By not participating in the most recent Global Petroleum Survey, rankings-obsessed Botswana has been knocked off its pedestal by Namibia and Seychelles and has robbed itself of an opportunity to brag about how good its international rankings are.
When the country participated in the previous survey, which is administered by the Fraser Institute, it emerged as the best-performing African country. The results of that survey were published in 2014. In the latest report, which came out last week, Namibia and Seychelles emerged as the top two ranked African jurisdictions, with the former having surpassed Seychelles to become the most attractive jurisdiction in Africa. The latter is largely a result of investors’ reduced concern with regard to regulatory uncertainty and the perceived strengthening of the commercial environment in the country. The report says that “Botswana, which headed the second quintile group in 2013, could not be assessed this year due to a lack of responses.” Second quintile jurisdictions are awarded scores between 20 and 39.99 according to the Policy Perception Index.
The survey, which measures negative sentiment regarding barriers to investment in oil and gas exploration and production facilities in various jurisdictions around the globe, was conducted from June 3, 2014, until August 23, 2014 and a total of 710 individuals working with 563 companies responded. Respondents were asked to indicate how each of the following 16 factors influence their decisions to invest in various jurisdictions: fiscal terms, taxation in general, environmental regulations, regulatory enforcement, cost of regulatory compliance, protected areas, trade barriers, labour regulations and employment agreements, quality of infrastructure, quality of geological data base, labour availability and skills, disputed land claims, political stability, security, regulatory duplication and inconsistencies and legal system.
The jurisdictions were assigned scores for each of 16 questions pertaining to these factors, which have been known to affect investment decisions. The scores are based on the proportion of negative responses a jurisdiction received with regard to each question. The greater the proportion of negative responses for a jurisdiction, the greater were its perceived investment barriers, and, therefore, the lower its ranking. This ranking is used to generate a Policy Perception Index. Jurisdictions are then sorted into clusters based on the size of their proved reserves allowing for an apples-to-apples comparison of policy perception in the context of available reserves.
The survey is designed to identify provinces, states, offshore regions, other geographic areas, and countries with the greatest barriers to investment in oil and gas exploration and production. “Jurisdictions that investors assess as relatively unattractive may thus be prompted to consider policy reforms that could improve their rankings.
Petroleum companies can also use the information to corroborate their own assessments and to identify jurisdictions where business conditions and the regulatory environment are most attractive for investment. The survey results are also a useful source of information for the media, providing independent evidence as to how particular jurisdictions compare,” the Fraser Institute says.