Extractive companies publish worldwide payments under UK law

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Mandatory reporting by oil, gas and mining companies under European Union country-by-country disclosure laws began in the UK and France in 2016. Key aspects of the reporting requirements – which have equivalents in Norway, Canada and the USA – are especially useful in preventing corruption: granularity (disaggregation by project and by recipient government entity); comprehensiveness (all countries of operation without exemptions); and timeliness (the most recent financial year).

Eighty-six extractive companies reported under UK law in 2016

UK-incorporated extractive companies must disclose payments within 11 months of each financial year-end, and London Stock Exchange-listed (Main Market) extractive companies within 6 months (unless the LSE is their secondary listing). UK-incorporated companies must provide open and machine-readable data. For most in-scope companies, the first reporting deadline was 30 June 2016 (if LSE-listed) or 30 November 2016 (if UK-incorporated and unlisted).

According to an assessment by PWYP UK and NRGI, by end-2016 disclosures of 2015 or 2015/16 payments to governments had been published by 86 UK-incorporated and/or LSE-listed oil, gas and mining companies (plus one forestry company). Prominent reporting companies include Anglo American, BG Group (now part of Royal Dutch Shell), BHP Billiton, BP, Cairn, Centrica, Gazprom, Glencore, Lukoil, Premier Oil, Randgold, Rio Tinto, Rosneft, Royal Dutch Shell, Soco, Total (main reporting obligation in France), Tullow and Vedanta. LSE-listed China Petroleum & Chemical (subsidiary of Chinese state-owned Sinopec Group) should have reported payments made in Angola and China but appears not to have.

Payments in which countries?

Disclosures from the above named 18 companies provide data on 84 host countries. These include resource-rich developing and transition states where extractive revenues may be hidden or associated with the “resource curse”, and developed economies that also may fail to gain optimal outcomes from resource extraction (see graph and table of some of the countries where these 18 companies report).
Anglo American 8Anglo AmericanBG Group 7BG GroupBHP Billiton 11BHP BillitonBP 12BPCairn 1CairnCentrica 2CentricaGazprom 4GazpromGlencore 9GlencoreLukoil 2LukoilPremier Oil 3Premier OilRio Tinto 7Rio TintoRosneft 2RosneftShell 13ShellSoco 2SocoTotal 17TotalTullow 6TullowVedanta 4VedantaAngola 3AngolaAustralia 7AustraliaAzerbaijan 2AzerbaijanBrazil 9BrazilCanada 8CanadaChina 3China Democratic Republic of Congo 3Democratic Republic of CongoEquatorial Guinea 2Equatorial GuineaGabon 3GabonIndia 4India Indonesia 6IndonesiaIraq 3IraqKazakhstan 5KazakhstanKenya 3Kenya Malaysia 2MalaysiaNigeria 2NigeriaPeru 4PeruPhilippines 2PhilippinesQatar 2Qatar Republic of Congo 3Republic of CongoRussia 5RussiaSouth Africa 5South AfricaTanzania 3TanzaniaUK 10UKUSA 6USAZambia 3ZambiaZimbabwe 2Zimbabwe

