Governance Highlights Corporate Organization and Ownership Created by the law N°72-22 of March 10th, 1972; incorporated in the Tunisian Republic. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings None reported Board of Directors Structure 13 members Independent Board Members None disclosed Is chairman also minister of energy or otherwise appointed by head of state? No Operations Highlights Upstream Oil Operates solely in the country. Does not have sole access to resources. Midstream Oil 0 Downstream Oil Does not operate Upstream Natural Gas 0 Midstream Natural Gas Does not operate Downstream Natural Gas Does not operate Other Does not operate Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 235 Upstream: Average Proved Gas Reserves (BCF) 784 Upstream: Average Annual Oil Production (MM Barrels) 16 Upstream: Average Annual Natural Gas Production (BCF) 21 Downstream: Average Annual Refinery Production (MM Barrels) 12 Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues($Millions) 384 Consolidated Average Total Assets($Millions) 946 Consolidated Average EBIT ($Millions) 233 Consolidated Average Net Income ($Millions) 47 A Citizen's Guide to National Oil Companies Page 534 Tunisia: Entreprise Tunisienne d'Activités Pétrolières (ETAP) Categorization Indicators Categories: Scores: Corporate Governance 78 Cor por ate Gover nance Public Sector Governance 82 100 Commercialization 83 Public Sector OilDependency 50 Gover nance Fiscal Regimes 88 Resource Endowment 0 0 Oil Dependency 100 Resour ce Endowment Commer cialization Local Contribution -13 Sector and Trade Openness 67 FiscalRegimes Average 72 ETAP Average NOC Worldwide Governance Indicators Trends and Issues Tunisia has a diversified economy but has high unemployment rates and generally strong government controls. The country is a net energy importer in spite of its resource endowment. This is partly due to the institutional and regulatory framework. Increased economic liberalization - (reduce the role of the government in the economy, streamline bureaucratic procedures, accelerate and make more transparent government decision-making, and improve the quality, price, and availability of telecommunications services ­ are essential to improve the investment climate, and support the achievement of broader economic goals for the country. A Citizen's Guide to National Oil Companies Page 535 Tunisia: Entreprise Tunisienne d'Activités Pétrolières (ETAP) Database Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Ownership Structure and Sole NOC or one of 2008 3 Enterprise Tunisienne d'Activités Governance Its Organization cluster of NOCs and Pétrolières (ETAP) is a 100% other sovereign state-owned company that enterprises in country manages oil and gas exploration and production activities. Corporate Ownership Structure and Number of NOCs of 2007 4 4 (upstream (ETAP), Governance Its Organization country downstream (STIR) and electricity and natural gas (STEG), distribution and marketing (SNDP). Corporate Ownership Structure and Description of Created by the law N°72-22 of Governance Its Organization incorporation and March 10th, 1972. ownership Corporate Ownership Structure and % shares controlled by 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international None reported Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international None reported Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20- No Governance Its Organization F with SEC? Corporate Board of Directors (BOD) Does a BOD exist Yes Governance Corporate Board of Directors (BOD) Description of BOD and 13 members Governance structure Corporate Board of Directors (BOD) Is chairman also No Governance minister of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members None disclosed Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, None disclosed Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and None disclosed Governance policy statements Corporate Role of BOD Based on available BOD does have power Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replacement General process for None disclosed Governance Key Executives recruitment, replacement of key execs and senior managers A Citizen's Guide to National Oil Companies Page 536 Tunisia: Entreprise Tunisienne d'Activités Pétrolières (ETAP) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Decision Making Level of NOC budget Budget processes appear to be Governance Processes authority. Comment on independent the general decision flow within NOC and between NOC and government for major projects. Corporate Decision Making Based on available Yes Governance Processes, Budget information, is NOC Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have Yes. Mostly a partner in Governance Processes, Budget authority to partner with concessions. Autonomy other entities? Corporate Mission and Objectives Does NOC have a 2008 3 "The Reconstitution of the Governance mission statement and, national hydrocarbon reserves if so, what are key and the supply of the domestic elements market with energy at favourable conditions of cost and security. Promotion of the hydrocarbon sector in Tunisia in order to attract more foreign companies to invest in the exploration activities. Management of the national patrimony through the technical support of exploration activities carried out by the operators and via the management of an exploration and production data base. Exploitation of 18 oil and gas concessions in which ETAP is partner. Optimisation of oil and gas production. Supply of the local market with natural gas and oil products. Exports of crude oil produced locally for ETAP and on behalf of the State. Providing ETAP's partners and petroleum companies services with related to exploration and production activities (laboratories, geological studies, seismic processing and reservoir modeling) using high technical equipments and experienced staff. Training of engineers and highly skilled staff. Association with international industry in order to improve qualification and to ensure technology- transfer." A Citizen's Guide to National Oil Companies Page 537 Tunisia: Entreprise Tunisienne d'Activités Pétrolières (ETAP) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Sources of Capital Based on available BOD and management has Governance information, budgeting decision-making power. About process and policy 20-30% of revenues are typically including % of cash available for reinvestment. flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited 2005 1 P/ Partners Audit et Conseil Governance Policy data and other (local Tunisian company). Data indications of disclosure is not on par with international and transparency standards. Corporate Skill Base Based on available 2005 1 59.5% management ratio in Governance information, NOC 2004; 60.4% in 2005 demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available A number of training programs Governance Management information, HR for workforce development. promotion and professional development policies Corporate Full Disclosure and Based on available None reported Governance Measurement of Non- information, brief commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available None reported Governance Measurement of Non- information, extent of commercial Objectives non-commercial obligations Value Operating Performance Upstream oil E&P. Operates solely in the country. Creation Where does it operate Does not have sole access to Metrics (solely in the country or resources. abroad-name countries)? Does it have sole access to country's resources? Value Operating Performance Does the NOC operate No Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, Creation storage, shipping Metrics Value Operating Performance Downstream oil refining Does not operate Creation & marketing, Metrics petrochemicals Value Operating Performance Upstream natural gas Creation E&P Metrics Value Operating Performance Midstream natural gas Does not operate Creation pipelines, storage, LNG Metrics Value Operating Performance Downstream natural gas Does not operate Creation distribution, NGL sales, Metrics petrochemicals A Citizen's Guide to National Oil Companies Page 538 Tunisia: Entreprise Tunisienne d'Activités Pétrolières (ETAP) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Value Operating Performance Other (power Does not operate Creation generation, etc) Metrics Value Operating Performance Avg reserve 100% Creation replacement rate (BOE, Metrics %) Value Operating Performance Avg reserve $8.17 Creation replacement cost Metrics ($/BOE) Value Operating Performance Change in BOE reserves 60% Creation (%) Metrics Value Operating Performance Change in BOE 9% Creation production (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream Metrics capital expenditures (%) Value Operating Performance Avg upstream $8.17 Creation exploration and Metrics production expenses ($/BOE) Value Operating Performance Avg production costs $2.20 Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes Metrics ($/BOE) Value Operating Performance Avg income after all No data Creation taxes ($/BOE) Metrics Value Operating Performance Avg effective tax rate No data Creation (%) Metrics Value Operating Performance Avg operating cash flow No data Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on No data Creation assets Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining -100% Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit Metrics volume ($M/barrel) A Citizen's Guide to National Oil Companies Page 539 Tunisia: Entreprise Tunisienne d'Activités Pétrolières (ETAP) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Value Operating Performance Avg refining and No data Creation marketing operating Metrics cash flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total after-tax 12% Creation income/revenues (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg gross debt/after-tax 35% Creation capital employed (%) Metrics Value Financial Performance Avg operating margin 61% Creation (%) Metrics Value Financial Performance Avg profit margin (%) 12% Creation Metrics Value Financial Performance Avg effective tax rate 80% Creation (%) Metrics Value Financial Performance Avg reinvestment risk No data Creation (%) Metrics Value Financial Performance Avg debt profile (%) 35% Creation Metrics Value Financial Performance Avg return on assets 5% Creation (%) Metrics Value Financial Performance Avg return on total 11% Creation capital employed (%) Metrics Value Financial Performance Avg fiscal contribution 113% Creation to State (%) Metrics Other Public Sector Governance Based on available No data Factors information, presence of a publicly articulated role of the hydrocarbon sector with respect to national development objectives Other Public Sector Governance Based on available No data Factors information, clear definition of the roles of policy, commercial operation and regulation and assignment to specific entities avoiding conflicts of interest A Citizen's Guide to National Oil Companies Page 540 Tunisia: Entreprise Tunisienne d'Activités Pétrolières (ETAP) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Public Sector Governance Based on available See mission statement Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available None Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available 2006 2 Information on oil revenue is Factors information, transparent 2007 5 contained in the state budget and hydrocarbon sector in ETAP's annual reports. There revenue management is no special oil revenue including revenue management mechanism or fund. distribution within the country Other Public Sector Governance NOC and/or country Tunisia does not participate in Factors participate in EITI EITI and no other major and/or other transparency programs operate in transparency initiatives the country. Other Fiscal Sustainability Based on available No data except for miscellaneous Factors information, do references. hydrocarbon sector fiscal regimes allow for sufficient capital investment Other Fiscal Sustainability Based on available 2008 7 Fitch AA+ (long-term), F1+ Factors information, do (short-term) hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available 2003 6 More or less, although certain Factors information, are restrictions on non-NOC's (right hydrocarbon sector to purchase assets after 4 years if fiscal regimes necessary at disclosed appropriate for the compensation rates; art. 70 H. development stage of Code). the domestic resource base Other Access to Reserves Hydrocarbon law to 2007 4 New laws, presented in 2000, Factors facilitate competitive boosted foreign presence in the upstream investment upstream. Other Access to Reserves Based on available Concession arrangements mainly Factors information, existence of negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available Concession arrangements mainly Factors information, types of joint ventures, role of NOC(s) A Citizen's Guide to National Oil Companies Page 541 Tunisia: Entreprise Tunisienne d'Activités Pétrolières (ETAP) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal Pure upstream company Factors integration Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company No data Factors BOE production from international operations (%) Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants Yes Factors in upstream Other Commercialization Competition level in 2007 4 Non-NOC participants - foreign Factors upstream including non- companies-concessioners; no NOC participants and formal requirement to partner requirement to include with NOC, yet a provision exists NOC as partner that there is a reduction in the tax rate from 75 percent to 50 percent if ETAP takes a 40 percent share of the concession. Other Commercialization Competition level in Very little if any Factors midstream, downstream including non-NOC participants and requirement to include NOC as partner Other Commercialization Competition level in Very little if any Factors midstream and downstream sectors A Citizen's Guide to National Oil Companies Page 542 Tunisia: Entreprise Tunisienne d'Activités Pétrolières (ETAP) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Commercialization Based on available Concessions are successful Factors information, prevalence and success of NOC/non-NOC alliances, joint ventures Other Commercialization Partial privatization of 0 Factors the NOC (as measured by ownership structure) Other Commercialization Based on available Not applicable (MoUs and JV's Factors information, level and but no activity yet). quality of NOC international operations Other Commercialization Based on available 0 Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of Ministry of Industry and Energy Factors independent, well- acts as a regulator funded and trained regulatory agencies, HC agency name, budget, number of staff Other Regulation NOCs are compelled to Not enough data Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure Appears so, yet not enough data Factors market transparency and good quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively Not enough data Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of 2007 5 Subsidy is provided by the Factors Objectives hydrocarbon price government through subsidies ($/BOE appropriation from the state production) provided by budget. Does not affect NOC NOC and/or except indirectly through NOCs government. brief revenue contributions. description of subsidy program, approach, cost A Citizen's Guide to National Oil Companies Page 543 Tunisia: Entreprise Tunisienne d'Activités Pétrolières (ETAP) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Non-commercial Provision and level of None reported Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC $1,610.92 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation $14.95 Factors Objectives obligations relative to workforce ($ M) Other Non-commercial Financial performance $654.98 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, NOC reports under national Comments reliability of data standards, somewhat close to provided by NOC(s) international ones. The data and governments seem to be reliable. Other Longevity of NOC Based on available ETAP was created in 1972. Comments information, history and Longevity is subject to any persistence of NOC(s) economic liberalization trends in Tunisia. Other Country Status Trends and issues Tunisia has a diversified Comments related to country economy but has high hydrocarbon sector unemployment rates and endowments and generally strong government performance controls. The country is a net energy importer in spite of its resource endowment. This is partly due to the institutional and regulatory framework. Increased economic liberalization - (reduce the role of the government in the economy, streamline bureaucratic procedures, accelerate and make more transparent government decision-making, and improve the quality, price, and availability of telecommunications services ­ are essential to improve the investment climate, and support the achievement of broader economic goals for the country. Other Non-commercial Number of employees 587 Factors Objectives Other Non-commercial BOE production per 54,717.85 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 21.30 Factors A Citizen's Guide to National Oil Companies Page 544 Tunisia: Entreprise Tunisienne d'Activités Pétrolières (ETAP) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Oil Dependency Net oil and gas export 0.54% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas 0.30% Factors revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 596.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 2,750.00 Factors reserves (BCF) Other Resource Endowment Total all source BOE 1,070.14 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic No data Factors BOE production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 55.69% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.96% Factors split, production (%) Other Operating Conditions Country BOE 86.69% Factors production as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 545 Tunisia: Entreprise Tunisienne d'Activités Pétrolières (ETAP) Sources of Information Source # Year of Source Source Description Links 1 2005 AR2004 www.etap.com.tn/library/1er%20ciculaire%20ETAP.p df 2 2006 ETAP Annual Report www.etap.com.tn/library/Rapport%20ETAP%20Angla is.pdf 3 2008 ETAP website http://www.etap.com.tn/etap/etap_gen_pres.html 4 2007 USEIA ­ Country Analysis http://www.eia.doe.gov/emeu/cabs/Arab_Maghreb_Un ion/Tunisia.html 5 2007 Central Bank of Tunisia http://www.bct.gov.tn/bct/siteprod/english/publications /rapport.jsp 6 2003 Ministry of Finance www.etap.com.tn/library/Hydrocarbons%20Code%20( Unofficial%20Translation).pdf 7 2008 Transparency International (operated through Berlin) http://www.mees.com/Energy_Tables/ratings.htm A Citizen's Guide to National Oil Companies Page 546 United Arab Emirates: Abu Dhabi National Oil Company (ADNOC) United Arab Emirates (UAE): Abu Dhabi National Oil Company (ADNOC) Summary Report Corporate Governance Highlights Corporate Organization and Ownership ADNOC is fully owned by the government (supervised by The Supreme Petroleum Council). Upstream affiliated companies are minority-owned by foreign companies. Shares Controlled by Government (%) 100% Domestic, International Exchanges for Equity Listings None Board of Directors Structure Not applicable Independent Board Members Not applicable Is chairman also minister of energy or otherwise appointed by head of state? Not applicable Operations Highlights Upstream Oil Oil and gas exploration and production both offshore and onshore. Have sole access to resources. Midstream Oil Over 800 kilometers of pipelines (including NG); oil tanker company. Downstream Oil Oil refining capacity over 500 MB/D; over 170 gas stations (as of 2003). Upstream Natural Gas Production of associated and non-associated gas Midstream Natural Gas ADGAS LNG, NGL plant, LNG shipping company Downstream Natural Gas Production of ammonia and urea, as well as polyethylene Other No data Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) 891 Upstream: Average Annual Natural Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) 139 Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) No data Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data A Citizen's Guide to National Oil Companies Page 547 United Arab Emirates: Abu Dhabi National Oil Company (ADNOC) Categorization Indicators Categories: Scores: Corporate Governance 38 Public Sector Governance 38 Commercialization 67 Fiscal Regimes 75 Resource Endowment 25 Oil Dependency 58 Local Contribution 0 Sector and Trade Openness 36 Average 50 Worldwide Governance Indicators Trends and Issues The United Arab Emirates has enjoyed great success in the current commodity cycle. The UAE is heavily dependent upon hydrocarbon revenues, but has used oil revenue to fianance a wide variety of diversification strategies ranging from education and research, to real estate, to finance. Abu Dhabi is interesting for its focus on R&D and commercialization of alternative energy technologies. Politically, the UAE has strong and constructive international relationships and partnerships. A Citizen's Guide to National Oil Companies Page 548 United Arab Emirates: Abu Dhabi National Oil Company (ADNOC) Database Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of 2004 1 Abu Dhabi National Oil Governance Its Organization cluster of NOCs and other Company (ADNOC) sovereign enterprises in combines various energy and country petrochemical companies Corporate Ownership Structure and Number of NOCs of 2008 2 1 Governance Its Organization country Corporate Ownership Structure and Description of 2004 1 ADNOC is fully owned by the Governance Its Organization incorporation and government (supervised by ownership The Supreme Petroleum Council). Upstream affiliated companies are minority- owned by foreign companies. Corporate Ownership Structure and % shares controlled by 2004 1 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international None Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international None Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist No Governance Corporate Board of Directors (BOD) Description of BOD and Not applicable Governance structure Corporate Board of Directors (BOD) Is chairman also minister Not applicable Governance of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members Not applicable Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, Not applicable Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and Not applicable Governance policy statements Corporate Role of BOD Based on available Not applicable Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers A Citizen's Guide to National Oil Companies Page 549 United Arab Emirates: Abu Dhabi National Oil Company (ADNOC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Decision Making Level of NOC budget Fiscal regime is applicable to Governance Processes authority. Comment on foreign entities only. Supreme the general decision flow Petroleum Council and within NOC and between ADNOC share decision- NOC and government for making responsibility. major projects. Corporate Decision Making Based on available The budget process appears to Governance Processes, Budget information, is NOC be unpredictable. Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have Yes; JV's in petrochemicals, Governance Processes, Budget authority to partner with etc. Autonomy other entities? Corporate Mission and Objectives Does NOC have a mission 2004 1 "Our business is about finding, Governance statement and, if so, what producing and marketing the are key elements natural resources on which the modern world depends." Corporate Sources of Capital Based on available Fiscal regime is applicable to Governance information, budgeting foreign entities only. Supreme process and policy Petroleum Council and including % of cash ADNOC share decision- flow/revenue available for making privileges. reinvestment Corporate Disclosure/Transparency Disclosure of audited data Releases unaudited Governance Policy and other indications of performance reports once in 5 disclosure and years; data is very limited. transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available 2004 1 ADNOC Petroleum Institute Governance Management information, HR established promotion and professional development policies Corporate Full Disclosure and Based on available 2004, 1,2 Only very general information Governance Measurement of Non- information, brief 2008 commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available 2004 1 Sponsorship in all social, Governance Measurement of Non- information, extent of economic and educational commercial Objectives non-commercial sectors obligations A Citizen's Guide to National Oil Companies Page 550 United Arab Emirates: Abu Dhabi National Oil Company (ADNOC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Upstream oil E&P. 2004 1 Oil and gas exploration and Creation Where does it operate production both offshore and Metrics (solely in the country or onshore. Have sole access to abroad-name countries)? resources. Does it have sole access to country's resources? Value Operating Performance Does the NOC operate 2004 1 No Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, 2004 1 Over 800 kilometers of Creation storage, shipping pipelines (including NG); oil Metrics tanker company. Value Operating Performance Downstream oil refining 2004 1 Oil refining capacity over 500 Creation & marketing, MB/D; over 170 gas stations Metrics petrochemicals (as of 2003). Value Operating Performance Upstream natural gas 2004 1 Production of associated and Creation E&P non-associated gas Metrics Value Operating Performance Midstream natural gas 2004 1 ADGAS LNG, NGL plant, Creation pipelines, storage, LNG LNG shipping company Metrics Value Operating Performance Downstream natural gas 2004 1 Production of ammonia and Creation distribution, NGL sales, urea, as well as polyethylene Metrics petrochemicals Value Operating Performance Other (power generation, 2004, 1,2 No data Creation etc) 2008 Metrics Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE 7% Creation production (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream Metrics capital expenditures (%) Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production Metrics taxes ($/BOE) A Citizen's Guide to National Oil Companies Page 551 United Arab Emirates: Abu Dhabi National Oil Company (ADNOC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow No data Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining 5% Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total after-tax No data Creation income/revenues (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg gross debt/after-tax No data Creation capital employed (%) Metrics Value Financial Performance Avg operating margin (%) No data Creation Metrics A Citizen's Guide to National Oil Companies Page 552 United Arab Emirates: Abu Dhabi National Oil Company (ADNOC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg profit margin (%) No data Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) No data Creation Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total capital No data Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to No data Creation State (%) Metrics Other Public Sector Governance Based on available No data Factors information, presence of a publicly articulated role of the hydrocarbon sector with respect to national development objectives Other Public Sector Governance Based on available 2004 1 Role of Supreme Petroleum Factors information, clear Council is defined; Ministry of definition of the roles of Energy exists, but role is policy, commercial unclear. Regulator role is operation and regulation shared by SPC and ADNOC. and assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available Absent Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available Not available Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available A Citizen's Guide to National Oil Companies Page 553 United Arab Emirates: Abu Dhabi National Oil Company (ADNOC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available 2008 10, The Abu Dhabi Investment Factors information, transparent 11, Authority's (ADIA) was hydrocarbon sector 12, established in 1976. ADIA revenue management 13, replaced the Financial including revenue 15 Investments Board created in distribution within the 1967 part of the then Abu country Dhabi Ministry of Finance. ADIA's funding sources derives from oil, specifically from the Abu Dhabi National Oil Company (ADNOC) and its subsidiaries which pay a dividend to help fund ADIA and its sister fund Abu Dhabi Investment Company (ADIC), founded in 1977. Similar to Abu Dhabi's strategy, Dubai developed plans to diversify their reliance on oil exports through creating sovereign wealth vehicles. There are several sovereign wealth funds: Investment Corporation of Dubai, Bourse Dubai ltd, Dubai Holdings, and Dubai World. The RAK Investment Authority was created by Emiri Decree No. (2)/ 2005 with the mandate to promote investments in various economic sectors. Information on the holdings and operations of the above sovereign wealth fund is not publicly disclosed. Other Public Sector Governance NOC and/or country Neither ADNOC nor the Abu Factors participate in EITI and/or Dhabi government support other transparency EITI. No other transparency initiatives programs operate in the country. Other Fiscal Sustainability Based on available 2008 4 Fiscal regime is applicable to Factors information, do foreign entities only. hydrocarbon sector fiscal regimes allow for sufficient capital investment Other Fiscal Sustainability Based on available No Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings A Citizen's Guide to National Oil Companies Page 554 United Arab Emirates: Abu Dhabi National Oil Company (ADNOC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Fiscal Sustainability Based on available 2008 4 Fiscal regime is applicable to Factors information, are foreign entities only. hydrocarbon sector fiscal regimes appropriate for the development stage of the domestic resource base Other Access to Reserves Hydrocarbon law to No data Factors facilitate competitive upstream investment Other Access to Reserves Based on available PSAs and concessions Factors information, existence of negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available 2004 1 Affiliates have a minority Factors information, types of joint foreign ownership and operate ventures, role of NOC(s) under concession agreements, PSAs as well. Other Operating Strategy Based on available 2004 1 Has service companies - Factors information, extent of affiliates; extent of turnkey contracts used outsourcing is unclear. directly by NOC(s) Other Business Integration Vertical, horizontal Vertically integrated affiliates Factors integration Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity A Citizen's Guide to National Oil Companies Page 555 United Arab Emirates: Abu Dhabi National Oil Company (ADNOC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in 2008 4 Under concession agreements Factors upstream with foreign minority ownership Other Commercialization Competition level in Low level of competition. Factors upstream including non- ADNOC has the right to take NOC participants and up to 60 percent in new oil requirement to include projects. NOC as partner Other Commercialization Competition level in 2008 4 No competition. Emirates in Factors midstream, downstream the UAE own and control its including non-NOC own infrastructure. participants and requirement to include NOC as partner Other Commercialization Based on available Under concession agreements Factors information, prevalence with foreign minority and success of NOC/non- ownership NOC alliances, joint ventures Other Commercialization Partial privatization of the 0 Factors NOC (as measured by ownership structure) Other Commercialization Based on available 51% in Dolphin Energy Factors information, level and (natural gas) in Qatar quality of NOC international operations Other Commercialization Based on available No data Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, 2008 4 There is no regulator in UAE Factors well-funded and trained regulatory agencies, HC agency name, budget, number of staff Other Regulation NOCs are compelled to NA Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market NA Factors transparency and good quality, unbiased data and information. HC agency independence indicators A Citizen's Guide to National Oil Companies Page 556 United Arab Emirates: Abu Dhabi National Oil Company (ADNOC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Regulation Regulators effectively NA Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of No data Factors Objectives hydrocarbon price subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of No data Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Very little, unaudited data Comments reliability of data reported. provided by NOC(s) and governments Other Longevity of NOC Based on available 2004 1 ADNOC was established in Comments information, history and 1971 and there are no persistence of NOC(s) indications that it would not persist. Other Country Status Trends and issues related The United Arab Emirates has Comments to country hydrocarbon enjoyed great success in the sector endowments and current commodity cycle. The performance UAE is heavily dependent upon hydrocarbon revenues, but has used oil revenue to fianance a wide variety of diversification strategies ranging from education and research, to real estate, to finance. Abu Dhabi is interesting for its focus on R&D and commercialization of alternative energy technologies. Politically, the A Citizen's Guide to National Oil Companies Page 557 United Arab Emirates: Abu Dhabi National Oil Company (ADNOC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data UAE has strong and constructive international relationships and partnerships. Other Non-commercial Number of employees 70,000 Factors Objectives Other Non-commercial BOE production per 15,695 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 0 0 98.92 Factors Other Oil Dependency Net oil and gas export 0.48 Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues 0.42 Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 97,800.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 215,066.29 Factors reserves (BCF) Other Resource Endowment Total all source BOE 134,880.40 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 0.73 Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 1.00 Factors split, production (%) A Citizen's Guide to National Oil Companies Page 558 United Arab Emirates: Abu Dhabi National Oil Company (ADNOC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Operating Conditions Country BOE production 3.19 Factors as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership Yes Factors A Citizen's Guide to National Oil Companies Page 559 United Arab Emirates: Abu Dhabi National Oil Company (ADNOC) Sources of Information Source # Year of Source Description Links Source 1 2004 ADNOC's five year achievement reports http://www.adnoc.ae/content.aspx?newid=320&mid= 320 2 2008 Company web-site www.adnoc.ae/ 3 2007 Central Bank of UAE AR 2006 http://www.centralbank.ae/annual_report.php 4 2008 Gas Regulation 2007 by GLG www.iclg.co.uk/khadmin/Publications/pdf/1804.pdf 5 2008 UAE YEARBOOK 2008 - English http://www.uaeinteract.com/uaeint_misc/pdf_2008/in dex.asp 6 2007 USEIA Country Analysis Brief http://www.eia.doe.gov/emeu/cabs/UAE/Profile.html 7 2008 CIA World Factbook - UAE https://www.cia.gov/library/publications/the-world- factbook/geos/ae.html#Econ 8 2008 Middle East Insurance Review estimate http://www.meinsurancereview.com/pages/subscriber /AIR-Article.asp?Article_ID=4869 9 2007 ADNOC News. Oil and gas industry in the UAE. Published On: http://www.adnoc.ae/AdnocNews_Details.aspx?New 30/05/2007 sID=d1410441-760a-4be8-a0be- fb9d22d5687d&newid=162&mid=162;%205 10 2008 Abu Dhabi Investment Company http://www.adic.ae/ 11 2008 Investment Corporation of Dubai http://www.icd.gov.ae/ 12 2008 Bourse Dubai Ltd. http://www.borsedubai.ae/ 13 2008 Dubai Holdings http://www.dubaiholding.com/ 14 2008 Dubai World http://www.dubaiworld.ae/en/Index.html 15 2008 RAK Investment Authority http://www.rak-ia.com/subpage.aspx?pageId=66 A Citizen's Guide to National Oil Companies Page 560 The NOCs in South Asia A Citizen's Guide to National Oil Companies Page 561 Bangladesh: PetroBangla Bangladesh: PetroBangla Summary Report Corporate Governance Highlights Corporate Organization and Ownership "PetroBangla is under administrative control of the Energy and Mineral Resources Division of the Ministry of Power, Energy and Mineral Resources." Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings PB and its companies are not listed on any exchanges. However, its subsidiaries such as BAPEX are encouraged to issue an IPO and be listed on the Dhaka Stock Exchange. Board of Directors Structure The Board of Directors is the policy making and managing body of PetroBangla, with members (17) from various Ministries: Ministry of Energy, Ministry of Finance, and Ministry of Planning. Board members also hold posts in PetroBangla companies. Independent Board Members It appears that board members are not independent and also hold posts in various PetroBangla companies. They are appointed by the government on recommendation of PB. Is chairman also minister of energy or otherwise appointed by head of state? Appointed. Operations Highlights Upstream Oil E&P of oil and gas in the public sector is done primarily by BAPEX Company (subsidiary of PetroBangla). Oil E&P is low priority given larger natural gas reserves. There are also a few PSAs with foreign oil companies. Midstream Oil No data. Downstream Oil No refining by PB. Bangladesh Petroleum Corporation (BPC) is a government-owned monopoly in Bangladesh which imports crude and refined products; refines oil; distributes/markets fuel oils, lubricants and other petroleum products in Bangladesh. Upstream Natural Gas Exploration is conducted by PetroBangla's subsidiary, BAPEX. Although BAPEX produces, major public sector gas companies are Bangladesh Gas Fields Company Ltd. and Sylhet Gas Fields Ltd. (producing 63.69% of gas), which are both subsidiaries of PetroBangla. Midstream Natural Gas Gas Transmission Company, the state monopoly for gas transport, transports high pressure bulk gas for private and public gas producers. LPG and CNG developments are actively encouraged by PetroBangla. Bangladesh does not produce or import LNG. Downstream Natural Gas Four marketing companies work under PetroBangla. Each has their own marketing franchise covered by a fairly extensive distribution system. Most of the distribution system is concentrated in the eastern zone; with plans to expand in the western zone. Other PetroBangla also has coal and granite mines. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) 21 Upstream: Average Annual Oil Production (MM Barrels) 0 Upstream: Average Annual Natural Gas Production (BCF) 437 Downstream: Average Annual Refinery Production (MM Barrels) No data A Citizen's Guide to National Oil Companies Page 562 Bangladesh: PetroBangla Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 1,075 Consolidated Average Total Assets ($Millions) 1,421 Consolidated Average EBIT ($Millions) 108 Consolidated Average Net Income ($Millions) -67 Categorization Indicators Categories: Scores: Corporate Governance 47 Corporate Governance Public Sector Governance 50 100 Commercialization 66 Public Sector Oil Dependency 50 Governance Fiscal Regimes 38 0 Resource Endowment 1 Resource Oil Dependency 96 Commercializati Endowment Local Contribution 61 Sector and Trade Openness 67 Fiscal Regimes Average 50 PetroBangla Average NOC Worldwide Governance Indicators Trends and Issues Bangladesh is endowed with large gas reserves that could be used to support the reduction of extreme levels of poverty, improving environmental conditions and modernizing the country's economy. To this end, Bangladesh needs to introduce reforms to promote investments, including changing the gas pricing policy to ensure sustainable performance of the sector, institutional restructuring to encourage the reduction of system losses, improve transparency in financial operations, and strengthen the role of the regulator. A Citizen's Guide to National Oil Companies Page 563 Bangladesh: PetroBangla Database Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Ownership Structure and Sole NOC or one of There are two NOCs in Governance Its Organization cluster of NOCs and Bangladesh - PetroBangla and other sovereign Bangladesh Petroleum enterprises in country Company. Corporate Ownership Structure and Number of NOCs of 2 Governance Its Organization country Corporate Ownership Structure and Description of 2006 1 Bangladesh Mineral Oil & Gas Governance Its Organization incorporation and 2008 2 Corporation (BMOGC) was ownership created through the Presidential order #27 on March 26, 1972. The minerals operation of the corporation was segregated and vested with a new organization, Bangladesh Mineral Development Corporation (BMEDC), on 27 September 1972. The reconstituted Bangladesh Oil & Gas Corporation (BOGC) was then named Petrobangla in 1974. In 1976 the importation, refining and marketing of crude and petroleum products was transferred to a new company, Bangladesh Petroleum Corporation. BOGC and BMEDC were merged into a single entity, Bangladesh Oil, Gas & Minerals Corporation (BOGMC), in 1985. In 1989, the corporation was short named Petrobangla and given the authority to hold the shares of the companies dealing in oil, gas and minerals exploration and development. "PetroBangla is under administrative control of the Energy and Mineral Resources Division of the Ministry of Power, Energy and Mineral Resources." Corporate Ownership Structure and % shares controlled by 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international 2008 7 PB and its companies are not Governance Its Organization exchanges where shares listed on any exchanges. are listed However"Dhaka Stock Exchange (DSE) yesterday urged Bapex, the petroleum and oil exploration division of Petrobangla, to raise capital from the stock market through an Initial Public Offering (IPO) and use the money raised for gas exploring activities." (June 2008) A Citizen's Guide to National Oil Companies Page 564 Bangladesh: PetroBangla Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Ownership Structure and Domestic, international None Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20- No Governance Its Organization F with SEC? Corporate Board of Directors (BOD) Does a BOD exist Yes Governance Corporate Board of Directors (BOD) Description of BOD and 2006 1 The Board of Directors is the Governance structure policy making and managing body of PetroBangla, with members (17) from various Ministries: Ministry of Energy, Ministry of Finance, and Ministry of Planning. Board members also hold posts in PetroBangla companies. Corporate Board of Directors (BOD) Is chairman also minister The chairman is appointed by Governance of energy or otherwise the President of the Country. appointed by head of state Corporate Board of Directors (BOD) Are any BOD members 2006 1 There are no independent Board Governance considered independent members. Board members are (external) and, if so, how appointed by the government on are they appointed PB's recommendations and some hold office in PetroBangla's subsidiaries. Corporate Board of Directors (BOD) Term of service (years, No data. Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and The Board of Directors is the Governance policy statements policy making and managing body of PetroBangla. Corporate Role of BOD Based on available No data. Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replacement General process for Appointed. Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget No data. Governance Processes authority. Comment on the general decision flow within NOC and between NOC and government for major projects. Corporate Decision Making Based on available 2006 1-12 The budget process involves Governance Processes, Budget information, is NOC other government agencies. Autonomy budget process Activities of PB are reviewed predictable and separate and examined by the Public from government Accounts Committee and the Parliamentary Standing Committee on Power, Energy & Mineral Resources. Corporate Decision Making Does the NOC have 2006 1-11 It is in Petrobangla's mandate to A Citizen's Guide to National Oil Companies Page 565 Bangladesh: PetroBangla Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Governance Processes, Budget authority to partner with "enter into PSAs with IOCs for Autonomy other entities? exploration and development of Oil and Gas and to supervise, monitor and coordinate the activities under the signed PSAs." Corporate Mission and Objectives Does NOC have a No data. Governance mission statement and, if so, what are key elements Corporate Sources of Capital Based on available No data. Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited No data. Governance Policy data and other indications of disclosure and transparency Corporate Skill Base Based on available No data. Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available 2004 3 The Energy Policy states that Governance Management information, HR PetroBangla "should have the promotion and right to select employees on its professional own terms and conditions of development policies employment so as to attract and retain high quality staff." Corporate Full Disclosure and Based on available No data. Governance Measurement of Non- information, brief commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available No data. Governance Measurement of Non- information, extent of commercial Objectives non-commercial obligations Value Operating Performance Upstream oil E&P. 2006 1 E&P of oil and gas in the public Creation Where does it operate sector is done primarily by Metrics (solely in the country or BAPEX Company (subsidiary abroad-name countries)? of PetroBangla). Oil E&P is low Does it have sole access priority given larger natural gas to country's resources? reserves. There are also a few PSAs with foreign oil companies. Value Operating Performance Does the NOC operate No. Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, No data. Creation storage, shipping Metrics Value Operating Performance Downstream oil refining No refining by PB. Bangladesh Creation & marketing, Petroleum Corporation (BPC) is Metrics petrochemicals a government-owned monopoly A Citizen's Guide to National Oil Companies Page 566 Bangladesh: PetroBangla Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data in Bangladesh which imports crude and refined products; refines oil; distributes/markets fuel oils, lubricants and other petroleum products in Bangladesh. Value Operating Performance Upstream natural gas 2006 1 Exploration is conducted by Creation E&P PetroBangla's subsidiary, Metrics BAPEX. Although BAPEX produces, major public sector gas companies are Bangladesh Gas Fields Company Ltd. and Sylhet Gas Fields Ltd. (producing 63.69% of gas), which are both subsidiaries of PetroBangla. Value Operating Performance Midstream natural gas 2006 1 Gas Transmission Company, the Creation pipelines, storage, LNG state monopoly for gas Metrics transport, transports high pressure bulk gas for private and public gas producers. LPG and CNG developments are actively encouraged by PetroBangla. Bangladesh does not produce or import LNG. Value Operating Performance Downstream natural gas 2006 1 Four marketing companies work Creation distribution, NGL sales, under PetroBangla. Each has Metrics petrochemicals their own marketing franchise covered by a fairly extensive distribution system. Most of the distribution system is concentrated in the eastern zone; with plans to expand in the western zone. Value Operating Performance Other (power generation, 2006 1 PetroBangla also has coal and Creation etc) granite mines. Metrics Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves 71% Creation (%) Metrics Value Operating Performance Change in BOE -39% Creation production (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream Metrics capital expenditures (%) Value Operating Performance Avg upstream No data Creation exploration and Metrics production expenses ($/BOE) A Citizen's Guide to National Oil Companies Page 567 Bangladesh: PetroBangla Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Value Operating Performance Avg production costs $0.29 Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all No data Creation taxes ($/BOE) Metrics Value Operating Performance Avg effective tax rate No data Creation (%) Metrics Value Operating Performance Avg operating cash flow No data Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating Metrics cash flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin 10% Creation (%) Metrics Value Financial Performance Avg profit margin (%) -6% Creation Metrics Value Financial Performance Avg effective tax rate 418% Creation (%) Metrics Value Financial Performance Avg reinvestment risk No data Creation (%) Metrics A Citizen's Guide to National Oil Companies Page 568 Bangladesh: PetroBangla Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets (%) -5% Creation Metrics Value Financial Performance Avg return on total -8% Creation capital employed (%) Metrics Value Financial Performance Avg fiscal contribution 39% Creation to State (%) Metrics Other Public Sector Governance Based on available 2008 2 The role of the hydrocarbon Factors information, presence of sector is defined in the revised a publicly articulated National Energy Policy (NEP) role of the hydrocarbon sector with respect to national development objectives Other Public Sector Governance Based on available Functions of various agencies Factors information, clear (Ministries, BERC) and definition of the roles of PetroBangla are defined. policy, commercial However, there is duplication in operation and regulation some functions among these. and assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available No data. Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available No data. Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available The state budget does not Factors information, transparent provide a breakdown of revenue hydrocarbon sector in oil and non-oil. No revenue management information is available on including revenue petroleum revenue management distribution within the and its distribution within the country country. Other Public Sector Governance NOC and/or country 2008 10, 11 Not participating in EITI and Factors participate in EITI not a candidate country. Both and/or other National Democratic Institute transparency initiatives and Transparency International maintain operations in Bangladesh. Other Fiscal Sustainability Based on available 2008 9 New model PSAs were drafted Factors information, do for the 3rd round of negotiation. hydrocarbon sector fiscal regimes allow for sufficient capital A Citizen's Guide to National Oil Companies Page 569 Bangladesh: PetroBangla Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data investment Other Fiscal Sustainability Based on available No data. Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available A major issue for Bangladesh Factors information, are has been natural gas hydrocarbon sector monetization, in particular for fiscal regimes regional export. appropriate for the development stage of the domestic resource base Other Access to Reserves Hydrocarbon law to The law exists but some of the Factors facilitate competitive requirements, such as partnering upstream investment with PetroBangla, may not be fully attractive. Other Access to Reserves Based on available PSAs Factors information, existence of negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available No data. Factors information, types of joint ventures, role of NOC(s) Other Operating Strategy Based on available Turnkey contracts are used. Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal Vertically integrated gas Factors integration exploration, production, transmission, and distribution company. Other International Presence Does NOC make No. Factors investments abroad Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company No data Factors BOE production from international operations (%) Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput A Citizen's Guide to National Oil Companies Page 570 Bangladesh: PetroBangla Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants 2007 6 Three state-owned subsidiaries Factors in upstream of PetroBangla dominate natural gas E&P. IOCs also participate, mainly through PSAs. Other Commercialization Competition level in 2007 5 Gas exploration, exploitation Factors upstream including non- 2007 13 and production activities are NOC participants and conducted under PSAs between requirement to include PetroBangla and IOCs. NOC as partner However, the gas sector is fraught with conflict. PetroBangla is the main buyer of gas produced by the country. It is also the principal entity that can define its uses and pricing. PetroBangla also represents the interest of the government who owns all but the foreign gas companies operating in the country. Other Commercialization Competition level in No competition. Domestic Factors midstream, downstream natural gas pipeline network is including non-NOC operated by the Gas participants and Transmission Company Ltd. requirement to include (GTCL), a subsidiary of NOC as partner PetroBangla. Bangladesh Energy Regulatory Commission (BERC), founded in 2003, suffers from budgetary and HR shortcomings that hinder its activity as regulator and affect its independence. Other Commercialization Based on available Curently, there is limited joint Factors information, prevalence activity in Bangladesh. In the and success of past, NOC/non-NOC alliances NOC/non-NOC added to gas production. alliances, joint ventures Other Commercialization Partial privatization of Not privatized. Factors the NOC (as measured by ownership structure) Other Commercialization Based on available None. Factors information, level and quality of NOC international operations A Citizen's Guide to National Oil Companies Page 571 Bangladesh: PetroBangla Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Commercialization Based on available No data. Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, 2007 13 The Bangladesh Energy Factors well-funded and trained Regulatory Commission Act, regulatory agencies, HC 2003 established the Bangladesh agency name, budget, Energy Regulatory number of staff Commission. BERC regulates downstream markets, including the issuing of licenses for gas distribution. BERC has no role in the upstream.. Other Regulation NOCs are compelled to 2007 13 The pricing mechanisms do not Factors adopt practices that encourage investment and would provide results efficiency of operations. similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure 2007 13 Bangladesh Energy Regulatory Factors market transparency and Commission (BERC) often good quality, unbiased suffers from budgetary data and information. shortcomings that hinder its HC agency activity as regulator and affect independence indicators its independence. Other Regulation Regulators effectively 2007 5-10; 9 "No statutory regulations Factors resolve disputes and directly addressing the issue of conflicts and address dispute resolution procedure in public concerns about the natural gas sector." development of and "PetroBangla has been forced to access to hydrocarbon go to international arbitration resources and several times over the dispute infrastructure. HC with IOCs on gas transmission agency dispute lines and payment of wheeling resolution policy charge as per the existing PSAs." Other Non-commercial Provision and level of 2007 8-4 The liquid fuel is offered to key Factors Objectives hydrocarbon price end users in Bangladesh at subsidies ($/BOE about a 40% lower price than to production) provided by consumers in other countries of NOC and/or the region. Gas prices are government. brief subsidized as well. description of subsidy program, approach, cost Other Non-commercial Provision and level of No data. Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC $177.68 Factors Objectives employees relative to total assets ($ M) A Citizen's Guide to National Oil Companies Page 572 Bangladesh: PetroBangla Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Non-commercial Compensation No data Factors Objectives obligations relative to workforce ($ M) Other Non-commercial Financial performance $134.33 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Current operational data is Comments reliability of data available from the company's provided by NOC(s) and website and ministries' websites. governments Limited financial data is available. Other Longevity of NOC Based on available Bangladesh Mineral Oil and Gas Comments information, history and Corporation (BOGMC), persistence of NOC(s) predecessor of PetroBangla, was created in 1972. Reconstituted BODGC was formed as PetroBangla in 1974. PB is positioned quite strongly in the country. Other Country Status Trends and issues related 2007 13 Bangladesh is endowed with Comments to country hydrocarbon large gas reserves that could be sector endowments and used to support the reduction of performance extreme levels of poverty, improving environmental conditions and modernizing the country's economy. To this end, Bangladesh needs to introduce reforms to promote investments, including changing the gas pricing policy to ensure sustainable performance of the sector, institutional restructuring to encourage the reduction of system losses, improve transparency in financial operations, and strengthen the role of the regulator. Other Non-commercial Number of employees 8,000 Factors Objectives Other Non-commercial BOE production per 9,423 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 52.94 Factors Other Oil Dependency Net oil and gas export -19.09% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas -3.72% Factors revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 3,000.00 Factors (MM Barrels) A Citizen's Guide to National Oil Companies Page 573 Bangladesh: PetroBangla Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Resource Endowment Avg EOY natural gas 13,772.72 Factors reserves (BCF) Other Resource Endowment Total all source BOE 5,374.61 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? No data. Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 55.82% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 96.11% Factors split, production (%) Other Operating Conditions Country BOE 74.43% Factors production as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 574 Bangladesh: PetroBangla Sources of Information Source # Year of Source Description Links Source 1 2006 Petrobangla Annual Report http://www.petrobangla.org.bd/annual_report.pdf 2 2008 Petrobangla website http://www.petrobangla.org.bd/ 3 2004 Bangladesh National Energy Policy http://www.petrobangla.org.bd/NEP_2004_fulldoc.pd f 4 2008 Bangladesh Energy Regulatory http://www.berc.org.bd/ Commission 5 2007 Gas Regulation - Bangladesh http://www.iclg.co.uk/index.php?area=4&country_res ults=1&kh_publications_id=42&chapters_id=1041 6 2007 USEIA Country Analysis Brief http://www.eia.doe.gov/emeu/cabs/Bangladesh/Full.ht ml 7 2008 The Daily Star website http://www.thedailystar.net/story.php?nid=43021 8 2007 "Bangladesh Gas Sector ­ Issues, http://www.adb.org/Documents/Reports/Bangladesh- Options and the Way Forward," by Gas-Sector/Chapter-1.pdf ADB 9 2008 "Govt unveils model PSA for 3rd http://www.independent- round bidding," Independent bangladesh.com/200802081576/country/govt-unveils- Bangladesh model-psc-for-3rd-round-bidding.html 10 2008 National Democratic Institute - http://www.ndi.org/worldwide/asia/bangladesh/bangla Bangladesh desh.asp 11 2008 Transparency International - http://www.ti-bangladesh.org/ Bangladesh 12 2001 Review of Development Trends in the http://www.cmi.no/publications/file/?958=a-review- Energy Sector of Bangladesh, 2001 of-development-trends-in-the-energy 13 2007 Bangladesh Gas Sector: Issues, www.adb.org/Documents/Reports/Bangladesh-Gas- Options, and the Way Forward Sector/BAN-Gas-Sector.pdf A Citizen's Guide to National Oil Companies Page 575 India: Oil and Natural Gas Corporation Ltd. (ONGC) India: Oil and Natural Gas Corporation Ltd. (ONGC) Summary Report Corporate Governance Highlights Corporate Organization and Ownership ONGC was incorporated in 1994 and reflects the evolution of the ONG Commission of India. ONGC has 7 subsidiaries and is a partially privatized NOC. Shares Controlled by Government 74.14% of the shares are controlled by the President of India while another 10.09% are controlled by other Indian NOCs. The rest is held by institutional investors and 2% by the public. Domestic, International Exchanges for Equity Listings ONGC is listed on the Bombay Stock exchange and on the National Stock Exchange of India. Board of Directors Structure The BOD is comprised of a Chairman, 6 full time executive directors and 7 non-executive directors. The Board "formulates strategies, policies and reviews its performance periodically". Independent Board Members There are some independent board members who are selected by the bureaucracy and appointed by the President of India. Is chairman also minister of energy or otherwise appointed by head of state? Members of the BOD are appointed by the President of India. Operations Highlights Upstream Oil ONGC operates domestically and has sought to increase its presence abroad. It does not have sole access to domestic resources. Midstream Oil ONGC does not have a midstream presence. Downstream Oil ONGC has a refinery in Mangalore with a capacity of 9 million tons but operating at 12 MMT. ONGC has very few service stations. Upstream Natural Gas Yes. Midstream Natural Gas Natural gas has been given to GAIL. In the future ONGC is likely to enter natural gas operations also. Downstream Natural Gas ONGC is entering the petrochemicals segment. Other ONGC has shown interest in the power sector but has been constrained from entry by the petroleum ministry. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 5,449 Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) 5,449 Upstream: Average Annual Natural Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) No data Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 198 Consolidated Average Total Assets ($Millions) 922 Consolidated Average EBIT ($Millions) 357 Consolidated Average Net Income ($Millions) 198 A Citizen's Guide to National Oil Companies Page 576 India: Oil and Natural Gas Corporation Ltd. (ONGC) Categorization Indicators Scores: Categories: Corporate Corporate Governance 59 Governance Public Sector Governance 76 100 Commercialization 92 Public Sector Oil Dependency 50 Governance Fiscal Regimes 75 0 Resource Endowment 2 Resource Oil Dependency 96 Commercializati Endowment Local Contribution 60 Fiscal Regimes Sector and Trade Openness 75 Average 67 ONGC Average NOC Worldwide Governance Indicators Trends and Issues India's dependency on oil is projected to increase from the current level of 75% to a projected 95% by 2030. The combination of rising oil consumption and fairly stable production levels leaves India increasingly dependent on imports to meet consumption needs. Recent natural gas discoveries offshore will help to attenuate this dependence but will not be sufficient meet internal demand. To help meet this growing demand, a number of import schemes including both LNG and pipeline projects have either been implemented or considered. Several natural gas pipeline projects have been on the chart for some years but have yet to be realized, hindered by regional and wider geopolitical considerations. A Citizen's Guide to National Oil Companies Page 577 India: Oil and Natural Gas Corporation Ltd. (ONGC) Database Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of cluster 2008 5 The state participates in 14 oil Governance Its Organization of NOCs and other and gas companies. Oil and sovereign enterprises in Natural Gas Corporation country (ONGC) is the largest oil company, and also the country's largest company overall by market capitalization. There are several state-owned companies in the downstream sector, of which the Indian Oil Corporation (IOC) is the largest. Corporate Ownership Structure and Number of NOCs of 2008 5 14 Governance Its Organization country Corporate Ownership Structure and Description of ONGC was incorporated in Governance Its Organization incorporation and 1994 and reflects the evolution ownership of the ONG Commission of India. ONGC has 7 subsidiaries and is a partially privatized NOC. Corporate Ownership Structure and % shares controlled by 2007 1-127 74.14% of the shares are Governance Its Organization government controlled by the President of India while another 10.09% are controlled by other Indian NOCs. The rest is held by institutional investors and 2% by the public. Corporate Ownership Structure and Domestic, international 2007 1-124 ONGC is listed on the Bombay Governance Its Organization exchanges where shares are Stock exchange and on the listed National Stock Exchange of India. Corporate Ownership Structure and Domestic, international Not listed Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist 2007 1-6 Yes Governance Corporate Board of Directors (BOD) Description of BOD and 2007 1-6 The BOD is comprised of a Governance structure Chairman, 6 full time executive directors and 7 non- executive directors. The Board "formulates strategies, policies and reviews its performance periodically". Despite the appearance of an independent board, policies are mostly controlled by the petroleum minister. The BOD appears to be a weak institution. A Citizen's Guide to National Oil Companies Page 578 India: Oil and Natural Gas Corporation Ltd. (ONGC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Board of Directors (BOD) Is chairman also minister of 2007 1-6 Members of the BOD are Governance energy or otherwise appointed by the President of appointed by head of state India. Corporate Board of Directors (BOD) Are any BOD members There are some independent Governance considered independent board members who are (external) and, if so, how selected by the bureaucracy are they appointed and appointed by the President of India. Corporate Board of Directors (BOD) Term of service (years, Members of the BOD serve 2 Governance with re-appointment). years and they can be re- Comment if they can be appointed for additional terms. readily removed. The chairman is selected by a public sector appointment board which consists mostly of retired bureaucrats. The final choice is influenced by political input though merit of the candidate does play a role. Corporate Role of BOD Description of role and BOD policy statements do Governance policy statements have an impact and guide the strategies of the corporation. Some influence is exercised by the Petroleum Ministry and the ruling party. Corporate Role of BOD Based on available The BOD's power, impact, Governance information, does BOD decision making authority have power, impact, appear to be limited, or at least decision making authority influenced by the government through the tight control of appointments.. Corporate Recruitment/Replacement General process for Key appointments of ONGC Governance Key Executives recruitment, replacement of are filled by a procedure key execs and senior similar to that used for the managers BOD and merit does play a part in the final selection. Senior managers are for most part selected on an annual appraisal system. However, for some positions caste-based selection for promotion plays some role. Corporate Decision Making Level of NOC budget Budget approval is a Governance Processes authority. Comment on the complicated process. Though general decision flow ONGC prepares the budget, within NOC and between and it is responsible, the NOC and government for planning commission of India major projects. has some impact on the final numbers. Parliament has to give the final approval though for the most part this is a formality. A Citizen's Guide to National Oil Companies Page 579 India: Oil and Natural Gas Corporation Ltd. (ONGC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Decision Making Based on available ONGC's budget making is a Governance Processes, Budget information, is NOC budget separate process and the Autonomy process predictable and country's budget has no separate from government impact. But there is a need to obtain formal approval from the parliament and the petroleum ministry plays a key role in the finalization along with direct or indirect input from the powerful planning commission. Corporate Decision Making Does the NOC have 2007 1 Yes. It has the authority to Governance Processes, Budget authority to partner with form partnerships with other Autonomy other entities? entities, but must obtain approval from the petroleum ministry. Corporate Mission and Objectives Does NOC have a mission 2006 1 The NOC has a general Governance statement and, if so, what mission statement but no firm are key elements articulation. The 2006 annual report includes a vision from the President of India, that ONGC "should give world leadership in management of energy sources, exploration of energy sources, diversification of energy sources, technology in Underground Coal Gasification and above all finding new ways of tapping energy wherever it is, to meet the ever growing demand of the country". Corporate Sources of Capital Based on available After paying dividends to the Governance information, budgeting government, the remaining process and policy amount is available to ONGC including % of cash for reinvestment. However flow/revenue available for since the recent price increase reinvestment in crude oil, the government has been transferring on an ad- hoc basis some percent of profit (the rationale for the target percentage has not been publicly disclosed) to downstream NOCs to compensate for their losses (whether or not the recipient entity has private shareholders). The decision regarding additional transfers is made by the Ministry of Petroleum (there appears to be no Paliamentary approval). The transfer is akin to a windfall profit tax charge. A Citizen's Guide to National Oil Companies Page 580 India: Oil and Natural Gas Corporation Ltd. (ONGC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Disclosure/Transparency Disclosure of audited data 2006 1 Accounts are audited by Governance Policy and other indications of independent auditors who are disclosure and transparency appointed by the shareholders. These are disclosed on the NOC's website. Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available 2008 1 There is a professional HR Governance Management information, HR promotion department and for the most and professional part promotion is based on development policies merit. Length of service is also one of the important factors. Years of service and caste-based quota are also considered. Upper management is appointed by the Government. Corporate Full Disclosure and Based on available 2008 1 ONGC is expected to Governance Measurement of Non- information, brief maximize shareholders' net commercial Objectives description of reporting on worth. Hence, noncommercial noncommercial objectives objectives are not part of the explicit set of targets for ONGC. However, the NOC carries out various community development and social programmes. "Major emphasis has been given for promotion of education, health and community development and in times of natural calamities such as floods, cyclones, earthquakes, landslides, etc. The impact of our concerted efforts is being felt by the community and good-will is being generated." Corporate Full Disclosure and Based on available 2006 1 ONGC appears to have very Governance Measurement of Non- information, extent of non- little in noncommercial commercial Objectives commercial obligations obligations. Value Operating Performance Upstream oil E&P. Where ONGC operates both Creation does it operate (solely in domestically and abroad. At Metrics the country or abroad-name home, it does not have sole countries)? Does it have access to domestic resources. sole access to country's resources? Value Operating Performance Does the NOC operate 2007 3 Yes, ONGC has interests in Creation abroad? about 25 oil and gas projects in Metrics 15 countries (Vietnam, Dudan, Syria, Russia, Colombia, Brazil, Myanmar, Iran, Egypt, Libya, Sao Tome e Principe, Côte d'Ivoire, Cuba, Cyprus, and Congo). A Citizen's Guide to National Oil Companies Page 581 India: Oil and Natural Gas Corporation Ltd. (ONGC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Midstream oil pipelines, ONGC does not have a Creation storage, shipping midstream presence. Metrics Value Operating Performance Downstream oil refining & ONGC has a refinery in Creation marketing, petrochemicals Mangalore with a capacity of 9 Metrics million tons but operating at 12 MMT. ONGC has very few service stations. Value Operating Performance Upstream natural gas E&P Yes. Creation Metrics Value Operating Performance Midstream natural gas The Gas Authority of India Creation pipelines, storage, LNG Ltd. (GAIL) holds an effective Metrics monopoly on natural gas transmission and distribution activities. Value Operating Performance Downstream natural gas ONGC is entering the Creation distribution, NGL sales, petrochemicals segment. Metrics petrochemicals Value Operating Performance Other (power generation, ONGC has shown interest in Creation etc) the power sector, but no Metrics concrete steps have been taken so far. Value Operating Performance Avg reserve replacement 100% Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves 10% Creation (%) Metrics Value Operating Performance Change in BOE production 3% Creation (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics A Citizen's Guide to National Oil Companies Page 582 India: Oil and Natural Gas Corporation Ltd. (ONGC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg operating cash flow vs No data Creation costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization rate No data Creation (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery capacity No data Creation (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and marketing No data Creation operating cash flow/capital Metrics expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) 38% Creation Metrics Value Financial Performance Avg profit margin (%) 14% Creation Metrics Value Financial Performance Avg effective tax rate (%) 99% Creation Metrics Value Financial Performance Avg reinvestment risk (%) No data Creation Metrics Value Financial Performance Avg debt profile (%) 0% Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total capital 13% Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to 40% Creation State (%) Metrics A Citizen's Guide to National Oil Companies Page 583 India: Oil and Natural Gas Corporation Ltd. (ONGC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available ONGC has been requested to Factors information, presence of a look for oil and gas abroad as a publicly articulated role of part of strategy for meeting the hydrocarbon sector with national energy security respect to national requirements. development objectives Other Public Sector Governance Based on available 2008 5 "The Ministry of Petroleum & Factors information, clear Natural Gas is situated in definition of the roles of Shastri Bhawan, New Delhi policy, commercial and is entrusted with the operation and regulation responsibility of exploration and assignment to specific and production of oil and entities avoiding conflicts natural gas, their refining, of interest distribution and marketing, import, export, and conservation of petroleum products and Liquified Natural Gas." The Directorate General of Hydrocarbons (DGH) has regulatory and supervisory responsibility over public and private sector exploration and production. ONGC is expected to operate along commercial lines like any other privately owned company and state- owned companies. However, the clarity and independence of roles is sometimes unclear. Other Public Sector Governance Based on available There are no such priorities for Factors information, presence of ONGC. publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available Not applicable. Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available 2008 6 For the most part, ONGC Factors information, transparent accounts are transparent and hydrocarbon sector revenue very detailed. The management including government's petroleum revenue distribution within revenue is indicated in the the country state budget, although as aggregate number. There is no specific petroleum revenue management mechanism. Other Public Sector Governance NOC and/or country India does not participate in Factors participate in EITI and/or EITI. other transparency initiatives A Citizen's Guide to National Oil Companies Page 584 India: Oil and Natural Gas Corporation Ltd. (ONGC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Fiscal Sustainability Based on available 2007, 3, India continues to try to lure Factors information, do 2008 5, 7 investment in its upstream hydrocarbon sector fiscal sector. USEIA reports regimes allow for sufficient recognize the importance of capital investment the " the New Exploration License Policy (NELP) in 2000, which for the first time permitted foreign companies to hold 100 percent equity ownership in oil and natural gas projects". "Today, around 23 foreign companies are located in India, apart from domestic majors. The biggest gas find in 2002 (by Reliance Industries Ltd) and the biggest onland crude oil find after 22 years by Cairn in the Barmer basin are testimonials to the success of NELP, and have effectively negated the perception that India's onshore and offshore assets do not have any oil and gas prospectively." Other Fiscal Sustainability Based on available Yes. ONGC has a high credit Factors information, do rating. Its rating is higher than hydrocarbon sector fiscal that of the country. regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available The recent imposition of the Factors information, are windfall oil tax may be a hydrocarbon sector fiscal deterrent to investing in regimes appropriate for the exploration activities, as large development stage of the share of projects upsides is domestic resource base captured by the government and even state-owned companies such as ONGC may not be able to retain enough cash for reinvestment. Recent licensing rounds did not attract much international interest, especially from the major IOCs. Other Access to Reserves Hydrocarbon law to See above, New Exploration Factors facilitate competitive License Policy (NELP) passed upstream investment in 2000 in an attempt to attract market participants. Other Access to Reserves Based on available To date, only a few foreign Factors information, existence of entities are operating in India. negotiated ONGC is treated just like any contracts/agreements for private oil company. upstream investment Other Operating Strategy Based on available There is no preference for Factors information, types of joint ONGC and they also bid with ventures, role of NOC(s) other private companies. A Citizen's Guide to National Oil Companies Page 585 India: Oil and Natural Gas Corporation Ltd. (ONGC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Operating Strategy Based on available Not applicable. Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal ONGC is taking steps to move Factors integration towards vertical integration. Other International Presence Does NOC make Yes. Factors investments abroad Other International Presence Avg company international No data Factors BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company international No data Factors refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company international No data Factors refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in Yes, there are non-NOC Factors upstream participants; recent licensing rounds attracted domestic and international companies, but international majors were missing. Other Commercialization Competition level in With even a few participants, Factors upstream including non- upstream competition is NOC participants and vigorous. requirement to include NOC as partner Other Commercialization Competition level in ONGC is not present in the Factors midstream, downstream midstream. There are several including non-NOC refineries operated by private participants and companies but some are export requirement to include only. There is vigorous NOC as partner competition in sales and marketing. Other Commercialization Based on available There are several non-NOC Factors information, prevalence and alliances both in India and success of NOC/non-NOC abroad. alliances, joint ventures A Citizen's Guide to National Oil Companies Page 586 India: Oil and Natural Gas Corporation Ltd. (ONGC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Partial privatization of the ONGC is partially privatized Factors NOC (as measured by as shown above. ownership structure) Other Commercialization Based on available s ONGC international activity Factors information, level and has grown considerably as quality of NOC energy security has pushed international operations outbound investment strategies. A trade off is political risk outside of India. Other Commercialization Based on available Except for possible Factors information, percent of employment practices, non-core commercial practically zero. activities in overall operations Other Regulation Presence of independent, The Directorate General of Factors well-funded and trained Hydrocarbons, affiliated with regulatory agencies, HC the Ministry of Petroleum and agency name, budget, Natural Gas, provides number of staff regulatory oversight. Other Regulation NOCs are compelled to ONGC has entered several Factors adopt practices that would countries outside India. This provide results similar to has been an important factor in those in competitive adopting international markets with price, access standards, and developing to and quality of energy good management practices. services. brief description: HC agency enforcement powers Other Regulation Regulators assure market The independence of the Factors transparency and good Regulator is not clear, given quality, unbiased data and the overall institutional culture information. HC agency and arrangments. Regulators independence indicators are often chosen among retired officers and political appointments are not uncommon. Other Regulation Regulators effectively The DGH is a relatively new Factors resolve disputes and institution. Its effectiveness is conflicts and address public likely to improve as concerns about experience accumulates. development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of 2002 4 India's administered price Factors Objectives hydrocarbon price subsidies mechanism (APM) was ($/BOE production) replaced in 2002 by a market provided by NOC and/or determined price mechanism government. brief (MPDM) but the government description of subsidy has continued to heavily program, approach, cost subsidize domestic purchases of petroleum products. In June 2008, India raised fuel prices by an average 10% to reduce rising cost of subsidies, but the A Citizen's Guide to National Oil Companies Page 587 India: Oil and Natural Gas Corporation Ltd. (ONGC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data cost ot the state remains high. Other Non-commercial Provision and level of 2006 1 From the company's annual Factors Objectives direct NOC funding of report this appears to be country social and limited. economic programs. brief description of programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance $315.58 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, ONGC and government web Comments reliability of data provided sites are accessible, with by NOC(s) and substantial data and governments information. Other Longevity of NOC Based on available India's organizations, agencies Comments information, history and and bureaucracies are long persistence of NOC(s) lived. ONGC has been in place for more than two decades; its future will hinge on success with international strategies. Other Country Status Trends and issues related to India's dependency on oil is Comments country hydrocarbon sector projected to increase from the endowments and current level of 75% to a performance projected 95% by 2030. The combination of rising oil consumption and fairly stable production levels leaves India increasingly dependent on imports to meet consumption needs. Recent natural gas discoveries offshore will help to attenuate this dependence but will not be sufficient meet internal demand. To help meet this growing demand, a number of import schemes including both LNG and pipeline projects have either been implemented or considered. Several natural gas pipeline projects have been on the chart for some years but have yet to be realized, hindered by regional and wider geopolitical considerations. Other Non-commercial Number of employees 34,166 Factors Objectives A Citizen's Guide to National Oil Companies Page 588 India: Oil and Natural Gas Corporation Ltd. (ONGC) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Non-commercial BOE production per 10,437 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 24.96 Factors Other Oil Dependency Net oil and gas export -20.19% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues -4.18% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves (MM 5,459.25 Factors Barrels) Other Resource Endowment Avg EOY natural gas 37,256.97 Factors reserves (BCF) Other Resource Endowment Total all source BOE 11,882.87 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Audited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 45.94% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.94% Factors split, production (%) Other Operating Conditions Country BOE production as 38.15% Factors % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 589 India: Oil and Natural Gas Corporation Ltd. (ONGC) Sources of Information Source Year of Source Description Links # Source 1 2007 ONGC website http://www.ongcindia.com/ 2 2008 CIA World Factbook - India https://www.cia.gov/library/publications/the-world-factbook/fields/2076.html 3 2007 USEIA Country Analysis Brief - India http://www.eia.doe.gov/emeu/cabs/India/Background.html 4 2002 CEE-UT, "LPG Subsidies in India" http://www.beg.utexas.edu/energyecon/new- era/case_studies/LPG_Subsidies_in_India.pdf 5 2008 Ministry of Petroleum and http://petroleum.nic.in/ Natural Gas 6 2008 Ministry of Finance http://finmin.nic.in/the_ministry/dept_revenue/index.html 7 2008 `Huge increase in recovery rate reflects http://www.thehindubusinessline.com/2008/09/30/stories/2008093050560900.htm the NELP's success', The Business Daily A Citizen's Guide to National Oil Companies Page 590 Pakistan: Oil & Gas Development Corporation Ltd. (OGDCL) Pakistan: Oil & Gas Development Corporation Ltd. (OGDCL) Summary Report Corporate Governance Highlights Corporate Organization and Ownership The government divested 14.8% of total shares and offered them to international and local institutional investors. Shares Controlled by Government 85.2% Domestic, International Exchanges for Equity Listings London Stock Exchange, Islamabad Stock Exchange, Karachi Stock Exchange Board of Directors Structure Chairman and CEO, 10 Directors Independent Board Members All members of the BOD are external except one director who acts as the Ministry of Petroleum & Natural Resources. Is chairman also minister of energy or otherwise appointed by head of state? No Operations Highlights Upstream Oil The company evaluates opportunities, domestic and overseas, to expand activities to other areas that may offer attractive exploration and development potential with a particular interest in those areas that complement their current exploration, development and production activities. OGDCL is the largest E&P company in Pakistan. Midstream Oil OGDCL does not have a pipeline infrastructure to entirely support upstream activities. Little storage capacity and no shipping network is owned by OGDCL. Downstream Oil OGDCL does not operate in the refining and marketing segment. Upstream Natural Gas OGDCL produces 25% of the country's natural gas. OMV is the foreign largest natural gas producer (17% of total country's production), other foreign operators are Eni, BP, and BHP Billiton. Midstream Natural Gas Pakistan's government is working on plans to build a pipeline that spans from Iran's natural gas reserves to India markets across Pakistan. However, no certainty on what NOC will be granted the opportunity to participate in this project. OGDCL has 29 oil and gas processing plants. These include dehydration, LPG, Sulfur Recovery, H2S Removal, Gas Sweetening, Condensate Stabilization, Refining and Compression Plants. Downstream Natural Gas OGDCL has downstream natural gas and NGLsales. Other None Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 96 Upstream: Average Proved Gas Reserves (BCF) 704 Upstream: Average Annual Oil Production (MM Barrels) 18 Upstream: Average Annual Natural Gas Production (BCF) 397 Downstream: Average Annual Refinery Production (MM Barrels) No data Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 1,655 Consolidated Average Total Assets ($Millions) 2,073 Consolidated Average EBIT ($Millions) 1,051 Consolidated Average Net Income ($Millions) 758 A Citizen's Guide to National Oil Companies Page 591 Pakistan: Oil & Gas Development Corporation Ltd. (OGDCL) Categorization Indicato Categories: Scores: Corporate Corporate Governance 59 Governance 100 Public Sector Governance 71 Public Sector Commercialization 67 Oil Dependency 50 Governance Fiscal Regimes 50 0 Resource Endowment 1 Resource Commercializati Oil