World Bank Document · The World Bank FOR OMCIAL USE ONLY MICROFICHE COPY ... ENSPM scole Nationale...

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The World Bank

FOR OMCIAL USE ONLY

MICROFICHE COPYR.eaie No. 10239

Report No. 10239-GUI Type: (PCR)TWEDDLE, E/ X31707 / T9 073/ OEDD3

PROJECT COMPLETION REPORT

REPUBLIC OF GUINEA

PETROLEUM EXPLORATION PROMOTION PROJECT(CREDIT 1438-GUI)

DECEMBER 27, 1991

Industry and Energy Operations DivisionCountry Department IAfrica Regional Office

This document has a restricted distribution and may be used by recipients only in the performance oftheir ofricial duties. Its contents may not otherwise be disclosed without World Bank authorization.

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LIST OI ACROUTKS

BSlCIP Bureau d'Etudes Induutirelles at de Cooperation del'Institut du P&trole

CQL Coopers and Lybrand

DH Direction of Hydrocarbons

ENSPM scole Nationale Sup6rieure don P6troles et Moteurs

a00o Ceophysical Company of Norway AS

GKOQUEST American Geophysical company

HQI Hydro Quebec International

HYDROVENTE a Government-owned sister agency of ONAH

KINBK Minist6re de 1'Energie et Konkour6

mmG Minist6re des Mines et G6ologie

INREE MinistAre des Ressources Naturelles, de 1'Energie et de1'Environnement

HSGB West African Regional Geological Study

ONAN Office National des Hydrocarbones

PCIAC Petro-Canada International Assistance Corporation

PSA Petroconsultants S.A.

SEE Secr6tariat d'Etat A 1'Energie

SGH SociSt5 Guin6enne des Hydrocarbures

SNE Soci6te Nationale d'Electricit6

SGP/SOQUIP Soci6t4 Guineenne des P6troles

FOR OFCIA USE ONLYTHE WORLD BANK

Washington. D.C. 20433U.S.A.

Oke of DrectotCGwalOpwatbrn Evaiukmn

December 27, 1991

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on GuineaPetroleum Exploration Promotion Project(Credit 1438-GUI)

Attached. for information, is a copy of a report entitled "Project

Completion Report on Guinea - Petroleum Exploration Promotion Project (Credit

1438-GUI)" prepared by the Africa Regional Office with Part II contributed by the

Borrower. No audit of this project has been miade by the Operations Evaluation

Department at this time.

Attachment

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

FOR OFFICLAL USE ONLY._,_,.I O. @11133

!TDs 143*-U

PROJECT COMPLETIZON RP

TABLE OF CONTENTS

Pag No.

PREFACz .. ........................ * . .iii,

EVALUATION SUMMARY .. # . *****e*******................ iv

PART I PROJECT RE W FROM BANR PERSPECTIVE

L. PROJECT IDENTITY ..... ........ ............ ....... 1

B. BACKGROUND ... ................ ............... *....** 1

C. PROJECT OBJECTIVES AND DESCRIPTION ...................... 2

- Project Objectives ... .................... 2- Project Description .............................. 2- Project Design and Organization ................... 3

D. PROJECT IMPLEMENTATION .. ... .................. 4

- Seismic Studies .................. ..... 4

- Geological Field Surveys . .......................... S- Petroleum Legislation .............................. .5

- Oil Companies' Status .................... . 6- Petroleum Exploration Promotion ................... . 6- MSGB - West Africa Geological Regional Study ....... 7- Institut ions ........ ............................... 7- Training ...................... .. 8- DR Building .......................... .. 9- Audit of the Credit Accounts ..... .................. 9- Disbursements .. .................................... 9- Procurement .......... ... .. ... ........................ 10

E. PROJECT RESULTS - GENERAL COMiENTS ....................... 10

F. PROJECT SUSTAINABILITY . .................................. 11

G. PERFORHANCE OF THE PARTIES INVOLVED IN THE PROJECT ....... 11

H. PROJECT DOCUMENTATION and DATA ..... . ...................... 12

PART II PROJECT REVIEW FROM BORROWER'S PERSPECTIVE

A. INTRODUCTION ...... ..................................... 13

B. BACKGROtND .13

C. PERFORMANCE OF THE PARTIES TO THE CREDIT AGREEMENT1438-GUI . .14

- PERFORMANCE OF BORROWER (GOVERNMENT OF GUINEA) 14- PERFORMANCE OF THE BANK ...... 15

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorzation

Table of Contents (Cont.)

D. Z VALUATION OF THE QUALITY OF WORLD BANK/REPUBLICGUINEA RELATIONS AND ITS IMPACT ON PROJECT')NPLEMWNTATION ......... . ......... ... .......... . 15

Z. CONCLUSION .*.* ................................ 17

PART III STATI TICAL PT

1. Project Time-table ................ ............ 18

2. Credit Cumulative Disbursements .. ............. 18

3. Project Implementation ....... *O.. 19

4. Project Costs and Financing ................. .. 20

5. Project Resulte ...... ......................... 21

A. Direct Benefits ......................... 21B. Economic Impact ...... . . .............................. 21C. Financial Impact ........................ 21D. Studies ................................. 22

6. Status of Credit Covenants ................... 22

7. Use of Dank Resources ...... ................... 23

A. Staff Inputs . . .............. 23B. Missions...... 23

PROJCT COMPLETION REORT

REPUBLIC OF GUIE

PETROLEUM EXPLORATION PROMOTION PROJECT

(CREDIT 1438-GUI)

PIUFACE

This in the Project Completion Report (PCR) for the PetroleumExploration Promotion Project in Guinea, for which Credit 1438-GUI in anamount of SDR 7.7 million was approved on January 17, 1984. The Creditwas closed on June 30, 1990, three years behind schedule. Anundisbursed amount of MDR 0.004 million was canceled and the lastdisburement was on September 10, 1990.

The-PCR was jointly prepared by the Industry and Energy operationsDivision of the Technical Department (AFTIE), Africa Region (Preface,Evaluation Summary, Parts I and III), and the Borrower (Part II).

Preparation of this PCR was started during the Bank's finalsupervision mission of the project in July 1990, and is based, interalia, on the President's report, the Credit Agreement, supervisionreports, correspondance between the Bank and the Borrower; and internalBank memoranda.


REPUBLIC OF G ' NEA


(CREDIT 1438-GUI)

9kis~LAirn gbiectives

1. In the early 1980s, as today, oil imports were a serious strain onGuinea' balance of payments. In spite of the efforts made by theSoci6t6 Guin6enne des Hydrocarbures (SGH), a joint venture formedbetween the Government and the American oil company, Superior Oil, nohydrocarbons had been discovered in the country. The Government wasinterested in evaluating the hydrocarbon potential of the sedimentarybasins of the country, and the Association agreed to grant a new creditto Guinea to that effect.

2. The project consisted of: (a) an exploration promotion componentincluding offshore seismic operations (in shallow water and on thecontinental slope and shelf) and geological field surveys in the onshoreBowe basin; (b) technical assistance to the Ministry of Mines andGeology (MHG); and (c) legal and economic training for MMG staff.Furthermore, following a Government request, a power-related componentwas included in the project, aimed at preparing a second Power Project.

3. The total project cost was estimated at USS12.0 million, with aforeign cost component of US$11.6 million. A US$3.6 million amount wasgranted by Petro-Canada International Assistance Corporation (PCIAC) tofinance, in parallel, the seismic program on the continental slope andshelf.

