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TRANSPARENCYINTERNATIONAL

the global coalition against corruption

PROMOTING REVENUETRANSPARENCY

2011 REPORT ON OIL

AND GAS COMPANIES


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2011 Transparency International. All rights reserved.

ISBN: 978-3-935711-66-1

Printed on 100% recycled paper.

Author: Barbara Kowalczyk-Hoyer

Design: Sophie Everett

Acknowledgements: We would like to thank all the individuals who contributed to all

stages o the research and the preparation o the report. Our gratitude goes t o many

TI colleagues who have invested time and eort, among them Franois Valrian,Susan Ct-Freeman and Peter Wilkinson.

Special thanks also go to Antoine Heuty, Karin Lissakers and Juan Carlos Quiroz o

our co-branding partner the Revenue Watch Institute or their valuable contributions.

Every eort has been made to veriy the accuracy o the inormation contained

in this report. All inormation was believed to be correct as o February 2011.

Nevertheless, Transparency International cannot accept responsibility or t he

consequences o its use or other purposes or in other contexts.

Cover photo: AFP/Getty Images

Transparency International (TI) is the global civil society organisation leading

the ight against corruption. Through more than 90 chapters worldwide and

an international secretariat in Berlin, TI raises awareness o the damaging

eects o corruption and works with partners in government, business and

civil society to develop and implement eective measures to tackle it.

www.transparency.org

The Revenue Watch Institute promotes the eective, transparent and

accountable management o oil, gas and mineral resources or the publicgood. Through capacity building, technical assistance, research, unding

and advocacy, we help countries to realize the development beneits o their

natural resource wealth.

www.revenuewatch.org

FOREWORD

Transparency International (TI) and the Revenue Watch Institute (RWI) are pleased

to issue the 2011 report on Promoting Revenue Transparency in Oil and Gas

Companies.

Our ndings are part o the Promoting Revenue Transparency(PRT) project and

build on earlier reports, the 2005 Save the Childrens Beyond the Rhetoric, TIs2008

Report on Revenue Transparency of Oil and Gas Companiesand the2010 Revenue

Watch Index, co-launched by RWI and TI.

TI and RWI have cooperated on the PRT project since 2007. Its goal is to promote

good governance in resource-rich countries by improving awareness o the

importance o revenue transparency among governments and companies.

While the Revenue Watch Index set revenue transparency benchmarks orgovernments, our latest research reviews reporting practices by major oil and

gas companies in areas relevant to revenue transparency. Our main objective is

to promote disclosure o payments by oil and gas companies to the countries

where they operate. Our ndings provide the basis or recommendations aimed at

companies but also at legislators, regulators and investors.

The report identies some encouraging progress since our 2008 report. More oil and

gas companies now publish inormation about their anti-corruption programmes.

Signicant disclosure gaps persist, however, notably in country-by-country disclosure

by corporations on their international operations.

We encourage the use o the report as a tool or advocacy by international and local

civil society organisations to support demands or higher disclosure standards. It will

also be helpul to companies or benchmarking and improving their reporting, and

to public bodies or evaluating and amending their regulatory processes. Our work

oers investors and nancial analysts a ramework or assessing the transparency o

companies in the oil and gas sector and other industries.

We hope that TIs and RWIs continued collaboration will contribute to larger civil

society eorts to improve governance in the extractives sector. We look orward to

receiving the views o all interested parties. We remain dedicated to transparent and

accountable management o natural resources or the common good.

Dr. Cobus de Swardt

Managing Director,

Transparency International Secretariat

Karin Lissakers

Director,

Revenue Watch Institute


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CONTENTS

MAJOR RESULTS 2

EXECUTIVE SUMMARY 4

1. Why transparency in the oil and gas sector matters 5

2. Methodology 6

3. Major findings 7

4. Key policy recommendations 8

RESULTS OF THE ANALYSIS 12

1. General results 12

2. Reporting on anti-corruption programmes (section 1) 14

3. Organisational disclosure (section 2) 22

4. Country-level disclosure (section 3) 30

5. National oil company specific (section 4) 43

6. Cross-section analysis 48

8. 2011 vs. 2008 results 51

CONCLUSION 52

ANNE XES 53

Anne x 1 - H isto ry of the proj ect 53

Anne x 2 M etho dolo gy and ques tio nnai re guid e 55

Anne x 3 B uild ing a p erf ect scor e co mpan y 65

Anne x 4 C ount ry- lev el d isc losu re o n do mest ic o pera tion s 70

Anne x 5 - D ata tab les wit h s ourc es 73

Anne x 6 D ata shar ing wit h co mpan ies - a n e xamp le of a da ta set 110

Anne x 7 O il a nd g as indu str y b ackg roun d r elev ant to the PRT repo rt 113

LIST OF TABLES AND DIAGRAMS 118

BIBLIOGRAPHY 119

END NOTES 120

ABBREVIATIONS AND ACRONYMS

APEC Asia-Pacic Economic Cooperation

BG BG Group

BHP BHP Billiton

BP British Petroleum

CEO Chie Executive Ocer

CIS Community o Independent States

CNOOC China National Oshore

Oil Corporation

CNPC China National Petroleum Corporation

EITI Extractive Industries

Transparency Initiative

EU European Union

GEP GEPetrol

IMF International Monetary Fund

ICC International Chamber o Commerce

IOC international oil company

(company with no state control)

IPIECA International Petroleum Industry

Environmental Conservation Association

KMG KazMunaiGaz National Company

KPC Kuwait Petroleum Corporation

NIOC National Iranian Oil Company

NNPC Nigerian National Petroleum Company

NOC national oil company

(state-controlled company)

OMV OMV Group AG

ONGC Oil and Natural Gas Corporation

(Indian NOC)

OPEC Organisation o Petroleum

Exporting Countries

PACI Partnering Against Corruption Initiative

PDVSA Petroleos de Venezuela

Pemex Petroleos Mexicanos

Petrobras Petrleo Brasileiro S.A.

Petronas Petroliam Nasional Berhad

P&L prot-and-loss

PRT Promoting Revenue Transparency

PWYP Publish What You Pay

QP Qatar Petroleum

RWI Revenue Watch Institute

SEC Securities and Exchange Commission

SNPC Socit Nationale des Ptroles

du Congo

SOCAR State Oil Company o Azerbaijan

Sonatrach Socit Nationale pour la Recherche,

la Production, le Transport,

la Transormation, et la Commercialisation

des Hydrocarbures s.p.

st. dev. standard deviation

UNCAC UN Convention against Corruption

UNGC UN Global Compact


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REPO

RTINGONANTI-CORRUPTIONPROGRAMMES

ORGANISATIONAL

DISCLOSURE

COUNTRY-LEVELDISCLOSURE-INTERNATIONAL

OPERATIONS

43%AVERAGE

65%AVERAGE

16%AVERAGE

INTERNATIONAL OIL

COMPANIES (IOCs)

NATIONAL OIL

COMPANIES (NOCs)

93%

84%

84%

81%

78%

78%

78%

77%

75%

75%

72%

71%

71%

67%

67%

64%

61%

61%

61%

57%

45%

43%

41%

35%

32%

32%

32%

30%

29%

28%

28%16%

13%

9%

9%

0%

100%

100%

100%

94%

94%

88%88%

88%

88%

88%

88%

88%

88%

88%

81%

81%

81%

75%

75%

75%

75%

75%

75%

75%

75%

75%

75%

69%

63%

63%

56%

56%50%

50%

44%

44%

44%

38%

31%

25%

19%

19%

13%

0%

69%

54%

40%

38%

29%

25%

20%

18%

16%

15%

19%

15%

15%

14%

14%

13%

12%

12%

11%

10%

10%

8%

8%

6%

2%

1%

0%

The major results o our study are three company

rankings, one or each o these sections:

1. reporting on anti-corruption programmes

2. organisational disclosure

3. country-level disclosure

The rst section refects companies reporting on

their anti-corruption programmes according to the

Transparency International - UN Global Compact

Reporting Guidance on the 10th Principle against

Corruption. Organisational disclosure measuresreporting on companies organisational structure,

operations, partnerships and standards used or

published nancial accounts. Country-level disclosure

refects companies reporting on meaningul country-

level nancial and technical data related to their

international operations.

All results are presented as percentages o maximum

possible scores (scale: 0 to 100 per cent). Scores in

the report are rounded to the nearest whole number.

Where companies score the same they are listed

alphabetically. The average scores or the three

sections are: 43, 65 and 16 per cent, respectively.

