Oil, Money and Secrecy in East Africa

An aerial view of an oil-drilling site in Buliisa, Uganda. (AFP/Tullow Oil Uganda)

Tom Rhodes, the Committee to Protect Journalists’ East Africa Consultant, has written an interesting story on the secrecy surrounding oil development in Uganda, Kenya and South Sudan. Rhodes writes that the inability of journalists to access information and report on contract deals and resource allocation greatly increases the risks for corruption and environmental degradation. Last year I wrote a post on Tullow Oil’s secret deals in Uganda, contrasting that situation to Tullow’s much more transparent operations in Ghana.

After I published that story a Tullow Oil representative contacted me and explained that Tullow’s practices were dictated by local governments. Tullow can be transparent in Ghana because the government wants to be transparent. In Uganda, the official told me, the government does not want contract information published.

Although I don’t doubt what the Tullow representative told me, I wonder what would happen if oil companies decided to make contract (and other information) public regardless of what a government may prefer. In Ghana I believe the actual contract publication was prompted by Kosmos Energy’s IPO. As part of the IPO process, Kosmos Energy submitted extensive documentation to the S.E.C., including its Ghana contracts. The Ghanaian government had pledged that its oil industry would be run transparently and Tullow Oil followed Kosmos in publishing contracts, but it’s the Kosmos Energy IPO that got the ball rolling.

Rhodes also brings up the issue of oil companies deferring to governments:

While offering general endorsements of transparency, oil companies typically defer actual requests for contract and other information to governments. “I have tried to communicate with them but they instead refer me to local government officials,” said Kuich, the South Sudanese freelance journalist. Levi Obonyo, former chairman of Kenya’s independent Media Council, says bluntly that oil companies hide behind governments to avoid public scrutiny. “Unfortunately, with regard to oil companies, the demand for accessing information has been directed at the government and public sector rather than the private sector,” Obonyo said. “Too often we tend to treat the private enterprise as an untouchable.”

Adengo of Tullow Oil told CPJ that it is up to the Ugandan government to determine whether a contract should be published, although the company “would welcome publication of all our contracts with all governments.” The French oil giant Total, which bought one-third interest in Tullow’s Uganda oil exploration sites in February 2012, supports transparency in oil revenues, but the decision ultimately lies with the government, said Ahlem Friga-Noy, manager of public affairs and external communication. “Publishing the oil contract is a decision which pertains to the government and not to the company,” she said. “Total is ready to publish the contract if the Ugandan authorities decide to do so.”

We shouldn’t forget that the S.E.C. adopted rules mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act requiring oil and gas companies to disclose payments to foreign governments (section 1504). At the time, The Wall Street Journal reported that, “The rules for section 1504 set a $100,000 threshold, below which companies would not have to report payments. The rules do not contain exemptions for reporting “confidential or competitively sensitive information” or exemptions for instances in which reporting the payments might violate foreign laws.”

No exemptions.

The American Petroleum Institute filed a lawsuit agains the S.E.C. in October 2012, which would suggest that a number of oil companies are happy with the secrecy status-quo.

Read the entire CPJ article here: Oil, Money and Secrecy in East Africa