Im_lementation Exoerience

4. A preliminary seismic test in the offshore area was carried out inthe offshore area. It was found that the sediments in the shallow waterzone were not thick enough to warrant the cost of any further seismicprogram. In March 1986, a seismic survey (1,546 km) was carried out inthe shelf area on a speculative basis (i.e. partly financed by thecontractor). This survey did not produce any encouraging results.

5. Since the seismic structural results were not encouraging, aseismic-stratigraphy study was carried out on 5,000 km of seismicprofiles. A few stratigraphic exploration targets were suggested, butnone was clearly defined. It is considered that further seismicreprocessing would be necessary to that effect.

6. Two field surveys were carried out (March/April 1985 and March1986) and two bore holes were drilled (March 1987 and January 1989 inthe Bowe basin in order to collect source rock samples from Silurianoutcrops (paragraphs 22 to 23 below). All the results pointed to theovermaturity of the Paleozoic source rocks. In line with the projectdescription, no further detailed survey was carried out.

7. In mid-1984, the promoting company Anglo-Suisse presented an offercovering a large exploration acreage, which included unusually lightwork commitments. This was turned down by the Government upon therecommendation of its exploration consultants (paragraph 32 below).

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8. A French firm was contracted in February 1985 to draft a petroleumcode (paragraph 25 to 28 below). This law (enacted September 23, 1986)is a production-sharing contract, with no payment of royalties orbonuses, and the inclusion of a possible Government equity participationin came of discovery.

hesults

9. The exploration consultants prepared a geological reportincorporating previous and new data (paragraph 33 amd 34 below). Theconclusions of this report, together with the new petroleum legislation,were presented to the oil industry during the course of two promotionalmeetings, which were held in Houston (June 16, 1987) and London (June23, 1987). No proposal for an exploration contract was presented by anyoil company.

10. The Project was not successful to the extent that the promotioneffort did not yield any oil industry interest. However, the projectresulted in: (a) enhanced scientific knowledge regarding the geologicalcharact4ristics of the Guinea offshore basin; and (b) the strengtheningof the technical -^-pertise of the Hydrocarbons Directorate (DH) staff.

11. During the implementation of the project, the Association agreed toa request from the Government to finance under the Credit aninstitutional study of the petroleum subsector (see uaraaraoh 40 blow).The selected consultant's recommendations included: (a) the preparationof a regulatory framework for petroleum activities in the country; (b)concentration of the technical control of these activities within theDH; and (c) an appropriate training program to enable the DH staff tofulfill this task. The consultant prepared the required regulations.These should be streamlined to be adapted to local conditions.

Sugtainabilitv

12. The experience acquired by the DH staff in petroleum explorationmay not survive long in case of a lasting absence of oil companies,activities. However, the preparation of a regulary framework forpetroleum activities in the country, and the initial training receivedby the DH staff in petroleum products distribution should be the basisof a permanent and beneficial DH's role in the country.

Lessons learned

13. The lack of success of the Government in its attempts to attractoil companies to explore the country's sedimentary basins results fromthe lack of well-supported exploration targets for prospective investors("conceptual exploration plays" in petroleum industry terms). In orderto attenuate the oil industry's negative evaluation of the hydrocarbonpotential of the country, it would be necessary to develop such plays,through the implementation of a limited exploration program includingmainly seismic data reprocessing (i.e. processing field-acquired seismictapes through appropriate new technical modelling).

14. In mid-1985, four countries in West Africa (Mauritania, Senegal,Gambia and Guinea Bissau) were preparing a regional geological studyincluding each country's western sedimentary basin. This regional studywas known under the acronym NSGB. In November 1985, the Ministryrequested the extension of the MSGB regional study to the Guineanoffshore sedimentary basin. The NSGB extended study was completed in1987. However, due to time constraints, and to the involvement of threedifferent consultants, the study was more a juxtaposition of localstudies than an actual regional study. Only five reports were sold tothe oil industry. The main lessons drawn are that a regional studyshould be: (a) conceived as such, and not be the result of the initial

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implae ntation of local studies, subsequently integrated; and (b) underthe responsibility of only one team of consultants from the start.

15. The implementation of the project under review illustrates thefutility, indeed the possible harm, of including acquisition of freshhard data, such as extensive seismic surve a or drilling of explorationwells, in a promotional project. These exploration tools aim atdefining prospects, which oil companies rightly see as their role; it isonly necessary to define well-supported conceptual plays in order toattract the oil industry in the exploration of a given basin. Workprograms to develop these exploration plays may include utilization oflight exploration methods such as reprocessing of existing seismic data,or satellite imagery techniques.

16. As mentioned in paragraph 7 above, the DH's exploration consultantsrecommended to the Government, with the Bank's agreement, that it notsign a contract with Anglo Suisse. in retrospect, it might have beenwiser to encourage the company to negotiate a contract on one portion ofthe required acreage. The promotional efforts of Anglo Suisse couldhave been linked to the promotional program carried out by DHi'sexploration consultants. Promotional companies should not necessarilybe dismissed out of hand. If such a company does not have anestablished reputation in the oil indnistry, it is advisable - as a lastresort - to secure its cooperation under acceptable conditions, ratherthan eliminating it a prXori from the scene.

17. No governmental unit in the country other than the DH has theauthority to control activities in the petroleum subsector. As the DHdoes not yet have the appropriate competence to fulfill this task, itstill requires technical assistance and training. More generally, theGovernment needs further technical and financial assistance to: (a)adapt DH staff to the petroleum products supply and distributionsubsectors; (b) attract oil companies by developing new explorationtargets in the Guinean basin, in an environment increasingly marked by arelative worldwide scarcity of exploration acreage; and (c) evaluate thegeothermal potential of the country.

PROJECT COMPLEXION REPORT

REPUBLIC Oz GUI


(CREDIT 1438-GUI)

PART It PROECT REVINW PFROMI SANM' pRSPECTI-VE

A. Poimect Idegtitv

Name Petroleum Exploration Promotion ProjectCredit No.: Credlt 1438-GUIRVP Unit Africa Region Country Department ICountry GuineaSector EnergySubsector s Petroleum

1. Despite its mineral and agricultural potential, Guinea's economicperformance declined from independence in 1958 until about 1973-74.When the project started, Guinea, with a per capita income of aboutUS$300, was among the least developed countries.

2. Guinea's economic development was hampered by structural problems.The economy was stagnating and the balance of payments was in chronicdeficit. The available foreign exchange could not satisfy domesticconsumption, service external debt, and finance the capital andrecurrent costs of existing and new projects.

3. Within this depressed environment, oil imports were a seriousstrain on the economy. Oil products supplied, in the early 1980s, 34%of the energy used (the remainder coming from fuelwood). Oil imports in1980 totaled about 414,000 tons, for an aggregate value of US$52million, representing about 28% of annual foreign exchange earningsFurthermore, there was considerable suppressed demand, a result of thelimited availability of foreign exchange to pay for more oil imports.

4. No oil or gas had been produced in any of the three sedimentaryareas of the country, which are: (a) the onshore Bowe basin (8,000 km2);(b) the shallow offshore zone along the coast (10,000 km2); and (c) thecontinental shelf and slope (over 45,000 km2) in progressively deeperwater, from 200 to 4,000 m.

5. The three basins were virtually unexplored. Three companies hadconducted limited exploration programs in the country's offshore. Shellcarried out airmag and reconnaissance seismic studies in 1969/1970.Between 1974 and 1979, SOQUIP, a joint venture between the Governmentand a consortium of foreign companies (Buttes, CFP, Naftagas and JapanGuinea Petroleum Co), conducted seismic work of 3,500 line-km anddrilled one well, which was dry.

