Petroleum Institutions

4. Sector ministries   

The agency at the centre of the network of government agencies in petroleum sector management and oversight is the sector ministry itself. This ministry typically has overall responsibility for the petroleum sector. This mandate requires the ministry to oversee sector operations and to set policy and strategic direction of the sector. The Ministry’s role is usually defined in sector legislation.

Tasks falling within its mandate and guided by legislation commonly include:

  • Sector policies and planning, including proposed legislation. Basic laws would require legislative approval, while subsidiary legislation/regulations would not normally require parliamentary approval;

  • Negotiation and award of contacts or licences – it is ideal that this is carried out through a transparent competitive bidding, although some countries still adopt the direct negotiation/open door policy;

  • Calculation and collection of royalties;

  • Preparation of regulations;

  • Oversight and regulatory functions, with authority to delegate this responsibility;

  • Coordination with other ministries, especially the ministries of finance and economic planning;

  • Governance of NRCs, sometimes in collaboration with the finance ministry – usually, the ministry would have a majority of seats on the board; and

  • Promotion of the sector at national and international events. 

Although environmental and sustainable development issues are usually the responsibility of other ministries, small units charged with coordination of the sector and environmental or social ministries on extractives sector-related impacts are often found within the extractives sector ministry. 

Typical roles of the sector ministry

A well-designed sector ministry will have:

  • A unit which is responsible for issuing and overseeing licenses, enforcing license conditions, and maintaining an up to date and public register of exploration and production licenses which is easily accessible by all interested parties;

  • For mining, an artisanal and small-scale  mining (ASM) unit (in states with large ASM);

  • An inspectorate with a strong presence at sector sites. This inspectorate will be responsible for inspections relating to compliance with licensing conditions, compliance with HSE regulations, and undertaking production and technical audits;

  • An environmental and social unit, which collaborates with, and provides support to, the environmental and social authorities that oversee the sector;

  • An economics unit that analyzes the economics of petroleum and mining companies operating in the sector;

  • A unit that promotes the sector at national and international events;

  • Highly experienced and skilled staff to oversee large petroleum and mining projects and to put the government on an equal footing when dealing with the management and specialist staff of international companies and large investors; and

  • Employment conditions and salaries which are sufficient to prevent the most highly skilled and experienced staff being hired away by international companies.