The analysed sample includes:

44 major oil and gas producers

(20 international and 24 national oil companies)

Based in 30 home countries

Producing in 73 host countries

Coverage of global reserves: 60 per cent of oil and

55 per cent o natural gas

Coverage of global production: 60 per cent of oil

and 60 per cent o natural gas

33 globally important, large producers(Fortune Global 500 and/or Forbes Global 2000),

plus 11 locally important national oil companies,

mostly rom oil-dependent countries

6%

6%

BG

BHP Billiton

British Petroleum

Statoil

Eni

Exxon Mobil

Repsol YPF

Royal Dutch Shell

Hess

Nexen Inc.

OMV

Marathon Oil

Woodside

Conoco Phillips

Total

Petrobras

Chevron

Suncor

Talisman

Devon

Wintershall

Pemex

Rosnet

PetroChina

KPC

ONGC

Sinopec

Petronas

Qatar Petroleum

CNOOC

PDVSACNPC

KazMunaiGaz

Inpex

Lukoil

SaudiAramco

Gazprom,GEPetrol,

NIOC,NNPC,

SNPC,SOCAR,

Sonangol, Sonatrach

BG

BHP Billiton

ONGC

British Petroleum

Woodside

Chevron

Eni

KPC

Marathon Oil

OMV

PDVSA

Repsol YPF

Royal Dutch Shell

Conoco Phillips

Gazprom

Wintershall

Exxon Mobil

Hess

Inpex

KazMunaiGaz

Pemex

PetroChina

Rosnet

Sinopec

Sonangol

Statoil

Petrobras

Suncor

Total

Devon

TalismanLukoil

SOCAR

Nexen Inc.

Qatar Petroleum

Sonatrach

Petronas

CNOOC

SaudiAramco

CNPC

NIOC

SNPC

GEPetrol

NNPC

Statoil

Nexen Inc.

Talisman

Woodside

Marathon Oil

Repsol YPF

Eni

Hess

Petrobras

Conoco

Lukoil

OMV

Wintershall

British Petroleum

BHP Billiton

ONGC

Suncor

Devon

Total

Exxon Mobil

Royal Dutch Shell

BG

Chevron

KPC

Sonatrach

CNPC

CNOOC, GEPetrol, Inpex,

PetroChina, Petronas

Diagram 1Major results

*An additional ranking ordisclosure on domesticoperations can be oundin Annex 4.


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EXECUTIVE SUMMARY

Companies create value or their shareholders, but they should also share this value

transparently in the countries in which they work, to promote economic development.

There are three ways to promote air sharing through greater transparency. First,

sound, publicly disclosed anti-corruption programmes are essential to prevent

individuals rom misappropriating revenues. Second, value can be shared with

business partners, provided these relationships are ully disclosed and the operating

subsidiaries are made known to the public. Lastly, precise inormation about how

much revenue goes to state budgets and how much is retained by companies mustbe ully disclosed to the public.

The Promoting Revenue Transparencyproject aims to make revenues rom oil

and gas extraction transparent and, as a result, more benecial to the societies o

resource-rich countries. In order to achieve this goal, we have analysed 44 leading

global oil and gas producers, including both international oil companies (IOCs)

and national oil companies (NOCs),1 in terms o their reporting on anti-corruption

programmes, organisational disclosure and country-level disclosure. Our ndings are

intended to serve as a basis or improvement in corporate reporting by the sector,

towards enhancing the transparency and accountability o these revenues.

1. WHY TRANSPARENCYIN THE OIL AND GASSECTOR MATTERSOil and gas producers transer considerable unds

to host governments in the orm o license ees,

royalties,2 dividends, taxes and support or local

communities. These large nancial infows should

contribute substantially to social and economic

development, yet many resource-rich countries

have been unable to transorm resource wealth

into wellbeing.3 When revenues rom the extractive

sector are not managed with transparency and

accountability, mineral and petroleum wealth canuel large-scale corruption, as well as poverty,

injustice and confict. One o the explanations or this

phenomenon is that large revenue infows lead to

excessive rent-seeking.4

The question is how to make oil and gas revenues

work or societies and not against them. The

relevance o this question is strengthened by the act

that resource dependency is mostly a problem in

poorer regions.5

The combination o high revenues o the oil and gas

industry, high poverty levels in many oil-producing

countries and, nally, high corruption risk6 makes

transparency critical. Oil and gas rents7 can constitute

a powerul budgetary instrument whose proper use

is strongly dependent on government transparency

and accountability. This money can oster long-

term socioeconomic development, but it can also

be misused, or example, to extend the political and

economic power o a ruling elite. In a positive scenario,

governments could use oil and gas rents to support

education, healthcare, clean water supply, transportation

inrastructure, small-scale entrepreneurship or

even economic diversication which are all basic

conditions to lit people out o extreme poverty andoster long-term development. Citizens o resource-

rich countries should have the right to know how their

resources are managed, what income they bring and

how this income is allocated.

Exploitation o natural resources and the related

oreign direct investment also have an impact on local

communities. There are both opportunities and risks

related to such investments, which engage the labour

market, the environment and local social structures.

This is another important reason why inormation

transparency should be a basic principle in the

extractive sector.

Our study evaluates companies on several important

aspects o transparency. Why is each o these

aspects important? First, anti-corruption programmes

constitute the basic preventive anti-corruption

measure applied by companies. Evaluating public

reporting on programmes such as this is the only

way or civil society to know i such programmes are

in place. Such reporting demonstrates companies

public commitment to ghting corruption. Second,

we analyse organisational disclosure reporting on

relationships among companies, their subsidiaries

and their partners, as well as the adequacy o their

nancial statements. This is necessary or transparent

contracts and nancial fows both inside and outside

companies. Third, we analyse country-level disclosure

concerning both transers to governments and data

that gives an insight into value sharing between

host countries and companies. Such inormation is

necessary or communities, civil society organisations

and other stakeholders to monitor the management

o natural resources in their countries and to hold

their governments to account. Fourth, we examine

certain NOC-specic issues that are necessary or

transparency in the oil and gas sectors.

In our 2008 Promoting Revenue Transparency(PRT)

report, we recommended that home governments

and appropriate regulatory agencies should consider

introducing mandatory revenue transparency

reporting or the operations o companies at home

and abroad.8 The importance o such disclosure in

the extractive sector was recently acknowledged

by legislative changes in Hong Kong9 and in the US

(the Dodd-Frank nancial reorm legislation).10 When

the new regulations are implemented, they should

considerably enhance the overall transparency

o nancial fows to governments o oil and gas

producing countries. Speaking in support o the new

US law, Senator Richard Lugar said: Too oten, oilmoney intended or the nations poor ends up lining

the pockets o the rich The resource curse aects

us as well as producing countries. It exacerbates

global poverty which can be a seedbed or terrorism,

it empowers autocrats and dictators, and it can crimp

world petroleum supplies by breeding instability.11

Transparency International Promoting Revenue Transparency 5


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2. METHODOLOGY12

Our report ocuses on companies and their eorts to

increase transparency and ght corruption, as well

as their contribution to disclosing nancial and other

fows to host governments. We analyse 44 major

oil and natural gas producers rom 30 countries.

We also analyse their country-level disclosure in all

countries within their upstream production,13 which

totalled 73 at the time o data collection. Our sample

covers about 60 per cent o proved global oil reserves

and more than 60 per cent o global oil production.

Concerning natural gas, analysed companies cover

about 55 per cent o proved global reserves and

nearly 60 per cent o global production.14

The major results o the analysis are three separatecompany rankings, one or each o the sections:

reporting on anti-corruption programmes,

organisational disclosure and country-level disclosure.

No combined cross-section score or ranking has

been calculated because we ound such results o

low inormative value, as there is little correlation

among the results o dierent sections.15 All data was

collected through desk research based exclusively

on publicly available inormation or documents.16

Preliminary data was shared with companies, and 24

o the 44 companies made a thorough data review.

We made no judgment on the levels o integrity o

companies practices; our evaluation is only based on

disclosed relevant inormation.

The questionnaire contains 51 questions ocusing on

the corporate inormation fow.17 The questions are

organised into our sections:

SECTION 1.Reporting on anti-corruptionprogrammes (questions 1-28)

The rst section ollows the elements o Transparency

International UN Global Compact (UNGC) Reporting

Guidance on the 10th Principle against Corruption.18

The questions reer to reporting on dierent elements

o anti-corruption programmes, including policies,

management systems and perormance. Since the

evaluation is based on reporting, some companies

might under-report but perorm well, while some

good reporters may not perorm as well as they imply.

SECTION 2.Organisational disclosure(questions 29-36)

The second section includes a set o questions

ocusing on companies subsidiaries, partners and

elds o operations. It also asks about the reliability o

companies accounts (applied accounting standards

and independent audit). All questions in this section

ocus on perormance.

