The oil and gas industry loves to trumpet their support of international transparency initiatives and their tax contributions to the US government, but when a new law requires them to tell the public exactly how much gets paid to whom around the world, they bring out the lobbyists and lawyers.

Browse through the corporate social responsibility reports of the top oil and gas companies, and you’ll see them singing from the same transparency hymnbook. Chevron says it “believes that the disclosure of revenues received by governments and payments made by extractive industries to governments could lead to improved governance in resource-rich countries.”

Many oil and gas companies are also “supporters” of the global Extractive Industries Transparency Initiative (EITI). (Companies can become a “supporter” simply by declaring “their support publicly”.) Unless a country decides to implement EITI, though, they are obliged to disclose nothing. For a company such as Chevron, this means disclosing tax and other payments in Nigeria (perhaps years after the fact), but nothing in next-door Equatorial Guinea, a classic petro-dictatorship. For the citizens of Equatorial Guinea—mala suerte (tough luck)!

In July 2010, the Dodd-Frank Wall Street Reform Act was signed into law. Dodd-Frank contains an important provision (“Section 1504″) that requires each oil, gas, and mining company to disclose their tax, royalty and other payments to governments in every country of operation. (Oxfam and our allies in the Publish What You Pay campaign fought hard for the inclusion of this provision—alongside our support for EITI.)

Many of the same companies praising transparency have been actively lobbying since the law passed to gut implementation by the Securities and Exchange Commission (SEC). The hypocrisy is out there in the open if you know where to look. Senate lobbying disclosure forms show that Chevron, Exxon, Shell, Conoco Phillips, Marathon, Occidental, the American Petroleum Institute (API), and others have been very active in Washington on this provision, targeting not only the SEC, but the House of Representatives, Senate, Department of State, Department of the Interior, and the National Security Council.

As I wrote last week, API (revenues of more than $198 million in 2009) has now threatened to sue the SEC unless the agency withdraws its proposed rule and starts from scratch to meet big oil’s secrecy wishes rather than the law and Congressional mandate. (Five API member companies are also on the EITI board, Exxon, Chevron, Shell, BP, and Statoil.)

Wiston House where the EITI board meeting will be held next week. Wikimedia Commons.

No one knows how much the oil and gas industry is spending specifically to undo the Dodd-Frank provision, but the oil and gas industry is one of the biggest lobbyists in the US, spending more than $145 million on lobbying activities in 2011. ConocoPhillips, Shell, ExxonMobil, Chevron and BP were the top five oil and gas spenders on lobbying in 2011, with ConocoPhillips spending a staggering $20.5 million. API spent more than $7 million in lobbying in 2011 and is spending a “significant amount” on its faux “grassroots” advertising campaign called “Vote 4 Energy”. These are the same companies who complain that the cost to disclose information they already collect is too onerous.

The yawning gap between the transparency rhetoric of companies and the reality of their actions has never been more apparent than it is now. The SEC may shortly issue a final rule to implement the Dodd-Frank provision, while on February 14th the oil industry’s designated transparency groupies, governments, and civil society groups will convene in the UK for the latest EITI board meeting. While the EITI board members enjoy the lovely and historic “Downton Abbey”-esque country manor setting of their board meeting, the industry’s lawyers and lobbyists will be working hard in Washington to gut a new global corporate transparency standard.

It’s time to blow the whistle on the industry’s transparent hypocrisy. For the more than 1.5 billion people living on less than $2 a day in resource-rich countries, there’s no time left to wait.

Village residents fetch water from a communal pump in Faloumbou, Senegal Tuesday. Rebecca Blackwell/Oxfam America.

1504   Section in Dodd-Frank Wall Street Reform Act requiring companies to disclose taxes, royalties, and other payments made to the US and foreign governments
 
1.5 billion  People living on less than $2 a day in “resource-rich” countries
 
$30 million  Value of Malibu mansion owned by Teodoro Nguema Obiang, son of oil-rich Equatorial Guinea’s dictator
 
1    Number of white crystal-covered ‘Bad Tour’ gloves in Teodoro’s Michael Jackson memorabilia collection valued at $3 million (See “U.S. vs. One Crystal-Covered ‘Bad Tour’ Glove” court filing.)
 
