The World Bank and Petroleum Development in the Third World

The issues that arise between state sovereignty over natural resources and the desire of the State to finance the development of its petroleum resources from external sources are briefly examined. The problem is particularly acute for the least developed countries. It is suggested that financing obtained from international agencies such as the World Bank, may provide a means for such countries to maintain full sovereignty over their petroleum resources and at the same time obtain needed financing. To this end the petroleum lending activities of the World Bank are examined both in terms of policy and in terms of the financial resources available. A special lending facility to help underwrite financial risk of petroleum exploration in the least developed countries is proposed.