SECTION 3.Country-level disclosure(questions 37-46)

This section asks about a limited set o operatingand nancial data, including money transers to host

governments. For each company, the entire set o

questions is asked separately or each country within

its upstream producing activities. The score or each

question in this section, thereore, is a score or

average country reporting.19 All questions ocus on

perormance.

Our set o questions on country-level disclosure

embraces a broader spectrum o data than Extractive

Industries Transparency Initiative (EITI) reporting

or what is required by the recently passed US

legislation.20 In addition to transers to governments,

we ask or certain operating data (reserves and

production) and certain data rom prot-and-loss

(P&L) accounts all on a country-by-country basis.

The intention behind this is to address a broader

range o questions related to revenue transparency

in the sector. One issue is to keep a record o money

transers to governments, and another is to allow civil

society organisations to nd out the value-sharing

rules applied in their countries. They should have

access to inormation about how value generated in

extractive industries is shared between governments

(societies) and companies.

SECTION 4.NOC-specifc(questions 47-51)

Questions in the ourth section apply only to the

24 NOCs in the sample. Not all o these questions

apply to all NOCs, because some imply companies

engagement in certain quasi-governmental activities.

However, this is not always the case.

The rst two sections ocus on corporate preventive

eorts aimed at increasing transparency and ghting

corruption within their corporate structures, while

the other two ocus on corporate contribution to the

disclosure o fows to host governments.

Each question was scored individually, and or each

o the rst three sections the total scores were

calculated.21 For Sections 1 and 2, these were the

simple sums o scores; or Section 3, or each country

o operations a simple sum o scores or questions

37 to 46, and then the average among all such sums

was calculated. The NOC-specic questions (Section

4) were evaluated separately with no general ranking.

3. MAJOR FINDINGSCompany rankings or Sections 1, 2 and 3 are

presented in Diagram 1.22 The major ndings are

summarised below.

REPORTING ON ANTI-CORRUPTIONPROGRAMMES

More and more, oil and gas companies are adopting

and making publicly available anti-corruption

programmes, the content o which is becoming

increasingly similar. Nevertheless, there is a

considerable group o companies, mostly non-listed23

NOCs that still do not publish their anti-corruption

codes, policies or measures.

Based on our review o publicly available inormation,

there are several important elements o anti-corruption

programmes that appear to be rarely implemented by

companies: the prohibition o acilitation payments,

anti-corruption training or business partners or

reporting on corruption-related incidents.

On average, IOCs report considerably better than

NOCs (see Diagram 1).

ORGANISATIONAL DISCLOSURE

Public disclosure o partnerships and subsidiaries,

including their countries o incorporation, are key

elements o organisational disclosure. The average

results in this section are relatively high. The domination

o IOCs over NOCs is less obvious than in section

1, as European and North American companies

are reluctant to reveal their partners in upstream

operations; the latter also do not disclose much

inormation on their non-consolidated subsidiaries.

COUNTRY-LEVEL DISCLOSURE

Country-level disclosure on international operations

has improved since the rst PRT report was released.

Reporting on production levels has become a broadly

accepted standard (an average score o 71 per cent)

and there are examples o good disclosure or each

remaining type o data. There were positive signals rom

several companies that intend to increase their country

-level reporting soon. This promising trend should be

strengthened by the recently passed US legislation.

Nonetheless, in spite o this positive trend, country-

level disclosure on international operations remains

very weak; it received the lowest average score

among all sections. Concerning governmental

transers and P&L data, many companies do not

disclose any such inormation, and the averagescores ranged rom 4 to 20 per cent.

The host country environment itsel cannot be

exclusively blamed or poor disclosure. In the

same host countries, oten described as dicult

environments, some companies disclose extensive

inormation, while others disclose only very sparse

inormation or none at all.

The average score or country-level disclosure on

international operations was almost twice as high

or IOCs as or NOCs. Concerning disclosure on

domestic operations, NOCs perormed better than

IOCs, supplying 9 o the top 10.

NOC-SPECIFIC ISSUES

Public listing and independence rom quasi-

governmental unctions (those perormed on behal o

the government) are the major actors dierentiating

NOC perormance. Listed NOCs with no quasi-

governmental unctions perorm the best in all

evaluated sections.

Since the rst PRT report was published in 2008,

there has been considerable progress in corporatereporting by NOCs. Eleven companies have begun

publishing corporate documents, including their anti-

corruption programmes such as codes o conduct

and sustainability reports, as well as annual reports.

REGIONAL PERFORMANCE

Regional perormance is mixed, though IOC-

dominated regions (Australia, Europe and North

America) lead in most rankings.

Transparency International 7Promoting Revenue Transparency


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Companies rom IOC-dominated regions perorm

the best in terms o reporting on anti-corruption

programmes and country-level disclosure o

international operations. On organisational disclosure,

Latin American companies perorm better than those

rom North America. Also, CIS-based companies

come very close to the leaders.

EITI SUPPORT AND TRANSPARENCY

For NOCs, EITI support correlates positively with

perormance in all evaluated sections. For IOCs,

this is the case only or reporting on anti-corruption

programmes and organisational disclosure, while or

country-level disclosure the correlation is negative.

TOP PERFORMERS

Repsol is the only company that reached the top 10

or all three major rankings. Eight companies scored

above average in all three rankings: Conoco, Eni,

Hess, Marathon, Petrobras, Repsol, Statoil, and

Woodside. All o them support the EITI.

4. KEY POLICYRECOMMENDATIONSWe have ormulated several major recommendations

on the basis o our analysis and resulting conclusions.

They concern diverse parties: companies, public

bodies and the investor community.

FOR ALL COMPANIES:

1. Detailed anti-corruption programmesshould be publicly available

We strongly recommend that companies review their

reporting on anti-corruption programmes accordingto the TI - UNGC Reporting Guidance on the 10th

Principle against Corruption. Several companies

already meet the criteria, except or independent

external assurance (D1524). Nonetheless, most

companies do not ollow the guidance, and their

publicly available documents on anti-corruption

programmes lack many key elements.

Some companies still do not make their codes o

conduct publicly available. We strongly recommend

that all such documents be published on websites,

with no password protection.

2. Companies should undertakevoluntary independent assurance oanti-corruption programmes

No company reviewed in this PRT project reported

on independent assurance o its anti-corruption

programme.

Corruption is a major risk actor o concern or

companies and their stakeholders. We encourage

companies to undertake voluntary independent

assurance along the lines o the TI Framework

or Voluntary Independent Assurance. Such a

practice would assist companies in ormulating and

implementing proper programmes, while providing

an objective and comparable assessment o a

companys anti-corruption eorts.

3. Companies should publish detailso their subsidiaries and felds ooperations

Companies should make public details o their

subsidiaries, both ully and non-ully consolidated,

including subsidiaries countries o incorporation and

parent companies interests. The same should hold

or inormation on companies elds o operations,

their interests and partners.

All such inormation should be clearly stated and

easily accessible on the companies websites.

Stakeholders should be able to easily trace the

connections between diverse companies, the division

o responsibilities and interests, and consequently the

possible routes o nancial fows.

4. Oil and gas companies shouldincrease their reporting on a country-by-country basis

Very ew companies report substantial inormation

on a country-by-country basis. However, some

companies already recognise the importance o such

reporting and provide broad voluntary country-level

disclosure, which shows that they do not see it as a

competitive disadvantage. Country-level reporting is

an inherent part o true transparency, and necessary

to assure good management o natural resources.

Companies country-by-country reporting should

include transers to governments (direct and indirect),

basic operating data and key elements o prot-and-

loss accounts. This data should allow stakeholders

to trace how value is s hared and how unds fow

between companies and governments. Both

elements are necessary or good management o

natural resources.

5. Companies should join the ExtractiveIndustries Transparency Initiative

The Extractive Industries Transparency Initiative (EITI)

oers a simple mechanism to ensure the systematic

disclosure and dissemination o inormation on payments

and revenue rom mining and oil and gas. Thereore

companies should join the EITI as a way to promote

both corporate and government transparency.

6. Companies should create andmaintain active corporate websites

Public inormation can be most easily and

inexpensively accessed on the Internet. Thereore

a corporate website is an ideal repository or

inormation on a company. However, corporateinormation is oten spread throughout dierent web

pages, databases and libraries, making it almost

impossible or an independent stakeholder to access

key inormation within a reasonable amount o time.

We believe that i a company truly intends to make

its inormation publicly available, it should maintain

an inormative, user-riendly and updated website.

