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Washington DC 22 June 2006

Sixth GGFR Steering Committee Meeting

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Agenda

• Overview

• Phase I (2003-2006)

• Phase II (2007-2009)

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OverviewGGFR Mission and Partners

• GGFR Mission: Working towards a world free of

flares • GGFR Partners:

– Partner Countries– Partner Companies– Donors– GGFR Core Team

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OverviewPhase I Strategy

– Worked with willing partner countries and companies

– Seized opportunities

– Developed innovative tools and methodologies – created the building blocks for a solid foundation

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OverviewPhase I Accomplishments

• Significant representation of world gas flaring in the Partnership

• Global deliverables– Global standard for flaring and venting– Regulatory best practices– Gas flaring data tool– Carbon credit financing

• In-Country public-private partnerships – 17 demonstration projects– Associated gas recovery plans– Country implementation plans

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From Global to Country focus

Flaring and Venting ReductionActivities

Commercialization

Regulations

Carbon Credits

Standards

Country Deliverables andDemo projects

Sustainable Gas Flaring Reduction

Phase I

Phase II

2006

2007Focus on major flaring countries and in-country deliverables

2003

2010

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OverviewPhase II Mandate

• International support– G8 Gleneagles endorsement

• GGFR Partnership actions– Option Paper, Sept. 2005– Steering Committee meeting, Nov. 2005– Workshop, March 2006– Steering Committee Meeting, June 2006

• Objective: Trust Fund Agreements in place by Nov., 2006

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OverviewPhase II Strategy (2007-2009)

– Identify and prioritize high-impact countries and companies

– Accelerate sustainability strategies in existing partner countries and global deliverables / activities (hand-off, mainstream, exit)

– Measure tangible results– Publicize successes

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Phase I:In Depth Review

- Key Success Factors- Flaring Data Update- Stakeholder Engagement Process (Standard)- Demonstration Projects

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Area Target Score

A significant representation of world gas flaring in the

Partnership

70-80% coverage of global flaring

Stakeholder Engagement Process (Standard) for

flaring and venting

Stakeholder Engagement Process endorsed and

implemented throughout the Partnership and beyond

Producer driven associated gas recovery

Completed prioritization of venting and flaring sources by

Partner companies, with Associated Gas Recovery Plans, including reduction

forecast

Country support to improve framework for associated

gas utilization

Completed Country Implementation Plans by GGFR client Countries

Demonstration projects facilitated by GGFR

Demonstration projects in all GGFR client countries

Phase I: Key Success Factors

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Coverage of world flaring: 2004

Achievement

52%

25%

23%

Partners through OPEC

GGFR Partners Countries

Non-Partners

(Data as reported to GGFR)

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Endorsement of the Stakeholder Engagement Process (“Standard”)

Achievement

Endorsed33%

Not yet67%

Partner country endorsement

Partner company endorsement

Endorsed89%

Not yet11%

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Country Implementation PlansAssociated Gas Implementation Plans

AchievementAs known to Core Team

AGRPs

CIPsReceived

0%

Still awaited100%

Received0%

Still awaited100%

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Achievement

Demonstration Projects

Demo Project coverage

Countries with67%

Countries without

33% Total of 17 projects

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Discussion/Actions

1. Overall achievement

2. Comments and agreement on the achieved results

Phase I: Key Success Factors

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Phase IFlaring Data Update

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Actions:

1. By end-September, Partners should provide 2005 actual flaring data, with an update for 2006 and 2008 and the projection for 2009.

2. Agree whether the aggregated flaring data (2004, 2006 & 2008) can be made available to the public through the two GGFR web-sites.

Phase I Flaring Data UpdateFlare and Vent Volumes

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Phase IStakeholder Engagement

Process (Standard)

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Phase I: Stakeholder Engagement Process (Standard)

Action items from 21 June Workshop

Associated Gas Recovery Plans• The Core Team will request, by end-June, Partner Companies to provide project-related gas flaring reduction volumes for 2003-2006. Data to be provided by end-September

• Summary AGRPs, including forecasts of project-related gas reduction volumes, should be sent to GGFRbefore end-2006

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Phase I: Stakeholder Engagement Process (Standard)

Action items from 21 June Workshop

Country Implementation Plans• The Core Team will request, by end-June, Partner Countries to provide project-related gas flaring reduction Volumes for 2003-2006. Data requested to be provided by end-September

• GGFR will be pleased to facilitate, at Partner Country’s request, development of CIPs through workshopsinvolving government, Operators and other stakeholders

