Below is the information on Statoil's publication of a breakdown of its tax payments to each country around the world (provided by PWYP).

Norwegian oil major takes big stride forward on transparency by publishing payments to governments

14 April 2005

Statoil, the Norwegian oil company, has made an important contribution to the global effort for greater transparency of payments from the oil industry to governments, by publishing a breakdown of its tax payments to each country around the world.

Oil companies rarely disclose how much they pay to the governments of developing countries where they operate. The citizens of these countries have no reliable way of knowing how much oil revenue their government is receiving. All too often, the result has been gross corruption and waste, which undermines efforts to reduce poverty and makes countries more unstable. As investors managing some $8.3 trillion in funds have highlighted, lack of transparency poses a significant business risk as companies are susceptible to local conflict and accusations of complicity in corrupt behaviour, thereby impairing their ‘license to operate’.[1]

In its Sustainable Development Report for 2004, Statoil has published details of direct and indirect tax payments to 26 countries, including several in the developing world. The company has also disclosed that it paid US$2.6 million in signature bonuses to the government of Brazil upon the signing of new licenses in the country last year. [2]

“This is an important step forward by Statoil which proves that oil companies can be much more open about their payments to governments if they choose to be,” said Henry Parham, international co-ordinator of the Publish What You Pay Coalition (PWYP), whose 270 member NGOs are campaigning for greater transparency of revenue flows to governments from the oil, gas and mining industries.
Although many oil companies support the principle of publishing their payments to each government, for example through the Extractive Industries Transparency Initiative (EITI), hardly any have actually done so for all their operations around the world. This was demonstrated in the recent “Measuring Revenue Transparency” report by PWYP member Save the Children UK.[3]

“Statoil is showing that it is serious about improving the transparency of its dealings with governments,” said Parham. “That said, there are some important gaps which Statoil needs to fill in future if its disclosures are to be fully credible.”

For example, Statoil has not disclosed payments to governments which are made in kind rather than in cash. In many countries, a government’s biggest source of income from oil does not come from tax payments but from its share of oil production, known as “profit oil”. Statoil has told PWYP that it is willing to disclose this information but needs to negotiate with its investment partners and may be constrained by confidentiality clauses in its contracts with some countries.

“While voluntary efforts by individual companies like Statoil are welcome, we need a more comprehensive approach to the problem of revenue transparency, because this is the only way that we can bring in all oil companies and ensure that progress is not blocked by governments which don’t want their finances scrutinised,” said Parham.

The EITI, an international initiative launched by the British government, is working towards greater transparency of revenue flows by encouraging developing countries to publish their earnings.[4] But as the recent Commission for Africa’s report has pointed out, the onus should not only be placed on developing countries, but on developed country governments.

Publish What You Pay calls on G8, EU and other countries that are home to oil and mining companies to work for greater transparency through relevant laws, stock exchange listing requirements and accounting standards. This is the only way to ensure a consistent global standard for revenue transparency so that all oil companies follow Statoil’s example.

www.publishwhatyoupay.org

Contacts:

Henry Parham

Coordinator, Publish What You Pay

Direct line: +44 (0) 20 7031 0204

coordinator@publishwhatyoupay.org

Gavin Hayman

Global Witness

Direct line: +44 (0) 20 7561 6361

• Below is just a very concise overview of the EITI conference (and its repercussions!) by PWYP.

The 2005 EITI Conference, held in London on 17 March 2005 and hosted by the British Government, brought together over 300 representatives from civil society, government, international financial institutions, the extractive industry and the media. The main purpose of the conference was to allow participants to renew commitments to greater transparency and to agree to a set of criteria for the implementation of the Initiative by host country governments.

PWYP members are pleased that the five minimum requirements have been adopted. These criteria, which include independent auditing of payments and revenues, consultation by governments with civil society at all stages of the EITI process, and identifying capacity building needs, will help ensure that there is a common baseline to which all implementing countries adhere.

Other positive outcomes of the conference include Statoil’s commitment to publish payments on a country-by-country basis and BP publicly declaring that it is too moving in this direction. This follows the recent commitment made by Shell to individual disclosure “wherever possible” and Talisman’s systematic disclosure of revenues paid to each country where it operates. In other developments, Niger, Cameroon and DRC publicly committed to the EITI principles and Norway stated that it will provide greater technical and financial support to the EITI at country levels.

However, as PWYP representatives highlighted during the conference, there is a long way to go before we can consider the EITI a success. We warmly acknowledge the significant steps taken by pilot countries so far but more countries (including OPEC members) and state-owned companies need to be brought on board to ensure the process is truly international and is making headway. In addition, civil society groups need greater resources – and in some cases increased political space – in order to engage properly and meaningfully with government and other stakeholders on this Initiative at country levels. Greater collective effort needs to be made to this effect.

PWYP and other stakeholders will use the framework developed by the Save the Children UK measuring transparency project to track progress made by companies and governments over time so that they deliver on their promises. We hope that by the time of the 2006 EITI Conference, concrete steps have been taken by both companies and G8 and EU governments in order to improve their scores. PWYP partners in developing countries will also be monitoring EITI implementation closely to ensure that the criteria are being applied fully. This is critical to enhancing the credibility and effectiveness of the Initiative.

• The Measuring Transparency project has developed a standard to assess the performance of companies and governments in support of revenue transparency. It also provides a framework to track their progress over time. The project's results highlight the leaders and laggards in both the oil and gas industry and between several countries. These will be used by investors, NGOs, ratings agencies and other relevant actors to pressure companies and governments for greater transparency.

Measuring Transparency was conceived by Save the Children UK and developed in collaboration with investors, independent consultants, ratings agencies and other members of the Publish What You Pay NGO coalition of which Save the Children UK is a co-founder and leading member. “Beyond the Rhetoric: measuring revenue transparency in the oil and gas industry” was published by Save the Children UK on the eve of the Extractive Industries Transparency Initiative London Conference (see below). There are two components to the report: the first focuses on company performance, the second looks at home government disclosure requirements.

The company report shows that companies’ performance is disappointing overall. The countries in which performance was assessed are Angola, Azerbaijan, Indonesia, Nigeria, Timor Leste and Venezuela. Company scores are uneven from country to country. Piecemeal efforts are being made in some countries but not everywhere, thereby affecting overall company scores. But the report highlights that systematic disclosure across countries is possible and that regulatory requirements have a significant impact in this regard.

The home government report ranks Australia, Canada, France, Italy, the Netherlands, Norway, Russia, South Africa, the UK and the United States. It reveals that the countries that have existing commitments to transparency are under-performing and that Canada, a non-EITI participant, actually has the best disclosure requirements on companies. The report calls on the countries concerned to take advantage of upcoming reforms of international accounting standards and the harmonisation of securities regulations and incorporate transparency requirements for company disclosure of revenue payments.

• A draft EITI source book has been published on the EITI web-site [http://www.eitransparency.org]. The source book seeks to build on the EITI Principles agreed at Lancaster House in June 2003. Since the Lancaster House conference, EITI has evolved considerably, and there is now demand for clear guidance on how EITI should be implemented. The source book seeks to provide this guidance and will continue to be developed as we learn the lessons of implementation in more countries. ►►►

• EITI was launched in Trinidad and Tobago on 12 January 2005. Steps are in place to establish an EITI committee where agreement will be sought on the early appointment of an aggregating body and on an implementation approach that honours the sanctity of contracts. ►►►

Last correction date of the file: 24/7/2008 - 14:50:2