All corporate documents and publications should be

directly downloadable, particularly annual reports,

stock exchange llings, social responsibility reports

and corporate codes o conduct. All externally

published inormation relevant or the company

(i.e. EITI reports rom countries where a company

participates in the initiative) should either be on its

website or linked to it. The website should include

active contact inormation or any member o the

public interested in urther inormation. Each corporate

website should have an English version, which allows

or global comparisons and analyses that can be

urther used by local NGOs and other stakeholders.

It is important or websites to be regularly updated,

including media releases and all published data.

FOR NOCS:

7. All NOCs should introduceinternationally or generally acceptedaccounting standards, as well asindependent auditing o their accounts

A number o non-listed NOCs still do not publish

their accounts in line with internationally or generally

accepted accounting standards, others do not

reveal the standards they use, and some do not

undergo independent auditing. Accordingly, even i

they publish their nancial and operating reports, it is

dicult to judge the quality and comparability o the

data against international standards.

8. The relationships between homegovernments and NOCs should be clearand publicly disclosed

NOCs hold special positions because governments

are their controlling owners. This infuences not only

competition in the extractive market but also the

transparency o public nancial fows and company

governance.

The rules that regulate relations between

governments and NOCs must be very careully set

and publicly known. All quasi-governmental unctions

o NOCs, i any, must be reported because they

concern the management o public resources, which

should be perormed or the public good.

Even though non-listed NOCs are not regulatedby stock exchanges, they should be accountable

to their stakeholders, just as listed companies are

accountable to their investors.

FOR PUBLIC BODIES:

9. The European Union shouldamend relevant legislation to requireEU-registered companies to reporton their operations on a country-by-country basis

In July 2010 the US Congress passed the Dodd-

Frank Wall Street Reorm and Consumer Protection

Act, which requires all companies registered with

the US Securities and Exchange Commission to

publicly report on a country-by-country basis their

payments to governments related to the extraction

o hydrocarbons and minerals. This important

piece o legislation is in line with one o the major

recommendations o the 2008 PRT report.

We encourage EU authorities to ollow this example

and additionally to extend required country-by-country reporting to operating and key P&L data. This

should allow or the monitoring o both money fows

and value-sharing processes.



8/65

10. All governments that are home tooil and gas producers should requirecompanies to report on their operationson a country-by-country basis

We strongly encourage governments, including the

US, to ollow up on and broaden the spectrum o

required country-by-country reporting. Companies

should report not only on their gover nmental transers

but also on their operations and key P&L elements.

11. Stock exchanges should enorceregulations providing or country-levelreporting

We strongly encourage all major stock exchangesto enorce appropriate requirements and regulations

aimed at providing more country-level reporting by

companies, primarily among producers o natural

resources. Such inormation should include transers

to governments, basic operating data and key

elements o prot-and-loss accounts.

Stock exchanges have to be transparent in order to

ensure a publicly accountable and ecient market.

Each step toward increasing the level o transparency

decreases the level o unoreseen risk and

consequent excessive volatility. Any such regulation

would have a double positive eect directly orcing

companies to engage in better disclosure, and

indirectly lowering the risk o investors decisions.

FOR THE INVESTOR COMMUNITY:

12. International rating agenciesand risk analysts should includetransparency measures in their riskevaluation models

Corruption constitutes a major risk or companies

and their stakeholders. Anti-corruption programmes,organisational transparency and country-level revenue

transparency can lower the risk o corruption. This is

especially true or industries that are highly vulnerable

to corruption. A thorough risk analysis should

thereore include a corruption risk assessment.

We strongly encourage all rating agencies and risk

analysts to include corporate transparency measures

in their risk evaluation models. Sound anti-corruption

programmes and transparent reporting should become

necessary standards or highly rated companies.

13. The International AccountingStandards Board should requirecompanies to report key inormation ona country-by-country basis

The International Accounting Standards Board (IASB)

should complete its work on new nancial reporting

standards to require extractive companies to report

country-by-country data on reserves, volumes,

key P&L elements, as well as benet streams

to governments. This inormation is valuable or

investors as well as o r the governments and citizens

o resource-producing countries. A new international

accounting standard or the extractive companies

has become all the more essential since the passage

o the 2010 Wall Street Reorm and Consumer

Protection Act in the US. This reorm would also

help standardise reporting between international and

domestic companies, and thus level the playing eld.

14. Corporate responsibility indicesshould include reporting on anti-corruption programmes, organisationaldisclosure and country-level disclosure

Transparency and accountability are important

elements o corporate responsibility. This is especially

true or the extractive industries, where transparency

and accountability lead to better management o natural

resources, which is particularly critical in poor countries.

Accordingly, we recommend that all three elements

o corporate transparency be included in corporate

responsibility indices: reporting on anti-corruption

programmes, organisational disclosure and country-

level disclosure.

Flickr/Robert Galloway



9/65

RESULTS OF THE ANALYSIS

1. GENERAL RESULTSThe analysis o collected data led to very dierent results or each analysed section.

On average, companies perormed relatively well on organisational disclosure, worse

on reporting on anti-corruption programmes and very poorly on country-level disclosure.

For organisational disclosure, the average score was 65 per cent, with only one

company scoring zero. For reporting on anti-corruption programmes, the average

score was 43 per cent; this section had the highest number o zero-scoring

companies, with eight evaluated companies awarded no points or their reporting on

anti-corruption programmes. For country-level disclosure, we evaluated international

and domestic operations separately. Disclosure on international operations wasevaluated or only 31 out o 44 companies, because 13 companies do not produce

hydrocarbons abroad. The average score was 16 per cent, with ve companies

scoring zero. For domestic operations (calculated or all 44 companies), the results

were considerably better; the average score was 53 per cent, with our companies

scoring zero. No company scored zero in all o the rst three sections.

The last section, with ve NOC-specic questions, resulted in a very complex picture

o this group. The NOCs constitute a heterogeneous group, requiring case-by-case

analysis. The major dierentiating actor among these companies was their public

listing on a stock exchange. Accordingly, we divided NOCs into three groups: publicly

listed NOCs, NOCs with listed major upstream subsidiaries, and non-listed NOCs.

Using the division between IOCs and NOCs, as well as the NOC-grouping according

to their listing status, we checked or relative average perormance o each relevant

company group (see Diagram 3). IOCs were the only group scoring above average

in all three sections. Listed NOCs achieved above-average results on organisational

disclosure and country-level disclosure. The remaining NOCs, both those with listed

subsidiaries and those that are non-listed, underperormed signicantly in all three

sections.

Another interesting nding was how NOCs and IOCs perormed depending on their

EITI support. Both NOCs and IOCs who support the EITI outperormed the average

in all three sections. Non-EITI supporter IOCs underperormed on organisational

disclosure, but surprisingly they perormed better than EITI-supporter IOCs on

country-level disclosure. Non-EITI supporter NOCs underperormed in all the

sections. EITI support coincides with better perormance or NOCs, while the eectis mixed or IOCs.

Diagram 2General resultsin section 1, 2 and 3

Each point illustratesone company

100%

80%

60%

40%

20%

0%

Diagram 3Relative perormanceIOCs and NOC-groups

Perormance measuredas relative to the averageo each section(sample average =1)

Diagram 4Relative perormanceNOCs vs. IOCs andEITI-support vs.Non-support

Perormance measuredas relative to the averageo each section(sample average =1)

ABOVE AVERAGE

BELOW AVERAGE IOCs

listed NOCs NOCs with

listed

subsidiaries

non-listed

NOCs

NOCs EITI IOCs

non-EITI

IOCs EITI

NOCs

non-EITI

ORGANISATIONAL

DISCLOSURE

REPORTING ON ANTI-

CORRUPTION PROGRAMME

COUNTRY-LEVEL DISCLOSURE

(INTERNATIONAL OPERATIONS)

ABOVE AVERAGE

BELOW AVERAGE

SAMPLE

SAMPLE



10/65

REPORTING ONANTI-CORRUPTIONPROGRAMMES

43%AVERAGE SCORE

93%HIGHEST PERFORMING:

BG

0%WORST PERFORMING:GAZPROM, GEPETROL,NIOC, NNPC, SNPC, SOCAR,

SONANGOL, SONATRACH

ckr/Adib Roy


11/65

2. REPORTING ON ANTI-CORRUPTIONPROGRAMMES (SECTION 1)The average score or all 44 analysed companies in the reporting on anti-corruption

programmes section was 43 per cent. The standard deviation25 o the sample was 31

per cent. IOCs perormed much better than NOCs, achieving an average score o 68

per cent compared to only 22 or NOCs.

