Statoil’s New York Stock Exchange listing in 2011. Photo: David Shankbone, Licensed under CC BY 3.0 via Wikimedia Commons http://bit.ly/1FAEJT5

Examples in Angola, Sierra Leone and Zimbabwe demonstrate what can be done with extractive industry disclosures, like Statoil’s recent release.

Today the 11^th largest oil company in the world with operations in more than 30 countries and listed on the NYSE, Statoil, disclosed the payments it makes to governments in countries where it operates at the project level. This may not sound like a big deal, but it’s part of a long transparency struggle that has had major victories and setbacks.

Statoil has long been a leader on transparency, supporting strong disclosure standards and distancing itself from the American Petroleum Institute’s lawsuit against the SEC. Statoil’s leadership shows that companies can publish their payments without harming their competitive edge and at little cost. This reality runs in the face of companies who claim they’ll lose their competitive edge if they are transparent. The SEC, which is now tasked with re-issuing regulations to implement the US extractives transparency law, Section 1504 of Dodd-Frank, should take note.

More than 60 percent of the world’s poorest people live in countries with valuable and abundant natural resources. In the oil, gas, and mining industry, billions of dollars in payments are made to governments for access to natural resources. Shining a light on these payments would help these people overcome the “resource curse” and ensure that natural resource revenues actually benefit the countries where they’re developed.

Unfortunately, many of these payments are kept in the dark – meaning citizens can’t track them and making them extremely vulnerable to corruption. Ultimately, citizens can’t hold governments accountable for how they spend this money. The UN estimates that Africa is losing $50-$60 billion every year to illicit financial flows, and the extractive sector has been found to be particularly vulnerable to corruption – especially bribery.

When citizens gain access to information, they’re able to uncover some pretty striking problems. For example, In countries like Angola, Sierra Leone, and Zimbabwe, local organizations are already using similar financial data to hold their governments accountable, and uncovering massive discrepancies and inconsistencies around payments to governments and between local, regional or national governments:

• In Angola, the Open Society Initiative for Southern Africa (OSISA) used oil sector data and found an $8.55 billion difference in the amount of oil that Sonangol said it sold and what the Ministries of Petroleum and Finance claim the company sold. There were also gaps on income taxes, production, signature bonuses, and exports. OSISA-Angola’s research also found that local communities aren’t receiving their fair share from revenue-sharing agreement; For example, oil-rich Cabinda province is legally entitled to 10 percent of the taxes generated by extraction, but is actually getting less than one percent.

(To note: The American Petroleum Institute and opponents of Dodd-Frank have often claimed that Angola prohibits disclosure, arguing they would be unable to work there and still comply with the law, so they say they need an exemption. But this argument has been disproven yet again after Statoil disclosed its payments to Angola today.)

• In Sierra Leone, the National Advocacy Coalition on Extractives (NACE) used EITI data to discover that the Sierra Leonean government was devaluing its resources: The country received just 4 percent of the value of all minerals exported in 2006, and 7 percent of the value of all minerals exported in 2007. In 2007, that meant the country received $10 million for mineral exports valued at $145 million – a significantly lower return than comparable countries. NACE is campaigning to urge the government to limit unnecessary tax incentives and exemptions that result in huge losses of revenue.
• In Zimbabwe, the Zimbabwe Environmental Law Association (ZELA) found a massive discrepancy between the state-owned Zimbabwe Mining Development Corporation’s anticipated diamond revenues ($600 million) and the payments actually received by Zimbabwe’s treasury ($45 million). ZELA also found significant inconsistencies in what Zimbabwe’s government said it received in dividends and royalties from mining operations, and what an official from the Zimbabwe Mining Development Corporation said it had contributed to the treasury.

Without mandatory payment disclosure, which provides timely and reliable evidence, identifying these types of cases is very difficult, and fully investigating and possibly litigating them is even harder. Local governments can’t be held accountable for how they manage and spend these revenues unless there is payment information at the project level, which is what makes Statoil’s disclosure so important. Despite this clear need from watchdogs around the world, some companies have argued for only disclosing payments by country, which would prevent citizens and investors from uncovering critical problems like these.

It’s great to see an oil company like Statoil showing leadership and promoting true transparency – not just as a PR exercise. Oxfam, along with its allies in Publish What You Pay, will keep campaigning to get the SEC to release strong transparency rules, and not cave to pressure and lawsuit threats from laggards in the oil industry. Statoil has made it clear that this type of disclosure can be done, and that transparency is good for business. It’s time for the US and other companies to follow Statoil’s lead!