APP - sunshine is the enemy of tyranny...of any kind

Don Quixote

cancer survivor
Contributor
no large organization wants the public to know what goes on behind the scenes, this includes governments most of all.

By Andrew Callus
LONDON (Reuters) - Africa-focused Tullow Oil Plc took a step this week towards the extra openness on government payments anti-corruption legislators want, releasing figures by country, and by payment type, for the first time.
In its 2012 corporate responsibility report, Africa's biggest independent international oil company published all the tax, royalty and other payments it has made to all governments around the world.
The report goes further than some larger companies have with disclosure, and offers a glimpse at the tens of billions of dollars pouring into the accounts of resource-rich African governments, but its disclosure level falls short of the demands of new legislation.
The sums paid are immense in the context of the economies of some of the poorest countries in the world, and legislators hope extra transparency will curb the corruption that has dogged extractive industries in Africa down the decades.
Tullow's report included payments it made to eight governments in sub-Saharan Africa, and comes as the non-binding Extractive Industries Transparency Initiative (EITI), to which its main producing country, Ghana, is a signatory, gathers momentum with countries and companies around the world.
It also follows recent transparency legislation in the United States, which goes further, insisting under rules linked to the Dodd-Frank Act that U.S.-registered companies disclose payments on a project-by-project basis.
Europe plans similarly tight rules under its proposed EU Accounting Directive.
The American Petroleum Institute, of which large oil companies such as Royal Dutch/Shell and Exxon Mobil are members, is engaged in litigation against the rules implementing the U.S. legislation, arguing it puts them in an impossible legal position with regard to contract terms in certain countries, and forces the disclosure of competitively sensitive data.
Tullow is not bound by U.S. legislation, and did not reveal contract details in its report. "We are prohibited from doing that in certain countries," said Chairman Simon Thompson.
However, he agreed that full project-by-project disclosure, as pioneered in Africa by Ghana, was the way forward, because it has "created an absolute level playing field so that everybody knows what everybody else's contract looks like and there are no commercial sensitivity issues as a result," he told Reuters.
"I think it's a very powerful example of transparency really working well and to the benefit of both of responsible companies and a responsible government."
MORE THAN THE FOREIGN AID?
Tullow is mainly an exploration company, and in the oil industry, the bulk of payments to governments come at the later, production stage.
It is also absent from the two dominant African producer countries - Nigeria and Angola - where contract terms and production costs may be quite different from the ones it pays. Tullow accounted for only 57,850 barrels per day (bpd) out of a total 6.2 million bpd from the region last year.
Nevertheless, it is the biggest international operator in the region outside the major integrated oil companies.
And its figures offer a glimpse of the scale of government oil income in a region where the World Bank says almost half the population exist below a poverty income threshold of $1.25 a day with some of the highest poverty rates in oil producing nations.
Tullow said it paid a total of $905 million in crude oil valued at $108 per barrel plus money to governments, of which about $751 million went to sub-Saharan Africa.
Even stripping out a $143 million disputed corporation tax payment in Uganda for the sale of some exploration assets, that amounts to more than $30 for each of the 21 million barrels Tullow produced there in 2012.
At that rate, the region's total output of 2.263 billion barrels a year would be yielding well over $60 billion a year for the governments. That compares with total 2011 Overseas Development Aid to sub-Saharan Africa of $45 billion, according to OECD figures.
Gas revenue, mainly for Nigeria and Angola at present, but in future potentially for Mozambique, Tanzania and others, would be on top of that.
"This (transparency push) is all about making sure the vast amounts of money these resources could earn, are all accounted for and used properly - bearing in mind these are non-renewable resources," said Carl Dolan, senior policy officer at the pressure group Transparency International.
"This is why this legislation is so badly needed. This is a once in a lifetime opportunity for these economies to put themselves on a sustainable footing."
$50 BLN COMING UGANDA'S WAY
Tullow also offered a flavour of the potential oil income awaiting oil frontier countries like Uganda, which has yet to produce any oil or gas, but where it sees promise.
Uganda's government can expect to earn $50 billion on behalf of its 35 million strong population from reserves already discovered over the lifetime of the fields, Tullow said - almost three years' worth of its $17 billion gross domestic product
(GDP).
Uganda borders to its west with the Democratic Republic of Congo, whose eastern borderlands are the scene of one of Africa's most intractable conflicts.
Asked where the oil money might go, the Commissioner for Uganda's Petroleum Exploration and Production Department, Ernest Rubondo, would not comment on the $50 billion estimate but said: "On the spending priorities... essentially they revolve around creating lasting value through investing on infrastructure and education to create human capacity."
OPPOSITION
Royal Dutch/Shell executives were taken to task at the company's annual general meeting last week by shareholders for joining in the opposition to the U.S. legislation.
Shell is a founder member of the EITI, but notes in its 2012 revenue transparency report - the second one it has published - that its data "excludes countries whose governments have prohibited or have otherwise indicated that we should not make such disclosure."
Tullow's Thompson said Tullow did not ask permission to publish its data, but simply informed country governments that it was going to do so.
"We don't feel that we are breaching any contracts by making clear the payments we are making. Much of that is in the public domain. All we are doing really is collecting the data and putting it in a form that enables others to use it."

http://news.yahoo.com/tullow-lifts-corner-africas-oil-payments-curtain-064659604.html
 
Back
Top