6. In January 1980, the Government and Union Texas Petroleum formedthe Soci6te Guin6enne des Hydrocarbures (SGH), an equal participationjoint venture, to explore a permit area of 36,000 km2. In August 1980,Superior Oil bought 75% of the Union Texas share in SGH and took on therole of operator. Superior conducted a detailed seismic survey (3,600line-km) and planned to drill a well, but the drilling was delayed by anoffshore border disagreement with Guinea Bissau.

- 2 -

7. The Minintry of Mines and Geology (MMO) (and,since 1984, itspetroleum division, the newly created Hydrocarbons Directorate (DR)),was responsible for petroleum exploration. It is also responsible forthe country's bauxite production and development of other mineralresources. The power subsector was under the responsibility of theMinistry of Energy and Konkour& (MINEK), which as such controlled theSoci6t& Nationale d "'eutricit& (SNE). The staff of the MMG was mainlytrained in mineral -ogy and mining engineering. However, a fewspecialists had rL ,-d university degrees in petroleum geology andacquired some experxence in petroleum exploration activities byfollowing the exploration activitios carried out in the country byinternational oil companies. The technical capabilities of the DRnevertheless needed strengthening.

S. The distribution of oil products was conducted, under the Ministryof Internal Comerce, by the Office National des Hydrocarbones (ONAH),a monopoly public enterprise created after the natioralization ofexisting petroleum products distributors. All service stations in thecountry were Government-owned and run by a sister agency of ONAH,Hydrov-nte.

9. The NMH was interested in evaluating all the areas of the countrywith hydrocarbon potential in order to attract additional oil companies,in addition to SGH, to conduct oil exploration in the country. Sinc3relinquishment would occur under the SGH agreement, additional acreagewould be available for promotion. The Government therefore requestedthe Association's assistance for the implementation of this promotionaleffort.

C. Project Obiectives and Doscriotion

Proiect objectives

10. The project was conceived to provide technical and institutionalassistance to the MMG in support of petroleum exploration promotionaimed at attracting the oil industry to conduct exploration activitiesin the country's free acreage. This was to be achieved through theacquisition of new seismic data and the integration of the results withpreviously existing data, in order to demonstrate the hydrocarbonpotential of the country to the oil industry. The project aimed also atproviding institutional support, through technical assistance andtraining.

11. A first Power project aimed at rehabilitating the Conakry powersystem, and provided technical assistance and training for the SNEentitled Guinea - First Power Project, Credit 1085-GUI (ProjectCompletion Report dated May 6, 1988) was carried out between February1981 and October 1986. Under this credit, a contract for the technicalassistance component was signed between Hydro Quebec International(HQI), of Canada, and MINEK to provide SNE with 14 experts inengineering, financial and training fields. This contract was to expirein May 1985, but it was already clear that technical support would beneeded for an additional 7.5 months to complete the transfer of know-howto the SNE staff. The Government requested that the financing of thecontract to the end of December 1983 be included in the petroleumproject. An amount of SDR 970,000 was included to that effect in theproject under review.

Proiect Descrip_tion

12. The project was organized around three main components: (a)preparation and implementation of a petroleum exploration promotion; (b)

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training of MM4 stafft and (c) reinforcemnt of SNE professionalcapability:

(a) The exploration component consisted of the following parts:

(L) Exacution of seismic surveys comprisingapproximately 600 line-km in the shallow water zone,and approximately 3,000 line-km in the continentalshelf and slope;

(ii) execution of two geological field surveys in theonshore Bowe basin;

(iii) organisation of data collected into an informationpackage for promotional purposes;

(iv) development of a strategy for promotion of acreageto the oil industry under appropriate commitmentsand fiscal terms;

(v) promotion of acreage to the oil industry; and

(vi) negotiation of petroleum exploration and productionagreements;

(b) The training program comprised:

gi) on-the-job training of MKG staff in all aspects ofpetroleum exploration and production; and

(ii) establishment and implementation of a program fortraining outside Guinea, including all petroleumexploration/development-related matters; and

(c) The Power component included strengthening SNE's planning,maintenance, operational, and accounting and commercialcapability through the provision of about 105 man-months ofconsultant services.

Proiect Desicn and organization

13. Within the framework of the exploration promotion policy adopted(i.e. including acquisition of hard data), the project was wellprepared. Three missions to Conakry paved the way for the project'sappraisal. The conceptual foundation of the project was clear and wellunderstood by both the Bank and the Ministry's staff (except for somedelicate technical issues difficult for laymen to grasp). The Ministerwas, however, initially opposed to preparing petroleum legislation, onthe grounds that drafting a now petroleum law was a Governmentprerogative. However, following the policy changes which occurred afterthe death of the first President of the Republic of Guinea, theconceptual basis of the project was fully understood by the new Ministerand objections disappeared. The MHG was the executing agency for theproject.

14. Through a PPF advance amounting to US$220,000, MMG was able tocontract an exploration consulting firm to review the existingexploration data on the country, and define a petroleum explorationpromotion policy. The consultants concluded that, since the country waslargely unexplored, substantially more exploration work was needed toevaluate it fully.

15. The consultants recommended taking advantage of the presence of aseismic boat, belonging to the American company Digicon, which was

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15. The consultants recomme nded taking advantage of the presence of aseiamic boat, belonging to the American company Digicon, which wasoperating in the neighboring waters of Guinea Bissau (under thefinancing of Bank's Credit Cr. 1334-GUB), to carry out an initialreconnaissance survey (165 km) of the shallow offshore. This test wouldprovide information needed to prepare a more detailed seismic program inthe same area (600 km) to be financed under the project. The Governmentrequested an increase in the PPF to finance this seismic test program.On April 21, 1983, the Association agr-ed to this request, and the PPFwas increased to an aggregate amount of US$1 million.

16. The test seismic lines were acquired in September 1983, andprocessed during the last quarter of 1983. The interpretation showedthat, contrary to initial expectations, the geological section whichunderlies the cretaceous section is not thick enough in the test area tooffer any attractive potential. This exploration finding resulted inthe first modification of the project and in the end the Bank did notfinance any further seismic surveys in the shallow water area.

D PROWECT IHPLh3WIgAOIoN

17. The first phase of the project consisted in acquiring new fielddata, both in the offshore area and in the BOWE basin. These new datawere to be subsequently integrated into the regional study to bepresented during the promotional seminars.

Seismic Studies

18. Through a PPf advance of an aggregate amount of US$1 million, theGovernment was able to hire an exploration consulting firm to review theavailable exploration data, and, on the basin of the consultants'conclusions and recommendations, to finance the execution of a seismictest survey (160 km) in offshore shallow water.

19. The test in the offshore shallow water area was carried out inSeptember 1983, and data acquired was processed by March 1984. It wasfound that sediments in the shallow water zone were not thick enough towarrant the cost of a full shallow water seismic program. Since theirseismic boat was expected to undertake its program in December 1984,PCIAC agreed to include in its program further reconnaissance lines inthe shallow water zone, in order to evaluate whether any future seismicprogram in this zone was justified.

20. According to PCIAC, the results of the seismic program were ratherencouraging. However, the Bank cautioned the Hydrocarbon Directorate(DH) against a too optimistic interpretation of the results, because ofthe lack of: (a) an adequate sedimentary section in shallow water; (b)structural traps within the mesozoic geological section; and (c)significant data about the sediments underlaying the mesozoic geologicalsection in the basin. However, following a recommendation from theMinistry's exploration consultant, a new seismic survey was carried outby the Government to complement the lines shot by PCIAC. This survey(1,546 km) was carried out in March 1986 on a semi-speculative basis(i.e. partly financed by the contractor). This survey did not produceany encouraging results.