The highest-perorming company was BG, with a score o 93 per cent. It missed only

2 points on question 28 regarding the exter nal audit o anti-corruption programmes

(no company scored positively on this question), and 0.5 points or question 11 (BG

scored 1 out o 1.5 points), which should be awarded or additional disclosure o

the procedures and controls to enorce the policy that orbids acilitation payments

(although many companies scored positively on question 11 or the prohibition o

acilitation payments, no company was awarded these additional 0.5 points).

The worst perorming companies were eight NOCs: Gazprom, GEPetrol, NIOC,

NNPC, SNPC, Sonangol, Sonatrach and SOCAR, which scored zero or the entire

section. In some cases we received inormation rom the companies that they had

internal codes o conduct that included numerous elements required in this section.

Some companies even provided us with relevant copies. However, none o these

documents are publicly available, so we could not give any points or this inormation.

We strongly encourage these companies to publicly disclose their codes o conduct

and other similar corporate regulations concerning anti-corruption programmes on

their corporate websites. Such disclosure demonstrates public commitment to anti-

corruption and allows stakeholders to access relevant inormation.26

Diagram 5Reporting on anti-corruption programmes- results by company

BG

BHP

BP

Statoil

Eni

Exxon

Repsol

Shell

Hess

Nexen Inc.

OMV

Marathon

Woodside

Conoco

Total

Petrobras

Chevron

Suncor

Talisman

Devon

Wintershall

Pemex

Rosnet

PetroChina

KPC

ONGC

Sinopec

Petronas

QatarPet

CNOOC

PDVSA

CNPC

KazMG

Inpex

Lukoil

SaudiAramco

Gazprom, GEP,

NIOC, NNPC,

SNPC, SOCAR,

Sonangol, Sonatrach

93%

84%

84%

81%

78%

78%

78%

77%

75%

75%

72%

71%

71%67%

67%

64%

61%

61%

61%

57%

45%

43%

41%

35%

32%

32%

32%

30%

29%

28%

28%

16%

13%

9%

9%

6%

0% AVERAGE = 43%

IOCs

NOCs



12/65

REPORTING ON ANTI-CORRUPTIONPROGRAMMES AND EITI SUPPORT

O the 44 companies evaluated, 18 support EITI. Among them, all except Qatar

Petroleum have submitted an EITI-compliant sel-assessment orm. This EITI

supporter group scored on average 70 per cent (st. dev. 15 per cent). The group o

non-EITI supporters includes six IOCs and 20 NOCs, and their average score was 24

per cent (st. dev. 24 per cent). The dierence in scores between EITI supporters and

non-supporters was very similar to the dierence between IOCs and NOCs, although

the groups had dierent members.

When testing IOCs and NOCs separately or EITI support, it emerges that among

IOCs, EITI supporters score an average o 75 per cent, compared to 53 or non-EITI

supporters. Among NOCs, EITI supporters achieved an average score o 54 per cent,

while non-EITI supporters scored only 15 per cent. NOCs that support the EITI score,

on average, about the same (negligibly higher) as IOCs that do not support the EITI. I

there were no points awarded or question 26 (regarding EITI support), all companies

scoring zero or the entire section (NOCs only) would still be non-EITI supporters.

In summary, the positive correlation between EITI support and reporting on anti-

corruption programmes is much stronger or NOCs than or IOCs.

Diagram 6Reporting on anti-corruption programmesEITI-supporters vs. non-supporters

Average or all companies is 43%

IOCs NOCs

BG

BHP

BP

Statoil

Eni

Exxon

Repsol

Shell

Hess

Marathon

Woodside

Conoco

Total

Petrobras

Chevron

Talisman

Pemex

QatarPet

Nexen Inc.

OMV

Suncor

Devon

Wintershall

Rosnet

PetroChina

KPC

ONGC

Sinopec

Petronas

CNOOC

PDVSA

CNPC

KazMG

Inpex

Lukoil

SaudiAramco

Gazprom,

GEPetrol, NIOC,

NNPC, SOCAR,

Sonangol,

Sonatrach, SNPC

AVERAGE = 70% AVERAGE = 24%

93%

84%

84%

81%

78%

78%

78%

77%

75%

71%

71%

67%

67%

64%

61%

61%

43%

29%

75%

72%

61%

57%

45%

41%

35%

32%

32%

32%

30%

28%

28%

16%

13%

9%

9%

6%

0%

NOCS PERFORMANCE IN REPORTINGON ANTI-CORRUPTION PROGRAMMES

NOCs constitute the majority o our sample, and because o their diversity they

deserve additional analysis relevant to their most dierentiating eatures. One such

eature, which emerged as relevant or companies perormance on their reporting on

anti-corruption programmes, is public listing on a stock exchange.

Among the 24 analysed NOCs, seven are publicly listed companies, ve have listed

major subsidiaries, and the remaining 12 are ully state-owned with no listed major

subsidiaries. The perormance o each NOC s ubgroup diered. Listed NOCs scored

an average o 37 per cent; NOCs with listed major subsidiaries scored 24; and non-

listed NOCs scored only 11. Public listing on a stock exchange is accompanied by

better reporting on anti-corruption programmes.

Another tested eature was the internationality o production. Among the 24 analysed

NOCs are 13 single-country producers and 11 multi-country producers. The latter

perormed much better regarding their reporting on anti-corruption programmes, withan average score o 33 per cent, while single-country producers scored only 15 per cent.

One possible explanation is that global presence osters the adoption o global standards.

Another is that in a globally operating company, public access (i.e. through a website) to

some internally set standards is the most practical way to introduce them to all employees.

Diagram 7Reporting on anti-corruptionprogrammes. Perormance o NOCs- listed vs. non-listed companies

Average or all NOCs is 22%

LISTED NOCs WITH LISTED SUBSIDIARIES NON LISTED

Statoil

Petrobras

Rosnet

PetroChina

ONGC

Inpex

Gazprom

Sinopec

Petronas

CNOOC

CNPC

KazMG

Premex

KPC

QatarPet

PDVSA

Saudi

Aramco

GEPetrol,

SOCAR,

Sonangol,

Sonatrach,

SNPC, NIOC,

NNPC

AVERAGE = 37%

AVERAGE = 24% AVERAGE = 11%

81%

64%

41%

35%

32%

9%

0%

32%

30%

28%

16%

13%

43%

32%

29%

28%

6%

0%

EITI SUPPORTERS NON-EITI SUPPORTERS



13/65

Diagram 8Reporting on anti-corruptionprogrammes. Perormance o NOCs- one vs. multi-country producers


SINGLE-COUNTRY PRODUCERS MULTI-COUNTRY PRODUCERS

Pemex

Rosnet

Sinopec

QatarPet

PDVSA

KazMG

SaudiAramco

Gazprom,

NIOC, NNPC

SNPC, SOCAR,

Sonangol

Statoil

Petrobas

PetroChina

KPC

ONGC

Petronas

CNOOC

CNPC

Inpex

GEPetrol,

Sonatrach

AVERAGE = 15%

AVERAGE = 33%

43%

41%

32%

29%

28%

13%

6%

0%

81%

64%

35%

32%

32%

30%

28%

16%

9%

0%

REGIONAL PERFORMANCE IN REPORTING ONANTI-CORRUPTION PROGRAMMES (BY HOME REGION)

Home jurisdiction also plays a role in shaping companies reporting. In our sample,

there are two Australian companies, nine European, nine North American, three Latin

American, seven Asian, our Middle Eastern, ve rom CIS countries and ve Arican.27

The division between NOCs and IOCs is, to a high degree, consistent with

geographical division (by home country). Australia, North America and Europe are

IOC regions, while Latin America, Asia, the Middle East, CIS and Arica are NOC

regions. The only exceptions to this rule are one European NOC (Statoil) and one

Russian IOC (Lukoil), but the perormance o both Statoil and Lukoil is closer to their

regional averages than to the IOC/NOC averages.28

One o the most striking results o the regional analysis is the varied perormance

o NOCs depending on their home region. Statoil outperorms all other continental

European companies. The average score o Latin American NOCs is higher than the

average score o the s ample, while all Arican companies scored zero.

The least consistent regional group is CIS, in which the standard deviation o the

sample is higher than its average. Scores in this group range rom zero or SOCAR

and Gazprom, to 41 per cent or Rosnet. The large dierence between Rosnets

and Gazproms scores is o particular interest, as both companies are publicly listed,

Russian NOCs. A possible explanation is that Gazprom has certain anti-corruption

programmes in place, but they are not publicly disclosed.

