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Initial Evidence of Corruption Risks in Government Oil and Gas Sales

23 June 2016
Author
Aaron Sayne, Alexandra Gillies
Download
Initial Evidence of Corruption Risks in Government Oil and Gas Sales (PDF 191.68 KB)
Topics
Beneficial ownership, Contract transparency and monitoring, Corruption, Global initiatives, Licensing and negotiation, State-owned enterprises
Countries
Angola, Indonesia, Iraq, Russia, Turkmenistan,
Stakeholders
Civil society actors, Government officials, Private sector
Precepts
P2 P6 P11 P12 What are Natural Resource Charter precepts?
Social Sharing

In many oil-producing countries, the government receives a physical share of production, and that oil is then typically sold by the national oil company (NOC). These trading transactions are currently subject to limited regulation and even fewer reporting requirements.

NRGI has argued for some time that these physical oil trading transactions merit greater transparency and oversight, for two reasons. First, the sales are economically important. For countries such as Iraq, Libya and Nigeria, oil sales have in past years generated over half of total government revenues. From 2011 to 2013, oil sales by the governments of Africa’s top ten producers totaled USD254 billion, an amount equivalent to 56 percent of those countries’ total public revenues.

Second, as with other high-value transactions in the extractive sector, the sales are susceptible to corruption. To illustrate what these corruption risks look like in practice, this briefing summarizes 11 real-world situations where corruption or the perception of corruption arose around NOC oil and gas sales. While achieving a comprehensive understanding of corruption risks in NOC commodity sales requires further analysis (as detailed in our conclusion), this briefing provides some initial evidence that these risks are real; subdivides the risks into three distinct stages of the sale process; and offers preliminary ideas about the type of policy response that is warranted.

Corruption risks appear at several stages of the process by which governments and NOCs sell their oil and gas. The examples presented in this collection fall roughly into three categories:

  1. Selection of buyers
  2. Negotiation of terms
  3. Transfer of revenues

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  • Topics
    Beneficial ownership
    Civic space
    Commodity prices
    Contract transparency and monitoring
    Coronavirus
    Corruption
    Economic diversification
    Energy transition
    Global initiatives
    Legislation and regulation
    Licensing and negotiation
    Mandatory payment disclosure
    Measurement of environmental and social impacts
    Measurement of governance
    Open data
    Revenue management
    Revenue sharing
    Sovereign wealth funds
    State-owned enterprises
    Subnational governance
    Tax policy and revenue collection
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    • Regional knowledge hubs
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