Tunisia - Petroleum Exploration Promotion Project

 Petroleum exploration promotion project Report No: ; Type: Report/Evaluation Memorandum ; Country: Tunisia; Region: Middle East And North Africa; Sector: Oil & Gas Exploration & Development; Major Sector: Oil & Gas; ProjectID: P005729 December 28, 1995 Tunisia Petroleum Exploration Promotion Project (Loan 3023-TUN) The Implementation Completion Report (ICR) on the Tunisia Petroleum Exploration Promotion project (Loan 3023- TUN, in the amount of $5.5 million, approved in FY90) was prepared by the Middle East and North Africa Regional Office. The Borrower's comments on the ICR are included. The loan was closed on December 31, 1993, after a sixmonth extension. Only $1.4 million of the loan was used; $4.1 million was canceled. The project's central objective was to attract private sector participation in hydrocarbon exploration activities and to thereby increase the exploitation of Tunisia's hydrocarbon resources. The project components included: (i) technical assistance to the national petroleum organization (ETAP) for promoting prospective petroleum acreage; (ii) data acquisition to establish potential new exploration leads; and (iii) laboratory and computer equipment to help process new information. The project's primary development objective, which was to attract private sector participation in petroleum exploration activities, was met. Two petroleum basins were studied and promoted to private companies. Promotion activities led to an expansion of exploration activity, from 15 operators in 1989 active on 26 permits, to 26 operators in 1994, active on 40 permits. ETAP's technical capabilities were strengthened, although it failed to gain its independence from direct control by Government ministries. Government bidding procedures were cumbersome, and after considerable delays, it was agreed that many of the loan components that were to be used for data acquisition and analysis were no longer necessary for project success. About 75 percent of the loan was eventually canceled. There is neither an ongoing operation nor a planned future operation. The Operations Evaluation Department (OED) rates the project's outcome as satisfactory (since the primary objective of attracting private investment for petroleum exploration was successfully met), its institutional development as moderate (since training strengthened ETAP's technical capabilities and improved its ability to promote prospective petroleum acreage), and its sustainability as uncertain (since the outcome of the exploration efforts by private sector companies is still uncertain). Successful ventures will encourage further exploration. As in the ICR, Bank performance is rated as unsatisfactory; the project scope was far in excess of what was needed in the Tunisian circumstances, and the Bank was never able to effectively work within Tunisia's strict procurement regime to implement the approved investment program in a timely manner. The ICR is inadequate. It fails to assess the project in terms of its objectives. Moreover, it does not describe the components that were implemented (i.e., technical assistance) and the benefits derived from these; instead it concentrates on the difficulties encountered in procurement of goods and services that were eventually proven to be unnecessary to meet the project's objectives. One result of this focus is that most ICR ratings are different from those of OED: project outcome rated as highly unsatisfactory (because many of the project components were not implemented), institutional development as negligible, and sustainability as unlikely. Finally, the ICR also fails to acknowledge and discuss the positive opinions on project outcome expressed by the Borrower in the appendix. The project may be audited.