Diagram 9Reporting on anti-corruptionprogrammes. Perormance by region


*Pemex included in Latin America

80%

60%

40%

20%

0%

Australia Europe USA+Can Latin America* Asia Middle East CIS Arica

IOCs

NOCs

ST. DEV.

78%74%

81%

67%

45%

26%

17%

9%

13%

0%



14/65

ORGANISATIONALDISCLOSURE

65%AVERAGE SCORE


BG, BHP, ONGC

0%WORST PERFORMING:NNPCorge Osodi / Panos


15/65

3. ORGANISATIONAL DISCLOSURE(SECTION 2)The average result or the 44 analysed companies in the organisational disclosure

section was 65 per cent. The standard deviation o the sample was 27 per cent. IOCs

generally perormed better than NOCs, averaging 78 vs. 55 per cent. The dierence

between these groups was much smaller than in the rst section (reporting on anti-

corruption programmes).

Three companies obtained the maximum possible score or this section: ONGC, BHP

and BG. Only one company, NNPC, scored zero.

Diagram 10Organisational disclosureresults by company

IOCs

NOCs

BG

BHP

ONGC

BP

Woodside

Chevron

Eni

KPC

Marathon

OMV

PDVSA

Repsol

Shell

Conoco

Gazprom

Wintershall

Exxon

Hess

Inpex

KazMG

Pemex

PetroChina

Rosnet

Sinopec

Sonangol

Statoil

Petrobras

Suncor

Total

Devon

Talisman

Lukoil

SOCAR

Nexen Inc.

QatarPet

Sonatrach

Petronas

CNOOC

SaudiAramco

CNPC

NIOC

SNPC

GEPetrol

NNPCAVERAGE = 65%

100%

100%

100%

94%

94%

88%

88%

88%

88%

88%

88%

88%

88%

81%

81%

81%

75%

75%

75%

75%

75%

75%

75%

75%

75%

75%

69%

63%

63%

56%

56%

50%

50%

44%

44%

44%38%

31%

25%

19%

19%

13%

6%

0%



16/65

ORGANISATIONAL DISCLOSURE AND EITI SUPPORT

The group o 18 EITI supporters scored an average o 80 per cent in the second

section o the questionnaire (st. dev. 15 per cent), while the group o non-EITI

supporters averaged 55 per cent (st. dev. 29 per cent). Like with the r st section, the

dierence in scores between EITI supporters and non-supporters was very similar to

the dierence between IOCs and NOCs.

Testing IOCs and NOCs separately or EITI support, it emerges that among IOCs that

support the EITI, the average score or the second section is 84 per cent, vs. 64 or

non-EITI supporters. Among NOCs, EITI supporters averaged 66 per cent, while non-

EITI supporters scored 53. Like with the rst section, EITI-supporting NOCs perorm

comparably to non-EITI supporting IOCs.

Diagram 11Organisational disclosure

EITI-supporters vs. non-supporters


IOCs NOCs


BG

BHP

BP

Woodside

Chevron

Eni

Marathon

Repsol

Shell

Conoco

Exxon

Hess

Pemex

Statoil

Petrobas

Total

Talisman

QatarPet

ONGC

KPC

OMV

PDVSA

Gazprom

Wintershall

Inpex

KazMG

PetroChina

Rosnet

Sinopec

Sonangol

Suncor

Devon

Lukoil

SOCAR

Nexen Inc.

Sonatrach

Petronas

CNOOC

SaudiAramco

CNPC

NIOC

SNPC

GEPetrol

NNPC

AVERAGE = 80%

AVERAGE = 55%

100%

100%

94%

94%

88%

88%

88%

88%

88%

81%

75%

75%

75%

75%

69%

63%

56%

44%

100%

88%

88%

88%

81%

81%

75%

75%

75%

75%

75%

75%

63%

56%

50%

50%

44%

44%38%

31%

25%

19%

19%

13%

6%

0%

NOCS PERFORMANCE ON ORGANISATIONAL DISCLOSURE

We tested whether there is a relationship between companies perormance on

organisational disclosure and their public listing status on stock exchanges.

Publicly listed companies achieved an average score o 79 per cent, NOCs with

listed subsidiaries 48, and non-listed NOCs 44. Public listing o companies is

accompanied by a higher level o organisational disclosure, which is primarily

related to legal reporting requirements.

We also tested the relationship between the internationality o production (one- vs.

multi-country producers) and companies perormance on organisational disclosure.

The test showed there is no considerable dierence in perormance based on

internationality o production, and among NOCs, single-country producers and

multi-country producers achieve similar scores.

Diagram 12Organisational disclosurePerormance o NOCslisted vs. non-listed companies


LISTED NOCs WITH LISTED SUBSIDIARIES NON LISTED

ONGC

Gazprom

Inpex

PetroChina

Rosnet

Statoil

Petrobras

KazMG

Sinopec

Petronas

CNOOC

CNPC

KPC

PDVSA

Pemex

Sonangol

SOCAR

QatarPet

Sonatrach

SaudiAramco

NIOC

SNPC

GEPetrol

NNPC

AVERAGE = 79%

AVERAGE = 48%

AVERAGE = 44%

100%

81%

75%

75%

75%

75%

69%

75%

75%

38%

31%

19%

88%

88%

75%

75%

50%

44%

44%

25%

19%

13%

6%

0%



17/65

RESULTS BY HOME REGION

In the section on organisational disclosure, regional dierences are smaller than in

the section on reporting on anti-corruption programmes. Also, the division between

better-perorming IOC-dominated regions vs. worse-perorming NOC-dominated

regions does not hold. Latin American companies and NOCs rom the CIS region

perorm better on average than Northern American companies. In each regional

group at least one company scores above the total sample average.

The section on organisational disclosure tested companies on eight questions.

Two concerned the reliability o accounts, asking about external audit and applied

accounting standards (questions 35 and 36). All companies scoring zero on one

or both o these questions were NOCs rom NOC-dominated regions (Asia, Arica,

Middle East and CIS). Such companies accounts, even i publicly available, lack

comparability against international standards, and their quality is dicult to judge.29

The remaining six questions concentrated on the disclosure o subsidiaries and

upstream operations. Such inormation should be publicly available or stakeholdersto reveal the connections between diverse companies, the division o responsibilities

and interests, and consequently the possible routes o nancial fows.30 Questions 29,

31 and 33 asked about the disclosure o consolidated subsidiaries, non-consolidated

subsidiaries and upstream elds o operations respectively (including names and

percentages o ownership/interest). Questions 30 and 32 asked about the disclosure

o countries o incorporation o companies' consolidated and non-consolidated

subsidiaries, while question 34 asked about partners in upstream elds o operations

(including their percentages o interest).

For these six questions we tested regional perormance, separately, or each o

them. Australia leads on all six questions, while other regions perormance is

more question-dependent. The weak point or European companies is question

34, regarding partners and their interests in upstream elds o operations. North

American companies on average revealed little inormation on their non-consolidated

subsidiaries and partners. Latin American companies (which perorm very well in

the entire category) were the weakest on question 32 regarding non-consolidated

subsidiaries countries o incorporation. For CIS countries, reporting on countries

o incorporation o both consolidated and non-consolidated subsidiaries is very

poor. Middle Eastern and Asian companies have relatively good reporting on their

subsidiaries, while Arican companies reveal more inormation about their partners

than, or example, European companies.

Some companies disclose their subsidiaries and countries o incorporation but do

not report their percentage o interests in such companies. As a result, some regions

score higher on question 30 regarding countries o incorporation o consolidated

subsidiaries than on question 29 regarding naming consolidated subsidiaries anddisclosing companys interests in each o them (i.e. Northern American companies,

see Diagram 14).

Diagram 13Organisational disclosureperormance by region



80%

60%

40%

20%

0%

Australia Europe Latin America* North America CIS Asia Middle East Arica

IOCs

NOCs

ST. DEV.