Dependency 95 Endowment Local Contribution 0 Fiscal Regimes Sector and Trade Openness 72 Average 57 OGDCL Average NOC Worldwide Governance Indicators Trends and Issues In the last few years oil and gas production in Pakistan has been very slowly growing. The country is dependent on oil imports to satisfy domestic demand. Demand for refined petroleum products has also exceeded domestic oil refinery capacity; nearly half of the oil imports are refined products. Fuel subsidies exacerbate downstream capacity constraints by discouraging efficiency and spurring demand growth. The government is planning to build a pipeline that spans from Iran's natural gas reserves to Indian markets; although there is still concern on the amount Iran will charge for the natural gas. A second gas import possibility is an eventual link to the Dolphin project in Qatar. This project would supply natural gas from Qatar to Pakistan. A key issue for Pakistan's hydrocarbon sector is how best to supply fuels for the critical generation capacity expansions that the country needs. A Citizen's Guide to National Oil Companies Page 592 Pakistan: Oil & Gas Development Corporation Ltd. (OGDCL) Database Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of cluster Oil & Gas Development Governance Its Organization of NOCs and other Corporation Ltd (OGDCL) is sovereign enterprises in one of a cluster of 3 NOCs and country other sovereign enterprises along with Pakistan Petroleum Ltd (PPL) and Pakistan State Oil (PSO). Corporate Ownership Structure and Number of NOCs of 3 Governance Its Organization country Corporate Ownership Structure and Description of 2007 1 The government divested Governance Its Organization incorporation and 14.8% of total shares and ownership offered them to international and local institutional investors. Corporate Ownership Structure and % shares controlled by 2007 1 85.2% Governance Its Organization government Corporate Ownership Structure and Domestic, international 2007 1 London Stock Exchange, Governance Its Organization exchanges where shares Islamabad Stock Exchange, are listed Karachi Stock Exchange Corporate Ownership Structure and Domestic, international No data Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist Yes Governance Corporate Board of Directors (BOD) Description of BOD and 2007 1 Chairman and CEO, 10 Governance structure Directors Corporate Board of Directors (BOD) Is chairman also minister No Governance of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members 2007 1 All members of the BOD are Governance considered independent external except one director (external) and, if so, how who acts as the Ministry of are they appointed Petroleum & Natural Resources. Corporate Board of Directors (BOD) Term of service (years, No data Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and 2007 1 BOD's roles and policy Governance policy statements statements are established by the Human Resources Committee and the CEO, and published in the company's annual report. Corporate Role of BOD Based on available 2007 1 The BOD has the authority to Governance information, does BOD design strategies and evaluate have power, impact, projects which may provide a decision making authority competitive advantage in the industry. BOD is also responsible for supervising all corporate policies and codes of A Citizen's Guide to National Oil Companies Page 593 Pakistan: Oil & Gas Development Corporation Ltd. (OGDCL) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data ethics to ensure the activities are performed in an efficient and transparent manner. Corporate Recruitment/Replacement General process for No specific process for Governance Key Executives recruitment, replacement recruitment, replacement of key of key execs and senior executives is in place. managers Corporate Decision Making Level of NOC budget 2007 1 The BOD has approved Governance Processes authority. Comment on OGDCL's first Strategic and the general decision flow Business Plan quantifying within NOC and between physical and financial goals NOC and government for and objectives. The plan major projects. stipulates medium term physical and financial targets on a macro level which forms the platform for preparing budget on a yearly basis. Corporate Decision Making Based on available No data Governance Processes, Budget information, is NOC Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have 2007 2 The three national oil Governance Processes, Budget authority to partner with companies, OGDCL, PSO and Autonomy other entities? PPL, operate under joint ventures and partnerships with various international oil companies and other domestic firms. Corporate Mission and Objectives Does NOC have a mission 2007 1 "To become a competitive, Governance statement and, if so, what dynamic and growing E&P are key elements company, rapidly enhancing our reserves through world class workforce, best management practices and technology and maximizes returns to all stakeholders by capturing high value business opportunities within the country and abroad while being a corporate responsible citizen". Corporate Sources of Capital Based on available 2007 1 Financial information revealed Governance information, budgeting by the NOC includes revenues process and policy and cash flows. However, no including % of cash budgeting process is clearly flow/revenue available for stated. reinvestment Corporate Disclosure/Transparency Disclosure of audited data 2007 1 Data is disclosed and audited Governance Policy and other indications of by an international reliable disclosure and firm. transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, A Citizen's Guide to National Oil Companies Page 594 Pakistan: Oil & Gas Development Corporation Ltd. (OGDCL) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data other descriptors) Corporate Incentives/Career Based on available 2007 1 The Human Resources Governance Management information, HR committee consists of five promotion and professional directors including the CEO. development policies Responsible for approvals of appointments and promotions to the executive group, recommendation, guidance, restructuring the organization, and review of policies required under the code of corporate governance. Corporate Full Disclosure and Based on available No data. Governance Measurement of Non- information, brief commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available No data. Governance Measurement of Non- information, extent of non- commercial Objectives commercial obligations Value Operating Performance Upstream oil E&P. Where 2007 1 The company evaluates Creation does it operate (solely in opportunities, domestic and Metrics the country or abroad- overseas, to expand activities to name countries)? Does it other areas that may offer have sole access to attractive exploration and country's resources? development potential with a particular interest in those areas that complement their current exploration, development and production activities. OGDCL is the largest E&P company in Pakistan. Value Operating Performance Does the NOC operate Yes Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, OGDCL does not have a Creation storage, shipping pipeline infrastructure to Metrics entirely support upstream activities. The company has little storage capacity and no shipping network. Value Operating Performance Downstream oil refining & 2007 1 OGDCL does not operate in the Creation marketing, petrochemicals refining and marketing Metrics segment. Value Operating Performance Upstream natural gas E&P 2007 2 OGDCL produces 25% of the Creation country's natural gas. OMV is Metrics the foreign largest natural gas producer (17% of total country's production), other foreign operators are Eni, BP, and BHP Billiton. A Citizen's Guide to National Oil Companies Page 595 Pakistan: Oil & Gas Development Corporation Ltd. (OGDCL) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Midstream natural gas 2007 2 Pakistan's government is Creation pipelines, storage, LNG working on plans to build a Metrics pipeline that spans from Iran's natural gas reserves to India markets across Pakistan. However, no certainty on what NOC will be granted the opportunity to participate in this project. OGDCL has 29 oil and gas processing plants. These include dehydration, LPG, Sulfur Recovery, H2S Removal, Gas Sweetening, Condensate Stabilization, Refining and Compression Plants. Value Operating Performance Downstream natural gas OGDCL has downstream Creation distribution, NGL sales, natural gas and NGLsales. Metrics petrochemicals Value Operating Performance Other (power generation, None Creation etc) Metrics Value Operating Performance Avg reserve replacement 304% Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement $0.35 Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE production No data Creation (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration $1.06 Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics A Citizen's Guide to National Oil Companies Page 596 Pakistan: Oil & Gas Development Corporation Ltd. (OGDCL) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg operating cash flow vs No data Creation costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) 64% Creation Metrics Value Financial Performance Avg profit margin (%) 46% Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) No data Creation Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets (%) 37% Creation Metrics Value Financial Performance Avg return on total capital No data Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to 79% Creation State (%) Metrics A Citizen's Guide to National Oil Companies Page 597 Pakistan: Oil & Gas Development Corporation Ltd. (OGDCL) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available 2007 3 The Ministry of Petroleum and Factors information, presence of a Natural Resources is publicly articulated role of responsible for designing the hydrocarbon sector national policies for the with respect to national development of the development objectives hydrocarbon industry taking into account the national needs. Other Public Sector Governance Based on available 2007 3 The Ministry of Petroleum and Factors information, clear Natural Resources, through the definition of the roles of Oil and Gas Regulatory policy, commercial Authority has clearly defined operation and regulation the roles of policy and and assignment to specific regulation, and specific entities avoiding conflicts assignments to NOCs in order of interest to avoid conflicts of interests. Other Public Sector Governance Based on available 2007 1 The primary objective is to Factors information, presence of enhance its reserves and publicly stated objectives production profile. Accelerate ranked by priority for production growth, exploit NOC(s) exploration opportunities, maintain low cost operations, pursue selective international expansion, and implement international best practice. Other Public Sector Governance Based on available No data Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available 2008 8 Oil and gas revenues are Factors information, transparent detailed in the state budget. hydrocarbon sector There is no special revenue revenue management management mechanisms for including revenue oil and gas revenue, that are distribution within the treated as any other source of country funding. Other Public Sector Governance NOC and/or country 2008, 4, 5, 6 No participation in EITI or Factors participate in EITI and/or 2007 other transparency initiatives. other transparency Transparency International and initiatives National Democratic Institute both operate in Pakistan. Other Fiscal Sustainability Based on available 2007 1 Fiscal regime allows sufficient Factors information, do capital investment for OGDCL hydrocarbon sector fiscal to carry its activities. Gradual regimes allow for decline in Government of sufficient capital Pakistan (GoP) participation in investment E&P activities. No GoP participation in onshore concessions under 2001 Petroleum Policy. Other Fiscal Sustainability Based on available No data Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC A Citizen's Guide to National Oil Companies Page 598 Pakistan: Oil & Gas Development Corporation Ltd. (OGDCL) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data credit ratings Other Fiscal Sustainability Based on available 2007 2 The hydrocarbon sector fiscal Factors information, are regime, by offering tax and hydrocarbon sector fiscal royalty payment incentives to regimes appropriate for the oil companies, has favored the development stage of the development of the domestic domestic resource base resource base. Other Access to Reserves Hydrocarbon law to 2007 1 Upstream investment is Factors facilitate competitive becoming more attractive to upstream investment competition since the law has modified to invite and attract investors and IOCs to enhance exploration and production in Pakistan. Other Access to Reserves Based on available 2007 2 Existing contracts for upstream Factors information, existence of activities involve BP, ENI, negotiated OMV, OPI, Petronas and contracts/agreements for Tullow. upstream investment Other Operating Strategy Based on available 2007 2 The three national oil Factors information, types of joint companies, OGDCL, PSO and ventures, role of NOC(s) PPL, operate under joint ventures and partnerships with various international oil companies and other domestic firms. Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal 2007 1 Vertical Integration Factors integration Other International Presence Does NOC make 2007 1 Yes Factors investments abroad Other International Presence Avg company international No data Factors BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company international No data Factors refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company international No data Factors refinery capacity as % company total refinery capacity A Citizen's Guide to National Oil Companies Page 599 Pakistan: Oil & Gas Development Corporation Ltd. (OGDCL) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in Yes Factors upstream Other Commercialization Competition level in 2007 1 Competitors in upstream Factors upstream including non- activities are not required to NOC participants and include NOC as partner. requirement to include NOC as partner Other Commercialization Competition level in 2007 1 Competitors in mid and Factors midstream, downstream downstream activities are not including non-NOC required to include NOC as participants and partner. Pakistan has 5 requirement to include refineries with capacity just NOC as partner under 270,000 B/D. Domestic demand offsets domestic supply; therefore, Pakistan must import refined products. PSO leads Pakistan's fuel distribution market. Other Commercialization Based on available 2007 2 Major IOCs operating in Factors information, prevalence Pakistan include BP, ENI, and success of NOC/non- OMV (Austria), Orient NOC alliances, joint Petroleum Inc (OPI Canada), ventures Petronas (Malaysia) and Tullow (Ireland). Other Commercialization Partial privatization of the 2007 1 In response to conditions laid Factors NOC (as measured by down by lenders like the ownership structure) International Monetary Fund and the World Bank, the government of Pakistan continues to strive for privatization of the three state- owned companies. The government has offered a 51% stake in PPL, 54% of PSO and has divested 15% of OGDCL. Other Commercialization Based on available 2007 1 OGDCL international Factors information, level and operations vary depending on quality of NOC the opportunities abroad. international operations Neither specific budget nor number of international operations is settled. Other Commercialization Based on available Not listed Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, 2007, 3, 2 There is no independent Factors well-funded and trained 2007 regulator for the upstream but regulatory agencies, HC the Oil & Gas Regulatory agency name, budget, Authority oversees midstream number of staff and downstream activties. Ministry of Petroleum and Natural Resources grants oil A Citizen's Guide to National Oil Companies Page 600 Pakistan: Oil & Gas Development Corporation Ltd. (OGDCL) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data concessions by open tender and by private negotiation. Other Regulation NOCs are compelled to 2007 3 Competitive market pricing is a Factors adopt practices that would responsibility of the Oil and provide results similar to Gas Regulatory Authority in those in competitive order to create a working markets with price, access environment where the interests to and quality of energy of all stakeholders namely the services. brief description: consumer, investor and the HC agency enforcement government are protected powers through independent and fair regulatory practices. Other Regulation Regulators assure market 2007 3 The Oil and Gas Regulatory Factors transparency and good Authority along with the quality, unbiased data and Minister of Petroleum and information. HC agency Natural Resources are in charge independence indicators of ensuring market transparency, quality of the goods and services and data information provided by the OGDCL Other Regulation Regulators effectively 2007 3 Oil and Gas Regulatory Factors resolve disputes and Authority is responsible for conflicts and address effectively addressing and public concerns about resolving disputes related to development of and access mid and downstream activities, to hydrocarbon resources the Minister of Petroleum and and infrastructure. HC Natural Resources is agency dispute resolution responsible to address and policy resolve disputes regarding upstream activities performed by the OGDCL. Other Non-commercial Provision and level of Fuel subsidies are actively used Factors Objectives hydrocarbon price in Pakistan and a number of subsidies ($/BOE issues exist with regard to cost production) provided by to government and transfers NOC and/or government. from OGDCL and other NOCs. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of No data Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC $188.47 Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations $1.61 Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance $150.49 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Data is disclosed and audited Comments reliability of data provided by an international reliable by NOC(s) and firm. governments A Citizen's Guide to National Oil Companies Page 601 Pakistan: Oil & Gas Development Corporation Ltd. (OGDCL) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Longevity of NOC Based on available 2007 1 In 1961 the government of Comments information, history and Pakistan signed a long-term persistence of NOC(s) loan agreement with Russia to finance equipment and services for exploration. Later, a number of donor agencies such as the World Bank, Canada International Development Agency and the Asian Development Bank, supported major development projects in forms of loans and grants which ultimately resulted in major oil and gas discoveries between 1968 and 1982. By 1989 the company began to operate with self generated funds. OGDCL not only generated internal funds to meet its debt obligations but also invested enough resources in exploration to increase the country's reserves and production. In 2003 disinvested 2.5% of its shareholdings and on December 2006 divested a further 10% of its holdings. The company is now listed in the London Stock Exchange. Other Country Status Trends and issues related 2007 2 In the last few years oil and gas Comments to country hydrocarbon production in Pakistan has been sector endowments and very slowly growing. The performance country is dependent on oil imports to satisfy domestic demand. Demand for refined petroleum products has also exceeded domestic oil refinery capacity; nearly half of the oil imports are refined products. Fuel subsidies exacerbate downstream capacity constraints by discouraging efficiency and spurring demand growth. The government is planning to build a pipeline that spans from Iran's natural gas reserves to Indian markets; although there is still concern on the amount Iran will charge for the natural gas. A second gas import possibility is an eventual link to the Dolphin project in Qatar. This project would supply natural gas from Qatar to Pakistan. A key issue for Pakistan's hydrocarbon sector is how best to supply A Citizen's Guide to National Oil Companies Page 602 Pakistan: Oil & Gas Development Corporation Ltd. (OGDCL) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data fuels for the critical generation capacity expansions that the country needs. Other Non-commercial Number of employees 11,000 Factors Objectives Other Non-commercial BOE production per 7,875 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 26.62 Factors Other Oil Dependency Net oil and gas export -31.10% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues -4.59% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 376.80 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 30,017.46 Factors reserves (BCF) Other Resource Endowment Total all source BOE 5,552.22 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 6.79% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.12% Factors split, production (%) A Citizen's Guide to National Oil Companies Page 603 Pakistan: Oil & Gas Development Corporation Ltd. (OGDCL) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Operating Conditions Country BOE production 65.22% Factors as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 604 Pakistan: Oil & Gas Development Corporation Ltd. (OGDCL) Sources of Information Source # Year of Source Description Links Source 1 2007 OGDCL www.ogdcl.com 2 2007 USEIA Country www.eia.doe.gov Analysis Brief - Pakistan 3 2007 Pakistan Ministry of http://202.83.164.26/wps/portal/Mopnr Petroleum 4 2008 EITI http://eitransparency.org/supporters/companies 5 Current Transparency http://www.transparency.org.pk/ International - Pakistan 6 2007 National Democratic http://www.ndi.org/worldwide/asia/pakistan/pakistan.asp Institute - Pakistan 7 2008 Google Finance http://finance.google.com/finance?q=KAR:OGDC 8 2008 Ministry of Finance http://www.finance.gov.pk/ A Citizen's Guide to National Oil Companies Page 605 The NOCs in Sub-Saharan Africa A Citizen's Guide to National Oil Companies Page 606 Angola: Sonangol Angola: Sonangol Summary Report Corporate Governance Highlights Corporate Organization and Ownership Despite having the government as the sole shareholder, Sonangol has always been governed as a private company. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings Not listed Board of Directors Structure After incorporation of Sonangol, a management committee was established to create necessary corporate infrastructure for developing business activities. This committee was later converted into a body called the Administration Council, consisting of 5 members (1 chairman, 4 VPs). Independent Board Members There are no independent board members. Normally the proposal for nomination comes from the Chairman, which should be validated by the Petroleum Minister and finally approved by the Council of Ministers (presided over by the President of Angola). Is chairman also minister of energy or otherwise appointed by head of state? The chairman is not the Minister of Energy. The council of Ministers (presided over by the President of Angola) appoints the BOD, including its chairman. Operations Highlights Upstream Oil Solely in Angola. However, Sonangol has sought, and achieved, international equity positions in the LNG value chain. Midstream Oil Sonangol has subsidiaries in logistics (storage, etc.) and shipping. Downstream Oil JV partnerships exist for refineries, gas stations, lubes. Upstream Natural Gas Angola LNG (ALNG) will initiate operations with associated gas. Eventually, upstream gas will presumably work through JVs and PSAs using the same approach as upstream oil ventures. Midstream Natural Gas Sonangol is a JV partner in ALNG and has obtained an equity position in Gulf LNG, a receiving/regasification terminal under development by El Paso Corporation in Pascagoula, Mississippi. Downstream Natural Gas Not active at this time. Other Sonangol has a telecom subsidiary and shareholding positions in other non-oil companies, such as financial services, and food. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) No data Upstream: Average Annual Natural Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) No data Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) No data Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data A Citizen's Guide to National Oil Companies Page 607 Angola: Sonangol Categorization Indicators Categories: Scores: Corporate Corporate Governance 53 Governance 100 Public Sector Governance 43 Public Sector Oil Dependency Commercialization 50 50 Governance Fiscal Regimes 50 0 Resource Endowment 2 Resource Oil Dependency 34 Commercializa Endowment Local Contribution 0 Sector and Trade Openness 56 Fiscal Regimes Average 39 Sonangol Average NOC Worldwide Governance Indicators 1998 Voice and Accountability 2002 Political Stability Government Effectiveness Regulatory Quality Rule of Law Control of Corruption 2004 2006 0 25 50 75 100 Trends and Issues Angola has been recovering from years of civil war. Oil and natural gas production are important resources for Angola's economic development. Goverance has been improving over the past few years, but the road is difficult. Futher improvements in transparency and governance are needed for sustainable socio-economic development. A Citizen's Guide to National Oil Companies Page 608 Angola: Sonangol Database Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of 2008 2 Sonangol is the sole Governance Its Organization cluster of NOCs and concessionaire for oil exploration other sovereign and production; part owner of enterprises in country refineries; and partner in Angola LNG. Corporate Ownership Structure and Number of NOCs of 1 Governance Its Organization country Corporate Ownership Structure and Description of Sonangol was created in 1976 Governance Its Organization incorporation and through the nationalization of ownership ANGOL to carry out the prospecting, research, development, sales, production, transportation and the refining of hydrocarbons and their derivatives (directly or in association with foreign companies). Corporate Ownership Structure and % shares controlled by 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international Not listed Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international Not traded Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist Yes Governance Corporate Board of Directors (BOD) Description of BOD and 2008 2 After incorporation of Sonangol, Governance structure a management committee was established to create necessary corporate infrastructure for developing business activities. This committee was later converted into a body called the Administration Council, consisting of 5 members (1 chairman, 4 VPs). Corporate Board of Directors (BOD) Is chairman also minister The chairman is not the Minister Governance of energy or otherwise of Energy. The council of appointed by head of Ministers (presided over by the state President of Angola) appoints the BOD, including its chairman. Corporate Board of Directors (BOD) Are any BOD members Normally the proposal for Governance considered independent nomination comes from the (external) and, if so, how Chairman, which should be are they appointed validated by the Petroleum Minister and finally approved by the Council of Ministers (presided by the President of Angola). A Citizen's Guide to National Oil Companies Page 609 Angola: Sonangol Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Board of Directors (BOD) Term of service (years, BOD members serve 3-year Governance with re-appointment). appointments, possibly except the Comment if they can be chairman. Indications are that readily removed. appointments actually are for 4 years and renewable for another 4. Corporate Role of BOD Description of role and The BOD is the primary decision- Governance policy statements making body in matters of overall strategy, and authorization for investment expenditures. Corporate Role of BOD Based on available It appears that the BOD has great Governance information, does BOD authority. have power, impact, decision making authority Corporate Recruitment/Replacement General process for Key executives and Governance Key Executives recruitment, replacement Administration Council members of key execs and senior are the same people; the managers Administration Council appears to be an Executive Management Team. Corporate Decision Making Level of NOC budget Within Sonangol, the Governance Processes authority. Comment on Administration Council is the the general decision flow primary decision-making body in within NOC and between matters of overall strategy and the NOC and government for authorization for investment major projects. expenditures. It also oversees corporate strategies regarding performance, rentability and international expansion. Corporate Decision Making Based on available It appears that Sonangol has Governance Processes, Budget information, is NOC considerable autonomy, both in Autonomy budget process terms of budget process and predictable and separate decision making. Several from government sources, including the International Monetary Fund, have reported concerns over the lack of transparency in internal management processes, as well as in the financial transactions between the state and the NOC. Corporate Decision Making Does the NOC have 2008 2 Partnering is the "modus Governance Processes, Budget authority to partner with operandi" for Sonangol. JVs and Autonomy other entities? PSAs are used in the upstream and partnerships in refineries. A Citizen's Guide to National Oil Companies Page 610 Angola: Sonangol Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Mission and Objectives Does NOC have a 2008 2 "Sonangol's prime objective is the Governance mission statement and, if prospecting, research, so, what are key elements development, production, transportation, commercialization and transformation of liquid and gaseous hydrocarbons and their derivatives, including petrochemicals. The stated vision: Become an integrated and competitive company; maintain itself as a catalyst of national development; meet its responsibilities with the State, economic partners and society overall; become one of the key players in the African oil market; project itself as a prestigious entity within the international market." Corporate Sources of Capital Based on available 2008 2 Sonangol appears to generate Governance information, budgeting sufficient funding through its process and policy business operations. In addition, including % of cash Sonangol acts as rent collector on flow/revenue available behalf of the state. for reinvestment Corporate Disclosure/Transparency Disclosure of audited No data Governance Policy data and other indications of disclosure and transparency Corporate Skill Base Based on available Company demographics and Governance information, NOC human resources are not publicly demographics (% disclosed. However, manpower management, % issues in Angola are reported by technical, other various sources as acute. descriptors) Sonangol's - and its international partners' ­ efforts and investment to build a skilled Angolan workforce have been relatively successful, but the needs remain important. Corporate Incentives/Career Based on available No data Governance Management information, HR promotion and professional development policies Corporate Full Disclosure and Based on available 2008 2 "Our commitment to sustainable Governance Measurement of Non- information, brief development and the stability of commercial Objectives description of reporting Angola is the central premise of on noncommercial our philosophy. This commitment objectives is visible in the annual budget set aside for investment in community projects." A Citizen's Guide to National Oil Companies Page 611 Angola: Sonangol Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Full Disclosure and Based on available 2008 2 "In pursuing its social objective, Governance Measurement of Non- information, extent of Sonangol can constitute new commercial Objectives non-commercial companies and acquire all or part obligations of the capital of an established company. Whenever it obtains a totality or a majority of the voting capital of said companies, it will establish the coordination, economic and financial direction and the business development of the said company." Value Operating Performance Upstream oil E&P. 2008 2 Solely in Angola. However, Creation Where does it operate Sonangol has sought, and Metrics (solely in the country or achieved, international equity abroad-name countries)? positions in the LNG value chain. Does it have sole access to country's resources? Value Operating Performance Does the NOC operate 2008 2 No Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, 2008 2 Sonangol has subsidiaries in Creation storage, shipping logistics (storage, etc.) and Metrics shipping. Value Operating Performance Downstream oil refining 2008 2 JV partnerships exist for Creation & marketing, refineries, gas stations, lubes. Metrics petrochemicals Value Operating Performance Upstream natural gas 2008 2 Angola LNG (ALNG) will Creation E&P initiate operations with associated Metrics gas. Eventually, upstream gas will presumably work through JVs and PSAs using the same approach as upstream oil ventures. Value Operating Performance Midstream natural gas 2008 2 Sonangol is a JV partner in Creation pipelines, storage, LNG ALNG and has obtained an equity Metrics position in Gulf LNG, a receiving/regasification terminal under development by El Paso Corporation in Pascagoula, Mississippi. Value Operating Performance Downstream natural gas Not active at this time. Creation distribution, NGL sales, Metrics petrochemicals Value Operating Performance Other (power generation, 2008 2 Sonangol's non-oil activities Creation etc) include telecommunications, air Metrics transportation, banking and insurance, training, and shipping, etc. Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics A Citizen's Guide to National Oil Companies Page 612 Angola: Sonangol Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE No data Creation production (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream Metrics capital expenditures (%) Value Operating Performance Avg upstream No data Creation exploration and Metrics production expenses ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all No data Creation taxes ($/BOE) Metrics Value Operating Performance Avg effective tax rate No data Creation (%) Metrics Value Operating Performance Avg operating cash flow No data Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation throughput (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics A Citizen's Guide to National Oil Companies Page 613 Angola: Sonangol Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin No data Creation (%) Metrics Value Financial Performance Avg profit margin (%) No data Creation Metrics Value Financial Performance Avg effective tax rate No data Creation (%) Metrics Value Financial Performance Avg reinvestment risk No data Creation (%) Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total No data Creation capital employed (%) Metrics Value Financial Performance Avg fiscal contribution to No data Creation State (%) Metrics Other Public Sector Governance Based on available Sonangol is central to Angola's Factors information, presence of economic development strategy. a publicly articulated role It is the largest source of revenue of the hydrocarbon sector for the government and provides with respect to national subsidized fuel to government development objectives agencies. The company invests in social projects (education, housing, health, culture) and in other businesses (telecommunications, financial services, food and agriculture, shipping, air transportation, etc). Other Public Sector Governance Based on available Angola's policy of economic Factors information, clear diversification envisions the definition of the roles of separation of the regulatory and policy, commercial commercial roles ­ currently operation and regulation carried out by Sonangol. Many and assignment to industry observers have raised specific entities avoiding concerns over the lack of clarity conflicts of interest on oversight roles and responsibility, and the potential conflict of interests arising from Sonagol's complex mandate. A Citizen's Guide to National Oil Companies Page 614 Angola: Sonangol Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available Although the prime objective for Factors information, presence of Sonangol is stated to be an oil publicly stated objectives company, the social objective is a ranked by priority for close second (if not actually the NOC(s) first). This is possibly a consequence of Angola's reconstruction imperatives. Other Public Sector Governance Based on available Human resources are the biggest Factors information, presence of challenge in Angola, but a strategy to transfer Sonangol is one of the best NOC non-commercial staffed entities in the country. In objectives to government addition, Sonangol provides or other agencies as target training to other capacity becomes government agencies in view of available the tranfer of certain of its funtions to these entities. Other Public Sector Governance Based on available Over the past few years, the Factors information, transparent government appears to have made hydrocarbon sector some efforts towards public revenue management disclosure of revenue flows from including revenue extractive industry. However, distribution within the overall transparency remains country relatively low. There is no petroleum revenue fund in Angola ­ although according to financial observers the creation of a saving and stabilization fund is being considered. Other Public Sector Governance NOC and/or country Angola did not opt for the Factors participate in EITI and/or adoption of EITI principles and other transparency standards. A 2002 law allows the initiatives government to withhold information that may be considered to be against national security. Other Fiscal Sustainability Based on available Yes. Production in Angola has Factors information, do doubled between 2003 and 2007. hydrocarbon sector fiscal Success rates are high, leading to regimes allow for high investors' interest and sufficient capital substantial signature bonuses. investment Other Fiscal Sustainability Based on available Sonangol is not traded and does Factors information, do not raise funds through increases hydrocarbon sector fiscal in its share capital. regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available Yes. Success in offshore Factors information, are exploration led to an increase in hydrocarbon sector fiscal proved reserves. The PSA terms regimes appropriate for appear to be attractive relative to the development stage of country's resource potential based the domestic resource on positive investor response to A Citizen's Guide to National Oil Companies Page 615 Angola: Sonangol Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data base Angola's bidding rounds. Other Access to Reserves Hydrocarbon law to Upstream is open; investors Factors facilitate competitive partner with Sonangol. Angola upstream investment has a PSA and holds bidding rounds for awarding blocks. Other Access to Reserves Based on available No data Factors information, existence of negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available Sonangol is a JV partner in Factors information, types of refineries and ALNG. joint ventures, role of NOC(s) Other Operating Strategy Based on available Sonangol's partners manage Factors information, extent of turnkey contracts. turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal The preference of the company Factors integration seems to be for both vertical and horizontal integration; this is consistent with the company's socioeconomic goals. As described before, the company has midstream and downstream assets and looks for other opportunities along the value chain. Other International Presence Does NOC make Sonangol has offices in Houston, Factors investments abroad Congo, Hong Kong, Singapore and London but no apparent physical assets or investments (at present). Sonangol clearly has interest in how its production is marketed and sold abroad, and clearly wants to participate in order to add value to its revenue streams. Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make Yes Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput A Citizen's Guide to National Oil Companies Page 616 Angola: Sonangol Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in Yes. Major IOCs operate in Factors upstream Angola as do prominent NOCs, including more recently the Chinese NOCs and service companies (including services, construction and others). Other Commercialization Competition level in Competition is strong among Factors upstream including non- international companies; NOC participants and partnership with Sonangol is requirement to include required. NOC as partner Other Commercialization Competition level in Not much competition. Refinery Factors midstream, downstream partnerships exist with Sonangol; including non-NOC distribution and marketing is participants and mostly dominated by Sonangol requirement to include subsidiaries. Angola's NOC as partner downstream market is too small to attract much IOC interest. Other Commercialization Based on available JVs in Angola appear very Factors information, prevalence successful as measured by and success of NOC/non- increases in production, exports NOC alliances, joint and continued investment. ventures Other Commercialization Partial privatization of 0% Factors the NOC (as measured by ownership structure) Other Commercialization Based on available 2008 2 Sonangol has offices in Houston, Factors information, level and Congo, Hong Kong, Singapore quality of NOC and London but no apparent international operations physical assets or investments (at present). Other Commercialization Based on available 2008 2 Per above, Sonangol has certain Factors information, percent of business activities in telecoms, non-core commercial financial services and food. activities in overall operations Other Regulation Presence of independent, 2008 2 Currently, there is no separate Factors well-funded and trained regulator. Sonangol also acts as regulatory agencies, HC the regulator (bidding rounds, agency name, budget, etc.). number of staff A Citizen's Guide to National Oil Companies Page 617 Angola: Sonangol Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Regulation NOCs are compelled to 2008 2 No independent HC regulation.. Factors adopt practices that "Sonangol has the exclusive would provide results rights to oil and gas exploration similar to those in and production in Angola - both competitive markets with onshore and offshore. The price, access to and process of negotiating and quality of energy granting oil concessions, as well services. brief as aftermath control, is the description: HC agency responsibility of Sonangol enforcement powers Holding." Other Regulation Regulators assure market No independent HC regulation. Factors transparency and good quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively No independent HC regulation. Factors resolve disputes and Disputes appear to be resolved at conflicts and address the executive level. public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of 2008 2 Sonangol provides fuel at below Factors Objectives hydrocarbon price market price to other government subsidies ($/BOE entities. production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of 2008 2 Indications are that Factors Objectives direct NOC funding of socioeconomic development country social and programs are part of Sonangol's economic programs. annual budget, reaching millions brief description of of dollars. programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation No data Factors Objectives obligations relative to workforce ($ M) Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) A Citizen's Guide to National Oil Companies Page 618 Angola: Sonangol Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Quality of Data Availability, extent, Sonangol makes available terms Comments reliability of data and conditions for bidding and provided by NOC(s) and participation, applicable laws, governments fiscal terms, bid packages. Transparency with respect to Sonangol's operations, especially financial data, and government revenue flows, is limited. A 2002 law empowers the government to keep data secret under the disguise of national security. Other Longevity of NOC Based on available Sonangol was established in Comments information, history and 1976. Since then, its finacial and persistence of NOC(s) operational strength and its political influence have been growing. Other Country Status Trends and issues related Angola is still recovering from Comments to country hydrocarbon the civil war. Oil and natural gas sector endowments and production are important performance resourece for the country's economic development. Futher improvements in transparency and governance will allow the country to sustainable socio- economic development. Other Non-commercial Number of employees No data Factors Objectives Other Non-commercial BOE production per No data Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 14.70 Factors Other Oil Dependency Net oil and gas export 91.89% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas 65.58% Factors revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 9,035.