21. Since the seismic results obtained did not result in any convincingstructural lead, the focus was shifted to more subtle stratigraphictraps, and it was decided to perform a stratigraphic-seismic study on5,000 km, which was carried out by an American company in mid-1986.This study gave good stratigraphic indications, but did not result inthe definition of well supported stratigraphic exploration targets.

Geolcaical Field Survey!

22. A first geological field survey in the onshore Bowe basin wascarried out from February to April 1985. A total of 42 samples werecollected by a team composed of four Guinean geologists and twogeologists from PSA. Analyses of collected samples showed that theSilurian shales, although cooked by volcanic intrusions, are potentialsource rocks. It was then decided to carry out a second field survey,in order to collect samples for geochemical analysis in areas as distantas possible from volcanic intrusions. The second geological fieldsurvey was implemented in March-April 1986: the samples showed arelative abundance of organic matter which, however, had been generallyaltered either through overcooking or surface alteration.

23. Since the apparent overmaturity of Silurian samples might resultfrom superficial alteration, it was decided to obtain fresh samples bydrilling two wells about 50 meters deep. In March 1987, two attemptedwells were prematurely abandoned in volcanic rocks. It was thenresolved to: (a) thoroughly study the location of further drillingthrough geophysical surveys, in order to verify the absence of shallowvolcanic rocks; and (b) to drill the shallow wells in appropriatelyselected locations. With equipment obtained from the Direction G6n6ralede la G6ologie, the DH carried out magnetic and gravity studies whichled to the location of two shallow wells. Drilling was performed inNovember 1988. The Tomboya and Tondon wells reached 220 and 114 metersdepth respectively. Silurian source rocks in both wells wereovermature.

24. In line with the project description, the negative results obtainedin the Bowe basin resulted in the termination of the exploration workprogram financed by the Bank in the basin. The geological field surveytargeted at analyzing the maturity of Paleozoic source rocks, which wasscheduled during appraisal for October/November 1984, was extended fromApril 1985 to November 1988, because of the difficulties met inobtaining fresh samples of these source rocks.

Petroleum Legislation

25. As mentioned above (paragraoh 13), the Minister did not agreeinitially to include the preparation of Petroleum Legislation in theproject. During negotiations, however, it was agreed, as a compromisebetween the respective positions of the Government and Bank, tointroduce a training program for Government's staff in petroleumcontract negotiations.

26. In December 1984, seminars were organized to that effect inConakry: (a) by the Ecole Nationale Superieure des P6troles et Moteurs(ENSPM) on the petroleum industry; and (b) by a legal consultant onpetroleum legislation and petroleum contract negotiations. These wereattended by about 20 to 30 persons from the Ministries of Mines andGeology, Finance, Commerce, Planning, Energy and the Central Bank.BEICIP made a well-organized and systematic presentation of the subject.

27. The MMG was impressed by the quality of the presentation, and asthe new Minister had expressed a strong interest in developing petroleumlegislation for the country the same consultant was retained for thatpurpose and a contract was signed on February 27, 1985. In June 1985,the consultant propcosed an initial draft of the Petroleum Code and aModel Contract, under two options: production-sharing contract, or jointventure between the Government and the oil companies. In December 1985,the consultant presented a final draft of the proposed petroleumlegislation, incorporating the Government's and Bank's comments.

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28. Following the Bank's recommendations, the Government opted for theproduction-sharing model, and the Petroleum Code and a Model ProductionSharing Agreement were enacted in September 1986. In order to preparethe petroleum exploration promotion, the Government also published"Guidelines for making applications for production-sharing contracts".Companies were requested to bid on two main items: the amount of workingcommitments, and profit oil sharing.

Oil Companies' Status

29. In late 1984, MOBIL inherited all petroleum rights previously heldby Superior Oil in Guinea, including its share in the SGP contract, as aconsequence of its take-over of the latter company.

30. The offshore dispute between the Republic of Guinea and theGovernment of Guinea Bissau was settled by the International Court ofJustice, in the Hague, on February 14, 1985. This decision resulted ina 25% decrease in the SGH contract area (from 36,000 km2 to 27,000 km2),and a subsequent extension to May 15,1986, of the SGH agreement.

31. In 1985, MOBIL requested the Government to jointly reassess thecontractual obligations inherited from Superior, which included thedrilling of an exploration well. MOBIL, however, eventually decided torelinquish the SGH contract area it had inherited from Superior. SGHwas finally dissolved in 1986. All information on the MOBIL contractarea was then released, and the MKG exploration consultant integratedthese data into the geological synthesis report later presented to theoil industry.

32. In mid-1984, the Ministry received an offer from a smallpromotional company called Anglo-Suisse Co. to acquire the rights overthe entire offshore acreage not committed at the time under the existingcontract with Superior. However, PSA advised the Government not toenter into a contract with Anglo-Suisse Co. because of the poor workcommitments offered, large acreage size and weak relinquishmentprovision. The Minister decided to go ahead with the petroleumexploration promotion, following which Anglo-Suisse could make a freshoffer, which would then be considered together with all other offers.The company never reiterated its offer.

Petroleum Exyloration Promotion

33. The Government's exploration consultant integrated the newlyacquired seismic data into the existing geological data, and published aregional report, which was thoroughly reviewed by the Bank. The finalreport was issued in January 1987.

34. Promotional meetings were held successively in Houston and Londonin June 1987, an eighteen months' lag as compared with the plannedSchedule of Implementation (caused by the long delay necessary to obtaintechnical data acquired by MOBIL). Although the promotionalpresentations were well attended, only five companies eventually boughtthe geological synthesis report as prepared by the MMG explorationconsultants (for a total amount of US$90,500), and none approached theGovernment to negotiate a petroleum exploration contract. This lack ofsuccess is mainly due to the absence of convincing exploration targetsin Guinea's offshore basin. Depressed oil prices at the time of thepromotion may also have acted as a deterrent.

35. In March 1988, the DH contracted a highly qualified explorationconsultant, (particularly well-informed about the hydrocarbon potentialof the country, since he had previously edited the MSGB report, seeparagraph 36 and 37 below), in order to carry out new promotionalefforts through visits to a certain number of selected oil companies in

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the US. This exercise was not succ-esful. The consultant neverthelessrecommended that similar promotional efforts be made to oil companies inEurope. In 1988, a delegation of the DH organized promotionalpresentations to nine European companies. These demonstrated a strongerinterest than the American oil industry, but no concrete proposal froman oil company ever materialized.

KSGS - West Africa Geoloalcal Reaional Study

36. In mid-1985, four countries in West Africa (Mauritania, Senegal,Gambia and Guinea Bissau) were preparing a regional geological studyincluding each country's western sedimentary basin. This regional studywas known under the acronym MSGB. On November 15, 1985, the Ministryrequested the extension of the MSGB regional study to the Guineanoffshore sedimentary basin.

37. The MSGB extended study was completed in 1987. However, due totime constraints, and to the involvement of three different consultants,the study was more a juxtaposition of local studies than an actualregional study. Only five reports were sold to the oil industry. Themethodology adopted to implement this unsuccessful regional study wasanalyzed with a view to preparing other regional studies, such as theRed Sea geological study. The main lessons drawn are that a regionalstudy should be: (a) conceived as such, and not be the result of theinitial implementation of local studies, subsequently integrated; and(b) under the responsibility of only one team of consultants from thestart.