Diagram 14Organisational disclosureresults by region/question


97%

86%

75%77%

69%

50%

70%

59%

44%

28%

QUESTION 29

CONSOLIDATED SUBSIDIARIES

Australia

Europe

Latin America*

Asia

Middle East

North America

CIS

AricaAVERAGE = 83%

100%

100%

100%

93%

88%

78%

70%

40%

Australia

Europe

Asia

Middle East

CIS

Latin America*

North America

Arica

QUESTION 31

NON-CONSOLIDATED SUBSIDIARIES

AVERAGE = 69%

100%

94%

79%

75%

70%

67%

44%

40%

QUESTION 33

FIELDS OF OPERATION

AVERAGE = 77%

Australia

Latin America*

Europe

North America

CIS

Asia

Middle East

Arica

100%

100%

94%

94%

90%

50%

50%

40%

Australia

Latin America*

Europe

North America

Asia

CIS

Middle East

Arica AVERAGE = 61%

QUESTION 30 - COUNTRIES

OF INCORPORATION

(CONSOLIDATED SUBSIDIARIES)

100%

100%

89%

89%

43%

40%

25%

0%

Australia

Europe

Asia

Middle East

North America

CIS

Arica

Latin America*

AVERAGE = 38%

QUESTION 32 - COUNTRIES

OF INCORPORATION

(NON-CONSOLIDATED SUBSIDIARIES)

100%

83%

43%

25%

22%

20%

0%

0%

QUESTION 34 - PARTNERS

IN FIELDS OF OPERATION

AVERAGE = 32%

Australia

CIS

Latin America*

Asia

North America

Arica

Europe

Middle East

75%

60%

50%

36%

28%

20%

17%

13%



18/65

COUNTRY-LEVELDISCLOSURE

16%AVERAGE SCORE


STATOIL

0%WORST PERFORMING:CNOOC, GEPETROL, INPEX,PETROCHINA, PETRONAS

ockphoto.com/ Andrew Penner


19/65

4. COUNTRY-LEVEL DISCLOSURE(SECTION 3)The section on country-level disclosure evaluates companies based on their reporting

o nancial data, transers to governments and operating data on a country-by-

country basis. Our sample includes 31 multi-country producers and 13 single-

country producers; all o the latter are NOCs producing oil and/or gas exclusively in

their home countries. For single-country producers, reporting on their country-level

operations is equal to their overall reporting and thereore only partially comparable to

country-by-country reporting o international producers. Moreover, most multi-country

producers apply higher reporting standards or their home operations than or their

international operations. Creating one company ranking, including data on both home

and international operations, would give an unintended comparative edge to single-

country producers.31 Thereore, we decided to ocus on the oreign operations o

analysed companies and calculate the ranking based on average country disclosureor international upstream production. This evaluation is only relevant or 31 multi-

country producers (see Diagram 15). In Annex 4, we include the supplementary

analysis o disclosure on domestic operations.32

The average score or country-level disclosure on international operations or 31

analysed companies was 16 per cent (standard deviation o 16 per cent).33 This was

the lowest average score among all the sections, and the poor perormance applies

to both international and national companies, and both publicly listed and non-listed

companies.34 On average, IOCs perormed better than NOCs (19 vs. 10 per cent;

without Statoil the average score or NOCs would only be our per cent). The best

perorming companies regarding international operations were Statoil, Nexen Inc.,

Talisman and Woodside. Five companies scored zero: CNOOC, GEPetrol, Inpex,

PetroChina and Petronas.

Diagram 15Country-level disclosureon international operations*results by company

*Only 31 companies rom the sample have upstreamproduction abroad, the remaining 13 companies aresingle-country producers.

IOCs

NOCs

Statoil

Nexen Inc.

Talisman

Woodside

Marathon

Repsol

Eni

Hess

Petrobras

Conoco

Lukoil

OMV

Wintershall

BP

BHP

ONGC

Suncor

Devon

Total

Exxon

Shell

BG

Chevron

KPC

Sonatrach

CNPC

CNOOC,

GEPetrol, Inpex,

PetroChina,

PetronasAVERAGE = 16%

69%

54%

40%

38%

29%

25%

20%

19%

18%

16%

15%

15%

15%

14%

14%

13%

12%

12%

11%

10%

10%

8%

8%

6%

2%

1%

0%



20/65

COUNTRY-LEVEL DISCLOSURE AND EITI SUPPORT

Regarding country-level disclosure on international operations, the EITI supporters score

is more than double the score o non-EITI supporters 22 vs. 10 per cent, respectively.

The analysis o both actors NOCs vs. IOCs, and EITI supporters vs. non-supporters

results in a very interesting ranking. The best perorming group in both domestic

and international country-level disclosure are NOCs that support the EITI, while the

worst perorming group are NOCs that do not support the EITI. The unexpected result

is that while EITI support among NOCs is accompanied by much better country-level

disclosure, EITI-supporters among IOCs perorm worse than the non-EITI supporters.

A possible explanation is that some companies consider their participation in the EITI

as an alternative or country-level reporting in their own corporate documents.

Diagram 16

Country-level disclosure -EITI-supporters vs. non-supportersinternational operations (31 companies)


IOCs NOCs


Statoil

Talisman

Woodside

Marathon

Repsol

Eni

Hess

Petrobras

Conoco

BP

BHP

Total

Exxon

Shell

BG

Chevron

69%

40%

38%

29%

25%

20%

19%

18%

16%

14%

14%

11%

10%

10%

8%

8% AVERAGE = 22%

Nexen Inc.

Lukoil

OMV

Wintershall

ONGC

Suncor

Devon

KPC

Sonatrach

CNPC

CNOOC,

GEPetrol,

Inpex,

PetroChina,

Petronas AVERAGE = 10%

54%

15%

15%

15%

13%

12%

12%

6%

2%

1%

0%

Diagram 17Country-level disclosure -NOCs vs. IOCs and EITI-support

*Average perormance or each group**For exact results on domesticdisclosure see Annex 4

INTERNATIONAL

DOMESTIC

NOCs/EITI-supporters

IOCs/non-EITI

IOCs/EITI-supporters

NOCs/non-EITI

Petrobras, Statoil

Pemex, Petrobras, QP, Statoil

43%

81%

21%

62%

19%

48%

48%

3%

*

**

REGIONAL PERFORMANCE ON COUNTRY-LEVEL DISCLOSURE(BY HOME COUNTRIES)

Concerning country-level reporting on international operations, Australia ranks rst,

which should be reinorced with the new BHP disclosure.35 North America, Europe

and Latin America score above the sample average, and CIS comes close to their

levels. The worst perorming regions are Arica, Asia and the Middle East, as the only

disclosure in these regions is partial inormation on production levels and reserves.36

IOCs NOCs

Diagram 18Country-level disclosureon international operationsperormance by region


For regions including one companyonly, the name o the company isquoted beside the score.

60%

40%

20%

0%

Australia North America Europe (av=21%) Latin America CIS Middle East Asia Arica

26%

22%

15%

69%

18%15%

6% 2% 1%

Statoil

PetrobrasLukoil

KPC



21/65

COUNTRY-LEVEL DISCLOSURE AND THE HOST COUNTRIES

The analysis o country-level disclosure raises an interesting question about how

much the host country environment infuences corporate disclosure. During our

consultations with companies, the dicult environment argument as an obstacle to

country-level reporting was oten mentioned.

To ollow up on this important issue, we used the collected data to compare levels

o corporate disclosure among dierent oil and gas producers within the same host

countries. As examples, we chose three countries rom each region rom the recently

published Revenue Watch Index country ranking.37 The major criterion was to have

a sucient number o producers in the sample in each selected country, in order to

present a comparative perormance eect.38

The results o the analysis are presented in Diagrams 19-23. For each country, there

are scores or disclosure on operations in this particular country. The companies in the

sample are not representative or each analysed country, and thereore the averages

concern only companies rom our s ample and not the entire upstream industry o thecountries. Thereore, the diagrams compare perormance o companies within the

same host environments and not the perormance o countries.

Among top-scoring companies in the selected Arican countries is only one local NOC

(Sonangol), while the remaining companies are oreign producers. Equatorial Guinea

is a particularly interesting case, because there are three US-based companies

with upstream production there, and their disclosure levels range rom eight to 54

per cent. Although operating within the same home and host laws, they apply very

dierent reporting standards.

In Asia local NOCs perorm well, and the perormance o oreign producers is very diverse.

In CIS countries the level o corporate disclosure is very diverse, ranging rom 0

to 77 per cent in Azerbaijan, 92 in Kazakhstan and 100 in Russia. Among the top

perorming companies are not only local NOCs but also several oreign producers.

The analysis o developed countries yields similar results. In Norway, companies

perormance ranges rom eight to 100 per cent, and in the US rom 0 to 69.

In Latin America the results are more country-specic. In Brazil, Petrobras strongly

outperorms the remaining producers. In Colombia, the perormance o companies

is less varied, ranging rom eight to 23 per cent. In Ecuador, Repsol discloses 69 per

cent o evaluated inormation. The disclosure o other companies remains rather modest.

Some producers publish extensive records o their nancial and operating

perormance in a certain country, while others do not publish any such data in the

same country. This phenomenon is repeated across countries and regions. Thereore,

there must be actors other than host country environment that infuence revenuetransparency. Among possible reasons or non-reporting are contractual agreements

with governments, lack o reporting capacities o companies, or other specic

company actors.