270   Days after enactment that Congress required the SEC to issue a final rule (regulation) to implement the law
 
559   Days since Dodd-Frank enacted into law by President Obama
 
289   Days that the SEC has been in violation of the law
 
13    Months after Dodd-Frank that the European Commission issued a legislative proposal that would place a similar requirement on oil and mining companies
 
0    Host country laws oil companies have been able to cite that would prohibit disclosure of payment information as required by Dodd-Frank
 
3    Commissioners eligible to vote on the final rule (Chairwoman Schapiro and Commissioner Paredes are recused because of conflicts of interest.)
 
$50 million  Estimated amount Exxon says that it would cost to comply with law, even though it provides no backing data for the estimate and presumably already collects and tracks payment information
 
$41 billion  Exxon’s 2011 profits—a 35% increase over 2010
 
$100,000  Cost Barrick Gold, world’s largest gold producer, says it would cost them to comply
 
$1.2 trillion  Approximate combined assets under management of investors who have told SEC to issue a strong final rule
 
3   Companies and industry associations (Shell, Exxon and API) who say that payment disclosure “could allow terrorists” to target a project
 
2  Nigerian oil workers unions who say it would actually make them safer
 
5  Companies who met SEC Commissioner Gallagher on December 2, 2011, to lobby for a weak final rule—Shell, Exxon, Chevron, ConocoPhillips, and Occidental
 
15  Oil and mining companies who “support” the voluntary Extractive Industries Transparency Initiative (EITI) program who are also members of American Petroleum Institute (API). API has threatened to sue the SEC to keep payment info secret.
 
5  Companies on the EITI board who are also API members
 
11  Luxury sports cars worth at least $5 million belonging to Teodoro seized by French police in Paris as part of an investigation into possible corruption
 
20  Days after auto seizure that President Obiang scored his son a UNESCO envoy post in Paris
 
$5,000  Teodoro’s reported monthly government salary as Equatorial Guinea’s minister of agriculture
 
2010  Year Equatorial Guinea was expelled from EITI for failing to meet its minimum transparency requirements
 
5   Companies producing oil and gas in Equatorial Guinea who will be covered by Dodd-Frank (Exxon, Marathon, Hess, Noble, and Mitsui produce the vast majority of oil and gas in Equatorial Guinea. The first four are members of the American Petroleum Institute. API sent a letter to the SEC on January 19 saying it would be unlawful to issue a final rule to implement the Dodd-Frank provision.)
 
No data  Percent of Equatorial Guinea’s population living below the poverty line. An estimated 60 percent lived on less than $1 a day according to a 2006 UN report.
 
700,000  Population in Equatorial Guinea still in the dark about the country’s finances and waiting for full implementation of Dodd-Frank Section 1504

For almost two decades, communities from the Ecuadorian Amazon have been fighting a long-shot legal battle against Chevron-Texaco for the billions of gallons of oil and toxic wastes dumped into their lands and water (well described in a recent New Yorker piece by Patrick Radden Keefe). With last week’s decision by an Ecuadorian Appellate Court upholding an $18 billion judgment (see prior Oxfam blogging on the case here and here), these communities may finally have what they need to hold the company accountable. Because Chevron has no operations in Ecuador, plaintiffs will need to have the judgment enforced elsewhere. With this decision in hand, they can seek Chevron assets in dozens of countries, including the United States. A memo drafted by plaintiff lawyers details the many options now available to them.

Chevron has gone to unprecedented lengths in fighting this case and its public response to the ruling shows no sign of wavering. Last year, Chevron managed to convince a US federal judge to block enforcement of the case anywhere in the world! That decision—a gross overreach—was fortunately overturned by the US Court of Appeals, making last week’s ruling all the more significant. Chevron continues to litigate the case in the United States and in The Hague, but its prospects for escape are rapidly diminishing. With Chevron also facing a multi-billion dollar lawsuit by the Brazilian government over a recent spill, settling the Ecuador case has to be high on people’s minds.