38. In a similar exercise, and within a cooperation agreement concludedbetween the Republic of Guinea and the Government of Guinea Bissau, bothGovernments agreed to carry out a joint evaluation of the hydrocarbonpotential of a common offshore area on both sides of the border. A workprogram was designed to that effect, and the Governments are currentlylooking for external assistance to finance this study.

Institutions

39. In mid-January 1985, the Ministry of Mines and Geology, with itspowers extended to cover both the petroleum and the electricitysubsectors, became the Ministry responsible for Planning and NaturalResources (MPNR). By December 1985, a reorganization resulted in theMPNR changing into a Ministry of Natural Resources, Energy andEnvironment (MNREE). Finally, in early 1988, the Secretariat d'Etat &l'Energie (SEE) was created within the MNREE. on October 6, 1988, theSEE (which incorporates the DH) was officially designated to carry outthe petroleum-related components of the Project.

40. In March 1988, in the context of the privatization of petroleumproducts distribution activities the Government requested the Bank tofinance under the Credit a study of the reorganization of Guinea'spetroleum subsector. The DH requested, and obtained the Bank'sagreement to contract the French company BEICIP for that task. The firmhad both the required qualifications and good experience in thepetroleum subsector in Guinea.

41. The consultant submitted a first draft of its report on January 19,1989, and issued its final report on March 10, 1989. It recommendedthat the DH's technical activity be extended to the entire petroleumsector, including the technical monitoring of petroleum supply anddistribution operations, in particular the much-needed control oversafety measures.

42. In February 1990, the Secretary of State for Energy issueddirectives enlarging the scope of the DH's activity as recomm-nded bySEICIP. However, these now directives are likely to remain meaninglessunless the DH receives: (a) appropriate training to give it the capacityto fulfill its expanded task; and (b) the position within the Governmentwhich would give it the nece"sary authority to carry out its technicalcontrol of petroleum activities in the country.

43. Following a Government request during the last phase of the project(June, 1990), the consultant also prepared regulations governingmaintenance of petroleum product storage and transportation facilities.These regulations fill a void, but being based on the Frenchregulations, are too detailed and sophisticated to be immediatelyapplied as such. They need be streamlined to suit the Government'scapacity for implementation.

44. During project implementation, and within the framework of thewithdrawal of the Government from public sector activities, the Bankalso financed consultants to assist the Government in the privatizationof ONAH. Lengthy negotiations took place between the Government and aconsortium of three oil companies (AGIP, SHELL and TOTAL) with a view tosetting up a joint venture (with shares of 49% for the Government and51% for the companies).

45. The Government's share of the joint venture takes the form ofONAH's assets in Guinea (distribution network in the capital city and inthe provinces). The Joint Venture's equity is evaluated at US$11.5million, of which US$2 million is in cash.

46. The new company, the Societe Guineenne des P6troles (SGP), wasofficially constituted on December 20, 1990. However, SGP will onlytake over the supply and distribution of petroleum products in thecountry over a 21 month period, when most of the relevant facilitieshave been rehabilitated. In the meantime, the Bank is financing amanagement contract for ONAH, which is implemented by the firm Coopersand Lybrand (C. & L.).

47. Petroleum storage and distribution facilities are in poorcondition, particularly with regard to safety issues, and constitute apermanent danger for the industrial and urban environment. As apriority task, the joint venture will have to rehabilitate thesefacilities. The cost is such that the Government's share exceeds itsinitial input, which has obliged it to request external financialassistance.

Trainina

48. The most efficient training received by DH staff was theirparticipation in the different surveys (such as GECO seismic survey andthe geological field surveys in the Bowe basin) and studies (such as theseismic-stratigraphy study carried out or the geochemical analysis ofthe samples collected in the Bowe basin) implemented under the Credit.Furthermore, the exploration consultant organized systematic trainingof DH staff in all petroleum exploration-related issues, includingtraining in computerized data bank utilization. The total training costunder the Credit was SDR 158,765, out of which approximately SDR 40,000were used to finance a crash course in safety control of petroleumstorage and transport facilities.

49. A small cell of geologists and geophysicists within the DH has beentrained, able to handle most exploration-related issues. Thequalifications acquired nevertheless need to be updated and completed incertain fields, such as seismic-stratigraphic studies. Moreover, the DH

staff requiros significant training in all petroleum activities relatingto products supply and distribution.

DH Building

50. The Division of Hydrocarbons (DH) had been allocated space in aseparate building owned by the Ministry, but the building needed to berehabilitated, and this space was not large enough to accommodate allthe Division's staff including the short-term technical consultants. InMay 1985, the Government requested the Bank to finance a pre-fabricatedoffice building for the DH. In view of the DR's urgent need for office&nd storage space, and its effect on project implementation, theAssociation agreed to the Government's request, and the Credit Agreementwas accordingly modified on October 29, 1985.

51. Following a call for bids sent to a short list of companies, theGovernment proposed to award the building contract to the French companySopromex, represented by the company Socipra. The contracts were signedon November 5, 1985, and July 7, 1986. On December 20, 1986, the DH tookpossession of the building. Basic office equipment was provided underthe Credit, and by June 1986 the DH staff occupied the new building.

Audit of the Credit A:counts

52. The Abidjan office of specialized firm was selected in early 1985to carry out the annual auditing of the Credit, and to set upappropriate accounting procedures within the DH. Auditing of theproject accounts was done regularly, although not always on time.Accounting procedures were set up within the DH, and were satisfactorilyapplied for most of the time (during a short period in 1987-1988 theemigration at short notice of the DH accountant left the Divisiontemporarily without a book-keeper).

Disbursements

53. Variances between planned and actual disbursements reflect thechanges to the project work program that occurred during itsimplementation.

AMOUNTS(in SDR)

Category Planned(Ref. Credit)

Acreement Actual

Seismic surveys 3,150,000 489,681

First geological field 390,000 575,509survey

Second geological field 245,000 0survey

Exploration consultants' 1,140,000 3,039,256services

Power consultants' 970,000 2,337,492services

Training 145,000 158,763

Office and garage 0 185,428

- 10 -

Refunding of PPF advance 970,000 876,732(P 187 GUI)

Unallocated 690,000 0

Cancelled 37,139

TOTAL 7,700,000 7,700,000

54. Three comments may be made to clarify this table:

(a) Since the Association felt that technical assistance to SNEwas still necessary beyond the period contemplated duringappraisal, and an expenditures on seismic data acquisitionwere lower than initially expected, it wau decided to financethe necessary assistance to SNE with the savings made from thereduction in the seismic program. This transfer of fundsbetween two categories of the project was terminated uponstrong opposition from the DH; and

(b) As mentioned above, under paragraphs 20 to 24, the firstgeological field survey was aimed at evaluating the maturationstatua of Paleozoic source rocks in the Bowe basin. However,this evaluation was more difficult than initially appreciated,and two geological surveys and two shallow well campaigns wereeventually required. Since the results of this study yieldedonly negative results, the detailed stratigraphy study,officially recorded in the project description as the "se-ondgeological survey", was never implemented. It was through atechnical misunderstanding about this geological work programthat aome of the corresponding expenditures were recorded inthe category "second geological survey". This error has beencorrected in the above table.

(c) Proceeds of the Credit were reallocated on October 29, 1985,for inserting a new category, providing office and garagefacilities for MPNR in the amount of SDR 180,000'.