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 1,620.00 Factors reserves (BCF) Other Resource Endowment Total all source BOE 9,314.31 Factors reserves (MM Barrels) A Citizen's Guide to National Oil Companies Page 619 Angola: Sonangol Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 97.00% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 100.00% Factors split, production (%) Other Operating Conditions Country BOE production 2,508.05% Factors as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership Yes Factors A Citizen's Guide to National Oil Companies Page 620 Angola: Sonangol Sources of Information Source # Year of Source Source Description Links 1 2008 USEIA Country Analysis Brief - Angola http://www.eia.doe.gov/emeu/international/contents.html 2 2008 Sonangol web site www.sonangol.co.ao 3 Current Ministry of Energy and Water http://www.angola-portal.ao/MINEA/Default.aspx 4 2008 USEIA International database http://www.eia.doe.gov/emeu/international/contents.html 5 2008 Ministry of Finance http://www.minfin.gv.ao/ 6 2008 National Bank of Angola http://www.bna.ao/ A Citizen's Guide to National Oil Companies Page 621 Cameroon: Société Nationale des Hydrocarbures (SNH) Cameroon: Société Nationale des Hydrocarbures (SNH) Summary Table Corporate Governance Highlights Corporate Organization and Ownership No data Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings Not listed Board of Directors Structure No data Independent Board Members No data Is chairman also minister of energy or otherwise appointed by head of state? No data Operations Highlights Upstream Oil SNH operates solely in country. Midstream Oil No. Cameroon Oil Tranportation Company (COTCO) is the owner of the Cameroon portion of the Chad-Cameroon Pipeline. Downstream Oil Societe Nationale de Rafinage (SONARA) is another NOC responsible for running the country's only refinery. Upstream Natural Gas Currently there is no non-associated gas production; associated gas is used for oil recovery and in-field power generation. In 2006, Perenco and SNH signed a 25-year PSA to develop the offshore Sanaga Sud natural gas fields; production will be used for power generation. Midstream Natural Gas No Downstream Natural Gas No Other No Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) 20 Upstream: Average Annual Natural Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) No data Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) No data Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data A Citizen's Guide to National Oil Companies Page 622 Cameroon: Société Nationale des Hydrocarbures (SNH) Categorization Indicators Categories: Scores: Corporate Governance 44 Corporate Governance Public Sector Governance 50 100 Commercialization 0 Public Sector Oil Dependency 50 Governance Fiscal Regimes 25 0 Resource Endowment 0 Resource Oil Dependency 91 Commercializati Endowment Local Contribution 0 Fiscal Regimes Sector and Trade Openness 67 Average 35 SNH Average NOC Worldwide Governance Indicators Trends and Issues Oil exports account for a quarter of fiscal revenues and 40-45% of export revenues but only 10% of Cameroon's GDP. The constant decline of production over the last two decades has encouraged the government to progressively liberalize the sector in order to attract investments. The government is also actively exploring ways to reduce the dependence on oil. However, unless measures are introduced to improve the transparency, accountability, and independence of state institutions, Cameroon's business environment is likely to remain challenging for foreign investors over the coming years. A Citizen's Guide to National Oil Companies Page 623 Cameroon: Société Nationale des Hydrocarbures (SNH) Database Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of cluster 2008 1 Société Nationale des Governance Its Organization of NOCs and other Hydrocarbures (SNH) for sovereign enterprises in upstream and Société country Nationale de Rafinage (SONARA) for refining. Corporate Ownership Structure and Number of NOCs of 2 Governance Its Organization country Corporate Ownership Structure and Description of No data Governance Its Organization incorporation and ownership Corporate Ownership Structure and % shares controlled by 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international Not listed Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international Not traded Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist Yes Governance Corporate Board of Directors (BOD) Description of BOD and No data Governance structure Corporate Board of Directors (BOD) Is chairman also minister No data Governance of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members No data Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, No data Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and No data Governance policy statements Corporate Role of BOD Based on available No data Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget No data Governance Processes authority. Comment on the general decision flow within NOC and between NOC and government for A Citizen's Guide to National Oil Companies Page 624 Cameroon: Société Nationale des Hydrocarbures (SNH) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data major projects. Corporate Decision Making Based on available 2008 3 Annual financial statements Governance Processes, Budget information, is NOC and production statistics are Autonomy budget process predictable publicly available, and are and separate from locally audited. But the level government of detail is not sufficient to have an understanding of the key performance indicators. By comparing annual statements over the years, it can be noted that capital investment requirements appear predictable, e.g., amounts needed for partnership activities. Corporate Decision Making Does the NOC have 2008 3 Yes, most operations are Governance Processes, Budget authority to partner with partnerships with Autonomy other entities? international companies. Corporate Mission and Objectives Does NOC have a mission 2008 3 To promote development of Governance statement and, if so, what hydrocarbons in Cameroon are key elements and to manage the state's interests. Corporate Sources of Capital Based on available 2008 4 "Net" revenue transfers from Governance information, budgeting SNH to the Treasury are process and policy indicated in its annual including % of cash accounts. SNH appears to flow/revenue available for have control over its cash reinvestment flow for reinvestment and/or distribution to its shareholder. Corporate Disclosure/Transparency Disclosure of audited data 2008 4 SNH accounts are audited Governance Policy and other indications of locally, certifications for disclosure and which are available on transparency company web site. Corporate Skill Base Based on available 2008 3 283 employees, all Governance information, NOC Cameroonians. demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available No data Governance Management information, HR promotion and professional development policies Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, brief commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available 2008 3 SNH does not seem to have a Governance Measurement of Non- information, extent of non- specific focus on non- commercial Objectives commercial obligations commercial activities. A Citizen's Guide to National Oil Companies Page 625 Cameroon: Société Nationale des Hydrocarbures (SNH) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Upstream oil E&P. Where 2008 3 SNH operates solely in Creation does it operate (solely in country. Metrics the country or abroad- name countries)? Does it have sole access to country's resources? Value Operating Performance Does the NOC operate 2008 3 No. Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, 2008 3 No midstream operations. Creation storage, shipping Cameroon Oil Transportation Metrics Company (COTCO) is the owner of the Cameroon portion of the Chad- Cameroon Pipeline (CCP). Value Operating Performance Downstream oil refining & 2008 3 Societe Nationale de Rafinage Creation marketing, petrochemicals (SONARA) is another NOC Metrics responsible for running the country's only refinery. Value Operating Performance Upstream natural gas E&P 2007 1 Currently there is no non- Creation associated gas production; Metrics associated gas is used for oil recovery and in-field power generation. In 2006, Perenco and SNH signed a 25-year PSA to develop the offshore Sanaga Sud natural gas fields; production will be used for power generation. Value Operating Performance Midstream natural gas 2008 3 No Creation pipelines, storage, LNG Metrics Value Operating Performance Downstream natural gas 2008 3 No Creation distribution, NGL sales, Metrics petrochemicals Value Operating Performance Other (power generation, 2008 3 No Creation etc) Metrics Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE production -1% Creation (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) A Citizen's Guide to National Oil Companies Page 626 Cameroon: Société Nationale des Hydrocarbures (SNH) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow vs No data Creation costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) No data Creation Metrics Value Financial Performance Avg profit margin (%) No data Creation Metrics A Citizen's Guide to National Oil Companies Page 627 Cameroon: Société Nationale des Hydrocarbures (SNH) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) No data Creation Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total capital No data Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to No data Creation State (%) Metrics Other Public Sector Governance Based on available No data. Factors information, presence of a publicly articulated role of the hydrocarbon sector with respect to national development objectives Other Public Sector Governance Based on available No data. Factors information, clear definition of the roles of policy, commercial operation and regulation and assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available No data. Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available No data Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available 2007, 2, 5 Information on the EITI web Factors information, transparent Current site indicates that some hydrocarbon sector revenue data is being revenue management provided. EITI notes that, including revenue "Although oil production in distribution within the Cameroon declined during the country 1990s, oil revenues still contributed 24% of government fiscal revenue, 50% of export earnings and A Citizen's Guide to National Oil Companies Page 628 Cameroon: Société Nationale des Hydrocarbures (SNH) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data about 6% of GDP in 2003". Information on "net revenue" tansfers from SNH to the Treasury is shown in SNH's Annual Reports. Other Public Sector Governance NOC and/or country 2007, 2, 5 Cameroon is an EITI Factors participate in EITI and/or Current candidate country. In June other transparency 2005, a World Bank mission initiatives visited the country to identify potential EITI stakeholders. The Government created a multi-stakeholder Committee to implement the EITI. In September 2005, a second Bank mission and the EITI Committee drafted an Action Plan, which was adopted and published in major local newspapers. The Government started to publish past audits of SNH as part of an IMF monitored program. Transparency International maintains operations in Cameroon. Other Fiscal Sustainability Based on available Cameroon has been a net Factors information, do exporter and offered new hydrocarbon sector fiscal incentives in 1999 and 2002 regimes allow for to attract more investment sufficient capital and arrest decline in investment production with some success. Early 2007 bid round attracted new investmentm especially in the Rio del Rey basin. But many bids were unacceptable to SNH. Other Fiscal Sustainability Based on available No data. Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available Most oil basins in Cameroon Factors information, are are already developed hydrocarbon sector fiscal although SNH believes that regimes appropriate for the there are still opportunities development stage of the for smaller fields. The next domestic resource base stage may focus more on developing natural gas reserves (estimated at 3.9 TCF) for power generation. A Citizen's Guide to National Oil Companies Page 629 Cameroon: Société Nationale des Hydrocarbures (SNH) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Access to Reserves Hydrocarbon law to 2007 1 Cameroon is a net exporter of Factors facilitate competitive oil but production has been upstream investment declining. In 1999 and 2002, Cameroon offered new financial incentives and tax breaks to attract new third party investments. The first PSA was signed in 2005. New production by Total halted Cameroon's production decline, at least temporarily. Major players in both Chad and Cameroon include ExxonMobil, Chevron, Petronas, Total, Shell, and Perenco. Other Access to Reserves Based on available Negotiated contracts exist for Factors information, existence of upstream investment. negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available SNH engages in PSAs. Factors information, types of joint ventures, role of NOC(s) Other Operating Strategy Based on available Turnkey operations are Factors information, extent of managed by the IOC turnkey contracts used operators. directly by NOC(s) Other Business Integration Vertical, horizontal There is no explicit strategy Factors integration of integration. There is a separate company for refining, for example. Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company international No data Factors BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company international No data Factors refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) A Citizen's Guide to National Oil Companies Page 630 Cameroon: Société Nationale des Hydrocarbures (SNH) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other International Presence Avg company international No data Factors refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in Yes, many of the largest IOCs Factors upstream operate and explore in Cameroon as well as smaller companies. Other Commercialization Competition level in Relative to the size of its Factors upstream including non- reserves and declining NOC participants and production over the years, a requirement to include large number of companies NOC as partner are present in Cameroon and partner with SNH in upstream. Other Commercialization Competition level in No data Factors midstream, downstream including non-NOC participants and requirement to include NOC as partner Other Commercialization Based on available No data. Factors information, prevalence and success of NOC/non- NOC alliances, joint ventures Other Commercialization Partial privatization of the 0% Factors NOC (as measured by ownership structure) Other Commercialization Based on available SNH does not invest Factors information, level and internationally. quality of NOC international operations Other Commercialization Based on available No data Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, There is no independent HC Factors well-funded and trained regulator. SNH represents regulatory agencies, HC state's interests, and promotes agency name, budget, development of HC resources number of staff in country. A Citizen's Guide to National Oil Companies Page 631 Cameroon: Société Nationale des Hydrocarbures (SNH) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Regulation NOCs are compelled to No data Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market No data Factors transparency and good quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively No data Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of 2006 7 Subsidies exist, funded Factors Objectives hydrocarbon price through SNH's revenue subsidies ($/BOE contributions to the state. In production) provided by 2005 Cameroon launched a NOC and/or government. program to reduce fuel brief description of subsidy subsidies with expectations of program, approach, cost implementation in 2007. The goal is to reduce the burden of losses incurred in SONARA. It is not clear what progress has been made. Other Non-commercial Provision and level of SNH does not seem to Factors Objectives direct NOC funding of sponsor such projects country social and directly; revenues are economic programs. brief transferred to the public description of programs treasury. and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, 2008 3 Locally audited financial Comments reliability of data provided reports are available at the by NOC(s) and SNH web site. However, governments these reports may not be consistent with international accounting standards. A Citizen's Guide to National Oil Companies Page 632 Cameroon: Société Nationale des Hydrocarbures (SNH) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Longevity of NOC Based on available SNH has existed since 1980 Comments information, history and and is likely to persist. persistence of NOC(s) Other Country Status Trends and issues related 2007 2 Oil exports account for a Comments to country hydrocarbon quarter of fiscal revenues and sector endowments and 40-45% of export revenues performance but only 10% of Cameroon's GDP. The constant decline of production over the last two decades has encouraged the government to progressively liberalize the sector in order to attract investments. The government is also actively exploring ways to reduce the dependence on oil.. However, unless measures are introduced to improve the transparency, accountability, and independence of state institutions, Cameroon's business environment is likely to remain challenging for foreign investors over the coming years. Other Non-commercial Number of employees 283 Factors Objectives Other Non-commercial BOE production per 71,567 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 35.83 Factors Other Oil Dependency Net oil and gas export 34.68% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues 9.28% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 400.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 3,900.00 Factors reserves (BCF) Other Resource Endowment Total all source BOE 1,072.41 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors A Citizen's Guide to National Oil Companies Page 633 Cameroon: Société Nationale des Hydrocarbures (SNH) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 37.30% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 100.00% Factors split, production (%) Other Operating Conditions Country BOE production 356.52% Factors as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 634 Cameroon: Société Nationale des Hydrocarbures (SNH) Sources of Information Source # Year of Source Description Links Source 1 2008 USEIA Country Analysis Brief - Chad and Cameroon http://www.eia.doe.gov/emeu/cabs/Chad_Cameroon/Oil. html 2 2007 EITI - Cameroon http://eitransparency.org/Cameroon 3 2008 SNH web site http://www.snh.cm/ 4 2008 SNG web site http://www.snh.cm/index.php?option=com_content&vie w=category&id=44&Itemid=54 5 Current Transparency International - Cameroon http://www.ti-cameroon.org/ 6 0 Cameroon Energy http://www.cameroonenergy.com/ 7 2006 Memorandum on Economic and Financial Policies of the http://www.spm.gov.cm/documents/art460_MPEF_lettr Government of Cameroon e_intention2007_a.pdf 8 0 Government of Cameroon - no web site for energy ministry http://www.spm.gov.cm/acceuil.php?lang=en available 9 2008 USEIA International database http://www.eia.doe.gov/emeu/international/contents.htm l A Citizen's Guide to National Oil Companies Page 635 Chad: Société des Hydrocarbures du Tchad (SHT) Chad: Société des Hydrocarbures du Tchad (SHT) Summary Report Corporate Governance Highlights Corporate Organization and Ownership SHT was created in 2006. The company is wholly owned by the government. By the end of 2007 the by-laws of the company were still under preparation. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings Not listed Board of Directors Structure No data Independent Board Members No data Is chairman also minister of energy or otherwise appointed by head of state? No data Operations Highlights Upstream Oil Upstream investments are made by foreign companies. Recently the government announced its desire to participate in exploration and production activities through the NOC. No details have been disclosed on actual or planned participation. Midstream Oil Tchad Oil Transportation Company (TOTCO) and Cameroon Oil Transportation Company (COTCO) are the operators for the Chad-Cameroon Pipeline (CCP). The government has a minority stake in both. SHT has no stake in TOTCO and/or COTCO. Downstream Oil The government, through the SHT, has a 40 percent stake in a refinery project operated by CNPC. Upstream Natural Gas No Midstream Natural Gas No Downstream Natural Gas No Other No Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) No data Upstream: Average Annual Natural Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) No data Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) No data Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data A Citizen's Guide to National Oil Companies Page 636 Chad: Société des Hydrocarbures du Tchad (SHT) Categorization Indicators Categories: Scores: Corporate Corporate Governance 34 Governance 100 Public Sector Governance 50 Public Sector Commercialization 0 Oil Dependency 50 Governance Fiscal Regimes 25 0 Resource Endowment 0 Oil Dependency 0 Resource Commercializa Local Contribution 0 Endowment Sector and Trade Openness 67 Fiscal Regimes Average 18 SHT Average NOC Worldwide Governance Indicators Trends and Issues Chad is still a frontier area for petroleum exploration. Improvements in the legal and fiscal framework, as well as the institutional environment will need to be made in order to attract foreign investors, especially given the deterioration in security and political environment. The lack of certainty of rights may affect the pace of exploration and development investments, with medium and long-term effects on the level of revenue and negative consequences on fiscal sustainability.The World Bank assisted development program for the Chad-Cameroon pipeline represented a unique attempt to manage exploitation of oil resources in a politically and geopolitically troubled country. Its withdrawal from the pipeline project, announced in September 2008, as a result of the government's failure to implement agreed poverty reduction measures may affect the investment environment and the sustainability of sector reforms. A Citizen's Guide to National Oil Companies Page 637 Chad: Société des Hydrocarbures du Tchad (SHT) Database Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data Corporate Ownership Structure and Sole NOC or one of cluster 2006 9 Société des Hydrocarbures du Governance Its Organization of NOCs and other 2007 1 Tchad (SHT) was founded in sovereign enterprises in 2006. country Corporate Ownership Structure and Number of NOCs of 1 Governance Its Organization country Corporate Ownership Structure and Description of No data Governance Its Organization incorporation and ownership Corporate Ownership Structure and % shares controlled by 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international Not listed Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international Not traded Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist No data Governance Corporate Board of Directors (BOD) Description of BOD and No data Governance structure Corporate Board of Directors (BOD) Is chairman also minister No data Governance of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members No data Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, No data Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and No data Governance policy statements Corporate Role of BOD Based on available No data Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget The SHT was created in 2006. Governance Processes authority. Comment on However, it was only by the the general decision flow end of 2007 that the within NOC and between government started to address NOC and government for its organization. No information major projects. has been made publicly available. But given the A Citizen's Guide to National Oil Companies Page 638 Chad: Société des Hydrocarbures du Tchad (SHT) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data importance of the petroleum sector as source of revenue for Chad, government intervention in SHT's decision making process is likely to be considerable. Corporate Decision Making Based on available No data. Governance Processes, Budget information, is NOC Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have 2008 7 Yes. SHT already has a joint Governance Processes, Budget authority to partner with venture with CNPC to build Autonomy other entities? and operate a refinery. Corporate Mission and Objectives Does NOC have a mission 2007, 1,4,9 SHT was organized by the Governance statement and, if so, what 2006 government to manage Chad's are key elements interests in hydrocarbon operations and partner on all petroleum contracts and agreements. Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data No data Governance Policy and other indications of disclosure and transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available No data Governance Management information, HR promotion and professional development policies Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, brief commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, extent of non- commercial Objectives commercial obligations Value Operating Performance Upstream oil E&P. Where SHT operates only in Chad. No Creation does it operate (solely in disclosure on SHT's Metrics the country or abroad- participation in upstream name countries)? Does it investments to date. have sole access to country's resources? A Citizen's Guide to National Oil Companies Page 639 Chad: Société des Hydrocarbures du Tchad (SHT) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data Value Operating Performance Does the NOC operate No data Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, Tchad Oil Transportation Creation storage, shipping Company (TOTCO) and Metrics Cameroon Oil Transportation Company (COTCO) are the operators for the Chad- Cameroon Pipeline (CCP). Value Operating Performance Downstream oil refining & 2008 7 SHT has a 40 percent share in a Creation marketing, petrochemicals joint venture with CNPC to Metrics build and operate a refinery, which is expected to begin operation in 2011. Value Operating Performance Upstream natural gas E&P 2008 8 Chad is not known to possess Creation any natural gas reserves. Due to Metrics its lack of reserves and infrastructure, Chad has no plans to develop a gas industry at the present time. Value Operating Performance Midstream natural gas No Creation pipelines, storage, LNG Metrics Value Operating Performance Downstream natural gas No Creation distribution, NGL sales, Metrics petrochemicals Value Operating Performance Other (power generation, No Creation etc) Metrics Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE production No data Creation (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics A Citizen's Guide to National Oil Companies Page 640 Chad: Société des Hydrocarbures du Tchad (SHT) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow vs No data Creation costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) No data Creation Metrics Value Financial Performance Avg profit margin (%) No data Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) No data Creation Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics A Citizen's Guide to National Oil Companies Page 641 Chad: Société des Hydrocarbures du Tchad (SHT) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total capital No data Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to No data Creation State (%) Metrics Other Public Sector Governance Based on available 2007 1,10 The contribution of the Factors information, presence of a petroleum sector to the publicly articulated role of country's economic the hydrocarbon sector development is recognized in with respect to national the revenue managemetn law development objectives 001/PR/99 (11 January 1999) as amended and implementing regulations (Decree 257/PR/MFI/07). The petroleum sector policy is however not publicly available. Other Public Sector Governance Based on available No data Factors information, clear definition of the roles of policy, commercial operation and regulation and assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available No data Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available No data Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available 2008 3 Law 01/PR/99 as amended and Factors information, transparent its implementing regulations hydrocarbon sector provides for the tansparent revenue management accumulation and use of oil including revenue revenue. Since the World Bank distribution within the announced its withdrawal from country the CCP in 2008, oil revenue and their use have not been published by the World Bank, the government, and the Collège de Contrôle et de Surveillance des Ressouces Pétrolières (a mixed government and civil society body entrusted with the oversight of petroleum A Citizen's Guide to National Oil Companies Page 642 Chad: Société des Hydrocarbures du Tchad (SHT) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data revenues). Other Public Sector Governance NOC and/or country 2008 11 In 2006 Chad elected to Factors participate in EITI and/or participate in EITI. other transparency Implementing regulation was initiatives passed in October 2007, and a multi-stakeholders group was appointed. However Chad has yet to obtain candidate status. Other Fiscal Sustainability Based on available 2006 5 Two IOCs and two NOCs hold Factors information, do petroleum exploration and hydrocarbon sector fiscal production rights in Chad. The regimes allow for fiscal regime is linked to sufficient capital project profitability, and should investment favor the development of large and marginal fields alike. Nevertheless, industry interest appears to be low. Political instability and the lack of certainty of contractual rights (frequent contract re- negotiation) may help to explain this. Other Fiscal Sustainability Based on available No data Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available The fiscal regime is linked to Factors information, are project profitability, and should hydrocarbon sector fiscal favor the development of large regimes appropriate for the and marginal fields alike. development stage of the domestic resource base Other Access to Reserves Hydrocarbon law to 2007, 1,4 "The Petroleum Revenue Factors facilitate competitive 2006 Management Law (law No. upstream investment 001/PR/99 of 1999) and amendments, such as law No. 002/PR/06 of 2006, defined the allocation of petroleum revenues. In 2000, the Chadian government revised its Petroleum Code. The revision allowed for production sharing agreements (PSAs) between foreign companies and the Chadian government. In addition, the government made the investment climate more attractive by reducing the corporate income tax rate from 50 percent to 45 percent. Further amendments to the Petroleum Code were under consideration in 2006." A Citizen's Guide to National Oil Companies Page 643 Chad: Société des Hydrocarbures du Tchad (SHT) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data Other Access to Reserves Based on available 2007 1 "Via SHT, Chad wants to Factors information, existence of control 60 percent of the negotiated country's oil sector. In August contracts/agreements for 2006, Chad's Oil Minister upstream investment announced the possibility of revising a previous agreement with the CCPDP consortium to add SHT as the fourth member. Also in August, the government accused Petronas and Chevron of not paying enough oil-profit tax due to a tax advantage agreement signed in 2000. The companies, which together control 60% of Chad's oil sector, are partners in the CCPDP with Exxon. After concluding negotiations, the two companies agreed in October 2006, to pay outstanding taxes for 2005 and 2006 totaling $289 million." Other Operating Strategy Based on available Joint venture between SHT and Factors information, types of joint CNPC for building and ventures, role of NOC(s) operating a refinery. No information available on SHT upstream participation. Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal With the new refinery under Factors integration construction, SHT will have participation in upstream and downstream. Other International Presence Does NOC make No. Factors investments abroad Other International Presence Avg company international Not applicable. Factors BOE production as % avg total company BOE production Other International Presence Change in company BOE Not applicable. Factors production from international operations (%) Other International Presence Does NOC make No. Factors investments abroad Other International Presence Avg company international Not applicable. Factors refinery throughput as % total refinery throughput Other International Presence Change in company Not applicable. Factors refinery throughput from international operations (%) A Citizen's Guide to National Oil Companies Page 644 Chad: Société des Hydrocarbures du Tchad (SHT) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data Other International Presence Avg company international Not applicable. Factors refinery capacity as % company total refinery capacity Other International Presence Change in company Not applicable. Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in Two IOCs hold petroleum Factors upstream rights in the Doba development in Chad. No information available on new entrants. Other Commercialization Competition level in According to some industry Factors upstream including non- obervers, the SHT may be NOC participants and required to be a partner. requirement to include NOC as partner Other Commercialization Competition level in The main midstream asset is Factors midstream, downstream CCP, structured as a public- including non-NOC private partnership. participants and requirement to include NOC as partner Other Commercialization Based on available No data. Factors information, prevalence and success of NOC/non- NOC alliances, joint ventures Other Commercialization Partial privatization of the 0% Factors NOC (as measured by ownership structure) Other Commercialization Based on available Not applicable. Factors information, level and quality of NOC international operations Other Commercialization Based on available No data. Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, 2006 9 The regulatory functions are Factors well-funded and trained carried out by the relevant regulatory agencies, HC sector ministries. SHT does not agency name, budget, have regulatory functions. number of staff Other Regulation NOCs are compelled to No data. Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers A Citizen's Guide to National Oil Companies Page 645 Chad: Société des Hydrocarbures du Tchad (SHT) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data Other Regulation Regulators assure market No data. Factors transparency and good quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively Local press has reported several Factors resolve disputes and labor and tax related disputes. conflicts and address However, major disputes public concerns about appear to be regulated out of development of and access court between the President of to hydrocarbon resources Chad and investors. and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of Fuel subsidies are provided by Factors Objectives hydrocarbon price the government through its subsidies ($/BOE utility company. production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of No data. Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC No data. Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data. Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance No data. Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Very little information is Comments reliability of data provided provided by the government of by NOC(s) and Chad. No web sites exist for governments SHT or government bodies in the energy sector. Other Longevity of NOC Based on available SHT was founded July 2006. Comments information, history and persistence of NOC(s) Other Country Status Trends and issues related Chad is still a frontier area for Comments to country hydrocarbon petroleum exploration. sector endowments and Improvements in the legal and performance fiscal framework, as well as the institutional environment will need to be made in order to attract foreign investors, especially given the deterioration in security and political environment. The lack of certainty of rights may affect the pace of exploration and development investments, with A Citizen's Guide to National Oil Companies Page 646 Chad: Société des Hydrocarbures du Tchad (SHT) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data medium and long-term effects on the level of revenue and negative consequences on fiscal sustainability.The World Bank assisted development program for the Chad-Cameroon pipeline represented a unique attempt to manage exploitation of oil resources in a politically and geopolitically troubled country. Its withdrawl from the pipeline project, announced in September 2008, as a result of the government's failure to implement agreed poverty reduction measures may affect the investment environment and the sustainability of sector reforms. Other Non-commercial Number of employees No data. Factors Objectives Other Non-commercial BOE production per No data. Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 17.2 Factors Other Oil Dependency Net oil and gas export No data. Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues No data. Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 900.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 0.00 Factors reserves (BCF) Other Resource Endowment Total all source BOE 900.00 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves A Citizen's Guide to National Oil Companies Page 647 Chad: Société des Hydrocarbures du Tchad (SHT) Indicator Indicator Description Indicator Year Source Response Category (Query) of Source of Data Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 100.00% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 100.00% Factors split, production (%) Other Operating Conditions Country BOE production 7,178.08% Factors as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 648 Chad: Société des Hydrocarbures du Tchad (SHT) Sources of Information Source # Year of Source Source Description Links 1 2007 USEIA Country Analysis Brief - Chad http://www.eia.doe.gov/emeu/cabs/Chad_Cameroon/Oi and Cameroon l.html 2 2008 Chad/Cameroon Development Project http://www.esso.com/Chad- English/PA/TD_HomePage.asp 3 2008 World Bank Chad/Cameroon Project www.worldbank.org/afr/ccproj 4 2006 USGS Minerals Yearbook - Chad http://minerals.usgs.gov/minerals/pubs/country/2006/m yb3-2006-cd.pdf 5 2006 BBC, petroleum tax disputes in Chad http://news.bbc.co.uk/2/hi/africa/5289580.stm 6 2008 USEIA International database http://www.eia.doe.gov/emeu/international/contents.ht ml 7 2008 Reuters news http://wap.alertnet.org/thenews/newsdesk/L915653.ht m 8 2008 Mbendi ­ Chad Oil and Gas http://www.mbendi.co.za/indy/oilg/af/ch/p0005.htm 9 2006 Journal Officiel de la Republique du Tchad ­ Août 2006 10 2008 CEFOD http://www.cefod.org 11 2008 EITI Progress Report May 2008 http://web.worldbank.org/WBSITE/EXTERNAL/TOPI CS/EXTOGMC/EXTEXTINDTRAINI/0,,contentMD K:21753604~pagePK:64168445~piPK:64168309~theS itePK:3634715,00.html 12 2008 BP Statistical Review of World Energy 2008 http://www.bp.com/sectiongenericarticle.do?categoryId =9023769&contentId=7044915 A Citizen's Guide to National Oil Companies Page 649 Congo (Brazzaville): Societe Nationale des Petroles du Congo (SNPC) Congo (Brazzaville): Societe Nationale des Petroles du Congo (SNPC) Summary Report Corporate Governance Highlights Corporate Organization and Ownership Societe Nationale des Petroles du Congo (SNPC) is one of SNPC Group's subsidiary/affiliated companies. SNPC oversees offshore and onshore oil exploration and production. Shares Controlled by Government 100% government owned. Domestic, International Exchanges for Equity Listings None Board of Directors Structure The existence of a BOD was acknowledged in the Action Plan for Implementation of SNPC's Audit Recommendations overseen by KPMG. Independent Board Members Unknown Is chairman also minister of energy or otherwise appointed by head of state? Unknown Operations Highlights Upstream Oil SNPC is involved via PSAs with non-NOC participants in all oil upstream activities. The majority of reserves are offshore accounting for 80% of production. Proven oil reserves increased from 1.5 million barrels in 2005 to 1.6 million barrels in 2007. Total's activity accounts for approximately 47% of Congo's oil production and ENI's accounts for 22%. Approximately 33% of total production corresponds to the government's share, and it is sold by SNPC on behalf of the state. Total is expected to bring online an offshore field in 2008 that will produce 90,000 B/D. In 2004 Chevron announced a significant discovery in the Common Interest Zone between Congo and Angola. Commercial production is not expected until 2012. Congo and Angola will share revenues equally. Midstream Oil There is one 71 kilometer oil pipeline. SNPC does not operate in this sector. Downstream Oil There is one 21,000 B/D refinery which is operated by a SNPC Group company CORAF. It operates at less than 50% capacity with prolonged periods of inactivity. In 2002, Hydro-Congo, a SNPC Group company, Chevron, Total and Tacoma/Puma- Energy (UK) formed a joint venture (SCLOG) to transport oil products in the country. There are about 100 service stations (affiliated with the SNPC Group) that also sell LPG. Upstream Natural Gas Most of Congo's natural gas reserves are associated gas. However, the country does not produce or consume gas due lack of proper production infrastructure. Congo does flare gas. The government would like to use gas for power generation. Midstream Natural Gas There is one 62 kilometer gas pipeline. SNPC does not operate in this sector. Downstream Natural Gas This sector does not exist in the Congo. Other None. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) 31 Upstream: Average Annual Proved Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) 4 A Citizen's Guide to National Oil Companies Page 650 Congo (Brazzaville): Societe Nationale des Petroles du Congo (SNPC) Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) No data Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data Categorization Indicators Categories: Scores: Corporate Governance 34 Corporate Public Sector Governance 39 Governance 100 Commercialization 33 Public Sector Fiscal Regimes 38 Oil Dependency 50 Governance Resource Endowment 0 0 Oil Dependency 42 Resource Commercializati Local Contribution 0 Endowment Sector and Trade Openness 58 Fiscal Regimes Average 31 SNPC Average NOC Worldwide Governance Indicators Trends and Issues The petroleum sector is expected to remain the driver of Congo's economy for the immediate future. However, without the development of additional oilfields, national production of crude oil is expected to peak in 2010, and decline thereafter as older fields become depleted. The key challenge for the government is to prepare for post-oil era, while at the same time encourage further investment in the oil sector. Improving corporate governance, efficiency, and transparency of the state-owned companies would be essential in view of declining production. A Citizen's Guide to National Oil Companies Page 651 Congo (Brazzaville): Societe Nationale des Petroles du Congo (SNPC) Database Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of cluster 2006 1, 3 The Société Nationale des Governance Its Organization of NOCs and other 2008 9 Pétroles du Congo (SNPC) is sovereign enterprises in state-owned company entrusted country with the management of the Government's interest in petroleum and natural gas. Subsidiaries of SNPC include: Congolaise de Raffinage (CORAF), which operates the country's sole petroleum refinery; Société Nationale de Recherche et d'Exploration Pétrolière (SONAREP), which is SNPC's operations (exploration and production) company; COTRADE, the crude oil marketing arm; Financière et Investissement du Congo (FININCO), the financial arm; SNPC Raffinage et Distribution (SNPC RD); Immobilière du Congo (IDC), and Integrated Logistic Services (INTEL'S), a provider of logistic services to the oil sector). Corporate Ownership Structure and Number of NOCs of 2006 1, 3 1 Governance Its Organization country Corporate Ownership Structure and Description of 2006 1, 3 SNPC was formed in 1998 to Governance Its Organization incorporation and manage the Government's ownership interest in petroleum and natural gas. Corporate Ownership Structure and % shares controlled by 2006 1 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international 2006 1 None Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international 2006 1 None Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F 2004 1 No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist 2008 9 SNPC is fully incorporated and Governance has a BOD. Corporate Board of Directors (BOD) Description of BOD and 2008 9 "The BOD comprises 10 Governance structure members, of which 4 with consultative role. The members of the Board are representatives of the Government, chosen for their expertise and competence." ."Corporate Board of Directors (BOD) Is chairman also minister 2008 9 Appointed by Presidential Governance of energy or otherwise Decree. appointed by head of state A Citizen's Guide to National Oil Companies Page 652 Congo (Brazzaville): Societe Nationale des Petroles du Congo (SNPC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Board of Directors (BOD) Are any BOD members 2008 9 No independent Board member. Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, No data Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and 2008 9 SNPC is engaged in the Governance policy statements exploration, production, refining, transportation, and maketing of crude oil and petroleum products. The company aims to become operator. Corporate Role of BOD Based on available 2008 9 "The BOD is the ultimate Governance information, does BOD decision making body of the have power, impact, company, except in cases where decision making authority the strategic nature of the decision requires the approval of the Government (i.e. the definition of SNPC's strategy and policy, the approval of SNPC's financial statements, the sale of assets, the obtaining of loans, and the change of its statutes)." Corporate Recruitment/Replacement General process for 2008 9 Appointed by the Government. Governance Key Executives recruitment, replacement No data is provided on the of key execs and senior process of appointment. managers Corporate Decision Making Level of NOC budget 2008 9, 1 SNPC appears to have Governance Processes authority. Comment on considerable budget autonomy. the general decision flow The dividend policy, if any, is within NOC and between not publicly disclosed. SNPC is NOC and government for responsible for the sale of the major projects. government share of production. The proceeds of sale, determined on the basis of a fiscal price as opposed to a market price, are transferred to the Treasury. Corporate Decision Making Based on available No data Governance Processes, Budget information, is NOC Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have 2007 3, 5 SNPC must be a party to all oil Governance Processes, Budget authority to partner with production and exploration Autonomy other entities? activities in the Congo. It develops production sharing agreements (PSAs) with non- NOC participants in the upstream sector. SNPC's interests in the PSAs range from 9-49%. A Citizen's Guide to National Oil Companies Page 653 Congo (Brazzaville): Societe Nationale des Petroles du Congo (SNPC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Mission and Objectives Does NOC have a mission No data Governance statement and, if so, what are key elements Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data 2008 1 SNPC financial data through Governance Policy and other indications of 2005 which is overseen by disclosure and KPMG is available on the transparency website of the Ministry of Finance and budget. The Ministry also publishes a series of diagnostics carried out by KPMG on the Congolese oil sector, including a strategic assessment of Congo's petroleum commercialization strategy. Corporate Skill Base Based on available 2008 9 There appears to be 501 Governance information, NOC employees in SNPC's Group, of demographics (% which 169 at SNPC's Holding. management, % technical, There is no information on the other descriptors) composition and skill level. Corporate Incentives/Career Based on available No data Governance Management information, HR promotion and professional development policies Corporate Full Disclosure and Based on available 2008 9 In 2002 SNPC established a Governance Measurement of Non- information, brief Foundation whose mission is to commercial Objectives description of reporting on carry out projects of public noncommercial objectives interest in the fields of health, education, culture, sport and vocational training. The Foundation's additional objective is to fight poverty and inequality, and in general terms, to improve the living standards of Congolese citizens in urban settings and villages. Corporate Full Disclosure and Based on available 2008 9 In 2006 the Foundation had a Governance Measurement of Non- information, extent of non- budget of approximately commercial Objectives commercial obligations US$2.4 million. Value Operating Performance Upstream oil E&P. Where 2007 3, 5, 2 SNPC is involved via PSAs Creation does it operate (solely in with non-NOC participants in Metrics the country or abroad- all oil upstream activities. The name countries)? Does it majority of reserves are have sole access to offshore accounting for 80% of country's resources? production. Proven oil reserves increased from 1.5 million barrels in 2005 to 1.6 million barrels in 2007. Total's activity accounts for approximately A Citizen's Guide to National Oil Companies Page 654 Congo (Brazzaville): Societe Nationale des Petroles du Congo (SNPC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data 47% of Congo's oil production and ENI's accounts for 22%. Approximately 33% of total production corresponds to the government's share, and it is sold by SNPC on behalf of the state. Total is expected to bring online an offshore field in 2008 that will produce 90,000 B/D. In 2004 Chevron announced a significant discovery in the Common Interest Zone between Congo and Angola. Commercial production is not expected until 2012. Congo and Angola will share revenues equally. Value Operating Performance Does the NOC operate 2007 3 No Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, 2007- 3, 6 There is one 71 kilometer oil Creation storage, shipping 2008 pipeline. SNPC does not Metrics operate in this sector. Value Operating Performance Downstream oil refining & 2007 1, 3 There is one 21,000 B/D Creation marketing, petrochemicals refinery which is operated by an Metrics affiliate of SNPC, CORAF. CORAF's nameplate capacity has been reported to be well in excess of its utilization rate. In 2002, Hydro-Congo, a SNPC Group company, Chevron, Total and Tacoma/Puma- Energy (UK) formed a joint venture (SCLOG) to transport oil products in the country. There are about 100 service stations (affiliated with the SNPC Group) that also sell LPG. Value Operating Performance Upstream natural gas E&P 2007 3 Most of Congo's natural gas Creation reserves are associated gas. Metrics However, the country does not produce or consume gas due lack of proper production infrastructure. Congo does flare gas. The government would like to use gas for power generation. Value Operating Performance Midstream natural gas 2007- 3, 6 There is one 62 kilometer gas Creation pipelines, storage, LNG 2008 pipeline. SNPC does not Metrics operate in this sector. Value Operating Performance Downstream natural gas 2007 3 None Creation distribution, NGL sales, Metrics petrochemicals Value Operating Performance Other (power generation, 2006 1 None Creation etc) Metrics A Citizen's Guide to National Oil Companies Page 655 Congo (Brazzaville): Societe Nationale des Petroles du Congo (SNPC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE production No data Creation (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow No data Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization 50% Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) A Citizen's Guide to National Oil Companies Page 656 Congo (Brazzaville): Societe Nationale des Petroles du Congo (SNPC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) No data Creation Metrics Value Financial Performance Avg profit margin (%) No data Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) No data Creation Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total capital No data Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to No data Creation State (%) Metrics Other Public Sector Governance Based on available 2007 5 The petroleum sector is Factors information, presence of a governed by the Code des publicly articulated role of Hydrocarbures (law No. 24- the hydrocarbon sector 1994) and implementing with respect to national regulations. There is no publicly development objectives available hydrocarbons sector policy, and the prioritization of sectoral objectives and their link with macro-economic objectives is not publicly disclosed. Other Public Sector Governance Based on available 2007 3, 5, 7 There is a Ministry of Factors information, clear Hydrocarbons. Its role appears definition of the roles of to be limited to policy making policy, commercial while regulatory and operation and regulation commercial functions in the and assignment to specific upstream sector are carried out entities avoiding conflicts by SNPC. of interest A Citizen's Guide to National Oil Companies Page 657 Congo (Brazzaville): Societe Nationale des Petroles du Congo (SNPC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance Based on available No data Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available No data Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available 2008 1 Petroleum revenues received by Factors information, transparent the State are detailed in the state hydrocarbon sector budget. In addition, the revenue management Ministry of Economy, Finance including revenue and Budget publishes quarterly distribution within the audited statements of petroleum country revenue received by the Government. Excess oil revenue is deposited at the regional central bank (BEAC) for saving and stabilization purposes. The operations of the Fund are not publicly available. Other Public Sector Governance NOC and/or country 2008 7 The Congo became EITI Factors participate in EITI and/or Candidate Country in February other transparency 2008. It had been intending to initiatives join in June 2004 but it wasn't until October 2007 that real progress was made. EITI implementation is governed by a 24 member Executive Committee under the authority of the Ministry of Finance. 6 members represent civil society, six the industry and 13 the government. Congo must complete validation by 3/9/10. Other transparency programs do not operate in Congo. Other Fiscal Sustainability Based on available 2007 3 There is significant investor Factors information, do interest in the oil upstream hydrocarbon sector fiscal sector. Oil production declined regimes allow for between 2000 and 2004, and sufficient capital again in 2007 after 2 years of investment increase in 2005-06. It is difficult to judge to what extent a more progressive fiscal regime could have helped to attract new investment, or additional investment in existing and maturing fields. A Citizen's Guide to National Oil Companies Page 658 Congo (Brazzaville): Societe Nationale des Petroles du Congo (SNPC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Fiscal Sustainability Based on available No data Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available No data Factors information, are hydrocarbon sector fiscal regimes appropriate for the development stage of the domestic resource base Other Access to Reserves Hydrocarbon law to 2007, 3, 5 Hydrocarbon Law No.24-1994 Factors facilitate competitive 2007 clearly defines the institutional upstream investment responsibilities, and the conditions for access to hydrocarbons. The law is sufficiently flexible to accommodate special investment conditions. The country has attracted some investment. USEIA has attributed rising oil production (05-06) to these investments. There is an ongoing project with KPMG (Transparency and Governance Project) to reach international best practices in management of the hydrocarbon sector. The country's investment frameworks are evolving. Other Access to Reserves Based on available 2007 3 There are numerous PSAs Factors information, existence of between SNPC and other negotiated companies in the oil upstream contracts/agreements for sector. upstream investment Other Operating Strategy Based on available 2007 3 SNPC participates in one joint Factors information, types of joint venture in oil products ventures, role of NOC(s) transportation. Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal 2008 9 SNPC operates in the upstream Factors integration oil sector and other industries. Other International Presence Does NOC make 2006 3 No Factors investments abroad Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production A Citizen's Guide to National Oil Companies Page 659 Congo (Brazzaville): Societe Nationale des Petroles du Congo (SNPC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make 2006 3 No Factors investments abroad Other International Presence Avg company No Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No Factors refinery throughput from international operations (%) Other International Presence Avg company No Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in 2007 3 Non-NOCs account for Factors upstream approximately 69% of Congo's oil production. Other Commercialization Competition level in 2007 3 Non-NOCs must participate in a Factors upstream including non- PSA with SNPC. NOC participants and requirement to include NOC as partner Other Commercialization Competition level in 2007 3 Joint venture in oil product Factors midstream, downstream transportation and oil industry including non-NOC logistics. participants and requirement to include NOC as partner Other Commercialization Based on available 2007 3 Prevalent upstream PSAs which Factors information, prevalence appear to be successful. and success of NOC/non- NOC alliances, joint ventures Other Commercialization Partial privatization of the 2007 3 None Factors NOC (as measured by ownership structure) Other Commercialization Based on available 2007 3 None Factors information, level and quality of NOC international operations Other Commercialization Based on available 2007- 1, 3 None Factors information, percent of 2008 non-core commercial activities in overall operations A Citizen's Guide to National Oil Companies Page 660 Congo (Brazzaville): Societe Nationale des Petroles du Congo (SNPC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Regulation Presence of independent, 2007 5 The upstream regulatory Factors well-funded and trained function is performed by SNPC. regulatory agencies, HC There is no mention of other agency name, budget, regulators. number of staff Other Regulation NOCs are compelled to 2006 5 SNPC negotiates PSAs with Factors adopt practices that would third parties. provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market 2008 1 The government is working to Factors transparency and good improve data quality and quality, unbiased data and timeliness, transparency and information. HC agency disclosure. This is an ongoing independence indicators process. Other Regulation Regulators effectively No data Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of No data Factors Objectives hydrocarbon price subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of No data Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) A Citizen's Guide to National Oil Companies Page 661 Congo (Brazzaville): Societe Nationale des Petroles du Congo (SNPC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Quality of Data Availability, extent, Extremely limited. The Comments reliability of data provided government is making efforts to by NOC(s) and improve. governments Other Longevity of NOC Based on available 2008 1 SNPC was established in 1998 Comments information, history and to oversee the government's persistence of NOC(s) participation in commercial oil upstream activities. Other Country Status Trends and issues related 2007- 1, 5, 7 The petroleum sector is Comments to country hydrocarbon 2008 expected to remain the driver of sector endowments and Congo's economy for the performance immediate future. However, without the development of additional oilfields, national production of crude oil is expected to peak in 2010, and decline thereafter as older fields become depleted. The key challenge for the government is to prepare for post-oil era, while at the same time encourage further investment in the oil sector. Improving corporate governance, efficiency, and transparency of the state-owned companies would be essential in view of declining production. Other Non-commercial Number of employees 31,120 Factors Objectives Other Non-commercial BOE production per 1,106 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 30.73 Factors Other Oil Dependency Net oil and gas export 56.63% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues 57.62% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 1,940.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 3,200.00 Factors reserves (BCF) Other Resource Endowment Total all source BOE 2,491.72 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors A Citizen's Guide to National Oil Companies Page 662 Congo (Brazzaville): Societe Nationale des Petroles du Congo (SNPC) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary 100% Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 77.86% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 100.00% Factors split, production (%) Other Operating Conditions Country BOE production 3,702.11% Factors as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 663 Congo (Brazzaville): Societe Nationale des Petroles du Congo (SNPC) Sources of Information Source Year Source Description Links # of Source 1 2008 Ministry of Economy, Finance & Budget. www.mefb-cg.org 2 2007 2008 BP Statistical Review of World Energy. www.bp.com 3 2007 USEIA Country Analysis Brief-Congo- Brazzaville, 5/16/2007. www.eia.doe.gov 4 2008 WTO www.wto.org 5 2007 "The Mineral Industry of Congo (Brazzaville)" by Philip M. Mobbs, 2006 http://minerals.usgs.gov/minerals/pubs/country/2006/myb3- Minerals Yearbook, US Geological Survey, 2006-cf.pdf November 2007. 6 2008 CIA-World Factbook-Democratic Republic of the Congo, June, 2008. www.cia.com/library 7 2008 EITI www.eitransparency.org 8 2008 Travel Document Systems http://www.traveldocs.com/cg/economy.htm 9 2008 Société Nationale des Pétroles du Congo http://www.snpc-group.com/presentation_organisation.htm A Citizen's Guide to National Oil Companies Page 664 Côte d'Ivoire: Société Nationale d'Operations Pétrolières de la Côte d'Ivoire (PETROCI) Côte d'Ivoire: Société Nationale d'Operations Pétrolières de la Côte d'Ivoire (PETROCI) Summary Report Corporate Governance Highlights Corporate Organization and Ownership Corporation; incorporated in Cote d'Ivoire; 20 billion CFA francs capital; 5% owned by employees. Shares Controlled by Government 95% Domestic, International Exchanges for Equity Listings No data Board of Directors Structure No data Independent Board Members Members are appointed by ministerial decree Is chairman also minister of energy or otherwise appointed by head of state? No data Operations Highlights Upstream Oil Operates solely in the country; has sole access to resources and manages state interests through PSAs with third parties. Midstream Oil Oil terminal with 30,000 mt of capacity Downstream Oil Transportation and some marketing of oil products; bunkering operations (JV); 20 gas stations. Upstream Natural Gas No data Midstream Natural Gas Plans to enter the midstream Downstream Natural Gas Mini distribution network of 4 km; 3 industrial customers; small LPG plant (73,000 mt in 2003). Other Small-scale gas-fired power generation Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) 8 Upstream: Average Annual Natural Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) No data Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) No data Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data A Citizen's Guide to National Oil Companies Page 665 Côte d'Ivoire: Société Nationale d'Operations Pétrolières de la Côte d'Ivoire (PETROCI) Categorization Indicators Categories: Scores: Corporate Corporate Governance 44 Governance 100 Public Sector Governance 49 Public Sector Commercialization 50 Oil Dependency 50 Governance Fiscal Regimes 50 0 Resource Endowment 0 Oil Dependency 95 Resource Commercializa Endowment Local Contribution 0 Sector and Trade Openness 58 Fiscal Regimes Average 48 PetroCI Average NOC Worldwide Governance Indicators Trends and Issues Notwithstanding the high level of oil prices, the country has been relatively less successful than its neighbors in attracting sizeable investment for the development of its deep-offshore potential, and the monetization of its gas reserves. In 2007 oil exports represented 28 percent of the governments export revenues: a substantial growth since 2001. In 2006 the oil revenue surpassed for the first time cocoa and coffee, the country's traditional export commodities. The high level of oil prices helped to achieve this result. Côte d'Ivoire relies on oil, natural gas and hydropower to satisfy internal energy demand. The majority of Côte d'Ivoire's electricity is generated through natural gas-powered stations with hydroelectricity accounting for around 20 percent. According to Government's official data, at the end of 2007, Côte d'Ivoire had 1,915 BCF of proved gas reserves (approximately 70 percent of the gas originally in place). Developing this potential would be an important contribution to the country's efforts to promote economic diversification, fiscal sustainablility, and energy security. A Citizen's Guide to National Oil Companies Page 666 Côte d'Ivoire: Société Nationale d'Operations Pétrolières de la Côte d'Ivoire (PETROCI) Database Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of 2008 1 Société Nationale Governance Its Organization cluster of NOCs and d'Operations Pétrolières de la other sovereign Côte d'Ivoire (Petroci) is enterprises in country primarily engaged in oil and gas exploration and production. Refining activities are carried out by Société Ivoirienne de Raffinage (SIR) ­ Abidjan, Société Multinationale des Bitumes (SMB). Corporate Ownership Structure and Number of NOCs of 3 Governance Its Organization country Corporate Ownership Structure and Description of 2008 1 Corporation; incorporated in Governance Its Organization incorporation and Cote d'Ivoire; 20 billion CFA ownership francs capital; 5% owned by employees. Corporate Ownership Structure and % shares controlled by 95% Governance Its Organization government Corporate Ownership Structure and Domestic, international No Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international No Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist 2008 1 Yes Governance Corporate Board of Directors (BOD) Description of BOD and No data Governance structure Corporate Board of Directors (BOD) Is chairman also minister No data Governance of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members 2008 1 Members are appointed by Governance considered independent ministerial decree (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, 2008 1 For three years renewable Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and No data Governance policy statements Corporate Role of BOD Based on available It appears that the Ministry of Governance information, does BOD Mines and Energy prevails have power, impact, with respect to budget decision making authority authority A Citizen's Guide to National Oil Companies Page 667 Côte d'Ivoire: Société Nationale d'Operations Pétrolières de la Côte d'Ivoire (PETROCI) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget No data Governance Processes authority. Comment on the general decision flow within NOC and between NOC and government for major projects. Corporate Decision Making Based on available No data Governance Processes, Budget information, is NOC Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have No data Governance Processes, Budget authority to partner with Autonomy other entities? Corporate Mission and Objectives Does NOC have a 2008 1 "Research and exploration of Governance mission statement and, if hydrocarbon deposits and all so, what are key annexes and related elements substances"; "Building a diversified and integrated oil economy, while optimizing efforts in research and exploitation of hydrocarbon resources" Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited No data Governance Policy data and other indications of disclosure and transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available No data Governance Management information, HR promotion and professional development policies Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, brief commercial Objectives description of reporting on noncommercial objectives A Citizen's Guide to National Oil Companies Page 668 Côte d'Ivoire: Société Nationale d'Operations Pétrolières de la Côte d'Ivoire (PETROCI) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, extent of commercial Objectives non-commercial obligations Value Operating Performance Upstream oil E&P. 2008 1 Operates solely in the country; Creation Where does it operate has sole access and manages Metrics (solely in the country or state interests in PSAs. abroad-name countries)? Does it have sole access to country's resources? Value Operating Performance Does the NOC operate No Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, 2008 1 Oil terminal with 30,000 ton Creation storage, shipping of capacity Metrics Value Operating Performance Downstream oil refining 2008 1 Transportation and some Creation & marketing, marketing of oil products; Metrics petrochemicals bunkering operations (JV); 20 gas stations. Value Operating Performance Upstream natural gas No data Creation E&P Metrics Value Operating Performance Midstream natural gas Plans to enter the midstream Creation pipelines, storage, LNG Metrics Value Operating Performance Downstream natural gas 2008 1 Mini distribution network of 4 Creation distribution, NGL sales, km; 3 industrial customers; Metrics petrochemicals small LPG plant (73,000 ton in 2003). Value Operating Performance Other (power generation, 2008 1 Small-scale gas-fired power Creation etc) generation Metrics Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE No data Creation production (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream Metrics capital expenditures (%) Value Operating Performance Avg upstream No data Creation exploration and Metrics production expenses ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production A Citizen's Guide to National Oil Companies Page 669 Côte d'Ivoire: Société Nationale d'Operations Pétrolières de la Côte d'Ivoire (PETROCI) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all No data Creation taxes ($/BOE) Metrics Value Operating Performance Avg effective tax rate No data Creation (%) Metrics Value Operating Performance Avg operating cash flow No data Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin No data Creation (%) Metrics Value Financial Performance Avg profit margin (%) No data Creation Metrics Value Financial Performance Avg effective tax rate No data Creation (%) Metrics Value Financial Performance Avg reinvestment risk No data Creation (%) Metrics A Citizen's Guide to National Oil Companies Page 670 Côte d'Ivoire: Société Nationale d'Operations Pétrolières de la Côte d'Ivoire (PETROCI) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total No data Creation capital employed (%) Metrics Value Financial Performance Avg fiscal contribution No data Creation to State (%) Metrics Other Public Sector Governance Based on available No data Factors information, presence of a publicly articulated role of the hydrocarbon sector with respect to national development objectives Other Public Sector Governance Based on available 2008 1 Roles of the Ministry of Factors information, clear Mines and Energy and NOCs definition of the roles of are clearly defined. The policy, commercial ministry has more policy and operation and regulation regulatory functions, and assignment to approving and overseeing specific entities avoiding activities of non-state oil and conflicts of interest gas companies. PETROCI is responsible for commercial operations. Other Public Sector Governance Based on available 2008 1 Some objectives identified: Factors information, presence of Research and exploration for publicly stated objectives hydrocarbon deposits and all ranked by priority for related resources; NOC(s) Production, transportation, storage and distribution of such products and by- products; Other Public Sector Governance Based on available No data Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available No data Factors information, transparent hydrocarbon sector revenue management including revenue distribution within the country A Citizen's Guide to National Oil Companies Page 671 Côte d'Ivoire: Société Nationale d'Operations Pétrolières de la Côte d'Ivoire (PETROCI) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Public Sector Governance NOC and/or country 2008 5,6 Cd'I is a candidate country for Factors participate in EITI and/or EITI, just accomplished in other transparency May 2008, with 2010 as the initiatives deadline for implementation. National Democratic Institute also operates in the country. Other Fiscal Sustainability Based on available Internal strife heavily Factors information, do impacted what had been a hydrocarbon sector fiscal robust hydrocarbon regime regimes allow for and the level of activity sufficient capital should be higher given the investment country's resource endowments. Fiscal regime is insensitive to oil price. Incentives to gas exploration and production may be needed to support the development of untapped reserves. Other Fiscal Sustainability Based on available No investment grade NOC Factors information, do credit rating issued. Major hydrocarbon sector fiscal source of external financing is regimes allow for promissory notes. investment grade NOC credit ratings Other Fiscal Sustainability Based on available See above. Factors information, are hydrocarbon sector fiscal regimes appropriate for the development stage of the domestic resource base Other Access to Reserves Hydrocarbon law to Yes Factors facilitate competitive upstream investment Other Access to Reserves Based on available PSAs. Factors information, existence of negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available PSAs. NOC typically has an Factors information, types of interest of 20-45% joint ventures, role of NOC(s) Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal Vertical integration Factors integration Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company No data Factors international BOE production as % avg total company BOE A Citizen's Guide to National Oil Companies Page 672 Côte d'Ivoire: Société Nationale d'Operations Pétrolières de la Côte d'Ivoire (PETROCI) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data production Other International Presence Change in company No data Factors BOE production from international operations (%) Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in On PSA basis Factors upstream Other Commercialization Competition level in No formal requirement to Factors upstream including non- include NOC as partner but it NOC participants and typically has an interest requirement to include ranging from 20% to 45%. NOC as partner Other Commercialization Competition level in No competition Factors midstream, downstream including non-NOC participants and requirement to include NOC as partner Other Commercialization Based on available 2008 1 Most JV's ceased operations Factors information, prevalence after unsuccessful exploration and success of results. NOC/non-NOC alliances, joint ventures Other Commercialization Partial privatization of 5% owned by employees Factors the NOC (as measured by ownership structure) Other Commercialization Based on available Not applicable Factors information, level and quality of NOC international operations Other Commercialization Based on available No data Factors information, percent of non-core commercial activities in overall operations A Citizen's Guide to National Oil Companies Page 673 Côte d'Ivoire: Société Nationale d'Operations Pétrolières de la Côte d'Ivoire (PETROCI) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Regulation Presence of independent, Ministry of Mines and Energy Factors well-funded and trained acts as a regulator regulatory agencies, HC agency name, budget, number of staff Other Regulation NOCs are compelled to No data Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market Ministry acts as a regulator Factors transparency and good quality, unbiased data and information. HC agency independence indicators Other Regulation Regulators effectively No data Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of No data Factors Objectives hydrocarbon price subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of No data Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation No data Factors Objectives obligations relative to workforce ($ M) Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) A Citizen's Guide to National Oil Companies Page 674 Côte d'Ivoire: Société Nationale d'Operations Pétrolières de la Côte d'Ivoire (PETROCI) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Quality of Data Availability, extent, No data Comments reliability of data provided by NOC(s) and governments Other Longevity of NOC Based on available 2008 1 Petroci was created in 1975 Comments information, history and and is likely to persist. persistence of NOC(s) Other Country Status Trends and issues related Notwithstanding the high Comments to country hydrocarbon level of oil prices, the country sector endowments and has been relatively less performance successful than its neighbors in attracting sizeable investment for the development of its deep- offshore potential, and the monetization of its gas reserves. In 2007 oil exports represented 28 percent of the governments export revenues: a substantial growth since 2001. In 2006 the oil revenue surpassed for the first time cocoa and coffee, the country's traditional export commodities. The high level of oil prices helped to achieve this result. Côte d'Ivoire relies on oil, natural gas and hydropower to satisfy internal energy demand. The majority of Côte d'Ivoire's electricity is generated through natural gas-powered stations with hydroelectricity accounting for around 20 percent. According to Government's official data, at the end of 2007, Côte d'Ivoire had 1,915 BCF of proved gas reserves (approximately 70 percent of the gas originally in place). Developing this potential would be an important contribution to the country's efforts to promote economic diversification, fiscal sustainablility, and energy security. Other Non-commercial Number of employees No data Factors Objectives Other Non-commercial BOE production per No data Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 14.50 A Citizen's Guide to National Oil Companies Page 675 Côte d'Ivoire: Société Nationale d'Operations Pétrolières de la Côte d'Ivoire (PETROCI) Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Factors Other Oil Dependency Net oil and gas export 0.10 Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas 0.05 Factors revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 250.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 958.75 Factors reserves (BCF) Other Resource Endowment Total all source BOE 415.30 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 0.60 Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 1.00 Factors split, production (%) Other Operating Conditions Country BOE production 1.64 Factors as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 676 Côte d'Ivoire: Société Nationale d'Operations Pétrolières de la Côte d'Ivoire (PETROCI) Sources of Information Source # Year of Source Description Links Source 1 2008 Company web-site (fr) www.petroci.ci 2 1996 Republique de Côte d'Ivoire. http://www.petroci.ci/pdf/code_petrolier.pdf Code Pétrolier (fr) 3 2005 Republique de Côte d'Ivoire. www.energie-omd.org/IMG/pdf/cedeao- Monographie pays (fr) monographie_cotedivoire.pdf 4 1996 Code des investissements http://www.petroci.ci/pdf/code_investissement.pdf 5 2008 EITI - CdI http://eitransparency.org/CoteDIvoire 6 2008 National Democratic Institute - http://www.ndi.org/worldwide/cewa/cotedivoire/coted Cd'I ivoire.asp A Citizen's Guide to National Oil Companies Page 677 Equatorial Guinea: GEPetrol Equatorial Guinea: GEPetrol Summary Report Corporate Governance Highlights Corporate Organization and Ownership Established as NOC by presidential decree in February 2001. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings Not listed Board of Directors Structure No information is provided other than that a BOD exists above the national directorate of GEPetrol. Independent Board Members No data Is chairman also minister of energy or otherwise appointed by head of state? No data Operations Highlights Upstream Oil GEPetrol only operates in its home country. Midstream Oil GEPetrol is a JV partner in the new Luba port project, a deepwater port to provide logistics services to the oil industry. Downstream Oil No refining by GEPetrol; very small market. Upstream Natural Gas GEPetrol's portfolio includes upstream natural gas. Midstream Natural Gas Sonagas, another NOC, is the partner in the EGLNG project. Downstream Natural Gas Sonagas participates in methanol and LPG production. Other GEPetrol and Sonagas are not involved in other activities. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) No data Upstream: Average Annual Natural Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) No data A Citizen's Guide to National Oil Companies Page 678 Equatorial Guinea: GEPetrol Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) No data Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data Categorization Indicators Categories: Scores: Corporate Governance 25 Corporate Public Sector Governance 40 Governance 100 Commercialization 0 Public Sector Oil Dependency 50 Fiscal Regimes 38 Governance Resource Endowment 0 0 Oil Dependency 10 Resource Commercializati Local Contribution 0 Endowment Sector and Trade Openness 55 Fiscal Regimes Average 19 GEPetrol Average NOC Worldwide Governance Indicators Trends and Issues Equatorial Guinea is the third largest oil exporter in Sub-Saharan Africa after Nigeria and Angola. The country has seen a rapid economic growth in the last 20 years, fuelled by growing oil production and more recently high oil prices. Notwithstanding the exceptional wealth and the relatively small population, the government has struggled to define and implement measures to develop the non oil economy and reduce poverty and inequality. A Citizen's Guide to National Oil Companies Page 679 Equatorial Guinea: GEPetrol Database Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Ownership Structure and Sole NOC or one of cluster 2008 2 GEPetrol, founded in 2002, Governance Its Organization of NOCs and other and Sonagas, founded in 2005. sovereign enterprises in country Corporate Ownership Structure and Number of NOCs of 2008 2 2 Governance Its Organization country Corporate Ownership Structure and Description of 2008 2 GEPetrol was established as Governance Its Organization incorporation and NOC by presidential decree in ownership February 2001 and started operating in 2002. Corporate Ownership Structure and % shares controlled by 2008 2 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international 2008 2 Not listed Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international 2008 2 Not traded Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F 2008 2 No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist 2008 2 Yes Governance Corporate Board of Directors (BOD) Description of BOD and 2008 2 According to company Governance structure organization, there is a BOD but no further details are available. The executive management team is led by the National Director, who reports to BOD based on the organizational chart. Corporate Board of Directors (BOD) Is chairman also minister of No data Governance energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members No data Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, No data Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and No data Governance policy statements Corporate Role of BOD Based on available No data Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers A Citizen's Guide to National Oil Companies Page 680 Equatorial Guinea: GEPetrol Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Decision Making Level of NOC budget 2008 2 GEPetrol is described as Governance Processes authority. Comment on the interacting with the Ministry of general decision flow Mines, Industry and Energy, within NOC and between but also as being separate and NOC and government for autonomous. However, the major projects. level of its budgetary authonomy is unclear. Corporate Decision Making Based on available No data Governance Processes, Budget information, is NOC Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have Yes, GEPetrol can engage in Governance Processes, Budget authority to partner with partnerships. Autonomy other entities? Corporate Mission and Objectives Does NOC have a mission 2008 2 GEPetrol does not have a Governance statement and, if so, what mission statement on the web are key elements site (although tasks, or objectives, are stated). Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data No data Governance Policy and other indications of disclosure and transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available No data Governance Management information, HR promotion and professional development policies Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, brief commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, extent of non- commercial Objectives commercial obligations Value Operating Performance Upstream oil E&P. Where 2008 2 GEPetrol operates only in EG. Creation does it operate (solely in Metrics the country or abroad-name countries)? Does it have sole access to country's resources? Value Operating Performance Does the NOC operate 2008 2 Not yet but GEPetrol is Creation abroad? considering participation in Metrics international E&P activities, either by itself or in partnership with other national or A Citizen's Guide to National Oil Companies Page 681 Equatorial Guinea: GEPetrol Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data international companies. Value Operating Performance Midstream oil pipelines, 2008 2 GEPetrol is a JV partner to the Creation storage, shipping new Luba port, a deepwater Metrics port to provide logistics services to the oil industry. Value Operating Performance Downstream oil refining & 2008 2 No refining by GEPetrol. Creation marketing, petrochemicals Metrics Value Operating Performance Upstream natural gas E&P 2008 2 GEPetrol's portfolio includes Creation upstream natural gas. Metrics Value Operating Performance Midstream natural gas 2008 2 Sonagas is the NOC partner in Creation pipelines, storage, LNG the EGLNG project. Metrics Value Operating Performance Downstream natural gas 2008 2 Not much activity by Sonagas - Creation distribution, NGL sales, very small market. Metrics petrochemicals Value Operating Performance Other (power generation, 2008 2 GEPetrol and Sonagas are not Creation etc) involved. Metrics Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE production No data Creation (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics A Citizen's Guide to National Oil Companies Page 682 Equatorial Guinea: GEPetrol Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Value Operating Performance Avg operating cash flow vs No data Creation costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery capacity No data Creation (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and marketing No data Creation operating cash flow/capital Metrics expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) No data Creation Metrics Value Financial Performance Avg profit margin (%) No data Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) No data Creation Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total capital No data Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to No data Creation State (%) Metrics A Citizen's Guide to National Oil Companies Page 683 Equatorial Guinea: GEPetrol Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Public Sector Governance Based on available 2008 2 The Ministry of Mines, Factors information, presence of a Industry and Energy is publicly articulated role of described as "the regulatory the hydrocarbon sector and legislative agency which with respect to national has responsibility for all development objectives matters relating to minerals, petroleum, industry and energy supplies." Oil revenues account for over 70% of the national income; as such, the sector is the primary engine of growth for the country's economy. Other Public Sector Governance Based on available 2008 2 The Ministry is in charge of Factors information, clear regulation and policy; definition of the roles of GEPetrol and Sonagas policy, commercial represent the commercial operation and regulation interests of the State in oil and and assignment to specific gas deals subject to these entities avoiding conflicts regulations and policies. of interest GEPetrol has some regulatory responsibilities such as E&P licensing. And Sonagas? Other Public Sector Governance Based on available 2008 10 Objectives (or duties) are Factors information, presence of stated but not ranked; and publicly stated objectives include promotion of open ranked by priority for acreage, buiding human NOC(s) capacity, securing access to technology, and environmental policy. Other Public Sector Governance Based on available No data Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available 2008 No data on oil revenue and its Factors information, transparent management is given in the hydrocarbon sector revenue official website of the Ministry management including of Economy and Finance. revenue distribution within The EG government pledged the country improvements and is now implementing EITI. Other Public Sector Governance NOC and/or country 2008 5 Equatorial Guinea is a Factors participate in EITI and/or candidate country to EITI. No other transparency information exists yet on this initiatives program. No other transparency initiatives seem to be in operation. A Citizen's Guide to National Oil Companies Page 684 Equatorial Guinea: GEPetrol Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Fiscal Sustainability Based on available 2008 2 Production and reserves in EG Factors information, do have increased significantly. hydrocarbon sector fiscal The last bidding round regimes allow for sufficient attracted ONGC (India) and capital investment NNPC (Nigeria) in addition to independents. No IOCs participated in that round; IOCs already operate in the country. PetroSA was also awarded blocks. Other Fiscal Sustainability Based on available No data Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available Given the expansion of Factors information, are reserves and production in hydrocarbon sector fiscal recent years, it appears that regimes appropriate for the fiscal regimes are appropriate development stage of the for the development stage of domestic resource base EG's resource base. Recently, the government passed legislation to increase required state participation in any upstream project to a minimum of 35%. Other Access to Reserves Hydrocarbon law to 2006, 3, 4, 1 The hydrocarbon law (Decree Factors facilitate competitive 2006, Law No. 8/2006 of November upstream investment 2007 2006) and model PSA appear to be attractive and open bidding rounds seem to attract investors. However, 3 blocks were awarded to PetroSA for South Africa's help in preventing a coup attempt in EG. Other Access to Reserves Based on available Production sharing agreements Factors information, existence of exist. negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available Under the PSA terms, Factors information, types of joint GEPetrol or Sonagas must ventures, role of NOC(s) have a minimum interest of at least 35%. Other Operating Strategy Based on available Turnkey contracts are held by Factors information, extent of the operators (GEPetrol and turnkey contracts used Sonagas partners in oil and gas directly by NOC(s) projects). Other Business Integration Vertical, horizontal None Factors integration Other International Presence Does NOC make No Factors investments abroad A Citizen's Guide to National Oil Companies Page 685 Equatorial Guinea: GEPetrol Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other International Presence Avg company international No data Factors BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company international No data Factors refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company international No data Factors refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in 2008 2 Yes Factors upstream Other Commercialization Competition level in 2008 2 Open bidding rounds exist Factors upstream including non- attracting diverse participants, NOC participants and including independents, IOCs requirement to include and NOCs from India, China NOC as partner and elsewhere. PSA terms require GEPetrol or Sonagas to be partners to international companies in their respective business areas. Other Commercialization Competition level in 2008 2 EG is a very small market; Factors midstream, downstream competition is limited. including non-NOC participants and requirement to include NOC as partner Other Commercialization Based on available 2008 2 Partnerships exist with both Factors information, prevalence other NOCs and non-NOCs. and success of NOC/non- NOC alliances, joint ventures Other Commercialization Partial privatization of the 2008 2 0% Factors NOC (as measured by ownership structure) Other Commercialization Based on available 2008 2 Currently, GEPetrol has no Factors information, level and international operations. quality of NOC international operations A Citizen's Guide to National Oil Companies Page 686 Equatorial Guinea: GEPetrol Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Commercialization Based on available No data Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, 2008 2 The overall regulator is the Factors well-funded and trained Ministry; but GEPetrol handles regulatory agencies, HC all aspects of upstream bidding agency name, budget, and licensing. number of staff Other Regulation NOCs are compelled to GEPetrol and Sonagas serve Factors adopt practices that would the government goals as provide results similar to outlined by the Ministry those in competitive policies and regulations; and markets with price, access represent in EG interest in oil to and quality of energy & gas investments. Local services. brief description: downstream markets are small HC agency enforcement and do not offer much room for powers competition. Other Regulation Regulators assure market 2008 2 The Ministry provides Factors transparency and good information related to upstream quality, unbiased data and data collection and availability information. HC agency of data packages. independence indicators Other Regulation Regulators effectively No data Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of All products are imported. The Factors Objectives hydrocarbon price market is small and customers subsidies ($/BOE are mostly poor. Subsidies production) provided by exist but have no data to NOC and/or government. quantify them. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of No data Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) A Citizen's Guide to National Oil Companies Page 687 Equatorial Guinea: GEPetrol Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Quality of Data Availability, extent, The Ministry web site contains Comments reliability of data provided very limited operating by NOC(s) and (volumetric) information, but governments considerable information on EG's resource endowments, activity, and geologic and geophysical data. Only descriptive information is provided for the NOCs. Other Longevity of NOC Based on available GEPetrol and Sonagas are very Comments information, history and new companies, established in persistence of NOC(s) 2002 and 2005, respectively. Other Country Status Trends and issues related to Equatorial Guinea is the third Comments country hydrocarbon sector largest oil exporter in Sub- endowments and Saharan Africa after Nigeria performance and Angola. The country has seen a rapid economic growth in the last 20 years, fuelled by growing oil production and more recently high oil prices. Notwithstanding the exceptional wealth and the relatively small population, the government has struggled to define and implement measures to develop the non oil economy and reduce poverty and inequality. Other Non-commercial Number of employees No data Factors Objectives Other Non-commercial BOE production per No data Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 14.08 Factors Other Oil Dependency Net oil and gas export 96.80% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues 90.06% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 1,755.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 1,300.00 Factors reserves (BCF) Other Resource Endowment Total all source BOE 1,979.14 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors A Citizen's Guide to National Oil Companies Page 688 Equatorial Guinea: GEPetrol Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 88.67% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.99% Factors split, production (%) Other Operating Conditions Country BOE production 1,690.57% Factors as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 689 Equatorial Guinea: GEPetrol Sources of Information Source # Year of Source Description Links Source 1 2007 USEIA Country Analysis Brief - Eq. Guinea http://www.eia.doe.gov/emeu/international/contents.html 2 2008 Ministry of Mines, Industry and Energy http://www.equatorialoil.com/ 3 2006 Hydrocarbon Law http://www.equatorialoil.com/2006- round/PDF%20FILES/EG%20Hydrocarbons%20Law%20( English%20Translation)_v7.1.pdf 4 2006 Model Contract http://www.equatorialoil.com/2006- round/PDF%20FILES/Model%20PSA_2006_English.pdf 5 2008 EITI - Eq. Guinea No web site available 6 2008 World Bank Country Profile - Eq. Guinea http://ddp- ext.worldbank.org/ext/ddpreports/ViewSharedReport?&CF =1&REPORT_ID=9147&REQUEST_TYPE=VIEWADV ANCED&HF=N&WSP=N 7 2008 World Bank At-A-Glance - Eq. Guinea http://devdata.worldbank.org/AAG/gnq_aag.pdf 8 2008 World Bank Millennium Development Goals - Eq. Guinea http://ddp- ext.worldbank.org/ext/ddpreports/ViewSharedReport?&CF =1&REPORT_ID=1336&REQUEST_TYPE=VIEWADV ANCED&HF=N 9 2008 CIA World Factbook - Eq. Guinea https://www.cia.gov/library/publications/the-world- factbook/geos/ek.html 10 2008 Ministry of Economy and Finance http://www.meh.es A Citizen's Guide to National Oil Companies Page 690 Ghana: Ghana National Petroleum Corporation (GNPC) Ghana: Ghana National Petroleum Corporation (GNPC) Summary Report Corporate Governance Highlights Corporate Organization and Ownership The GNPC was established in 1983 under PNDC Law 64 as a body corporate to undertake the "exploration, development, production and disposal of petroleum". GNPC began to operate in 1985. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings Not listed Board of Directors Structure No data Independent Board Members No data Is chairman also minister of energy or otherwise appointed by head of state? No data Operations Highlights Upstream Oil GNPC operates only in Ghana and only in upstream. Private companies can invest in upstream. GNPC promotes such investment and manages the investor relations. Midstream Oil Another NOC, Bulk Oil Storage & Transport (BOST) is responsible for storage; not much pipeline transportation capacity exists in Ghana. Downstream Oil Two other NOCs, Tema Oil Refinery (TOR) and Ghana Oil Company Limited (GOIL) are operating in the downstream. Upstream Natural Gas GNPC's portfolio includes upstream natural gas but so far only limited associated gas production happens at the Saltpond basin. New E&P activity targeting non-associated gas fields may take place in the near future. Midstream Natural Gas BOST was recently assigned the task of building and operating gas transmission pipelines in Ghana to deliver gas from the West African Gas Pipeline to other parts of Ghana. Downstream Natural Gas No gas local distribution concession has been awarded yet. The Energy Commission (EC) and Public Utilities Regulatory Commission (PURC) finished most licensing and pricing regulations but parliament has not approved all of them. There are local companies interested in building local distribution networks in Tema and Takoradi; these potential investors are waiting for frameworks to be finalized and natural gas deliveries from WAGP to begin. Other GNPC has interest in a gold mine. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) No data Upstream: Average Annual Natural Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) No data A Citizen's Guide to National Oil Companies Page 691 Ghana: Ghana National Petroleum Corporation (GNPC) Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) No data Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data Categorization In Categories: Scores: Corporate Governance 31 Corporate Public Sector Governance 26 Governance 100 Commercialization 0 Public Sector Fiscal Regimes 25 Oil Dependency 50 Governance Resource Endowment 0 0 Oil Dependency 86 Resource Commercializati Local Contribution 0 Endowment Sector and Trade Openness 67 Fiscal Regimes Average 28 GNPC Average NOC Worldwide Governance Indicators Trends and Issues Reform of oil sector governance arrangements has begun ahead of first oil from Ghana's Jubilee field in 2010. A Government team has been formulating a national oil and gas policy to establish principles of sound resource, environmental and revenue management modelled on best international practices. Moreover, some implementation measures are already under preparation, notably draft petroleum legislation, now in the form of a published Bill, which, among other things, would separate regulatory from commercial interests of the State. A new regulatory body would be reponsible for licensing and negotiation of petroleum agreements. The national oil company, GNPC, would focus on holding the State's participation in petroleum licences, operating licences for its own account either independently or in joint venture and engaging in pipeline and some other downstream operations. Implementation is subject to agreement on detailed aspects of these measures by a new administration following the December 2008 Presidential elections. A Citizen's Guide to National Oil Companies Page 692 Ghana: Ghana National Petroleum Corporation (GNPC) Database Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Ownership Structure and Sole NOC or one of 2008 1 Ghana National Petroleum Governance Its Organization cluster of NOCs and other Corp. (GNPC) is responsible sovereign enterprises in for upstream; Tema Oil country Refining (TOR) is the refining company, Ghana Oil Company Ltd. (GOIL) is the products marketing & distribution, and Bulk Oil Storage & Transport Ltd. (BOST) is the strategic storage and distribution company. Corporate Ownership Structure and Number of NOCs of 4 Governance Its Organization country Corporate Ownership Structure and Description of 2008 2 The GNPC was established in Governance Its Organization incorporation and 1983 under PNDC Law 64 as a ownership body corporate to undertake the "exploration, development, production and disposal of petroleum". GNPC began to operate in 1985.TOR and GOIL were originally set up by Italian companies in the early 1960s but their shares were later transferred to the State in 1977 and 1975 respectively. Corporate Ownership Structure and % shares controlled by 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international Not listed Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international Not traded Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist Yes Governance Corporate Board of Directors (BOD) Description of BOD and No data Governance structure Corporate Board of Directors (BOD) Is chairman also minister No data Governance of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members No data Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, No data Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and No data Governance policy statements A Citizen's Guide to National Oil Companies Page 693 Ghana: Ghana National Petroleum Corporation (GNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Role of BOD Based on available No data Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget No data Governance Processes authority. Comment on the general decision flow within NOC and between NOC and government for major projects. Corporate Decision Making Based on available No data Governance Processes, Budget information, is NOC Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have 2008 1 Yes. GNPC is already a Governance Processes, Budget authority to partner with partner with international Autonomy other entities? companies and is negotiating with others for new offshore concessions after recent oil discoveries. Corporate Mission and Objectives Does NOC have a 2008 1 "The mission of GNPC is to Governance mission statement and, if promote, explore and develop so, what are key elements the hydrocarbon resources of the nation through lean, efficient and technology-driven investments so as to enhance the economic development of Ghana". The web site further states: "Ghana National Petroleum Corporation is responsible for the exploration, development, production and disposal of petroleum in Ghana". Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data No data Governance Policy and other indications of disclosure and transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) A Citizen's Guide to National Oil Companies Page 694 Ghana: Ghana National Petroleum Corporation (GNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Incentives/Career Based on available No data Governance Management information, HR promotion and professional development policies Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, brief commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available 2008 1 Other than specifying that Governance Measurement of Non- information, extent of service companies contracting commercial Objectives non-commercial with GNPC must follow local obligations content requirements (see below) there does not appear to be much focus on non- commercial activities. Value Operating Performance Upstream oil E&P. 2008 1 GNPC operates only in Ghana Creation Where does it operate and only upstream. Private Metrics (solely in the country or companies can invest in abroad-name countries)? upstream. GNPC promotes Does it have sole access such investment and manages to country's resources? the investor relations. Value Operating Performance Does the NOC operate 2008 1 No Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, 2008 1,2,3 Bulk Oil Storage & Transport Creation storage, shipping (BOST) is responsible for Metrics storage; pipeline transportation capacity is limited. Value Operating Performance Downstream oil refining 2008 2,3 TOR and GOIL are the NOC Creation & marketing, entities in Ghana operating in Metrics petrochemicals the downstream. TOR is the only refinery in the country; GOIL competes with private companies in the products market. Value Operating Performance Upstream natural gas 2008 1 GNPC's portfolio includes Creation E&P upstream natural gas; but only Metrics limited associated gas production happens at the Saltpond basin. New E&P activity targeting gas fields may take place in the near future. Value Operating Performance Midstream natural gas 2008 1,2,3 BOST was recently the task of Creation pipelines, storage, LNG building and operating gas Metrics transmission pipelines in Ghana to deliver gas from West African Gas Pipeline to other parts of Ghana. A Citizen's Guide to National Oil Companies Page 695 Ghana: Ghana National Petroleum Corporation (GNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Value Operating Performance Downstream natural gas 2008 1,2,3 No gas local distribution Creation distribution, NGL sales, concession has been awarded Metrics petrochemicals yet. The Energy Commission (EC) and Public Utilities Regulatory Commission (PURC) finished most licensing and pricing regulations but parliament has not approved all of them. There are local companies interested in building local distribution networks in Tema and Takoradi; these potential investors are waiting for frameworks to be finalized and natural gas deliveries from WAGP to begin. Value Operating Performance Other (power generation, 2008 1 GNPC has interest in a gold Creation etc) mine. According to company Metrics web site, it used to have some activities in the telecom sector but no current data available on these activities. Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE No data Creation production (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream Metrics capital expenditures (%) Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all No data Creation taxes ($/BOE) Metrics A Citizen's Guide to National Oil Companies Page 696 Ghana: Ghana National Petroleum Corporation (GNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow No data Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total after-tax No data Creation income/revenues (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg gross debt/after-tax No data Creation capital employed (%) Metrics Value Financial Performance Avg operating margin No data Creation (%) Metrics Value Financial Performance Avg profit margin (%) No data Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk No data Creation (%) Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics A Citizen's Guide to National Oil Companies Page 697 Ghana: Ghana National Petroleum Corporation (GNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total No data Creation capital employed (%) Metrics Value Financial Performance Avg fiscal contribution to No data Creation State (%) Metrics Other Public Sector Governance Based on available 2008 1,2,3 Hydrocarbons have not played Factors information, presence of a an important role in the publicly articulated role Ghanaian economy as of the hydrocarbon sector production has been very with respect to national limited. With recent oil development objectives discoveries and high oil prices, the government's interest in the sector has increased, but it is too early for a policy of resource-driven economic development. Other Public Sector Governance Based on available 2008 1,2,3 GNPC, TOR, GOIL, BOST Factors information, clear and the regulatory agencies, definition of the roles of EC, PURC and the National policy, commercial Petroleum Authority (NPA), operation and regulation have specific roles. But and assignment to jurisdictional overlaps occur; specific entities avoiding and decision making authority conflicts of interest can be challenged. GNPC manages upstream investment with Ministry of Energy supervision. Other Public Sector Governance Based on available 2008 1 GNPC's objective has been to Factors information, presence of generate enough revenues from publicly stated objectives its non-hydrocarbon sector ranked by priority for activities (telecom, gold) to NOC(s) support riskier and more capital-intensive upstream activities. Other Public Sector Governance Based on available 2008 1 This does not seem to be an Factors information, presence of a issue; GNPC does not have strategy to transfer NOC large revenues and has not been non-commercial assigned non-commercial objectives to government objectives. or other agencies as capacity becomes available A Citizen's Guide to National Oil Companies Page 698 Ghana: Ghana National Petroleum Corporation (GNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Public Sector Governance Based on available 2008 4 "In September 2003 the Factors information, transparent Minerals Commission released hydrocarbon sector the first revenue figures. A revenue management multi-stakeholder Steering including revenue Committee was established distribution within the followed by the creation of an country EITI Working Group by ministerial decree in February 2005. A Secretariat formed to oversee EITI implementation was created in the Ministry of Finance and Economic Planning. The EITI Secretariat is a subset of the Multistakeholder Committee." Other Public Sector Governance NOC and/or country 2008 4 Ghana was named an EITI Factors participate in EITI and/or candidate country in September other transparency 2007. EITI focuses more on the initiatives mining sector than the hydrocarbon sector in Ghana; but if recent oil discoveries lead to significant revenues, the focus may shift to oil. Other Fiscal Sustainability Based on available No. Ghana attracted little Factors information, do investment over the years and hydrocarbon sector fiscal production has been too small regimes allow for to justify reinvestment. The sufficient capital fiscal regime has also been less investment than attractive relative to country's resource potential. Finally, investment negotiations have been less than transparent, creating the impression of preferential treatment. Recent discoveries may increase the level of interest in Ghana. Other Fiscal Sustainability Based on available No data Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available Ghana's fiscal regime has been Factors information, are relatively harsh taking into hydrocarbon sector fiscal consideration the country's regimes appropriate for prospectivity. In addition, past the development stage of bidding rounds have suffered the domestic resource from lack of transparency and base inadequate promotion. Recent discoveries and high oil prices may warrant a review of the fiscal regime to improve its competitiveness and flexibility. A Citizen's Guide to National Oil Companies Page 699 Ghana: Ghana National Petroleum Corporation (GNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Access to Reserves Hydrocarbon law to 2008 1 Upstream investment takes Factors facilitate competitive place under the Law, PNDCL upstream investment 84, 1984, Petroleum Income Tax Law 188, and GNPC Law 64. However, there is a new draft bill, which is expected to pass in early 2009. Currently, upstream investment happens via concessionary agreements with GNPC. With the new law, a more competitive and transparent process for upstream bidding is expected. Other Access to Reserves Based on available 2008 1 Agreements are reached not Factors information, existence of through open bidding rounds negotiated but rather through negotiations contracts/agreements for with GNPC and the Ministry. upstream investment Other Operating Strategy Based on available 2008 1 Companies are awarded E&P Factors information, types of joint licenses for 5-10 years. GNPC ventures, role of NOC(s) is not necessarily a partner. However, GNPC both issues and regulates the agreements. Other Operating Strategy Based on available 2008 1 The service companies (private Factors information, extent of operators) contracting with turnkey contracts used GNPC would hold turnkey directly by NOC(s) contracts. Other Business Integration Vertical, horizontal 2008 1 No integration. Factors integration Other International Presence Does NOC make 2008 1 No Factors investments abroad Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations A Citizen's Guide to National Oil Companies Page 700 Ghana: Ghana National Petroleum Corporation (GNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data (%) Other Commercialization Non-NOC participants in Yes Factors upstream Other Commercialization Competition level in Only a handful of smaller Factors upstream including non- companies such as Kosmos and NOC participants and Tullow are operating in Ghana. requirement to include Amerada Hess is the only NOC as partner larger company that appears to be active. If recent discoveries prove successful and if Ghana decides to pursue a more open bidding system, the country may attract more investors. Other Commercialization Competition level in There are several private Factors midstream, downstream companies competing in including non-NOC products marketing against participants and GOIL. The National Petroleum requirement to include Authority (NPA) regulates NOC as partner product prices via a price-cap method, leaving enough room for competition. GOIL is subject to same regulation. TOR is the only refinery. Other Commercialization Competition level in On the marketing side, it Factors midstream and appears healthy. See above. downstream sectors Other Commercialization Based on available GNPC is negotiating and holds Factors information, prevalence some agreements with and success of NOC/non- upstream operators and service NOC alliances, joint contracts with service ventures companies. Other Commercialization Partial privatization of the 0% Factors NOC (as measured by ownership structure) Other Commercialization Based on available Not active internationally. Factors information, level and quality of NOC international operations Other Commercialization Based on available There is no specific data but Factors information, percent of non-commercial activities do non-core commercial not appear to constitute a activities in overall significant part of GNPC's operations overall activities. Other Regulation Presence of independent, For upstream, GNPC is the Factors well-funded and trained regulator with Ministry of regulatory agencies, HC Energy concurrence. For agency name, budget, downstream, NPA is the number of staff independent regulator. A Citizen's Guide to National Oil Companies Page 701 Ghana: Ghana National Petroleum Corporation (GNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Regulation NOCs are compelled to Not fully applicable as there is Factors adopt practices that no independent upstream would provide results regulator; in fact, GNPC has similar to those in some regulatory functions. competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market GNPC's regulatory role has the Factors transparency and good potential to undermine data quality, unbiased data and transparency. information. HC agency independence indicators Other Regulation Regulators effectively No publicized dispute Factors resolve disputes and resolution policies. It is likely conflicts and address that the Ministry of Energy public concerns about and/or Attorney General's development of and office will get involved in case access to hydrocarbon of conflicts. resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of There are no significant Factors Objectives hydrocarbon price petroleum subsidies in Ghana. subsidies ($/BOE GNPC is not producing much production) provided by crude oil; TOR imports crude NOC and/or government. oil at world prices and prices brief description of its refined products subsidy program, accordingly. NPA regulates approach, cost product prices based on refinery gate (and import) prices. Recently, the government reduced some taxes and import tariffs to provide relief to customers but did not touch fuel prices otherwise. In 2001, Ghana initiated a petroleum product price rationalization program that was successfully implemented in 2005. The program was designed to phase out subsidies that prevented full cost recovery by TOR. Other Non-commercial Provision and level of There is no specific data but Factors Objectives direct NOC funding of non-commercial activities do country social and not appear to constitute a economic programs. significant part of GNPC's brief description of overall activities. programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) A Citizen's Guide to National Oil Companies Page 702 Ghana: Ghana National Petroleum Corporation (GNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, 2008 1 No financial data on GNPC is Comments reliability of data available. Some information provided by NOC(s) and on activities and how GNPC governments administers Ghana's hydrocarbon laws and establishes service contracts is available. Other Longevity of NOC Based on available GNPC has been around since Comments information, history and 1990 (at least). But persistence of NOC(s) commensurate with the small size of hydrocarbon reserves in Ghana, its role has been limited. Other Country Status Trends and issues related Reform of oil sector Comments to country hydrocarbon governance arrangements has sector endowments and begun ahead of first oil from performance Ghana's world-class Jubilee field in 2010. A Government team has been formulating a national oil and gas policy to establish principles of sound resource, environmental and revenue management modelled on best international practices. Moreover, some implementation measures are already under preparation, notably draft petroleum legislation, now in the form of a published Bill, which, among other things, would separate regulatory from commercial interests of the State. A new regulatory body would be reponsible for licensing and negotiation of petroleum agreements. The national oil company, GNPC, would focus on holding the State's participation in petroleum licences, operating licences for its own account either independently or in joint venture and engaging in pipeline and some other downstream operations. Implementation is subject to agreement on detailed aspects of these measures by a new administration following the December 2008 Presidential elections. A Citizen's Guide to National Oil Companies Page 703 Ghana: Ghana National Petroleum Corporation (GNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Non-commercial Number of employees No data Factors Objectives Other Non-commercial BOE production per No data Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 200.00 Factors Other Oil Dependency Net oil and gas export -36.42% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues -14.02% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 16.50 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 805.19 Factors reserves (BCF) Other Resource Endowment Total all source BOE 155.33 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 10.62% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 100.00% Factors split, production (%) Other Operating Conditions Country BOE production 1.49% Factors as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 704 Ghana: Ghana National Petroleum Corporation (GNPC) Sources of Information Source # Year of Source Description Links Source 1 2008 GNPC web site http://www.gnpcghana.com/home/ 2 2008 TOR web site http://www.torghana.com/index.htm 3 2008 GOIL web site http://www.goilonline.com/web/ 4 2008 EITI - Ghana http://eitransparency.org/Ghana 5 2005 Ministry of Energy, Petroleum http://www.energymin.gov.gh/deregulation.htm Product Pricing Statement 6 2008 USEIA International database http://www.eia.doe.gov/emeu/international/contents.html A Citizen's Guide to National Oil Companies Page 705 Mozambique: Empresa Nacional de Hidrocarbonetos de Mocambique (ENH) Mozambique: Empresa Nacional de Hidrocarbonetos de Mocambique (ENH) Summary Report Corporate Governance Highlights Corporate Organization and Ownership Organized by and held by the government of Mozambique. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings None Board of Directors Structure No data Independent Board Members No data Is chairman also minister of energy or otherwise appointed by head of state? No data Operations Highlights Upstream Oil The company operates solely in the country but does not have exclusive access to resources. Affiliate Companhia Moçambicana de Hidrocarbonetos (CMH) is developing Pande Field and Temane field (jointly with South African Coal Oil and Gas Corporation (Sasol). Midstream Oil No data Downstream Oil No data Upstream Natural Gas No data Midstream Natural Gas No data Downstream Natural Gas No data Other No data Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) No data Upstream: Average Annual Natural Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) No data Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues($Millions) No data Consolidated Average Total Assets($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data A Citizen's Guide to National Oil Companies Page 706 Mozambique: Empresa Nacional de Hidrocarbonetos de Mocambique (ENH) Categorization Indicators Categories: Scores: Corporate Governance 44 Cor por ate Gover nance 100 Public Sector Governance 75 Public Sector OilDependency 50 Commercialization 50 Gover nance Fiscal Regimes 25 0 Resource Endowment 0 Oil Dependency 95 Resour ce Endowment Commer cialization Local Contribution 0 FiscalRegimes Sector and Trade Openness 63 Average 48 ENH Average NOC Worldwide Governance Indicators 1998 Voice and Accountability 2002 Political Stability Government Effectiveness Regulatory Quality Rule of Law Control of Corruption 2004 2006 0 25 50 75 100 Trends and Issues Mozambique has small but attractive natural gas reserves that it is attempting to exploit both for internal energy and national development needs. Exports to South Africa are currently an important driver of upstream investment. A small but growing number of international companies operate in the sector. The country is still in post-civil war recovery, and investments needs remain important. The Government is introducing measures to strengthen the administration of the petroleum resources to enhance economic development and welfare in Mozambique. A Citizen's Guide to National Oil Companies Page 707 Mozambique: Empresa Nacional de Hidrocarbonetos de Mocambique (ENH) Database Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of cluster A cluster of sovereign Governance Its Organization of NOCs and other companies operates in each sovereign enterprises in sector. The Empresa Nacional country de Hidrocarbonetos de Mocambique (ENH) E&P affiliate had an IPO of 5% of stock at local exchange. Corporate Ownership Structure and Number of NOCs of 4 Governance Its Organization country Corporate Ownership Structure and Description of Organized by and held by the Governance Its Organization incorporation and government of Mozambique. ownership Corporate Ownership Structure and % shares controlled by 2005 7 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international None Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international None Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist Yes Governance Corporate Board of Directors (BOD) Description of BOD and No data Governance structure Corporate Board of Directors (BOD) Is chairman also minister No data Governance of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members No data Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, No data Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and No data Governance policy statements Corporate Role of BOD Based on available No data Governance information, does BOD have power, impact, decision making authority Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers A Citizen's Guide to National Oil Companies Page 708 Mozambique: Empresa Nacional de Hidrocarbonetos de Mocambique (ENH) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Corporate Decision Making Level of NOC budget No data Governance Processes authority. Comment on the general decision flow within NOC and between NOC and government for major projects. Corporate Decision Making Based on available No data Governance Processes, Budget information, is NOC Autonomy budget process predictable and separate from government Corporate Decision Making Does the NOC have Yes Governance Processes, Budget authority to partner with Autonomy other entities? Corporate Mission and Objectives Does NOC have a mission No data Governance statement and, if so, what are key elements Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data No data Governance Policy and other indications of disclosure and transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available No data Governance Management information, HR promotion and professional development policies Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, brief commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, extent of non- commercial Objectives commercial obligations Value Operating Performance Upstream oil E&P. Where 2008 6 The company operates solely Creation does it operate (solely in in the country but does not Metrics the country or abroad- have exclusive access to name countries)? Does it resources. Affiliate CMH is have sole access to developing Pande Field and country's resources? Temane field (jointly with Sasol). Value Operating Performance Does the NOC operate No Creation abroad? Metrics A Citizen's Guide to National Oil Companies Page 709 Mozambique: Empresa Nacional de Hidrocarbonetos de Mocambique (ENH) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Midstream oil pipelines, No data Creation storage, shipping Metrics Value Operating Performance Downstream oil refining & No data Creation marketing, petrochemicals Metrics Value Operating Performance Upstream natural gas E&P No data Creation Metrics Value Operating Performance Midstream natural gas No data Creation pipelines, storage, LNG Metrics Value Operating Performance Downstream natural gas No data Creation distribution, NGL sales, Metrics petrochemicals Value Operating Performance Other (power generation, No data Creation etc) Metrics Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE production No data Creation (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics A Citizen's Guide to National Oil Companies Page 710 Mozambique: Empresa Nacional de Hidrocarbonetos de Mocambique (ENH) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg operating cash flow No data Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total after-tax No data Creation income/revenues (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg gross debt/after-tax No data Creation capital employed (%) Metrics Value Financial Performance Avg operating margin (%) No data Creation Metrics Value Financial Performance Avg profit margin (%) No data Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) No data Creation Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics A Citizen's Guide to National Oil Companies Page 711 Mozambique: Empresa Nacional de Hidrocarbonetos de Mocambique (ENH) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg return on total capital No data Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to No data Creation State (%) Metrics Other Public Sector Governance Based on available 2001 2 "The State, including State Factors information, presence of a institutions and entities have a publicly articulated role of definitive role in promoting the hydrocarbon sector the exploitation of the existing with respect to national potential in such a way as to development objectives provide access to the benefits of petroleum production and contribute to the social and economic development of the country." Other Public Sector Governance Based on available Present. Roles of the Ministry, Factors information, clear Council of Ministers, INP are definition of the roles of clearly defined. Role of NOC policy, commercial is obscure. operation and regulation and assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available No data Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available No data Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available No data Factors information, transparent hydrocarbon sector revenue management including revenue distribution within the country Other Public Sector Governance NOC and/or country Mozambique does not Factors participate in EITI and/or participate in EITI and no other transparency other major transparency initiatives programs appear to operate there. A Citizen's Guide to National Oil Companies Page 712 Mozambique: Empresa Nacional de Hidrocarbonetos de Mocambique (ENH) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Fiscal Sustainability Based on available 2002 5 Investment tax credit (5-15%); Factors information, do deduction from taxable hydrocarbon sector fiscal income up to 15% on regimes allow for specialized (advanced) sufficient capital equipment; tax deductible investment expenditures; income tax benefits till 2010; exemption of customs duties; 25% reduction in corporate income tax for 8 years. Other Fiscal Sustainability Based on available Investment grade NOC credit Factors information, do ratings was not granted hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available 2001, 2, 3 Yes; 2-15% royalty; corporate Factors information, are 2004 income tax rate is 32% of net hydrocarbon sector fiscal profit, with no ring fencing; regimes appropriate for the development costs are development stage of the depreciated over four years. domestic resource base Other Access to Reserves Hydrocarbon law to 2001, 2,5 Present; appears to be Factors facilitate competitive 2002 favorable. upstream investment Other Access to Reserves Based on available Exploration and Production Factors information, existence of Contracts (EPCs). negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available Exploration and Production Factors information, types of joint Contracts (EPCs) - 10-20%. ventures, role of NOC(s) Other Operating Strategy Based on available No data Factors information, extent of turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal No data Factors integration Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company international No data Factors BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make No Factors investments abroad Other International Presence Avg company international No data Factors refinery throughput as % total refinery throughput A Citizen's Guide to National Oil Companies Page 713 Mozambique: Empresa Nacional de Hidrocarbonetos de Mocambique (ENH) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company international No data Factors refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in 2008 4 Yes Factors upstream Other Commercialization Competition level in There is growing competition. Factors upstream including non- Exploration and Production NOC participants and Contracts with the requirement to include government of Mozambique - NOC as partner Anadarko, Sasol, Norsk Hydro, Eni. . Other Commercialization Competition level in No data Factors midstream, downstream including non-NOC participants and requirement to include NOC as partner Other Commercialization Competition level in No data Factors midstream and downstream sectors Other Commercialization Based on available ENH is partner of Factors information, prevalence international companies in and success of NOC/non- E&P contracts. In some NOC alliances, joint cases, IOCs start with 100% ventures working interest in projects. Other Commercialization Partial privatization of the 0 Factors NOC (as measured by ownership structure) Other Commercialization Based on available Not applicable Factors information, level and quality of NOC international operations Other Commercialization Based on available No data Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, 2008 4 INP (National Petroleum Factors well-funded and trained Institute) "manages the regulatory agencies, HC petroleum resources of agency name, budget, Mozambique and administers number of staff the related operations for the benefit of the Society, and in compliance with the existing laws, government policies and contractual commitments". A Citizen's Guide to National Oil Companies Page 714 Mozambique: Empresa Nacional de Hidrocarbonetos de Mocambique (ENH) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Regulation NOCs are compelled to No data Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market 2004 3 The Council of Ministers has Factors transparency and good power to "(a) Approve the quality, unbiased data and execution of exploration and information. HC agency production contracts and of oil independence indicators or gas pipeline contracts; (b) Approve development plans and any substantial amendments thereto, as drafted by the holders of rights of exploration and production of petroleum; (c) Define the powers effecting other contracts under the terms of the law; (d) Perform any other duties attributed under the terms of the law or of any other applicable legislation." Independence of INP is questionable, although it is formally an autonomous body. Other Regulation Regulators effectively No data Factors resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of No data Factors Objectives hydrocarbon price subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of No data Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) A Citizen's Guide to National Oil Companies Page 715 Mozambique: Empresa Nacional de Hidrocarbonetos de Mocambique (ENH) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Almost nonexistent Comments reliability of data provided by NOC(s) and governments Other Longevity of NOC Based on available No data Comments information, history and persistence of NOC(s) Other Country Status Trends and issues related Mozambique has small but Comments to country hydrocarbon attractive natural gas reserves sector endowments and that it is attempting to exploit performance both for internal energy and national development needs. Exports to South Africa are currently an important driver of upstream investment. A small but growing number of international companies operate in the sector. The country is still in post-civil war recovery, and investments needs remain important. The Government is introducing measures to strengthen the administration of the petroleum resources to enhance economic development and welfare in Mozambique. Other Non-commercial Number of employees No data Factors Objectives Other Non-commercial BOE production per No data Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 200.00 Factors Other Oil Dependency Net oil and gas export -13.64% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues -5.38% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 0.