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Emily Greenspan has conducted extensive research around the principle of Free, Prior, and Informed Consent and its application to communities affected by extractive industries projects. In this post, she weighs in on the importance of local community involvement for both companies and communities vis-à-vis the Keystone XL pipeline and a mining project run by Southern Copper in Peru.

The present controversy in the US surrounding the proposed Keystone XL pipeline highlights a challenge that many countries face as the global search for oil, gas, and other natural resources continues to expand its reach. Governments facing oil and mining development decisions are forced to weigh their desire to promote energy security against the need to protect local water sources and other natural resources critical to the lives and livelihoods of the communities that will be impacted by these projects. Whatever decision they make, one thing is clear—it is in governments’ own best interest to prioritize local community participation in decision-making and ensure the provision of reliable, independent information to affected communities and their representatives.

Governments and companies alike should recognize that securing the approval of project-affected communities is not just best practice, but frequently a prerequisite for successful project implementation.

In the US, the proposed Keystone XL pipeline (which would bring oil from the tar sands in Canada to the Gulf Coast) has faced opposition from many Nebraskans and their elected leaders due to concerns about potential environmental impacts to the environmentally sensitive Sandhills region. Responding to environmental concerns raised by Nebraskans and others, last week the US State Department decided to delay their decision on whether to approve the project. It appears local opposition is having at least some impact, as last week project operator TransCanada agreed to reroute the pipeline to avoid the Sandhills.

In Peru—a country highly dependent on the export of minerals and other natural resources—earlier this year, the government cancelled a $1 billion mining project run by Southern Copper after mass protests that resulted in violence and three deaths. Peru’s mining ministry rejected the company’s environmental impact assessment as a result of the conflict. In fact, Peruvian President Ollanta Humala stated recently that a key focus of his administration would be on improving the relationship between the government, mining companies, and communities impacted by mining projects.

By committing to securing the Free, Prior, and Informed Consent (FPIC) of communities affected by oil, gas, and mining projects, governments and companies can take an important step towards preventing social conflict and promoting a stable climate for investment. When adequately implemented, FPIC ensures that communities have the opportunity to approve or reject projects. FPIC is a basic right for indigenous peoples under international law, and as a principle should also be applied to other communities whose land and natural resources stand to be impacted by oil, gas, or mining projects.

FPIC also requires that communities receive adequate and timely information about the potential social and environmental impacts of these projects. A recent study by Oxfam suggests, for example, that when implemented effectively high-level, independent expert panels can be one helpful way of identifying risks and opportunities around oil and mining projects and bringing new information into the public realm.

Regardless of the specific strategies that governments choose to employ to meet their energy needs, they should keep in mind that engaging the affected communities in deciding whether and/or how oil and mining projects move forward must be an essential step in the process.

Kathryn Martorana was the former extractive industries campaign coordinator at Oxfam America.

As global demand for energy and natural resources continues to grow, oil and mining companies are moving into remote areas of the world. Mining impacts men and women differently because of their roles and relationships in the family and community. Projects can bring benefits to the community in terms of revenues and jobs, but they can also have severe negative impacts on rights of local communities, particularly women, deepening their vulnerability to poverty. Experience and research indicates that social and environmental risks of mining often fall heavily on the women, elderly, and children.

Joanna Manu from Ghana. Along with other activists, she identified two cyanide spills in 2004 and 2006. They went to court and were eventually able to negotiate settlements and close the mine. Photo by Jane Hahn/Oxfam America.

Oxfam America is getting ready to kick off a 10-day Gender Justice and Mining Tour. Starting on November 5, women representatives from Peruvian and Ghanaian civil society groups will speak at university, diaspora, and policy events in Washington, DC, New Jersey, and Massachusetts, with the intention of spreading awareness about the rights of women and the continued roles they play in advocating for fair and accountable practices around oil and mining operations.

