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06/12/2016

Statoil discloses its payments to governments

Development Policy

Statoil discloses its payments to governments

Angola's Agbami field. [Statoil]

On 19 March, Norwegian oil and gas company Statoil disclosed the sums it paid to governments in 2014.

The precedent-setting 35 page report, 2014 – Payment to governments, details the remittances made by Statoil where it currently operates: Algeria, Angola, Azerbaijan, Brazil, Canada, Libya, Nigeria, Norway, Russia, the UK, the USA and Venezuela.

In its introductory remarks, Statoil says it welcomes initiatives to strengthen revenue transparency legislation, but believes that a global standard for revenue is more important. The report states that the EU Transparency Directive requires member states and EEA countries to implement appropriate legislation no later than the financial year beginning 1 January 2016, with reports submitted in 2017.

In Norway, a similar law was approved in 2013, and took effect on 1 January 2014.

The report discloses relevant payments to governments for extractive activities, and the various types of remittances made, due to different fiscal regimes.

These payments fall in the following categories: taxes, royalties (usage-right payments), license fees (right to use a geographical area for exploration), bonuses (sums to be paid when discovering natural resources or when production starts), and host government entitlements (a host government’s share of production or other ownership rights).

All figures are given in Norwegian crowns (1 EUR = 8.69 NOK).

According to the report, after Norway, the largest payments made by Statoil were made to Angola (over 22 billion crowns), Azerbaijan (over 10 billion crowns) and Nigeria (over 5 billion crowns).

The Angolan continental shelf is the largest contributor to Statoil’s production outside Norway, and Angola is a key building block for Statoil’s international production growth.

In Azerbaijan, Statoil takes part in oil production in the Azeri-Chirag-Gunashli field. It is also a partner in the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, which runs from the Azerbaijan capital of Baku to the Turkish port of Ceyhan, on the Mediterranean. Statoil also has a 20% share in the Trans Adriatic Pipeline (TAP).

In Nigeria, Statoil has a 20% share in the country’s largest deep water oil production field Agbami, where Chevron is the operator. In Nigeria, limited liability companies are required to pay an “education tax”. In 2014, Statoil paid 360 million crowns in such tax.

Disclosing payments made to governments is an important tool in fighting corruption, because it documents whether corporate activities benefit host countries. Such practices also reveal if companies actually pay taxes in the countries in which they operate.

ONE, the campaigning and advocacy organization co-founded by U2 frontman Bono, issued a press release praising Statoil’s self-disclosures.

“This is a big win for everyone who has campaigned with us for more transparency in the extractive industry for many years. We strongly welcome this report which contains a comprehensive breakdown of direct payments to governments from Statoil’s companies on a project by project basis,” ONE states.

The organisation adds that “other big oil companies have been much more duplicitous by talking about transparency publicly while putting their sharpest minds on finding weaknesses in the UK’s transparency legislation”.

ONE warns that the latest efforts to adopt relevant legislation in the UK may allow major loopholes and undermine transparency.

“We’re calling on the UK government to stand up to Big Oil and reject this shoddy industry guidance,” the ONE press release concludes, inviting people to take action and tweet the British government.

Background

Europe increasingly depends on raw materials from emerging economies. Nearly all the supply of rare earth metals used in electronics and industry are produced by China.

The European Association of Mining Industries, Metal Ores and Industrial Minerals contends that more than 50% of major reserves or raw materials are located in countries with a per capita gross national income of $10 per day or less.

Charities and human rights groups have long campaigned for legally binding laws that would affect hundreds of companies, citing business deals involving rogue regimes and lucrative mining concessions used to finance wars in Angola, Sierra Leone, Congo and other countries.

They also complain that closed-door deals between politicians and corporations have kept petroleum-rich countries like Nigeria largely impoverished.

Further Reading