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| Oil majors rebuked for lack of transparency |
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29-APR-2008 Intellasia | Financial Times |
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29 Apr, 2008 - 7:00:00 AM |
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Most leading oil multinationals fall well short of best practice on revealing financial data and combating corruption, a survey by Transparency International, the anti-graft group, claims.
The research says western companies such as Exxon (NYSE:XOM) Mo billion, ChevronTexaco and BPrank as middling or poor performers on voluntarily disclosing information about their operations -alongside China National Offshore Oil Corp, Russia's Lukoil and Petronas of Malaysia.
The survey of 42 companies highlights growing worries that -in an era of booming crude prices -too little is being done to combat corruption and state mismanagement of oil wealth.
The report says transparency is "not yet a common practice" for many of the companies driving oil export revenues worth an estimated US$866 billion (€555bn, UK pound 437bn) globally in 2006. The research says: "There remains a large group of low performers...Revenue transparency from oil and gas companies can end much of the secrecy that keeps citizens in the dark about resource wealth."
In the report's rankings of 26 big oil companies that operate outside their home countries, only Royal Dutch/Shell of the largest multinationals wins entry to the eight-strong top bracket. BP, Chevron and France's Total (NYSE:TOT) are placed in a middle tier of nine, while ExxonMobil is in the bottom group.
Exxon and Chevron did not respond to requests for comment. BP said it never commented on external surveys.
Oil companies and their critics have long argued over the degree of the industry's culpability for the so-called "paradox of plenty" that has left crude-rich countries such as Nigeria and Angola racked by conflict and corruption.
TI says oil companies have important responsibilities in the areas its report assesses, including publishing the sums paid to host countries, revealing details of reserves and production costs, and publishing data on anti-graft policies and sanctions on employees who break them.
The Extractive Industries Transparency Initiative -an alliance of governments, business and civil society set up to increase openness in oil industry finances -said the research showed companies had made some progress, but still had much more to do.
Jonas Moberg, head of the EITI secretariat, said it was "unfortunate" that most of the companies examined in the report refused to cooperate in its preparation, as this showed there were still transparency problems. He said: "Ultimately, it should be perfectly obvious that companies make public what they pay governments for resources that, in the end, belong to those countries."
People familiar with the research said that some companies had tried to block or water down its findings. Much of the lobbying was done by US businesses, which generally perform more poorly than their European counterparts, according to the report's criteria.
In a sign of the growing significance attached internationally to transparency in extractive industries, the World Bank this month launched an initiative to expand information disclosed by governments and companies. One element of the work is the creation of a "rapid response fund" to give governments in developing countries extra resources to help them negotiate more effectively with oil and gas companies.
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