Across the globe, women in oil and mining-affected communities are making their voices heard by raising awareness in their communities, disseminating information among women, and generating alliances with local social organizations, communities, and local authorities to counter the negative impacts of mining. In Ghana, Peru, Guatemala, and Cambodia, women advocates are standing up for their rights and holding their governments accountable for fair compensation, equitable access to water, and proper distribution of revenues. In La Oroya, Peru, Rosa Amaro, President of the Movement for the Health of La Oroya, is seeking to hold US-based Doe Run corporation accountable for polluting the Peruvian town with high lead levels, forcing residents to leave their homes, an area now named one of the ten most polluted areas in the world.

Women in rural communities, being responsible for traditional duties such as preparing food, raising children, and tending to a farm, often feel the presence of mining operations most acutely. When human rights and environmental standards are not respected, mining operations can have detrimental impact on the surrounding environment, as seen in La Oroya. Lack of prior consultation with a community, water contamination, and forced relocation can subject women to walking miles to find alternate water sources and arable land to farm, leading to reduced time for other chores, education, and leisure. Traditionally marginalized from decision-making, it is often exceptionally difficult for women to advocate for their rights within their community.

Oxfam America’s Peru office has been supporting women’s organizations such as the Movement for the Health of La Oroya and CooperAccion for over a decade around the environmental clean-up of La Oroya.

It is our hope that the Oxfam America Speakers Tour will foster a deeper understanding of the impact of mining on women and bring larger visibility to their plight.

This blog post was written by Emily Greenspan, extractive industries policy and advocacy advisor who authored Oxfam America’s report “Watching the Watchdogs”.

In recent decades, extractive industry companies increasingly have extended their reach to more remote and sensitive areas, as well as to more politically risky environments, in search of oil, gas, and other natural resources. At the same time, local communities, NGOs, and others increasingly demand more accountability of the corporations managing projects with the potential to cause serious environmental and social harm.

Within this context, expert panels – consisting of experienced, “independent” or third-party individuals who provide recommendations to project sponsors on social and environmental issues – have emerged as one approach to mitigate project risk for companies and communities. But in an era where public image can have a very real bottom line impact on corporate revenues, and given that expert panels typically have only advisory authority (a bark with not much bite), are these panels being used by companies and international financial institutions for image rather than for constructive advice?

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With the rebel takeover of Tripoli recently, questions are swirling about how the new authorities will manage Libya’s significant oil and gas wealth. Pre-war Libya relied on oil and gas revenues for more than 80% of government revenue in 2010 and rebuilding the country and building new, democratic institutions will, for the foreseeable future, have to be on the back of these revenues.

The country has 44 billion barrels of proven reserves and companies are already knocking on the doors of the National Transitional Council (NTC) in order to get access to Libya’s hydrocarbon riches. As I explain further below, the NTC is also prepared to honor existing contracts with oil and gas companies. But the benefit to the Libyan people will depend on how these revenues are managed.

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This guest blog post was written by Emily Greenspan, extractive industries policy and advocacy advisor.

All eyes are on Peru’s new president, Ollanta Humala, in his first weeks on the job. Peruvian citizens and the international community watch closely to gauge how he approaches one of the country’s key challenges: reducing social conflict and economic inequalities associated with Peru’s booming mining and oil activities without undermining the country’s impressive economic growth. Last week, Peru’s Congress took a major step in the right direction by unanimously approving a law that requires the government to consult with indigenous peoples prior to implementing legal or administrative measures that would affect them directly, including development projects like oil drilling and mining. The law specifies that consultations should aim to secure indigenous peoples’ agreement or consent. If effectively implemented, this law could reduce social conflict and improve Peru’s investment climate.

Community members from La Apalina Village near Yanacocha Gold Mine, Cajamorca, Peru. Photo by Chris Hufstader/Oxfam America.