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 4,313.66 Factors reserves (BCF) Other Resource Endowment Total all source BOE 743.73 Factors reserves (MM Barrels) A Citizen's Guide to National Oil Companies Page 716 Mozambique: Empresa Nacional de Hidrocarbonetos de Mocambique (ENH) Year Indicator Indicator of Category Indicator Description (Query) Source Source Response of Data Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 0.00% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 0.00% Factors split, production (%) Other Operating Conditions Country BOE production 19.74% Factors as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 717 Mozambique: Empresa Nacional de Hidrocarbonetos de Mocambique (ENH) Sources of Information Source # Year of Source Source Description Links 1 2008 National Petroleum Institute web-site http://www.inp.gov.mz 2 2001 PETROLEUM LAW Nº 3 /2001 OF 21 FEBRUARY http://www.inp.gov.mz/ 3 2004 PETROLEUM OPERATIONS http://www.inp.gov.mz/ REGULATIONS. Decree No. 24/2004, of 20 August 4 2008 INP web-site http://www.inp.gov.mz/about_inp 5 2002 REPUBLIC OF MOÇAMBIQUE CODE http://www.inp.gov.mz/ OF FISCAL BENEFITS 6 2008 CMH web-site http://www.cmh.co.mz/sobre_nos.html 7 2005 COMPETITION TRIBUNAL REPUBLIC http://www.saflii.org/za/cases/ZACT/2005/47.pdf OF SOUTH AFRICA Case no.: 37/LM/May05 A Citizen's Guide to National Oil Companies Page 718 Nigeria: Nigerian National Petroleum Company (NNPC) Nigeria: Nigerian National Petroleum Company (NNPC) Summary Report Corporate Governance Highlights Corporate Organization and Ownership NNPC is a public company entrusted with the management of "all government interests in the Nigerian oil industry". Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings Not listed Board of Directors Structure The NNPC BOD has 12 members. Following the dissolution of the NNPC Board in April 2007 (post-national elections), a new board was appointed by the Federal Government of Nigeria. Independent Board Members The NNPC Board consists of Group Managing Director, 6 Executive Directors and 4 appointees of the government. The Chairman of the Board is the Minister of Petroleum. The GMD and Executive Directors typically rise from within NNPC subject to Board approval. Is chairman also minister of energy or otherwise appointed by head of state? Yes. The Minister of Petroleum is chairman of the BOD. Operations Highlights Upstream Oil NPDC has initiated operations in Equatorial Guinea as part of a new MOU associated with settlement of territorial boundary issues. Midstream Oil NNPC has 12 strategic business units, including midstream oil operations. There is a pipeline subsidiary. Downstream Oil NNPC has 12 strategic business units, including refining and marketing, although Nigeria's downstream segment is open to competitive private participation. There are several R&M subsidiaries. Duke Oil is a marketing subsidiary based in London. Upstream Natural Gas Upstream gas is operated in the same way as upstream oil, i.e., through JVs and PSAs. Production of associated gas through JVs is NNPC's responsibility. Midstream Natural Gas Nigerian Gas Company Ltd (NGC) is responsible for gas pipelines. LNG projects are usually done as partnerships between NNPC and IOCs. Downstream Natural Gas NGC and private companies run LDCs, NGLs operations. Other NNPC is playing a key role as a JV partner in requesting IOCs to build power plants. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) No data Upstream: Average Annual Natural Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) No data A Citizen's Guide to National Oil Companies Page 719 Nigeria: Nigerian National Petroleum Company (NNPC) Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) No data Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data Categorization Indicators Categories: Scores: Corporate Governance 47 Corporate Public Sector Governance 45 Governance 100 Commercialization 67 Public Sector Oil Dependency 50 Fiscal Regimes 25 Governance Resource Endowment 13 0 Oil Dependency 72 Resource Commercializati Local Contribution 0 Endowment Sector and Trade Openness 39 Fiscal Regimes Average 45 NNPC Average NOC Worldwide Governance Indicators Trends and Issues Nigeria remains dependent on hydrocarbon production and revenues for its economy. Development of the country's natural gas resources will likely increase that dependence, especially if domestic industries cannot be spurred by increased natural gas production and improved access. A large factor is integrity of Nigeria's electric power system, integral both to hydrocarbon operations and as a vehicle for natural gas monetization and improved standards of living. A number of regional issues are at play, including commitment of natural gas reserves to the new West African Gas Pipeline; a push to develop the Trans-Sahara Pipeline, which is very costly and questionable with regard to netbacks for Nigerian natural gas production; and rationalization of Nigeria's downstream segment as a boost to regional supplies of petroleum products. A Citizen's Guide to National Oil Companies Page 720 Nigeria: Nigerian National Petroleum Company (NNPC) Database Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Ownership Structure and Sole NOC or one of cluster 2008 1 NNPC Group constitutes the Governance Its Organization of NOCs and other sole NOC; it contains 12 sovereign enterprises in strategic business units. country Corporate Ownership Structure and Number of NOCs of 2008 1, 15 1 - At present, the state's Governance Its Organization country 2007 main actor in the sector is NNPC and its various subsidiaries. However, the government plans to break-up NNPC in five new organisations, and to create a national energy council to oversee the sector as a whole. Corporate Ownership Structure and Description of 1990 14 The Nigerian National Governance Its Organization incorporation and 2007 15 Petroleum Corporation Act ownership 1990 established NNPC as a corporation empowered to engage in all commercial activities relating to the Petroleum industry and to enforce all regulatory measures relating to the general control of the petroleum sector through its petroleum inspectorate department. Corporate Ownership Structure and % shares controlled by 2008 1 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international 2008 1 Not listed Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international 2008 1 Not traded Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F 2008 1 No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist 2008 1 Yes. The NNPC has a 12- Governance member board; subsidiary companies also have their own boards. Corporate Board of Directors (BOD) Description of BOD and 2008 1 The NNPC BOD has 12 Governance structure members and consists of Group Managing Director, 6 Executive Directors and 4 appointees of the government. Corporate Board of Directors (BOD) Is chairman also minister Yes. The Minister of Governance of energy or otherwise Petroleum is chairman of the appointed by head of state BOD. Corporate Board of Directors (BOD) Are any BOD members 2008 2 There are four external Governance considered independent directors appointed by the (external) and, if so, how government. The GMD and are they appointed Executive Directors typically rise from within NNPC subject to Board approval. A Citizen's Guide to National Oil Companies Page 721 Nigeria: Nigerian National Petroleum Company (NNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Board of Directors (BOD) Term of service (years, 1990 14 Three years renewable once. Governance with re-appointment). Per above, removal or Comment if they can be dissolution is possible. readily removed. Corporate Role of BOD Description of role and The BOD sets strategy, Governance policy statements approves projects and contracts. ThrCorporate Role of BOD Based on available The BOD has power and Governance information, does BOD decision making authority. have power, impact, The GMD's office is the top decision making authority management of the company. Corporate Recruitment/Replacement General process for NNPC personnel are typically Governance Key Executives recruitment, replacement career professionals. of key execs and senior Executive Directors typically managers rise from within the company after decades of service. In recent years, a worldwide effort to recruit qualified personnel supplemented this in-house capacity. Corporate Decision Making Level of NOC budget The NNPC budget typically Governance Processes authority. Comment on the covers the company's share of general decision flow JV projects. It also includes within NOC and between some exploration and NOC and government for development investment. major projects. NNPC senior managers have limited budget approval authority which constrains investment and implementation of critical projects. Corporate Decision Making Based on available 2008 8 NNPC prepares its own Governance Processes, Budget information, is NOC budget, which must be Autonomy budget process predictable approved by the Committee and separate from of Petroleum Resources at the government House (National Assembly). In November 07, NNPC presented its budget for upstream operations for 2008 to President Yar-Adua for review and consideration by Government. "The estimated budget was $15.2 billion with an expected government contribution of $8.8 billion. The Government would provide $4.9 billion through the 2008 budget allocation while the balance of $3.8 billion would be sourced by NNPC and the Ministry of Finance from NNPC's JV partners and (for the first time) commercial banks, including the sum of $2.9 billion outstanding for 2006 and 2007 performance." A Citizen's Guide to National Oil Companies Page 722 Nigeria: Nigerian National Petroleum Company (NNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Decision Making Does the NOC have Upstream operations have Governance Processes, Budget authority to partner with been managed through JVs Autonomy other entities? and PSAs. NNPC is said to be in negotiations with JV partners to increase the Nigerian equity share to a majority position. Corporate Mission and Objectives Does NOC have a mission 2008 1 "NNPC is an integrated oil Governance statement and, if so, what and gas company, engaged in are key elements adding value to the nation's hydrocarbon resources for the benefit of all Nigerians and other stakeholders." Corporate Sources of Capital Based on available See above on budget process. Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data No data Governance Policy and other indications of disclosure and transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available Staff development and Governance Management information, HR promotion growth are among NNPC's and professional core values. The company is development policies reportedly making active use of training programs around the world and in-country. Corporate Full Disclosure and Based on available No information is reported. Governance Measurement of Non- information, brief commercial Objectives description of reporting on noncommercial objectives Corporate Full Disclosure and Based on available 2008 1 Other than promoting the Governance Measurement of Non- information, extent of non- Nigerian Content policy, commercial Objectives commercial obligations NNPC does not seem to have many obligations to provide non-commercial services. Value Operating Performance Upstream oil E&P. Where 2008 1 NPDC, a wholly owned Creation does it operate (solely in subsidiary of NNPC, has Metrics the country or abroad- initiated operations in name countries)? Does it Equatorial Guinea as part of a have sole access to new MOU associated with country's resources? settlement of territorial boundary issues. No information is available on other international E&P investments. Value Operating Performance Does the NOC operate 2008 1 Yes, including international Creation abroad? marketing offices. Metrics A Citizen's Guide to National Oil Companies Page 723 Nigeria: Nigerian National Petroleum Company (NNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Value Operating Performance Midstream oil pipelines, 2008 1 NNPC has 12 strategic Creation storage, shipping business units, including Metrics midstream oil operations. There is a pipeline subsidiary. Value Operating Performance Downstream oil refining & 2008 1 NNPC has 12 strategic Creation marketing, petrochemicals business units, including Metrics refining and marketing, although Nigeria's downstream segment is open to competitive private participation. There are several R&M subsidiaries. Duke Oil is a marketing subsidiary based in London. Value Operating Performance Upstream natural gas E&P 2008 1 Upstream gas is operated in Creation the same way as upstream oil, Metrics i.e., through JVs and PSAs. Production of associated gas through JVs is NNPC's responsibility. Value Operating Performance Midstream natural gas 2008 1 Nigerian Gas Company Ltd Creation pipelines, storage, LNG (NGC), a wholly owned Metrics subsidiary of NNPC, is responsible for gas pipelines. LNG projects are usually done as partnerships between NNPC and IOCs. Value Operating Performance Downstream natural gas 2008 1 NGC and private companies Creation distribution, NGL sales, run LDCs, NGL operations. Metrics petrochemicals Value Operating Performance Other (power generation, NNPC is playing a key role Creation etc) as a JV partner in requesting Metrics IOCs to build power plants. Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE production No data Creation (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics A Citizen's Guide to National Oil Companies Page 724 Nigeria: Nigerian National Petroleum Company (NNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow vs No data Creation costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating cash Metrics flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) No data Creation Metrics Value Financial Performance Avg profit margin (%) No data Creation Metrics Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) No data Creation Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total capital No data Creation employed (%) Metrics A Citizen's Guide to National Oil Companies Page 725 Nigeria: Nigerian National Petroleum Company (NNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Value Financial Performance Avg fiscal contribution to No data Creation State (%) Metrics Other Factors Public Sector Governance Based on available The oil sector accounts for information, presence of a about 50% of GDP, more publicly articulated role of than 95% of export receipts, the hydrocarbon sector and more than 80% of with respect to national government revenue. development objectives Although NNPC's vision is to be a world class oil company, its mission underlines the fact that it works for the benefit of all Nigerians. Also, its role in local content and IPPs may be indicative of company's involvement in wider government objectives. Other Factors Public Sector Governance Based on available NNPC's 12 subsidiaries information, clear mostly have clearly defined definition of the roles of roles. When it comes to policy, commercial regulation, there is some operation and regulation overlap between National and assignment to specific Petroleum Investment entities avoiding conflicts Management Services of interest (NAPIMS) and the Department of Petroleum Resources (DPR). The latter was carved out of NNPC's self-regulating function and is intended to serve as an independent hydrocarbon regulator. In the natural gas segment, there are conflicts between NGC and other gas sector operators. Other Factors Public Sector Governance Based on available No data information, presence of publicly stated objectives ranked by priority for NOC(s) Other Factors Public Sector Governance Based on available 2007 15 There is a plan to re-organize information, presence of a NNPC into different units strategy to transfer NOC with more commercial non-commercial objectives orientations. A new to government or other downstream gas regulator agencies as capacity may take away NGC's becomes available regulatory functions. Similarly, regulatory functions embedded in NAPIMS may be moved into DPR. A Citizen's Guide to National Oil Companies Page 726 Nigeria: Nigerian National Petroleum Company (NNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Factors Public Sector Governance Based on available 2008 3,4 "Nigeria was one of the first information, transparent countries to commit to EITI. hydrocarbon sector NEITI remains the most revenue management ambitious and the most including revenue advanced. Nigeria has distribution within the conducted and published country independent audits of payments and revenues, and was the first to insist that information be published in a disaggregated fashion, making it possible to identify revenues company by company, category by category and well by well." Several public finance management reforms have been lauched, including the passage of the Fiscal Responsibility Act in 2007. Other Factors Public Sector Governance NOC and/or country 2008, 3, 4, 5, Nigeria is a candidate country participate in EITI and/or Current 6 for EITI. Under former other transparency President Obasanjo, Nigeria initiatives lauched NEITI, a transparency initiative that goes beyond the minimum standards of EITI. In addition to EITI, Transparency International maintains a national chapter in Nigeria (but no web site) and National Democratic Institute has been active in the country. Other Factors Fiscal Sustainability Based on available Judging by the pace of information, do development and continous hydrocarbon sector fiscal industry interest in Nigeria, regimes allow for the fiscal regime would sufficient capital appear to be adequate to investment support investment and re- investment. The new NNPC restructuring plan and assertiveness of the government and NNPC with regard to increasing their take and NNPC equity is affecting IOC forward looking views. Natural gas pricing and implicit export restraints (through political assignment of reserves and fields to particular projects) are obstacles for upstream development. Overall, the biggest challenge at this time is probably unrest in the Niger Delta. NNPC has begun internal efforts to grapple with security and A Citizen's Guide to National Oil Companies Page 727 Nigeria: Nigerian National Petroleum Company (NNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data community benefit issues; several IOCs already have efforts underway. Other Factors Fiscal Sustainability Based on available NNPC is not listed. A stated information, do goal for the NNPC hydrocarbon sector fiscal restructuring is to explore regimes allow for international capital market investment grade NOC access. credit ratings Other Factors Fiscal Sustainability Based on available 2007 9 Natural gas pricing and information, are implicit export restraints are hydrocarbon sector fiscal obstacles for gas upstream regimes appropriate for the development as well as development stage of the investment in gathering domestic resource base systems, flared gas capture and pipelines. To meet the stated national goal of deploying natural gas production for internal market development, weaknesses in the electric power framework also need to be address. Encouraging in this regard is establishment of the National Energy Regulatory Commission (NERC) and the effort to professionalize that agency. Other Factors Access to Reserves Hydrocarbon law to 2008 1 All the petroleum in Nigeria facilitate competitive is vested in the Federal upstream investment Government, whose sole responsibility it is to control the resources and only permit their exploitation under license, in accordance with the Petroleum Act 1969 as amended. Sector laws and regulations cover the terms and conditions of operations, technical and safety standards, environmental and health protection. Two types of licenses are awarded: an Oil Prospecting License (OPL) is granted for a period of maximum 5 years (10 for deep offshore) and confers exclusive rights of exploring the area specified in the license; and Oil Mining Lease (OML) is granted upon confirmation of potential for economic production of petroleum from the OPL. The OML is granted for a period of 20 years and entitles the holder to the exclusive rights to explore, win, produce and carry away petroleum from A Citizen's Guide to National Oil Companies Page 728 Nigeria: Nigerian National Petroleum Company (NNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data the relevant area. Holders of OPL are entitled to convert their license to OML upon commercial discovery. The following forms of contract are available:, Concession, Joint Venture, Production sharing, Service contract, and Joint Operating Company. Other Factors Access to Reserves Based on available A number of contracts and information, existence of agreements are in place. negotiated contracts/agreements for upstream investment Other Factors Operating Strategy Based on available Petroleum agreements are information, types of joint used with JVs that include ventures, role of NOC(s) NNPC and its subsidiaries. Other Factors Operating Strategy Based on available IOCs, domestic operators and information, extent of NNPC all hold turnkey turnkey contracts used service contracts. directly by NOC(s) Other Factors Business Integration Vertical, horizontal Through its 12 business units, integration NNPC is fully integrated. Other Factors International Presence Does NOC make Yes. For example, NPDC investments abroad took blocks in Equatorial Guinea. Other Factors International Presence Avg company international No data BOE production as % avg total company BOE production Other Factors International Presence Change in company BOE No data production from international operations (%) Other Factors International Presence Does NOC make Yes investments abroad Other Factors International Presence Avg company international No data refinery throughput as % total refinery throughput Other Factors International Presence Change in company No data refinery throughput from international operations (%) Other Factors International Presence Avg company international No data refinery capacity as % company total refinery capacity Other Factors International Presence Change in company No data refinery capacity from international operations (%) A Citizen's Guide to National Oil Companies Page 729 Nigeria: Nigerian National Petroleum Company (NNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Factors Commercialization Non-NOC participants in 2007 7 A number of diverse non- upstream NOCs are active in Nigeria's upstream segment. Other NOCs (China, India, Korea, Russia, Algeria) are either operating or evaluating opportunities to operate in Nigeria. Other Factors Commercialization Competition level in The State reserves the right to upstream including non- participate in the operations NOC participants and of any block, directly or requirement to include through NNPC. NOC as partner Other Factors Commercialization Competition level in 2007 7 Permits have been issued to midstream, downstream build several private including non-NOC refineries. Oando, a leading participants and petroleum-marketing requirement to include company in Nigeria, is NOC as partner considering building a 180,000 B/D refinery in Lagos. And effort is underway to privatize NNPC's four oil refineries, petrochemicals plants, and its Pipelines and Products Marketing Company (PPMC). IOCs have shown little interest but there are negotiations with Libyan, Indian, and Chinese investors. A downstream oil issue is petroleum product pricing and associated subsidies, which limit cost recovery for downstream businesses. Other Factors Commercialization Based on available Upstream JVs appear to be information, prevalence successful although recent and success of NOC/non- and ongoing issues such as NOC alliances, joint local content, NNPC ventures restructuring, gas pricing policies and Niger Delta unrest are straining relations. Other Factors Commercialization Partial privatization of the 0% NOC (as measured by ownership structure) Other Factors Commercialization Based on available International operations are information, level and recent; too early to evaluate. quality of NOC international operations A Citizen's Guide to National Oil Companies Page 730 Nigeria: Nigerian National Petroleum Company (NNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Factors Commercialization Based on available NNPC does not seem to have information, percent of an extensive or explicitly non-core commercial stated social investment activities in overall program. However, as noted, operations NNPC is said to be evaluating how to improve community benefits in sensitive locations. A stated goal is to engage in community development efforts through commercial arrangements, but it also appears that terms would be favorable in order to spur local development and political stability. Other Factors Regulation Presence of independent, Current 11,12 DPR has resource constraints well-funded and trained with regard to both budget regulatory agencies, HC and staffing. In addition, as agency name, budget, noted, there is overlap and number of staff conflict between its functions and NAPIMS and other regulators that get involved in various activities across the oil and natural gas value chains. With regard to downstream oil, the Petroleum Products Pricing Regulatory Agency (PPPRA) has oversight product prices (and overall performance of the downstream segment). Other Factors Regulation NOCs are compelled to Regulators, in general, seem adopt practices that would to have limited enforcement provide results similar to powers. It is widely those in competitive acknowledged that for markets with price, access transparency improvements, to and quality of energy Nigeria's regulatory bodies services. brief description: should be streamlined and HC agency enforcement bolstered with regard to powers budgets and staffing. Other Factors Regulation Regulators assure market Independence is reportedly transparency and good curtailed by lack of resources, quality, unbiased data and overlapping jurisdictions and information. HC agency political interference. The independence indicators Ministry of Energy appears to be housed within NNPC. Interactions between ministry and NOC appear to be very close. Other Factors Regulation Regulators effectively No data resolve disputes and conflicts and address public concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy A Citizen's Guide to National Oil Companies Page 731 Nigeria: Nigerian National Petroleum Company (NNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Factors Non-commercial Provision and level of PPPRA is tasked with Objectives hydrocarbon price regulating products, including subsidies ($/BOE subsidies, which are then production) provided by compensated to NNPC NOC and/or government. through the State budget. The brief description of subsidy amount of the subsidies is not program, approach, cost in the public domain but assumed to be substantial. Other Factors Non-commercial Provision and level of Per above, NNPC does not Objectives direct NOC funding of seem to directly engage in country social and broad social programs. economic programs. brief Revenues are supposed to be description of programs funneled through government and support for that purpose. Other Factors Non-commercial Measure of NOC No data Objectives employees relative to total assets ($ M) Other Factors Non-commercial Compensation obligations No data Objectives relative to workforce ($ M) Other Factors Non-commercial Financial performance No data Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Transparency has been Comments reliability of data provided improving, especially after by NOC(s) and the launch of NEITI. governments However much more remain to be done. Nigeria is intensely covered by international news media, with mixed quality of information. Other Longevity of NOC Based on available NNPC has existed since the Comments information, history and 1970s. It has grown and persistence of NOC(s) gained experience. Efforts have been made to improve staffing and skills levels. NNPC demonstrates a level of commercial and technical knowledge among its senior managers that often exceeds that of other African NOCs. Political pressure and lack of transparency may hinder NNPC's performance. Other Country Status Trends and issues related Nigeria remains dependent on Comments to country hydrocarbon hydrocarbon production and sector endowments and revenues for its economy. performance Development of the country's natural gas resources will likely increase that dependence, especially if domestic industries cannot be spurred by increased natural gas production and improved access. A large factor is integrity of Nigeria's electric power system, integral both to hydrocarbon operations A Citizen's Guide to National Oil Companies Page 732 Nigeria: Nigerian National Petroleum Company (NNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data and as a vehicle for natural gas monetization and improved standards of living. A number of regional issues are at play, including commitment of natural gas reserves to the new West African Gas Pipeline; a push to develop the Trans-Sahara Pipeline, which is very costly and questionable with regard to netbacks for Nigerian natural gas production; and rationalization of Nigeria's downstream segment as a boost to regional supplies of petroleum products. Other Non-commercial Number of employees No data Factors Objectives Other Non-commercial BOE production per No data Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Factors Oil Dependency BOE R/P (years) 63.81 Other Factors Oil Dependency Net oil and gas export 72.74% revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Factors Oil Dependency Total oil and gas revenues 28.09% as a share of GDP (%) Other Factors Resource Endowment Avg EOY oil reserves 36,220.00 (MM Barrels) Other Factors Resource Endowment Avg EOY natural gas 18,6991.14 reserves (BCF) Other Factors Resource Endowment Total all source BOE 68,459.85 reserves (MM Barrels) Other Factors Resource Endowment Audited or unaudited? Unaudited Other Factors Operating Conditions Company domestic No data reserves as % of country BOE reserves Other Factors Operating Conditions Company domestic No data reserves as % of total company reserves Other Factors Operating Conditions Company domestic BOE No data production as % of country BOE production A Citizen's Guide to National Oil Companies Page 733 Nigeria: Nigerian National Petroleum Company (NNPC) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Factors Operating Conditions Company primary No data distillation capacity as % of total country primary distillation capacity Other Factors Operating Conditions Company refinery No data throughput as % of total country refinery throughput Other Factors Operating Conditions Country oil/natural gas 52.91% split, reserves (%) Other Factors Operating Conditions Country oil/natural gas 99.98% split, production (%) Other Factors Operating Conditions Country BOE production 633.98% as % of total country BOE consumption Other Factors Trade Openness WTO Membership Yes Other Factors Competition OPEC Membership Yes A Citizen's Guide to National Oil Companies Page 734 Nigeria: Nigerian National Petroleum Company (NNPC) Sources of Information Source # Year of Source Description Links Source 1 2008 NNPC web site http://www.nnpcgroup.com/ 2 2008 Nigerian Tribune on probe of upstream http://www.tribune.com.ng/17012008/news/news1.html contracts 3 2008 EITI Nigeria http://eitransparency.org/Nigeria 4 2008 Nigeria EITI www.neiti.org.ng 5 Current National Democratic Institute - Nigeria http://www.ndi.org/worldwide/cewa/nigeria/nigeria.asp 6 Current Transparency International - Nigeria No web site 7 2007 USEIA Country Analysis Brief - Nigeria http://www.eia.doe.gov/emeu/cabs/Nigeria/oil.html 8 2008 Daily Trust, NNPC budgeting http://www.dailytrust.com/index.php?option=com_content&task= view&id=11784&Itemid=101 9 2007 Presentation on NERC http://www.ccife.org/Nigeria/votreccife/membres/docs/New_Elect icity_Sector_Invesment_Oportunities.pdf 10 Current NERC Web site not available 11 Current PPPRA http://www.pppra-nigeria.org/ 12 Current DPR http://www.dprnigeria.com/home.html 13 2008 USEIA International database http://www.eia.doe.gov/emeu/international/contents.html 14 1990 Nigerian National Petroleum Corporation http://www.nigeria- Act 1990 law.org/Nigerian%20National%20Petroleum%20Corporation%20 Act.htm 15 2007 Elendu Reports: The Restructuring of NNPC. http://elendureports.com/index.php?option=com_content&task=vi September 8, 2007. ew&id=489&Itemid=34 A Citizen's Guide to National Oil Companies Page 735 South Africa: PetroSA South Africa: PetroSA Summary Report Corporate Governance Highlights Corporate Organization and Ownership PetroSA is a wholly-owned entity of the government of the Republic of South Africa. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings Not listed Board of Directors Structure President and CEO, Chief Financial Officer, Company Secretary, Vice President: Operations, New Venture Upstream, New Ventures Midstream, Trading Supply and Logistics, Strategy & Planning Independent Board Members Members of BOD are not independent. Is chairman also minister of energy or otherwise appointed by head of state? No Operations Highlights Upstream Oil PetroSA operates oil and gas exploration and production activities. Midstream Oil PetroSA only operates crude oil storage in South Africa on behalf of the Strategic Fuel Fund. Petronet is the principal operator of South Africa's fuel pipeline system. It accounts for 3000 km of line and is responsible for petroleum storage and pipeline maintenance. Petronet uses a telecontrol technology to monitor the pipeline. A new project is being evaluated with Mozambique's Pande Gas for a multiproduct pipeline corridor between Gauten and Durbang. Operates crude storage tanks in Saldanha Bay for the storing and maintaining strategic supply for South Africa on behalf of the government. Downstream Oil PetroSA does not operate refining assets. South Africa has the second largest refining capacity in Africa (488,297 B/D) after Egypt (726,250 B/D). A number of companies own and operate refineries. Refined products are sold in the South African market and exported to the Indian and Atlantic basins. Upstream Natural Gas PetroSA conducts natural gas E&P. The South African government has provided additional investment money for the exploration of natural gas in fields in Mossel Bay. Government agencies are involved in the natural gas industry to promote and develop natural gas exploration and production in South Africa. Some of the companies active in natural gas exploration are: iGAS, PetroSA, Petroleum Agency of South Africa and Petronet. Midstream Natural Gas Petronet, the principal operator of South Africa's fuel pipeline system, also transports natural gas. Natural gas from Mozambique is imported through a 536 mile pipeline which is jointly owned by the governments of South Africa and Mozambique. There is currently a plan to build a pipeline which would transport natural gas from Namibia to Cape Town. Downstream Natural Gas South Africa produces a small amount of natural gas and uses it in synthetic fuel production at PetroSA's 36,000 B/D Mossel Bay GTL facility. The quality of petrochemicals exceeds most international regulatory and environmental specifications. Marketing and sales are activities carried and supervised by the Trade, Supply and Logistics Department at PetroSA. Other PetroSA does not engage in activities outside of its core oil and gas businesses. Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) 5,700 Upstream: Average Proved Gas Reserves (BCF) 39 Upstream: Average Annual Oil Production (MM Barrels) 19 Upstream: Average Annual Natural Gas Production (BCF) No data A Citizen's Guide to National Oil Companies Page 736 South Africa: PetroSA Downstream: Average Annual Refinery Production (MM Barrels) No data Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) 70,540 Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) 26,978 Consolidated Average Net Income ($Millions) 9,883 Categorization Indicators Categories: Scores: Corporate Governance 69 Corporate Public Sector Governance 62 Governance 100 Commercialization 100 Public Sector Oil Dependency Fiscal Regimes 75 50 Governance Resource Endowment 3 0 Oil Dependency 96 Resource Commercializati Local Contribution 0 Endowment Sector and Trade Openness 67 Fiscal Regimes Average 67 PETROSA Average NOC Worldwide Governance Indicators Trends and Issues South Africa's economy and political leadership is vital to the rest of the continent. South Africa is a leader in conversion technologies (coal to liquids, gas to liquids) and clearly is moving to parlay that expertise into ventures that can enhance the national and regional energy portfolios. South Africa has also been a leader in building transparency and operating independent, well supported energy regulatory functions. These important attributes need to be strengthened for the country to continue on its path of economic integration and social improvement. A Citizen's Guide to National Oil Companies Page 737 South Africa: PetroSA Data Table Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Ownership Structure and Sole NOC or one of The Petroleum Oil and Gas Governance Its Organization cluster of NOCs and Corporation of South Africa, other sovereign PetroSA, is the sole upstream enterprises in country NOC for the country. Petronet is the State-owned operator of the national fuel pipeline system. Corporate Ownership Structure and Number of NOCs of 2008 1 1 Governance Its Organization country Corporate Ownership Structure and Description of 2008 1 PetroSA is a wholly-owned Governance Its Organization incorporation and entity of the government of the ownership Republic of South Africa. Corporate Ownership Structure and % shares controlled by 2008 1 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international Not listed Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international Not listed Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20- 2008 1 No Governance Its Organization F with SEC? Corporate Board of Directors (BOD) Does a BOD exist 2008 1 Yes Governance Corporate Board of Directors (BOD) Description of BOD and 2008 1 President and CEO, Chief Governance structure Financial Officer, Company Secretary, Vice President: Operations, New Venture Upstream, New Ventures Midstream, Trading Supply and Logistics, Strategy & Planning Corporate Board of Directors (BOD) Is chairman also 2008 1 No Governance minister of energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members 2008 1 Members of BOD are not Governance considered independent independent. (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, No data Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and 2008 1 Roles and policy statements are Governance policy statements well defined in PetroSA organizational structure. Corporate Role of BOD Based on available 2008 2 PetroSA BOD has the power to Governance information, does BOD lead the company towards the have power, impact, established goals set by the decision making BOD itself while following the authority policies made by the Department of Mines and Energy. A Citizen's Guide to National Oil Companies Page 738 South Africa: PetroSA Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget No data Governance Processes authority. Comment on the general decision flow within NOC and between NOC and government for major projects. Corporate Decision Making Based on available 2008 2 Budget is not completely Governance Processes, Budget information, is NOC predictable and is not separate Autonomy budget process from the Government. The predictable and separate Department of Minerals and from government Energy, through its Minister, evaluates and approves the final budget PetroSA will receive each year. Corporate Decision Making Does the NOC have 2008 1 PetroSA has the authority to Governance Processes, Budget authority to partner with partner with other entities in Autonomy other entities? order to perform any operation. Corporate Mission and Objectives Does NOC have a 2008 1 A mission statement is in place. Governance mission statement and, if "To become the leading so, what are key provider of hydrocarbons and elements related quality products by leveraging its proven technologies and harnessing its human capital for the benefit of its stakeholders." Corporate Sources of Capital Based on available 2008 1 Financial information discloses Governance information, budgeting operating cash flow figures. process and policy However, neither capital including % of cash expenditures nor the amount of flow/revenue available revenue for reinvestment are for reinvestment available. Corporate Disclosure/Transparency Disclosure of audited 2008 1 Although PetroSA does not Governance Policy data and other participate in any transparency indications of disclosure initiative, data is internally and transparency audited and available to the public. Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available 2008 1 PetroSA has developed policies Governance Management information, HR within its HR department to promotion and ensure the attraction, professional development and retention of development policies talented professionals. Corporate Full Disclosure and Based on available 2008 1 PetroSA is involved in Governance Measurement of Non- information, brief Corporate Social Investments commercial Objectives description of reporting focusing on education, health, on noncommercial environment, community objectives development. A Citizen's Guide to National Oil Companies Page 739 South Africa: PetroSA Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Corporate Full Disclosure and Based on available 2008 1 Environmental protection Governance Measurement of Non- information, extent of commercial Objectives non-commercial obligations Value Operating Performance Upstream oil E&P. 2008 2 PetroSA operates oil and gas Creation Where does it operate exploration and production Metrics (solely in the country or activities. abroad-name countries)? Does it have sole access to country's resources? Value Operating Performance Does the NOC operate Yes Creation abroad? Metrics Value Operating Performance Midstream oil pipelines, 2008 1 PetroSA only operates crude oil Creation storage, shipping storage on behalf of the Metrics Strategic Fuel Fund. Petronet is the principal operator of South Africa's fuel pipeline system. It accounts for 3000 km of line and responsible for petroleum storage and pipeline maintenance. Petronet uses a telecontrol technology to monitor the pipeline. A new project is being evaluated with Mozambique's Pande Gas for a multiproduct pipeline corridor between Gauten and Durbang. Operates crude storage tanks in Saldanha Bay for the storing and maintaining strategic supply for South Africa on behalf of the government. Value Operating Performance Downstream oil refining 2008 3 PetroSA does not operate Creation & marketing, refining assets. South Africa Metrics petrochemicals has the second largest refining capacity in Africa (488,297 B/D) after Egypt (726,250 B/D). A number of companies own and operate refineries. Refined products are sold in the South African market and exported to the Indian and Atlantic basins. Value Operating Performance Upstream natural gas 2008 3 PetroSA conducts natural gas Creation E&P E&P. The South African Metrics government has provided additional investment money for the exploration of natural gas in fields in Mossel Bay. Government agencies are involved in the natural gas industry to promote and develop natural gas exploration and production in South Africa. Some of these companies active in natural gas exploration are: iGAS, PetroSA, Petroleum Agency of South Africa and A Citizen's Guide to National Oil Companies Page 740 South Africa: PetroSA Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Petronet. Value Operating Performance Midstream natural gas 2008 3 Petronet, the principal operator Creation pipelines, storage, LNG of South Africa's fuel pipeline Metrics system, also transports natural gas. Natural gas from Mozambique is imported through a 536 mile pipeline which is jointly owned by the governments of South Africa and Mozambique. There is currently a plan to build a pipeline which would transport natural gas from Namibia to Cape Town. Value Operating Performance Downstream natural gas 2008 1 South Africa produces a small Creation distribution, NGL sales, amount of natural gas and uses Metrics petrochemicals it in synthetic fuel production at PetroSA's 36,000 B/D Mossel Bay GTL facility. The quality of petrochemicals exceeds most international regulatory and environmental specifications. Marketing and sales are activities carried and supervised by the Trade, Supply and Logistics Department at PetroSA. Value Operating Performance Other (power 2008 1 PetroSA does not engage in Creation generation, etc) activities outside of its core oil Metrics and gas businesses. Value Operating Performance Avg reserve replacement 1,911% Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE -21% Creation production (%) Metrics Value Operating Performance Avg upstream operating No data Creation cash flow/upstream Metrics capital expenditures (%) Value Operating Performance Avg upstream No data Creation exploration and Metrics production expenses ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production Metrics taxes ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics A Citizen's Guide to National Oil Companies Page 741 South Africa: PetroSA Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all No data Creation taxes ($/BOE) Metrics Value Operating Performance Avg effective tax rate No data Creation (%) Metrics Value Operating Performance Avg operating cash flow No data Creation vs costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization No data Creation rate (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery No data Creation capacity (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit Metrics volume ($M/barrel) Value Operating Performance Avg refining and No data Creation marketing operating Metrics cash flow/capital expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin 38% Creation (%) Metrics Value Financial Performance Avg profit margin (%) 14% Creation Metrics Value Financial Performance Avg effective tax rate 99% Creation (%) Metrics Value Financial Performance Avg reinvestment risk No data Creation (%) Metrics Value Financial Performance Avg debt profile (%) 0% Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total 13% Creation capital employed (%) Metrics A Citizen's Guide to National Oil Companies Page 742 South Africa: PetroSA Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Value Financial Performance Avg fiscal contribution 40% Creation to State (%) Metrics Other Public Sector Governance Based on available 2008 2 The Department of Minerals Factors information, presence of and Energy has the a publicly articulated Hydrocarbons, Energy Planning role of the hydrocarbon and Clean Energy Branch as a sector with respect to responsible entity to regulate national development and promote hydrocarbon objectives energy carriers; and to ensure integrated energy planning through policy development for the environment and renewable technology and provision of administrative services. Other Public Sector Governance Based on available 2008 1 PetroSA has defined the Factors information, clear necessary roles and policies for definition of the roles of every operating activity to policy, commercial reduce possible conflicts of operation and regulation interests. and assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available 2008 1 Objectives are available to Factors information, presence of public but not ranked. Plans are publicly stated to diversify into other petroleum objectives ranked by industry activities such as gas priority for NOC(s) development and associated infrastructure and services, GTL technology commercialization, downstream marketing and improve the security of supply (fuel, oil and gas) to the country. Other Public Sector Governance Based on available No data Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available No data Factors information, transparent hydrocarbon sector revenue management including revenue distribution within the country Other Public Sector Governance NOC and/or country 2008 1 No participation in EITI and no Factors participate in EITI other transparency initiative are and/or other presented. transparency initiatives A Citizen's Guide to National Oil Companies Page 743 South Africa: PetroSA Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Fiscal Sustainability Based on available 2008 1 The fiscal regime along with the Factors information, do budget evaluation and approval hydrocarbon sector by National Energy Regulator fiscal regimes allow for of South Africa (NERSA), sufficient capital appear to have enabled investment sufficient capital investment to increase PetroSA profitability margins. Other Fiscal Sustainability Based on available No data Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available 2008 1 Yes, NERSA and the Factors information, are Department of Minerals and hydrocarbon sector Energy work together to fiscal regimes evaluate PetroSA plans and appropriate for the feasibility to accomplish goals development stage of the and targets set by the BOD. All domestic resource base targets and strategies are made on behalf of the government of South Africa to strengthen exploration, expand production and ensure domestic demand is met. Other Access to Reserves Hydrocarbon law to 2008 3 NERSA regulates policy over Factors facilitate competitive the entire South African energy upstream investment industry. NERSA has created regulations and laws to promote participation in the hydrocarbon industry by local and foreign companies and competition in the South African market. Other Access to Reserves Based on available 2008 3 PetroSA is responsible for Factors information, existence of managing and promoting the negotiated licensing of oil and natural gas contracts/agreements for exploration. International Oil upstream investment Companies involved in South Africa's upstream activities are: Anschutz International, BHP Billiton, Forest Oil international, and Pioneer Natural Resources. Other Operating Strategy Based on available 2008 3 PetroSA holds 60% of Sable Factors information, types of and Pioneer Natural Resources joint ventures, role of 40%. NOC(s) Other Operating Strategy Based on available 2008 3 PetroSA, its partners and IOCs Factors information, extent of all use turnkey contracts. turnkey contracts used directly by NOC(s) Other Business Integration Vertical, horizontal 2008 1 Vertical Factors integration Other International Presence Does NOC make No. They operate international Factors investments abroad offices for product sales, customer interface, and partnership management. A Citizen's Guide to National Oil Companies Page 744 South Africa: PetroSA Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other International Presence Avg company No data Factors international BOE production as % avg total company BOE production Other International Presence Change in company No data Factors BOE production from international operations (%) Other International Presence Does NOC make 2008 1 Yes. PetroSA has offices in Factors investments abroad Europe, the U.S., and Middle East. In Africa, they have offices in Nigeria, Equatorial Guinea, Egypt and Sudan. Offices are active in marketing PetroSA products and technologies such as GTL. But PetroSA was also awarded 3 exploration blocks in Equatorial Guinea, and has an oil concession in Egypt. The company also has upstream prospecting operations in Nigeria, Gabon, Namibia and Mozambique. Other International Presence Avg company No data Factors international refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company No data Factors international refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants 2008 3 Upstream activities are mainly Factors in upstream carried out by PetroSA. However, non-NOCs are currently involved in such activities: Anschutz International, BHP Billiton, Forest Oil Int., and Pioneer Natural Resources. Other Commercialization Competition level in 2008 3 Upstream competition is open to Factors upstream including non- foreign competitors and NOC participants and promoted by South Africa's requirement to include government. No partnership NOC as partner with PetroSA is required. A Citizen's Guide to National Oil Companies Page 745 South Africa: PetroSA Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Commercialization Competition level in Midstream and downstream Factors midstream, downstream activities include many IOC including non-NOC competitors: BP, Chevron, participants and Engen, Shell, and Total. Several requirement to include domestic firms are also involved NOC as partner such as: Naledi Petroleum and Afrc Oil. Other Commercialization Based on available 2008 3 Upstream venture arrangements Factors information, prevalence appear to be successful. Some and success of reported examples of new NOC/non-NOC developments include BHP alliances, joint ventures Billiton's project to drill offshore in Western South Africa to increase oil reserves and production and Mozambique's Pande Gas for a multiproduct pipeline corridor between Gauten and Durbang. Other Commercialization Partial privatization of None Factors the NOC (as measured by ownership structure) Other Commercialization Based on available 2008 1 PetroSA has international Factors information, level and offices to manage its partnership quality of NOC and customer relationships. international operations Other Commercialization Based on available PetroSA does not operate Factors information, percent of outside of its core businesses. non-core commercial activities in overall operations Other Regulation Presence of independent, 2008 1 NERSA and the Department of Factors well-funded and trained Minerals and Energy have regulatory agencies, HC regulatory and policy oversight agency name, budget, for hydrocarbons. NERSA is a number of staff highly regarded independent regulator and a model for many other countries. Other Regulation NOCs are compelled to 2008 2 The Department of Minerals Factors adopt practices that and Energy is responsible for would provide results supervision of energy services similar to those in quality, access to sources of competitive markets energy and fair pricing. PetroSA with price, access to and is obliged to conduct all quality of energy activities within the frameworks services. brief established by the Department description: HC agency of Minerals and Energy. enforcement powers Other Regulation Regulators assure 2008 4 The National Energy Regulator Factors market transparency and of South Africa ensures that all good quality, unbiased processes, in which PetroSA is data and information. involved, are in compliance HC agency with the established law and independence indicators policies in place. A Citizen's Guide to National Oil Companies Page 746 South Africa: PetroSA Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Regulation Regulators effectively 2008 2 The Department of Minerals Factors resolve disputes and and Energy is responsible for conflicts and address addressing public issues public concerns about regarding hydrocarbon development of and resources and infrastructure. access to hydrocarbon The department has strategies resources and and procedures to resolve infrastructure. HC hydrocarbon-related disputes. agency dispute resolution policy Other Non-commercial Provision and level of 2008 2 Fuels prices reflect international Factors Objectives hydrocarbon price and local market conditions. subsidies ($/BOE The Department of Minerals production) provided by and Energy posts NOC and/or comprehensive information on government. brief fuels price trends as well as description of subsidy taxes and levies. program, approach, cost Other Non-commercial Provision and level of 2008 1 PetroSA Corporate Social Factors Objectives direct NOC funding of Investment (SCI) is considered country social and an important pillar of PetroSA's economic programs. transformation to integrate brief description of social functions within PetroSA programs and support business. Primary objectives are: Contribute to stabilizing social upliftment and economic development in the country, create sustainable value in the secondary economy and empower disadvantaged communities to become more healthy, secure and self- sufficient. The focus areas are: Education, Health, Environment, and Community Development. Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation No data Factors Objectives obligations relative to workforce ($ M) Other Non-commercial Financial performance $2,064.63 Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Large amount of information Comments reliability of data disclosed on South Africa's provided by NOC(s) and NOC; data verifiable, reliable governments and available is provided by PetroSA, National Energy Regulator of South Africa, and the Department of Minerals and Energy. A Citizen's Guide to National Oil Companies Page 747 South Africa: PetroSA Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Longevity of NOC Based on available 2008 1 PetroSA was formed in 2002 Comments information, history and from the merger of three persistence of NOC(s) previous entities: Mossgas LTD, Soekor LTD, and Strategic Fuel Fund Association. President Thabo Mbeki launched PETROSA in 2002 as the Petroleum Oil and Gas Corporation of the Republic of South Africa. Other Country Status Trends and issues South Africa's economy and Comments related to country political leadership is vital to the hydrocarbon sector rest of the continent. South endowments and Africa is a leader in conversion performance technologies (coal to liquids, gas to liquids) and clearly is moving to parlay that expertise into ventures that can enhance the national and regional energy portfolios. South Africa has also been a leader in building transparency and operating independent, well supported energy regulatory functions. These important attributes need to be strengthened for the country to continue on its path of economic integration and social improvement. Other Non-commercial Number of employees 34,166 Factors Objectives Other Non-commercial BOE production per 547 Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency 200.00 Factors BOE R/P (years) Other Oil Dependency Net oil and gas export -12.39% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas -3.92% Factors revenues as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves 15,000.00 Factors (MM Barrels) Other Resource Endowment Avg EOY natural gas 353.00 Factors reserves (BCF) Other Resource Endowment Total all source BOE 15,060.86 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Audited Factors A Citizen's Guide to National Oil Companies Page 748 South Africa: PetroSA Indicator Indicator Year of Category Indicator Description (Query) Source Source Response of Data Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 99.60% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 99.88% Factors split, production (%) Other Operating Conditions Country BOE 11.15% Factors production as % of total country BOE consumption Other Trade Openness WTO Membership Yes Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 749 South Africa: PetroSA Sources of Information Source # Year of Source Description Links Source 1 2008 PetroSA web site www.petrosa.co.za 2 2008 Department of Minerals and Energy www.dme.gov.za 3 2007 USEIA Country Analysis Brief - South www.eia.doe.gov Africa 4 2008 National Energy Regulator of South Africa www.nersa.org.za A Citizen's Guide to National Oil Companies Page 750 Sudan: Sudan Petroleum Company Ltd. (Sudapet) Sudan: Sudan Petroleum Company Ltd. (Sudapet) Summary Report Corporate Governance Highlights Corporate Organization and Ownership Sudapet (Sudan Petroleum Company Ltd.) was established in 1997. It is a wholly owned company of the Ministry of Energy & Mining, incorporated under the Petroleum Resources Laws of the Republic of the Sudan. Shares Controlled by Government 100% Domestic, International Exchanges for Equity Listings Not listed Board of Directors Structure No data Independent Board Members No data Is chairman also minister of energy or otherwise appointed by head of state? No data Operations Highlights Upstream Oil Sudapet operates only in Sudan. Midstream Oil None Downstream Oil Sudapet is not involved. Khartoum Refining Co. operates downstream as a 50-50 partnership between the Government of Sudan and China National Petroleum Corp. Port Sudan refinery operates as a 50-50 partnership between the Government of Sudan and Petronas. Upstream Natural Gas None Midstream Natural Gas None Downstream Natural Gas None Other No Operations Performance Highlights (2004-2007; not all years or data reported) Upstream: Average Proved Oil Reserves (MM Barrels) No data Upstream: Average Proved Gas Reserves (BCF) No data Upstream: Average Annual Oil Production (MM Barrels) No data Upstream: Average Annual Natural Gas Production (BCF) No data Downstream: Average Annual Refinery Production (MM Barrels) No data Financial Performance Highlights (2004-2007; not all years or data reported) Consolidated Average Total Revenues ($Millions) No data Consolidated Average Total Assets ($Millions) No data Consolidated Average EBIT ($Millions) No data Consolidated Average Net Income ($Millions) No data A Citizen's Guide to National Oil Companies Page 751 Sudan: Sudan Petroleum Company Ltd. (Sudapet) Categorization Indicators Categories: Scores: Corporate Governance 38 Corporate Public Sector Governance 24 Governance 100 Commercialization 0 Public Sector Oil Dependency Fiscal Regimes 50 50 Governance Resource Endowment 1 0 Oil Dependency 83 Resource Commercializati Local Contribution 0 Endowment Sector and Trade Openness 34 Fiscal Regimes Average 33 PETROSA Average NOC World Governance Indicators Trends and Issues Sudan is clearly poised to play a role as a major new African, and international, producing and exporting country. Management of internal and regional politics and conflicts is, however, key to success. Diversion of revenues away from a focus on national development and benefits would undermine Sudan's success. International scrutiny of operations and commercial arrangements in Sudan is growing more intense, as is disagreement among a variety of OECD and Asian governments regarding the transparency and integrity of Sudan's hydrocarbon sector. A Citizen's Guide to National Oil Companies Page 752 Sudan: Sudan Petroleum Company Ltd. (Sudapet) Database Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Ownership Structure and Sole NOC or one of cluster 2008 3 Sudapet is the main NOC with Governance Its Organization of NOCs and other various operating subsidiaries. sovereign enterprises in Other sovereign entities appear country to exist such as NilePet (which also appears to act as an NOC) for South Sudan and Khartoum State which has a share in a block. Corporate Ownership Structure and Number of NOCs of 1 or more Governance Its Organization country Corporate Ownership Structure and Description of 2008 2,3 Sudapet (Sudan Petroleum Governance Its Organization incorporation and Company Ltd.) was ownership established in 1997. It is a wholly owned company of the Ministry of Energy & Mining, incorporated under the Petroleum Resources Laws of the Republic of the Sudan. Corporate Ownership Structure and % shares controlled by 100% Governance Its Organization government Corporate Ownership Structure and Domestic, international Not listed Governance Its Organization exchanges where shares are listed Corporate Ownership Structure and Domestic, international Not traded Governance Its Organization exchanges where bonds are traded Corporate Ownership Structure and Company files form 20-F No Governance Its Organization with SEC? Corporate Board of Directors (BOD) Does a BOD exist No data Governance Corporate Board of Directors (BOD) Description of BOD and No data Governance structure Corporate Board of Directors (BOD) Is chairman also minister of No data Governance energy or otherwise appointed by head of state Corporate Board of Directors (BOD) Are any BOD members No data Governance considered independent (external) and, if so, how are they appointed Corporate Board of Directors (BOD) Term of service (years, No data Governance with re-appointment). Comment if they can be readily removed. Corporate Role of BOD Description of role and No data Governance policy statements Corporate Role of BOD Based on available No data Governance information, does BOD have power, impact, decision making authority A Citizen's Guide to National Oil Companies Page 753 Sudan: Sudan Petroleum Company Ltd. (Sudapet) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Recruitment/Replacement General process for No data Governance Key Executives recruitment, replacement of key execs and senior managers Corporate Decision Making Level of NOC budget 2008 1,2,3 There appears to be alignment Governance Processes authority. Comment on the between Sudapet and national general decision flow budgets. within NOC and between NOC and government for major projects. Corporate Decision Making Based on available 2008 1,2,3 It appears that Sudapet Governance Processes, Budget information, is NOC budget prepares its budget subject to Autonomy process predictable and government approval. separate from government Corporate Decision Making Does the NOC have 2008 1,2,3 Sudapet appears to have Governance Processes, Budget authority to partner with authority for partnerships and Autonomy other entities? is engaged in a number of shares of blocks. Corporate Mission and Objectives Does NOC have a mission 2008 2 "Sudapet is an oil and gas Governance statement and, if so, what company that specializes in are key elements E&P, G&G surveys, research and studies, O&M. It is a business company that operates in an economic and commercial manner to maximize its shareholder's value. It professionally aims at growth and profitability; safe and effective operations; development and training of the national workforce; adding value and increasing reserves and production; and contributing to the development of the Sudanese nation." Corporate Sources of Capital Based on available No data Governance information, budgeting process and policy including % of cash flow/revenue available for reinvestment Corporate Disclosure/Transparency Disclosure of audited data No data Governance Policy and other indications of disclosure and transparency Corporate Skill Base Based on available No data Governance information, NOC demographics (% management, % technical, other descriptors) Corporate Incentives/Career Based on available 2008 1,2,3 Sudapet has limited technical Governance Management information, HR promotion and financial resources. and professional development policies A Citizen's Guide to National Oil Companies Page 754 Sudan: Sudan Petroleum Company Ltd. (Sudapet) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Corporate Full Disclosure and Based on available 2008 1,2,3 Sudapet appears not to engage Governance Measurement of Non- information, brief directly in noncommercial commercial Objectives description of reporting on objectives. Revenues noncommercial objectives provided to the Sudanese government would be used for these purposes. Corporate Full Disclosure and Based on available No data Governance Measurement of Non- information, extent of non- commercial Objectives commercial obligations Value Operating Performance Upstream oil E&P. Where 2008 1,2,3 Sudapet operates only in Creation does it operate (solely in Sudan. Metrics the country or abroad-name countries)? Does it have sole access to country's resources? Value Operating Performance Does the NOC operate 2008 1,2,3 One of Sudapet's operating Creation abroad? companies signed a PSA in Metrics Ethiopia in partnership with Nilepet, indicating an ability to take passive positions outside of Sudan. Value Operating Performance Midstream oil pipelines, 2008 1,2,3 None Creation storage, shipping Metrics Value Operating Performance Downstream oil refining & 2008 1,2,3 Sudapet is not involved. Creation marketing, petrochemicals Khartoum Refining Co. Metrics operates downstream as a 50- 50 partnership between the Government of Sudan and CNPC. Port Sudan refinery operates as a 50-50 partnership between the Government of Sudan and Petronas. Value Operating Performance Upstream natural gas E&P 2008 1,2,3 None Creation Metrics Value Operating Performance Midstream natural gas 2008 1,2,3 None Creation pipelines, storage, LNG Metrics Value Operating Performance Downstream natural gas 2008 1,2,3 None Creation distribution, NGL sales, Metrics petrochemicals Value Operating Performance Other (power generation, 2008 1,2,3 No Creation etc) Metrics Value Operating Performance Avg reserve replacement No data Creation rate (BOE, %) Metrics Value Operating Performance Avg reserve replacement No data Creation cost ($/BOE) Metrics Value Operating Performance Change in BOE reserves No data Creation (%) Metrics Value Operating Performance Change in BOE production No data Creation (%) Metrics A Citizen's Guide to National Oil Companies Page 755 Sudan: Sudan Petroleum Company Ltd. (Sudapet) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Value Operating Performance Avg upstream operating No data Creation cash flow/upstream capital Metrics expenditures (%) Value Operating Performance Avg upstream exploration No data Creation and production expenses Metrics ($/BOE) Value Operating Performance Avg production costs No data Creation excluding production taxes Metrics ($/BOE) Value Operating Performance Avg upstream after-tax No data Creation income/revenues (%) Metrics Value Operating Performance Avg earnings before No data Creation interest & taxes ($/BOE) Metrics Value Operating Performance Avg income after all taxes No data Creation ($/BOE) Metrics Value Operating Performance Avg effective tax rate (%) No data Creation Metrics Value Operating Performance Avg operating cash flow vs No data Creation costs incurred (%) Metrics Value Operating Performance After tax return on assets No data Creation Metrics Value Operating Performance Avg refinery utilization rate No data Creation (%) Metrics Value Operating Performance Change in total refining No data Creation production (%) Metrics Value Operating Performance Change in refinery capacity No data Creation (%) Metrics Value Operating Performance Avg income from No data Creation operations per unit volume Metrics ($M/barrel) Value Operating Performance Avg refining and marketing No data Creation operating cash flow/capital Metrics expenditures (%) Value Operating Performance Avg pre-tax return on No data Creation assets (%) Metrics Value Financial Performance Avg total operating cash No data Creation flow/total capital Metrics expenditures (%) Value Financial Performance Avg operating margin (%) No data Creation Metrics Value Financial Performance Avg profit margin (%) No data Creation Metrics A Citizen's Guide to National Oil Companies Page 756 Sudan: Sudan Petroleum Company Ltd. (Sudapet) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Value Financial Performance Avg effective tax rate (%) No data Creation Metrics Value Financial Performance Avg reinvestment risk (%) No data Creation Metrics Value Financial Performance Avg debt profile (%) No data Creation Metrics Value Financial Performance Avg return on assets (%) No data Creation Metrics Value Financial Performance Avg return on total capital No data Creation employed (%) Metrics Value Financial Performance Avg fiscal contribution to No data Creation State (%) Metrics Other Public Sector Governance Based on available 2008 4 With high oil prices and active Factors information, presence of a investments, Sudan's growth publicly articulated role of rate has reached 10% per year. the hydrocarbon sector with Sudan still sees itself as an respect to national agricultural society; while they development objectives want to benefit from oil revenues, they also want to continue supporting the agriculture sector. Employment in the agricultural sector constitutes 80% of the total national work force. Other Public Sector Governance Based on available No information is available. Factors information, clear Since Sudapet is owned by the definition of the roles of ministry, it appears that policy, commercial functions are aggregated. operation and regulation and assignment to specific entities avoiding conflicts of interest Other Public Sector Governance Based on available No data Factors information, presence of publicly stated objectives ranked by priority for NOC(s) Other Public Sector Governance Based on available No data Factors information, presence of a strategy to transfer NOC non-commercial objectives to government or other agencies as capacity becomes available Other Public Sector Governance Based on available No data Factors information, transparent hydrocarbon sector revenue management including revenue distribution within the country A Citizen's Guide to National Oil Companies Page 757 Sudan: Sudan Petroleum Company Ltd. (Sudapet) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Public Sector Governance NOC and/or country Current 5,6 Sudan is not a candidate Factors participate in EITI and/or country for EITI. other transparency Transparency International initiatives indicates a national chapter but no contact information is provided. Other transparency programs do not appear to operate in the country. Other Fiscal Sustainability Based on available It appears that fiscal regimes Factors information, do are adequate for capital hydrocarbon sector fiscal investment. Proved reserves regimes allow for sufficient and production have been capital investment rising. Sudapet enters into JVs with outside investors, mostly from Asia. However, fiscal systems do not seem to be at par with traditional systems around the world and contractual arrangements are opaque. Sudan's resource endowments and internal politics may attract participation on a negotiated basis. Other Fiscal Sustainability Based on available No Factors information, do hydrocarbon sector fiscal regimes allow for investment grade NOC credit ratings Other Fiscal Sustainability Based on available Investment is flowing, Factors information, are production is rising. Industry hydrocarbon sector fiscal expectations are for Sudan to regimes appropriate for the become a significant producer development stage of the and join OPEC. domestic resource base Other Access to Reserves Hydrocarbon law to Competition is dubious; Factors facilitate competitive investments appear to be upstream investment mostly based on government relations and negotiated arrangements, and many NOC-NOC partnerships are in place in particular with Asian entities. Other Access to Reserves Based on available Negotiated contracts and Factors information, existence of agreements clearly exist. negotiated contracts/agreements for upstream investment Other Operating Strategy Based on available 2008 2 Sudapet engages in JVs Factors information, types of joint primarily with other NOCs: ventures, role of NOC(s) CNPC, ONGC and Petronas among others. Only 2 IOCs are listed among Sudapet's partners. Sudapet's participating interests in different blocks in Sudan range between 5% and 30%. A Citizen's Guide to National Oil Companies Page 758 Sudan: Sudan Petroleum Company Ltd. (Sudapet) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Operating Strategy Based on available Sudapet's partners hold the Factors information, extent of turnkey arrangements or, in turnkey contracts used some cases (CNPC) may directly by NOC(s) provide their own services. Other Business Integration Vertical, horizontal Sudapet is primarily an Factors integration upstream company. Other International Presence Does NOC make No, only the passive Factors investments abroad agreement through its subsidiary in Ethiopia as mentioned above. Other International Presence Avg company international No data Factors BOE production as % avg total company BOE production Other International Presence Change in company BOE No data Factors production from international operations (%) Other International Presence Does NOC make No direct investments Factors investments abroad Other International Presence Avg company international No data Factors refinery throughput as % total refinery throughput Other International Presence Change in company No data Factors refinery throughput from international operations (%) Other International Presence Avg company international No data Factors refinery capacity as % company total refinery capacity Other International Presence Change in company No data Factors refinery capacity from international operations (%) Other Commercialization Non-NOC participants in There are only 2 non-NOCs Factors upstream operating in Sudan's upstream. Other Commercialization Competition level in Arrangements appear to be Factors upstream including non- negotiated. Competition NOC participants and appears to be limited. Sudapet requirement to include must be a JV partner. NOC as partner Other Commercialization Competition level in No data Factors midstream, downstream including non-NOC participants and requirement to include NOC as partner Other Commercialization Based on available There are limited NOC/non- Factors information, prevalence NOC JVs. and success of NOC/non- NOC alliances, joint ventures Other Commercialization Partial privatization of the Not planned. Factors NOC (as measured by ownership structure) A Citizen's Guide to National Oil Companies Page 759 Sudan: Sudan Petroleum Company Ltd. (Sudapet) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Commercialization Based on available No data Factors information, level and quality of NOC international operations Other Commercialization Based on available No data Factors information, percent of non-core commercial activities in overall operations Other Regulation Presence of independent, 2007 1 "In October 2005, Sudan Factors well-funded and trained established the National regulatory agencies, HC Petroleum Commission (NPC) agency name, budget, to bolster the development of number of staff the country's oil resources. NPC allocates new oil contracts, and ensures equal sharing of oil revenues between the national government in Khartoum and the Government of South Sudan (GoSS). NPC is responsible for resolving duplicate oil contract issues in which the GoSS has allocated contracts overlapping contracts previously granted by Khartoum (Total and White Nile Ltd. over Block B and the White Nile Petroleum Operation Company (WNPOC) and Ascom Group of Moldavia over Block 5b). President Bashir is believed to co-chair the NPC with Vice- President Salva Kiir, who also heads the GoSS." Other Regulation NOCs are compelled to No data Factors adopt practices that would provide results similar to those in competitive markets with price, access to and quality of energy services. brief description: HC agency enforcement powers Other Regulation Regulators assure market There is no independent Factors transparency and good regulatory body. quality, unbiased data and information. HC agency independence indicators A Citizen's Guide to National Oil Companies Page 760 Sudan: Sudan Petroleum Company Ltd. (Sudapet) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Regulation Regulators effectively Disputes appear to be Factors resolve disputes and managed at the presidential conflicts and address public (head of state) level. concerns about development of and access to hydrocarbon resources and infrastructure. HC agency dispute resolution policy Other Non-commercial Provision and level of No data Factors Objectives hydrocarbon price subsidies ($/BOE production) provided by NOC and/or government. brief description of subsidy program, approach, cost Other Non-commercial Provision and level of No data Factors Objectives direct NOC funding of country social and economic programs. brief description of programs and support Other Non-commercial Measure of NOC No data Factors Objectives employees relative to total assets ($ M) Other Non-commercial Compensation obligations No data Factors Objectives relative to workforce ($ M) Other Non-commercial Financial performance No data Factors Objectives relative to workforce ($ M) Other Quality of Data Availability, extent, Very little information is Comments reliability of data provided available from either the by NOC(s) and government or NOC. governments Other Longevity of NOC Based on available Sudapet is a relatively young Comments information, history and company, having been persistence of NOC(s) established in 1997. The combination of Sudan's resource endowments along with the prevalence of NOC- NOC partnerships suggests that Sudapet will be long lived. A Citizen's Guide to National Oil Companies Page 761 Sudan: Sudan Petroleum Company Ltd. (Sudapet) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Country Status Trends and issues related to Sudan is clearly poised to play Comments country hydrocarbon sector a role as a major new African, endowments and and international, producing performance and exporting country. Management of internal and regional politics and conflicts is, however, key to success. Diversion of revenues away from a focus on national development and benefits would undermine Sudan's success. International scrutiny of operations and commercial arrangements in Sudan is growing more intense, as is disagreement among a variety of OECD and Asian governments regarding transparency and integrity of Sudan's hydrocarbon sector. Other Non-commercial Number of employees No data Factors Objectives Other Non-commercial BOE production per No data Factors Objectives employee (oil and natural gas production and/or refinery throughput; BOE/employee) Other Oil Dependency BOE R/P (years) 42.75 Factors Other Oil Dependency Net oil and gas export 88.91% Factors revenues as share of overall export revenues (oil trade balance as % of exports of goods and services) Other Oil Dependency Total oil and gas revenues 17.04% Factors as a share of GDP (%) Other Resource Endowment Avg EOY oil reserves (MM 6,614.50 Factors Barrels) Other Resource Endowment Avg EOY natural gas 3,000.00 Factors reserves (BCF) Other Resource Endowment Total all source BOE 7,131.74 Factors reserves (MM Barrels) Other Resource Endowment Audited or unaudited? Unaudited Factors Other Operating Conditions Company domestic No data Factors reserves as % of country BOE reserves Other Operating Conditions Company domestic No data Factors reserves as % of total company reserves Other Operating Conditions Company domestic BOE No data Factors production as % of country BOE production A Citizen's Guide to National Oil Companies Page 762 Sudan: Sudan Petroleum Company Ltd. (Sudapet) Indicator Indicator Description Indicator Year of Source Response Category (Query) Source of Data Other Operating Conditions Company primary No data Factors distillation capacity as % of total country primary distillation capacity Other Operating Conditions Company refinery No data Factors throughput as % of total country refinery throughput Other Operating Conditions Country oil/natural gas 92.75% Factors split, reserves (%) Other Operating Conditions Country oil/natural gas 100.00% Factors split, production (%) Other Operating Conditions Country BOE production as 486.17% Factors % of total country BOE consumption Other Trade Openness WTO Membership No Factors Other Competition OPEC Membership No Factors A Citizen's Guide to National Oil Companies Page 763 Sudan: Sudan Petroleum Company Ltd. (Sudapet) Sources of Information Source # Year of Source Description Links Source 1 2007 USEIA Country Analysis Brief - Sudan http://www.eia.doe.gov/emeu/cabs/Sudan/Oil.html 2 2008 Sudapet web site http://www.sudapet.sd/about.htm 3 2008 European Coalition on Oil in Sudan http://www.ecosonline.org/index.cfm?event=showcompanies &page=companies 4 2008 CIA World Factbook - Sudan https://www.cia.gov/library/publications/the-world- factbook/geos/su.html#Econ 5 Current EITI http://eitransparency.org/ 6 Current Transparency International http://www.transparency.org/regional_pages/africa_middle_ east/about 7 2008 USEIA International database http://www.eia.doe.gov/emeu/international/contents.html A Citizen's Guide to National Oil Companies Page 764