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Phase I: Stakeholder Engagement Process (Standard)

Comments from 21 June Workshop

GGFR Data Tool• Tool was very well received and considered fit-for-purpose• It was agreed not to aim for high frequency/high detail reporting during early stages of tool implementation • DOE requested to include non-Partner countries in roll out to maximize coverage• Cameroon requested possibility for higher frequency of reporting and data transfer from company databases be considered in next tool enhancement • Norway suggested that all reporting should be done through the Data Tool

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Phase IDemonstration Projects Update

(Commercial)

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1) Feasibility studies

1) Project identification

workshops

2) Stakeholder

facilitation

Ohanet-Algeria / LPG- Indonesia

Río del Rey-Cameroon / Sedigi-Chad

Gulf of Guinea / Zafiro-EG / Ofon-Nigeria

Approach Projects

Phase I: Demonstration Projects Update (Commercial)

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Phase I Demonstration ProjectsGulf of Guinea:A two phase approach

Stage I (2004/2005): In country studies and facilitation

1- Cameroon: Very disperse sources and few markets (38 fields – 1.6

BCM flaring) Study carried out identifying attractive option for

Domestic: Conversion to gas (power plant and refinery) plus additional Power

Workshops organized in 2004 and 2005 No real follow up after the study.

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Stage I (2004/2005): In country studies and facilitation

2- Equatorial Guinea– Challenge: Relatively few fields, few markets (EG

NLG and locally)– Collaborative effort needed between IOCs and

government: Creation of a GGFR EG Steering Committee

– Flaring reduction options identified based on expanded project boundaries

– Joint Feasibility Study carried out by two operators– No agreement reached on investment needed and

gas available

Phase I Demonstration ProjectsGulf of Guinea:A two phase approach

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Stage 2 (end 2005/2007): Regional facilitationNigeria/Cameroon/Equatorial Guinea

• Regional feasibility Study presented on Nov. 17, 2005 in London

As a result, two MOUs have been signed between the countries– Feb. 2006: Between Nigeria and EG– March 2006 : Between Cameroon and EG

• Stakeholders to solicit GGFR facilitation if and when needed

Phase I Demonstration ProjectsGulf of Guinea:A two phase approach

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Action:

Ensure local engagement towards successful

project implementation

Leverage World Bank Group’s unique position and

resources to facilitate and provide financing

Agree on specific next steps in:

−Gulf of Guinea

−Algeria

−Nigeria

Phase I: Commercial Project Status

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Phase IDemonstration Projects Update

(Carbon Credit)

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1) Gas to power

2) Gas to pipeline

3) Gas to reinjection

4) Gas to LNG

5) Gas to LPG

Russian JI (Russia)Afam (Nigeria)

TFT (Algeria)Kwale (Nigeria)OB/OB (Nigeria)

LNG (Angola)

LPG (Indonesia)

Methodology Projects

Phase I: Demonstration Projects Update (Carbon Credit)

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Action:

• Provide data and resources to finalize PDD’s and methodologies (OB/OB, LNG, TFT, AFAM)

• Sponsors submit draft methodologies for approval (Shell, Chevron, ENI, and Sonatrach)

• Increase participation and institutional capacity from Designated National Authorities (Angola, Algeria, Kazakhstan, Libya, Nigeria, and Russia)

Phase ICDM/JI Project Status

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Phase I Work Program, Budget and Financing

GGFR Total Expenditures for 2003-2006: US$ 8 million

Carbon Credits23%

Commercialization/Gas

Utilization/Legal Framew ork

21%

Standard9%

Core Team28%

Dissemination + Workshops

6%Small

Scale/Access to energy

6%

Others, including data tool

7%

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Phase IWork Program, Budget and Financing

Country Deliverables

47%

Global Deliverables

19%

Core Team28%

Dissemination6%

Total Expenditures 2003 – 2006 US$ 8 million

Nigeria 25%

Algeria 20%

Indonesia 17%

Russia 12%

Chad 7%

Angola7%

Cameroon 5%

Others7%

of which Country Deliverables US$ 3.8 million

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Phase II

Engage GGFR PartnersFocus on high-impact countriesDefine KPI’s to measure results

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Phase II Strategy (2007-2009)

– Identify and prioritize high-impact countries and companies

– Engage Partners more– Accelerate sustainability strategies in

existing partner countries and global deliverables / activities (hand-off, mainstream, exit)

– Measure tangible results– Publicize successes

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Phase II Country Selection

“Long-list” of potential client countries for extension period:

The Gulf of Guinea : Cameroon, Equatorial Guinea, Nigeria

CIS : Russia, Kazakhstan, Azerbaijan

Middle East : Libya, Qatar, UAE, Saudi Arabia, Iraq

Latin America : Brazil, Mexico, Venezuela

Asia : Indonesia

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Phase II Country SelectionSelection Process:

1. “Long List” proposed – March, 2006

2. Select “Intermediate List” – June, 2006- Based on Partner interest, ability and willingness to work

with Core Team

3. Define “Short List” – October, 2006 - 5 Programs / ~10 target countries - Based on country assessments

4. Develop country-specific Strategies & Action Plans

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Goal

• Measure progress towards ultimate expected outcome (reduced flaring and venting)

Approach

• Structured around 5 Focus Areas:1. Communication & Partner Coverage

2. Stakeholder Engagement (Standard)

3. Commercialization

4. Carbon Credits

5. Flaring Regulations and Policies

Phase II Results Framework

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Phase II Results Framework

Approach (cont.)

• Regular exchange of Key Performance Indicators (KPI’s) by Partners and core team

• GGFR Steering Committee to steward partnership using KPI’s

• Use KPIs to define targets for exit or sustainability strategy in countries

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Phase II Results Framework

Action:• Partners provide feedback on

proposed KPI’s – June 22, 2006• Provide input on KPI’s and targets

– by Sept. 30, 2006• Select critical KPI’s and agree on

targets – October Workshop

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Communication Strategy

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Communication Strategy Baseline – Little visibility for GGFR• 89 news stories mentioning gas flaring in the

headline (title): One mentions World Bank; none mention GGFR

• 789 articles mention gas flaring in passing: Only 90 mention World Bank; only 11 mention GGFR

• Tone of coverage from sample of articles shows 47% negative coverage, 33% balanced coverage, and 20% positive coverage.

• 76% of coverage is devoted to Nigeria alone

• 16% deals with Russia, Kazakhstan; Remaining 8% refers to other topics/countries

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Communication Strategy Core messages

• The GGFR Partnership contributes specific solutions to overcome barriers

• The success and viability of gas flaring reduction projects depend on having the right conditions and incentives

• GGFR partners are working to limit the waste of a valuable clean energy resource and the emission of carbon dioxide

• The GGFR Partnership’s achievements demonstrate that its efforts are relevant, viable and desirable

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Communication Strategy Action

• Designate communications representatives to participate in

• Communications Workshop (following October Strategy Workshop)– Define overall communications

program– Propose communications budget

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Communication Strategy Flaring Best Practices Forum

2 ½ day Global ConferenceDecember 13-15, 2006 in Paris

Objectives:• Bring together high level representatives from

Governments/Companies to raise Gas Flaring awareness

• Sharing of Best Practices, Success Stories• Raising Technology and Regulatory awareness• Demo project identification to fuel GGFR Phase

II

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Communication Strategy Flaring Best Practices Forum

Action:• Secure sponsorship by June 30,

2006• Finalize participation and

presentations (through Organizing Committee) by Sept. 30, 2006

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Sustainability (Exit) Strategy

for Global Activities

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Sustainability (Exit) Strategy for Global ActivitiesGGFR Global Activities:

• Stakeholder Engagement Process (Standard) implementation

• Maintain and implement data tool• Best Practice dissemination• Communication

*Note: Exit strategies for individual countries will be determined in country planning phase, based on Results Framework and KPI’s

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Sustainability (Exit) Strategy for Global Activities

How do we see the Partnership after 2009 when the extension period ends?

Option A: Partnership ceases to exist- E.g., Core functions are outsourced to …?

Option B: Partnership continues in a changed form- E.g., Core Team hosted outside World Bank?

Action: Feedback to the core team by Sept. 30, 2006 for development of a Sustainability Strategy at the October workshop

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Phase II – Strategic Planning

October, 2006

Strategic Workshop• Finalize Short List of countries• Define Work Program for selected countries• Finalize KPI’s and targets

Communications Workshop• Define Communications Plan

Action:• Define participation by Sept. 30, 2006

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Phase II Funding Options

Selective funding of Country/Regional Programs was not supported by the Steering Committee Nov 16

WBG, OPEC, Donor Countries and Partner Companies contribute $350,000 each for 3 year period

Partner Countries contribute $100,000 each for 3 year period

Trust Fund Extension draft letter will be distributed

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Phase IIAction

Action (June 22, 2006):

• Confirm Partner support for the conceptual level of expenditure

• Agree on the individual Partner contributions

• Agree on procedure for Trust Fund extension