Diagram 19Corporate disclosurein chosen host countries ABOVE AVERAGE BELOW AVERAGE

ALGERIA

Statoil

Talisman

Woodside

BHP

Eni

Hess

Repsol

BP

Conoco

Total

PetroChina,

Sonatrach

ANGOLA

Sonangol

Statoil

Eni

Exxon

Petrobras

Total

BP

Chevron

ASIA

Marathon

Hess

Exxon

CNPC,

GEPetrol

EQUATORIAL GUINEA

Diagram 20Corporate disclosurein chosen host countries

CHINA

ABOVE AVERAGE BELOW AVERAGE

INDONESIA MALAYSIA

Sinopec

Statoil

CNOOC

PetroChina

CNPC

BP

Chevron

Conoco

Eni

Shell

Devon,

KPC

Talisman

Hess

Eni

BP

Chevron

Conoco

Exxon

KPC

Total

CNOOC,

CNPC,

Inpex,

PetroChina,

Petronas

Petronas

Talisman

Hess

Exxon

KPC

Shell

AFRICA

69%

31%

23%

15%

15%

15%

15%

8%

8%

8%

0%

77%

69%

15%

15%

15%

15%

8%

8%

54%

23%

8%

0%

85%

69%

54%

38%

15%

8%

8%

8%

8%

8%

0%

54%

23%

15%

8%

8%

8%

8%

8%

8%

0%

85%

31%

15%

8%

8%

8%



22/65

LATIN AMERICA

EUROPE AND NORTH AMERICACIS


BRAZIL


COLOMBIA ECUADOR

Petrobras

ONGC

Repsol

BG

Chevron

Shell

Devon,

Inpex

Nexen Inc.

Petrobras

ONGC

Repsol

BP

Chevron

Total

Repsol

Petrobras

Eni

Conoco

CNPC,

PetroChina


NORWAY


USA

Statoil

Talisman

Eni

Hess

Total

Conoco

Marathon

BP

Chevron

Exxon

Shell

Nexen Inc.

Statoil

Exxon

Hess

BP

Chevron

Conoco

Marathon

Shell

Talisman

Woodside

Devon

Suncor

BHP

Petrobras

Repsol

BG

Eni

Total

Inpex


AZERBAIJAN


SOCAR

Statoil

BP

Hess

Lukoil

Chevron

Total

CNPC,

Devon,

Exxon,

Inpex,

PetroChina

KAZAKHSTAN

Eni

KazMG

Lukoil

OMV

BG

BP

Chevron

CNPC

Exxon,

PetroChina,

Shell

Lukoil

Rosnet

Gazprom

Statoil

Wintershall

BP

Conoco

Hess

Eni

ONGC

Repsol

Shell

Total

Exxon

RUSSIA

77%

69%

54%

23%

15%

8%

8%

0%

92%

85%

15%

15%

8%

8%

8%

8%

0%

100%

100%

92%

69%

62%

54%

54%

23%

15%

15%

15%

8%

8%

0%

100%

54%

50%

23%

23%

15%

15%

8%

8%

8%

8%

69%

69%

62%

62%

54%

54%

54%

54%

54%

54%

54%

46%

31%

15%

15%

15%

8%

8%

8%

0%

100%

15%

15%

8%

8%

8%

0%

23%

23%

15%

15%

8%

8%

8%

69%

17%

15%

8%

0%



23/65

COUNTRY-LEVEL DISCLOSURE ON INTERNATIONAL OPERATIONS COMPARATIVE PERFORMANCE

Another way to look at companies perormance on country-level disclosure is to

evaluate their perormance relative to the sample. For example, i a company scores

50 per cent on question 40 (development and exploration costs) and 50 per cent on

question 45 (production volumes), and the sample averages or these questions are

11 and 71 per cent respectively, then on the rst question the company outperorms

the sample, while on the second question it underperorms although it was awarded

the same scores or both questions.

Based on this approach, we calculated each companys relative perormance or each

question rom the section on country-level disclosure on international operations (or

the 31 multi-country producers). In order to make the results clearer the questions

were grouped into three categories: transers to governments, nancial data and

operating (technical) data. The companies were then ordered according to their

overall ranking in the section (the ranking on international operations; see Diagram 15

at the beginning o this section).

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

q.45

q.46

q.37

q.42*

q.43

q.44

q.38

q.39

q.40

q.41

STATOIL

OPERATING DATA TRANSFERS

FINANCIAL DATA AVERAGE

Diagram 24Country-level disclosure on internationaloperations relative perormance

How to read the spider-webs: Each spider-webillustrates the perormance o one company as relativeto the analysed sample. The average line (black dottedline) indicates the border between under- and over-perormance. The large coloured areas indicate betterthan average perormance o a company. I a companysresult is on the average line, it perormed equal to thesamples average. I a coloured area is smaller than theaverage line, the companys perormance was poor. Forexample, Statoil outperormed strongly on transers togovernments, while it had below-average reporting onother nancial data (except or revenues, q.38) and onreserves (q. 46). The scale is equal or all diagrams.

*question number

NEXEN INC.

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

TALISMAN

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

WOODSIDE

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

MARATHON

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

REPSOL YPF

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

HESSENI

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

PETROBRAS

WINTERSHALL

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

CONOCO

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

OMV

BP

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

LUKOIL

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

BHP



24/65

OPERATING DATA TRANSFERS

FINANCIAL DATA AVERAGE

Diagram 24 cont.Country-level disclosureon international operationsRelative perormance

Please reer to page 40 orull explanation.

SUNCOR

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

ONGC

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

DEVON

EXXON

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

TOTAL

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

SHELL

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

BG

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

CHEVRON

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

KPC

CNPC

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

SONATRACH

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

CNOOC, GEPETROL, INPEX,

PETROCHINA, PETRONAS

0 points

q.45

q.46

q.37

q.42

q.43

q.44

q.38

q.39

q.40

q.41

5. NOC-SPECIFIC (SECTION 4)The NOCs constitute a highly diverse group. The only common characteristic that

dierentiates them rom IOCs is their ownership structure they are all controlled by

the state. Our sample includes 24 NOCs: 16 ully state-owned; seven majority-state

and minority privately-owned; and one (Inpex) majority privately-owned (though the

Japanese state owns a 30 per cent stake and a golden share, allowing it to control all

substantial decisions o the company).

GROUPING OF NOCS

Several major eatures could be used as criteria or grouping NOCs. First, some

NOCs perorm and some do not perorm quasi-governmental unctions in the oil

and gas market, such as licensing, awarding concessions or even regulating the

oil and gas industry. Second, NOCs have dierent levels o international exposure;

some o them, although called national, are in act international companies, as theyproduce hydrocarbons not only domestically but also abroad. Our sample includes

11 international and 13 ully homebound NOCs. Third, some NOCs are publicly

listed companies (with the state being the controlling shareholder), some have major

upstream subsidiaries that are publicly listed, and some are non-listed, ully state-

owned companies.

Company grouping along these three types o criteria is summarised in Table 1.



25/65

The division between single- and multi-country producers coincides little with the

other two eatures, while there does exist a relationship between public listing and

the type o activities the company perorms in the oil market. We decided to use the

listing criterion as the basis or NOC-grouping:

1. Publicly listed NOCs

This group has two major eatures in common: public listing and no regulatory

unctions (as reported) within the oil and gas market. The group includes: Gazprom,

Inpex, ONGC, Petrobras, PetroChina, Rosnet and Statoil.

2. NOCs with listed subsidiaries

These NOCs have publicly listed major upstream subsidiaries, making them partially

accountable to public investors. Most perorm certain quasi-governmental activities,

usually limited to licensing. This group includes: CNOOC, CNPC, KazMunaiGaz,

Petronas and Sinopec.

3. Non-listed NOCs

The third group has two major, common eatures: ull state-ownership and

engagement in regulatory unctions o the oil and gas market. This group is the

least homogeneous o the three and includes 12 companies: GEPetrol, KPC, NIOC,

NNPC, Pemex, PDVSA, Qatar Petroleum, SaudiAramco, SOCAR, SNPC, Sonangol

and Sonatrach. All NOCs rom OPEC countries belong to this group.

Table 1NOCs grouping

*Companies in purple aresingle-country upstream producers

PUBLICLY LISTED NOCsNOCS WITH LISTED

SUBSIDIARIESNON-LISTED NOCS

COMBINING REGULATORY

AND MARKET ACTIVITIES

KMG*

Petronas

CNOOC

CNPC

GEPetrol QatarPet*

KPC SNPC*

NIOC* SaudiAramco*

NN

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