Procurement

55. World Bank guidelines were followed in all steps of theProject, and the evaluation of bids was thorough. Consultants withspecial qualifications, such as BEICIP for the preparation of PetroleumLegislation, were contracted directly.

z3 Proiect Results - General Comments

56. The Project was not successful to the extent that the promotioneffort did not yield any oil industry interest. However, the projectresulted in: (a) enhanced scientific knowledge regarding the geologicalcharacteristics of the Guinea offshore basin; and (b) the strengtheningof the technical expertise of the Hydrocarbons Directorate (DH) staff.

57. Variances in the project work program consisted of:

(a) the addition to, or subtraction from the project componentssuch as the cancellation of the seismic survey in the shallowoffshore region, or the decision to carry out a seismic-stratigraphy study on the shelf area; and

- 11 -

(b) modifications to the appraisal schedule, such as theconsiderable extension of the analysis of the maturation ofPaleozoic souree rock in the Bowe basin.

58. These changes resulted from findings due to ongoing exploration, orfrom some external decision (such as the relinquishment by MOBIL of itsacreage), and reflect thorough follow-up of the project, and anappropriate reaction to unfolding developments. However, a fewdecisions taken during project implementation, such as the country'sparticipation in the MSGB regional study, or the construction of abuilding for the DH staff, could equally well have been made duringappraisal.

59. The geological and geophysical work carried out under the projectdetermined that the onshore and offshore acreage had lses potential forhydrocarbons than was initially expected. During appraisal, these tworisks had been contemplated, but they seemed at the time to beoutweighed by the potential benefits of a commercial hydrocarbonsdiscovery.

60. The risk of devaluing potential acreage through costly seismicsurveys should have led to a consideration of organizing a promotioncampaign based on existing data, without resorting to the acquisition offresh hard technical data.

F. Proiect Sustainabilitv

61. The Project resulted in a regulatory framework for petroleumrelated activities in the country and the strengthening of the technicalexpertise of the DH staff. Technically supervising the petroleumproducts supply and distribution is indispensable, in particular in thefield of: (a) safety of products storage and transport; (b) protectionof the environment with regard to petroleum products storing andhandling; and (c) products quality control. If the regulatory framework is first adapted to local conditions and second enacted, and if theDH receives further training to give it the capacity to enforce theappropriate regulations, the Project will have a long-term andbeneficial effect.

Gv Performance of Parties Involved in the Proiect

Performance of the Borrower

62. The Borrower took full advantage of the training program providedunder the project. It always provided the appropriate support andcooperation to visiting consultants as well as to Bank missions. It wasconsistently open to dialogue with the Association's representatives,which was a key element in the satisfactory implementation of theproject.

63. However, the Borrower did not always provide the Association withperiodic reports about the implementation of the project, or therequired annual audit reports, within the prescribed time frame.

Performance of the Bank

64. The key task of the Bank was monitoring the exploration programcarried out under the Project, and preparing appropriate recommendationsto the Government when unexpected exploration results were obtained.Furthermore, although the decision to carry out a complementary seismicsurvey on the shelf area may be questioned, the Association assisted theGovernment in finding a geophysical contractor who agreed to cofinancethe acquisition of this complementary seiamic data. The Bank Also

- 12 -

monitored closely the implementation of the covenants included in theDevelopment Credit Agrement.

Performanc- of consultants

65. All the consultants involved in the implmentation of the Projectcarried out their tasks satisfactorily in accordance with internationalindustry standards. The most important function, however, was performedby the Government's consultant, who should share the praise (and thecensure) given to the Bank, in particular for its swift reaction to newexploration finding.

66. Despite the favorable results listed above, there were certain lesssatisfactory outcomes which concerned the following:

(a) the overstepping of SNE's budget, as established in category2.d of Schedule 1 of the Credit Agreement;

(b) the insufficient budget allocation for training SNE, whichreceived category 2.d of Credit 1438-GUI, prejudiced thePetroleum Exploration Promotion Project by spending SDR1,367,491.90 more than the SDR 970,000 allocated to it; and

(c) this overrun had to be made up by the project, which also hadto fund a large number of supplementary studies.

67. The project vianagement and the auditors drew the attention of theappropriate representatives of Guinea and the World Bank to thissituation, which jeopardized the continuation of the project and upsetits budgetary estimates. Compensation for this overrun was requestedbut to no avail.

G. ProIect Documentation and Data

68. Abundant files regarding the implementation of the project exist inthe Bank and were utilized to draft this report. Furthermore, the DHprovided all the data and documents necessary to complement the Bank'srecords.

- 13 -


REPUBLIC OF GUINEA


(CREDIT 1438-GUI)

PART II a PROJECT RVEW FROM MRRM'S PERIPUCTV

As INTRODUCTON

1. In accordance with the recommendations that resulted from the talkshold in Conakry January 23-26 between the World Bank and the Division ofHydrocarbons, we herewith submit Chapter xr of the Completion Report onthe Petroleum Exploration Promotion Project in Guinea covered by Credit1438-GUI.

2. The first part of this chapter, the background, provides an outlineof the objectives of the project and its financial structure, while thesecond part is an integral part of the report itself and focuses on anevaluation of the performance of the parties to Credit Agreement 1438-GUI during project implementation.

B. B*ACKGROUND

3. Following a series of negotiations held between November 1979 andJanuary 1984, Credit Agreement 1438-GUI was signed on January 31, 1984between IDA (International Development Association) and the Governmentof the Republic of Guinea. The purpose of this Agreement concerning thePetroleum Promotion Project was:

(a) to assist the Government of Guinea in its efforts to promoteexploration activities in the country's free acreage byinternational petroleum companies; and

(b) to create and maintain in operation a Division of Hydrocarbons(DH) which would be responsible for executing and supervisingall exploration and production activities.

4. The project program consisted of four components: a technicalcomponent; a promotional component; a training component; and aninfrastructure and equipment component.

(a) The technical component had three objectives:

(i) to conduct seismic surveys offshore, on the plateau andon the continental shelf;

(ii) to reprocess some of the seismic data gathered fromearlier surveys;

(iii) to carry out geological field surveys in the Bowe basin;

(b) The promotional component also had three objectives:

(i) to develop an exploration promotion strategy;

(ii) to provide assistance with this promotion;

- 14 -

(iii) to negotiate exploration and production agreements;

(c) The primary objective of the training component was to provideproject staff with training during project implementation bothin Guinea and abroad, in geology, geophysics and also in theeconomic and legal aspects of the petroleum industry; and

(d) The primary objective of the infrastructure and equipmentcomponent wau to ensure the efficient operation of the DHthrough the provision of infrastructure, technical equipmentand office facilities.

5. To enable it to carry out this program the Project was thebeneficiary of three sources of funding:

(a) IDA Credit No. 1438-GUI for SDR 7.7 million, SDR 970,000 ofwhich was allocated to the Socl#td Nationale d'Electricit6(SNE). This Credit is interest-free and repayable in 50 yearswith a 10-year grace period;

(b) a grant from Petro-Canada International Assistance Corporation(PCIAC) amounting to US$3.6 million. This money has beenmanaged entirely by PCIAC which provided its services free ofcharge; and

(c) a contribution from the Government of Guinea to cover localexpenditures amounting to US$400,000.

Credit 1438-GUI, initially given a term of three years (1984-87),was granted three extensions and closed on June 30, 1990.