Peru’s national ombudsman office recently documented more than 200 social conflicts across the country, the majority of which relate to socio-environmental issues, such as those that often emerge around mining and oil projects. In 2009, the situation became particularly explosive when police clashed with indigenous protesters in the town of Bagua in northern Peru, leaving 34 dead and numerous injuries among police officers and indigenous peoples. The conflict erupted around a set of legislative decrees put in place by the Garcia government, which indigenous federations and civil society organizations claimed would infringe upon indigenous land rights, and were passed without genuine consultation with indigenous communities.

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Last year, when Oxfam and allies were celebrating the passage of the Dodd-Frank Wall Street Reform Act and the provision on oil and mining payment  transparency, we were largely focused on the impact that these new disclosures would have on resource-rich developing countries. It turns out, though, that there could be a big financial benefit for the US Treasury and a country struggling with record deficits.

Few realize that the oil and mining payment disclosure provision – section 1504 or the “Cardin-Lugar” provision – requires reporting by companies in every country of operation, including reporting of payments in the US from production on Federal lands and offshore oil and gas production on the Outer Continental Shelf. The US Interior Department has just told the Securities and Exchange Commission (SEC) that implementation of this provision could be “very useful” in its work to collect oil and gas revenues inside the US.  The Office of Natural Resource Revenue (ONRR) – charged with collecting and disbursing more than $10 billion in oil and gas revenues each year – has written to the SEC to say that how the agency implements the provision could help them “ensure that energy companies are reporting correctly and paying every dollar due to the American taxpayer.”

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Today’s guest blog post is written by Emily Greenspan, extractive industries policy and advocacy advisor.

Big wins for the poor sometime come in unlikely venues. This week the International Finance Corporation (IFC)–the private sector lending arm of the World Bank Group–released its new and, in some ways, improved policies designed to protect the environment and communities. The IFC has been criticized for funding high-risk projects in sectors like oil, gas, and mining that entail serious risks for local communities. IFC’s new policies–its so-called “Sustainability Framework”–outline social and environmental requirements for the companies that it funds in order to reduce the risk associated with its projects.

Why is this important? IFC’s social and environmental policies have far reaching impact. IFC invested $18 billion in 528 projects in FY2010, including FY10 commitments of more than $1 billion in the oil, gas, mining, and chemicals industries and just under $1.6 billion in infrastructure. In many cases, its financing is relatively modest but often serves to catalyze projects and bring in other lenders. Its policies are often emulated by other international public lenders – such as export credit agencies – and by private commercial banks such as Citigroup, Barclays, Credit Suisse, and many others who belong to the Equator Principles, a set of standards for reducing social and environmental harm adopted by 72 export credit agencies and private banks. In that sense, when the IFC changes its policies, it can be big news.

This woman from Cajamarca, Peru, lives in a community affected by gold mining. FPIC would give the community a voice in mining projects.Photo by Jessica Erickson/Oxfam America.

For these reasons, Oxfam and other NGOs have been in the trenches over the past two years trying to wrench out improvements. IFC’s new framework includes a precedent-setting requirement that its clients secure the Free Prior and Informed Consent (FPIC) of indigenous communities prior to launching development activities expected to generate adverse impacts on their lands and natural resources. FPIC is critical to ensuring that indigenous communities participate in decision-making processes around development projects that affect their lands, cultural identity, and livelihoods. FPIC will also benefit governments and companies seeking to promote long-term sustainability and prevent conflict around high-impact development projects. Increasingly, companies and investors are beginning to acknowledge FPIC as best practice.

The IFC’s updated Sustainability Framework also promotes increased transparency in the oil, gas, and mining sectors by requiring extractive industry clients to disclose their contracts with host governments. This will help to prevent secret deals and enable citizens to hold their governments accountable for decisions regarding natural resource management. Internationally, several governments already recognize contract disclosure as best practice. Most recently, Ghana’s Ministry of Energy posted all of its petroleum contracts online in May.

These are big wins, but as with any new policy, implementation must be closely watched. We hope that IFC’s new FPIC and contract disclosure policies will set in motion a ripple effect among other international financial institutions, export credit agencies, companies, and governments, helping to reduce social conflict and increase transparency around large-scale development projects globally.