Example country Prominent companies disclosing payments under UK regulations
Angola BP, Gazprom, Total
Australia Anglo American, BG Group, BHP Billiton, BP, Glencore, Rio Tinto, Shell
Azerbaijan BP, Total
Brazil Anglo American, BG Group, BHP Billiton, BP, Premier Oil, Rio Tinto, Rosneft, Shell, Total
Canada Anglo American, BHP Billiton, BP, Centrica, Glencore, Rio Tinto, Shell, Total
China BHP Billiton, Shell, Total
Democratic Republic of Congo Glencore, Soco, Total
Equatorial Guinea Glencore, Tullow
Gabon Shell, Total, Tullow
India BG Group, BHP Billiton, BP, Vedanta
Indonesia BHP Billiton, BP, Premier Oil, Rio Tinto, Shell, Total
Iraq BP, Shell, Total
Kazakhstan BG Group, Gazprom, Glencore, Lukoil, Total
Kenya BG Group, Total, Tullow
Malaysia BHP Billiton, Shell
Nigeria Shell, Total
Peru Anglo American, BHP Billiton, Glencore, Rio Tinto
Philippines Shell, Total
Qatar BP, Shell
Republic of Congo Soco, Total, Tullow
Russia BP, Gazprom, Lukoil, Rosneft, Total
South Africa Anglo American, Glencore, Rio Tinto, Total, Tullow, Vedanta
Tanzania BG Group, BHP Billiton, Glencore
UK BG Group, BHP Billiton, BP, Cairn, Centrica, Gazprom, Premier Oil, Shell, Total, Tullow
USA Anglo American, BHP Billiton, BP, Rio Tinto, Shell, Vedanta
Zambia Anglo American, Glencore, Vedanta
Zimbabwe Anglo American, Rio Tinto

How good is the reporting?

This growing body of extractives data is essential – if not sufficient – to inform citizens, civil society, journalists and parliamentarians about the revenues generated by exploitation of their countries’ natural resources, how well the money compensates for negative social and environmental impacts and which government entities get paid (see PWYP’s Chain for Change).

The first year’s reporting in the UK needs improvement, however, and company disclosures are not always complete.

Difficulty in locating some reports and lack of open data
All UK-incorporated companies’ reports are available online in open data from Companies House, but there is no annual index; site users need to insert a blank space in the search box to produce a list of reports. LSE-listed companies’ disclosures currently lack a central location, making it hard to know how many have reported, and need not be in open data format. (Similar challenges occur with companies reporting in France.) LSE-listed companies are required to announce their report on the National Storage Mechanism but many do not, and none have used the correct classification. However, all LSE-listed companies will be required to upload their reports centrally in open data from 2018.

Over-aggregated or omitted data
Several companies have broadly – and geographically – aggregated data for multiple different oil and gas fields or mines: Shell (“Gulf of Mexico (West)”, “Northern North Sea”, “Sabah Inboard and Deepwater Oil”, “SPDC East”, “UK Offshore”); BHP Billiton (“Gulf of Mexico”); BP (“Gulf of Mexico Central”); Glencore (“DRC Copperbelt Region”). Very broad project aggregation may result in companies hiding suspect payments and arguably contravenes the law’s purpose.

Other companies fail to identify the government entities they pay, which PWYP considers a legal infringement. Lukoil lumps together payments to unnamed “state authorities”. Aggregate Industries (part of LafargeHolcim, which reports in France) identifies only unnamed “national” or “regional/local” governments. Petrofac initially failed to identify government entities but subsequently corrected this.

Companies are required to specify in-kind payments by value and volume and to explain how the value was determined. To verify price per barrel, value should be divisible by volume. However, Shell has for at least one project in Nigeria combined oil and gas in-kind payments in a single figure, making the price per barrel for each incalculable, and when requested refused to fully clarify. Petrofac originally combined cash and in-kind payments in Tunisia in a single uncheckable figure but then amended its report.

BP omits payments by non-subsidiary joint ventures (JVs), and Shell excludes payments by JVs over which it has joint control. Given the frequency of JVs in resource extraction, and because JV production entitlements are often the largest payment to a government, non-reporting of JV payments by non-operating partners – which could be reported proportionately – will leave large sums of money undisclosed.

Disclosures by Total and some other companies contain omissions of certain types of payments that require further investigation.

What next?

Civil society has been active in accessing and analysing the data, including via PWYP’s Data Extractors programme and PWYP US’s Extract a Fact site. Our work with the data will be the subject of future blogs.

The UK will review its regulations in 2017, followed by the European Commission’s EU-wide review in 2018. Civil society needs to engage with these processes to defend the value of mandatory reporting and, where possible, persuade policy makers to close loopholes and strengthen the law.

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