C. PERFORMANCE OF PARTIES TO THE CREDIT AGREEMENT 1438-GUI

We shall evaluate, in turn, the performance of the Borrower and ofthe World Bank and also the quality of their relations and its impact onproject implementation:

Performance of Borrower (Government of Guinea)

6. While the Government of Guinea did, on the whole, fulfill itsobligations under the Credit Agreement, including the establishment of aDH, compliance with procedures for procurement, hiring consultants anddisbursement etc., there were some shortcomings, such as:

(a) its inability to make the necessary premises available to theProject, as provided for in Section 3.10 of the CreditAgreement. This situation caused serious operating andorganizational problems which prompted the Government tosubmit a request to the World Bank for the reallocation of theCredit to allow the construction of offices for the Project;

(b) the complexity and sluggishness of administrative channels didnot facilitate the provision of counterpart local funds by theBorrower, particularly following the closing of BanquesPubliques in 1985 and the transfer of the Project Account tothe Treasury;

(c) the shortfall in the Borrower's actual participation, whichtotaled only GF 54 million. (This is well below the amountstipulated in the Credit Agreement, viz. GF 176 million -equivalent to US$400,000); and

- 15 -

(d) the Project was seriously affected by the multiplorestructuring operations that took place and which often didnot comply with the pertinent provisions of the CreditAgreement, am stipulated in Sections 3.02 and 3.04.b of saidAgreement.

Performance of the Bank

7. In the course of Project implementation the Bank satisfactorilyperformed all its obligations under Credit Agreement 1438-GUI. It fullyperformed its role with respect of the payment of invoices, thereallocation of funds from one category of expenditure to another as andwhen required, and the monitoring of all the works carried out both inGuinea and by the consultants abroad.

8. The manner in which Bank staff directly involved in the monitoringof the project made themselves available was noted with particularsatisfaction.

9. Certain comments still need to be made, however, with respect tothe Bank's performance:

(a) the delay, averaging two months, which sometimes occurred inthe Bank's payment of invoices hindered the start-up ofcertain works, such as the construction of offices, theregular monitoring of disbursements and the timely calculationof the balance remaining under the Credit; and

(b) the Bank's reservations about long-term training for Guineanstaff, in accordance with well-established career plans, arealso deeply regrettable.

In fact the only training provided under the Project was in theform of short-term seminars which did not offer participants anyopportunity for specialization.

D. 3VALUAMION OF THE OUALITY OF WORLD BAU/REPUBLIC OF GUINEANRATIONS AND ITS IMACT ON PROJECT IPEMENTATrON

10. Besides conducting its customary missions, the World Bank alsoplayed the role of chief adviser on all petroleum-related activitiesthroughout all the phases of Project implementation. This atmosphere ofmutual understanding facilitated decision-making on important issuesconcerning the Project's basic objectives. Also, during the entireProject no contract was canceled and no invoice was left unpaid becauseof irregularities.

11. Relations between the World Bank and the Guinean Government werethus characterized by an atmosphere of understanding and frankcooperation at all levels and by a sound grasp of the problems in termsof finding positive and optimal solutions.

12. on the whole the Petroleum Exploration Promotion Project in Guineaachieved the objectives assigned to it under the terms of the CreditAgreement 1438-GUI, as confirmed by the following results:

(a) establishment of a DH (See Section 3.02 and 6.01 of theAgreement) and the provision of appropriate infrastructure forthe operation of this division (offices, vehicles, materialsand various types of equipment etc.);

(b) acquisition of 3,400 km of new seismic profiles by PCIAC andGECO and also the reprocessing of 6,500 old lines the by

- 16 -

Geophysical Development Corporation in the case of the seismicstudies and Texas Geophysical Company in the case of thegravimetric analysist and

(c) the conducting of two geological campaigns in the Bowe Basinfollowed by two deep core-drill surveys.

13. Geochemical studies have been made of the samples collected in thecourse of this work to assess the petroleum potential of the Paleozoicformationss

(a) completion of a synthesis study of the potential of thepetroleum marketed in 1987 and the holding of two promotionalmeetings in June 1987, one in Houston and the other in London,with the assistance of P&troconsultants S.A. (Swiss) duringwhich five offshore blocks with a total area of about 50,000km2 were offered to the international petroleum industry;

(b) the preparation and enactment of a petroleum code relating tohydrocarbon exploration and extraction, a standard productionsharing contract and an implementing decree, all theaforementioned legislation having been prepared with theassistance of BEICIP;

(c) the participation of Guinea in the MSGB (Mauritania, Senegal,Gambia, Guinea-Bissau and Republic of Guinea) regionalgeological synthesis study;

(d) the training of Guinean staff both in Guinea and abroadthrough their involvement in the studies carried out andthrough advanced training seminars;

(e) the construction of offices for the Project following areallocation of funds requested by the Government;

(f) the completion, at the end of 1988, of the study on thereorganization of the petroleum sector in Guinea with theassistance of BEICIP; and

(g) the conducting in December 1989 of the so-called "in-housevisit" promotional campaign aimed at European petroleumcompanies.

14. Despite the favorable results listed above, there were certain lesssatisfactory outcomes which concerned the following:

(a) the overstepping of SNE's budget, as established in category2.d of Schedule 1 of the Credit Agreement;

(b) the insufficient budget allocation for training SNE, whichreceived category 2.d of Credit 1438-GUI, prejudiced thePetroleum Exploration Promotion Project by spending SDR1,367,491.90 more than the SDR 970,000 allocated to it; and

(c) this overrun had to be made up by the project, which also hadto fund a large number of supplementary studies.

15. The project management and the auditors, Coopers & Lybrand, eachdrew the attention of the appropriate representatives of Guinea and theWorld Bank to this situation, which jeopardized the continuation of theproject and upset its budgetary estimates. Compensation for thisoverrun was requested but to no avail.

- 17 -

16. On the subject of the training of Guinean personnel, not only wasthe budget allocated, i.e. SDR 145,000, insufficient but there was alsoa total absence of any career prospects for the people involved.

B. CONCgZaQ

17. Implementation of the Petroleum Exploration Promotion Project warextremely worthwhile in terms of the organization and revitalization ofGuinea's petroleum sector.

18. Numerous positive elements, such as the further training of DHstaff, the significant assets acquired and the volume of technical dataobtained on Guinea's offshore and onshore potential etc., all helped toconsolidate the spirit of cooperation that exists between the World Bankand the Guinean Government.

19. The few shortcomings that occurred during Project implementationcould easily have been prevented had the two parties taken more carefulto adhere strictly to the terms of the Credit Agreement, which wouldhave yieldea much more significant results.

20. While one of the most important objectives, i.e. the signing of thehydrocarbon exploration-production contracts, has yet to be achieved,the latest "in house visit" promotional campaign is seen as extremelypromising. The Guinean Government and the World Bank must thereforecontinue to work together to sustain this effort.

21. The standardization and monitoring of Guinea's entire petroleumsector will also be the legitimate responsibility of the DH, and willcaLl for additional efforts by the Government to restructure and trainstaff.

22. It is therefore important for the World Bank to continue itsassistance to the Government in the form of a further Credit, whichwould enable the DH to perform the responsibilities assigned to it moreeffectively.

..

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REPUBLIC OF GUINIA


(CREDIT 1438-GUI)

PART III: STATISTICAL INFORASTZON

1. Proiect Timetable

Date:Planned Date:Revised "a e:Actu

First mention in file. 06/14/79

Identification 03/1982

Preparation 04/82 to 03/83

Appraisal mission 09/1982 03/1983

Loan Comnittee 02/1983 08/1983

Negotiation 10/1983 12/12-14/83

Board Presentation 06/1983 11/1983 01/17/1984

Signature 01/31/1984

Effective Date 04/1984 06/19/1984

Credit Closing Date 06/30/1987 06/30/1988 06/30/1990

Credit Completion Date 12/31/1986 06/30/1988 10/30/1990

2. Credit Cumulative DiSbursements

US S million

FY84 FY85 FY86 L8_7 FY88 FY89 FY90/91Appraisal 1.5 5.0 7.5 8.0(cumulative)

Actual (cumulative) 0 1.2 5.6 6.8 7.8 8.4 8.9

Actual as % of 24 75 77 89 105 111appraisal

SDR million

Appraisal FY84 FY85 FY86 FY87 FY88 FY89 FY90/91(cumulative)

Actual (cumulative) 1.4 4.8 7.2 7.7

Actual as % of 0 1.2 4.9 6.1 6.9 7.3 7.7appraisal

25 68 79 90 95 100

Comnent: Date of last disbursement was September 10, 1990.

- 19 -

3. Proiect Imglementation

Appraisal Actualfty_Tndioators Estimate Estimate

Test seismic survey 10/83 09/83

Agreement on training program for 1984 12/83 12/83

Establishment of Hydrocarbons Unit 01/84 01/84

Reprocessing of old seismic data 04/84 04/85

Seminar on Petroleum Legislation OS/85 12/84

Commencement of shallow water 09/84 Canceledseismic program

First geological field survey 11/84 03/85 to 11/88

Commencement of seismic program on 01/85 12/84continental shelf

Decision regarding second geological 04/85 07/88field survey

Second geological field survey 10/85 Canceled

Employment of accounting consultants 10/85 03/85

Submission of promotion report 01/86 01/87by consultant

Promotional meetings with oil companies 01-02/86 06/87

Closing Date 06/30/87 06/30/90

- 20 -

4. Project costs and Pinancina

(a) Proiect costs broken down between categories (Ref. Project Cost as estimated inthe Prciident's Report)

Ammuta(in us $000)

APPrisa EbtUna Rcvbed Etimae ActludLocal Foin Tol Local Foign TOtl LOal Fori Total

Exchange Exbcange ExchaugeCow Coat cogs

1. Seoisic Swvey 0 6,300 6,300 0 1,173 1,173 0 4,740 4,740

2. GoocheincaAmldyasiof 0 30 30 0 30 30 0 i1S 115field sanlc

3. Tewchia Axsistane 90 1,200 1,290 90 1,200 1,290 46 4,070 4,116COi Exploration Promoon

4. BIecUric Power 30 900 930 90 2,544 2,634 9 2,544 2,553

S. Tmraig 30 150 180 30 IS0 180 5 176 181

6. Material ad Equipmnw 150 200 350 150 200 350 62 226 288

7. Refndidg of PPF advsace 1,000 1,000 0 1,000 1,000 0 1,121 1,121(P 187 GUI)

8. Coewingeci 100 1,820 1,920 0 3,160 3,160 0 0 0

9. Canelled 32 32

ToUt 400 11,600 12,000 360 9,457 9,817 122 13,024 13,146

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(b) Proigct Financing

Planned(Ref. President's

Report)Source Aareement Revised Final Comments

IDA 8,000 n.a. 8,838 Difference (838) isdue to variations inexchange rate

Domestic 400 n.a. 122 Difference due toGovernment's lack offunds

Co-financing 3,600 n.a. 3,600 evaluated: PCIACfinanced directly aseismic survey carriedout with its ownseismic boat

Other ExternalSources 0 586

Total 12,000 13,146

5. Project Results

A. Direct Benefits

Appraised Estimated at Estimated at FullIndicator Estimate Closing Date Develonment

Number of newexplorationcontracts n.a. 0 0 (If no further promotional

effort is carried out)strengtheningof DH technicalcapacity possible realized will progressively decrease if

exploration activities are notrevived

B. Economic Impact

Appraisal ActualEstimate (At final develonment)

Economic Rate of Return None NoneObservation: no SAR was prepared.

C. Financial Imoact

Not applicable

- 22 -

D. studies

Purpose au definedat appraisal, orduring the course Impact of the

Studjie of the Proiect Status Study

Evaluation of Promotion of completed Reports soldHydrocarbon acreage for US $90,500Potential but no

contract wassigned

Seismic Promotion of completed May be usefulStratigraphic acreage completed for futureinterpretation promotionoffshore

Geochomical Promotion of completed no resultmodeling acreage

Geochemical Study of completed Conclusions:study: Bowe hydrocarbon overmaturitybasin potential of the of source

Bowe basin rocks

Interpretation Promotion of completed no resultof Potential acreagefield data

PCIAC report Promotion of completed no resultacreage

Regulations controlling safety completed the DH willconcerning issues and need technicaldownstream petroleum products assistance topetroleum quality control enforceactivities regulations

6. Status of Credit Covenants

AgreementCovenants Section Comnliance

Maintaining a hydrocarbons 2.04 Metunit within the MMG

Employing expatriate 3.02 Metconsultants

Exchanging views with IDA Metregarding promotion strategy 3.03(a)

opening of a separate account 3.05(b) Incompletely met

Furnishing training 3.06(a) Metprogram to IDA irregularly

Reviewing with IDA results 3.07(a)&(b) Metof the first field survey

Preparing periodical reports 3.08(a) Met with occas-ional delay

- 23 -

Maintaining separate accounts 4.01(a) Metfor SNE component of theproject

Auditing of project accounts 4.01(b) Met withoccasional delay

Comments: a separate account in hard currency was opened, into which therevenue from the sale of promotional documents was deposited.However, the DH has not yet been given access to the account.

7. Use of Bank Resources

A. Staff Inout

Stage ofProiect Cycle Staff Weeks

Through Appraisal 30.1

Appraisal through Effectiveness 17.6

Supervision 107 5

TOTAL 155.2

B. Missions

Mission Number of Persons Mission Specialization PerformanceDate SW in the field Place Represented Rating Status

(a) Throuch Appraisal

03/80 1 CONAKRY GST 1

10/81 0. LONDON GST 2


03/82 3 CONAKRY FA & EC 2

04/82 0.5 LONDON GST 2

10/82 1.5 CONAKRY FA & GST 2

(b) Through Effectiveness

03/83 2 CONAKRY FA & GST 1

06/83 2 CONAKRY FA & LEG 1

(c) SuRervision

02/84 0.5 GENEVA GST 1

05/84 1 CONAKRY FA 1

- 24 -

06/84 1 CONAXRY OST 1

08/84 3 CONAKRY PA & LEG 1

11/84 0.5 CONAKRY PA 1

12/84 1 OONAXRY LEG 1

02/85 2 CONAKRY PA & EGR 1

04-05/85 2 CONAKRY PA & EGR 1

09/85 1 CONAKRY LEG 1

10/85 1 GENEVA GST 1

01/86 3 CONAKRY GST, LEG & EGR 1

07/86 0.5 PARIS GST 1


06/87 1 HOUSTON GST & EGR 1

10/87 1 GENEVA GST & EGR 1


07/88 2 CONAKRY GST & EGR 1




07/90 0.5 PARIS GST 1

TOTAL StaffWeeks in the

Field: 37,5

Key to Specialization: GST = Geologist; EGR = Engineer; LEG = LawyerPA = Financial Analyst; EC = Economist

Key to Status: = 1 No Problem Met during Mission

World Bank Document · The World Bank FOR OMCIAL USE ONLY MICROFICHE COPY ... ENSPM scole Nationale...

Documents

Transcript of World Bank Document · The World Bank FOR OMCIAL USE ONLY MICROFICHE COPY ... ENSPM scole Nationale...