Tullow's transparency record impressive, but…

The Chairman of the Civil Society Platform on Oil and Gas, Dr Steve Manteaw offers a critique of Tullow's transparency performance and concludes that in spite of the seeming progress, there is much more to be desired of the company.

Tullow, last week, launched its Annual Report for 2014, with extensive coverage of its earnings, and payments to its host governments on project-by-project basis.

The company says its 2014 report marks the third consecutive year it has reported its payments to governments in the countries of its operations, and the second year it has reported in line with the EU accounting Directive.

Indeed, Tullow has cooperated fully with the Ghana Extractive Industry Transparency Initiative (GHEITI) which I co-chair, and readily provided all required information for the purpose of GHEITI audit.

The report makes interesting revelations. Out of a total sales revenue of US$1.96 billion from its North and West Africa portfolio, which include operations in countries such as Congo, Cote d'voire, Equatorial Guinea, Gabon, and Mauritania, Ghana contributed a whopping US$1.3 billion, making the country Tullow's cash cow.

Assessing its economic foot prints in the countries where it operates, Tullow says it has spent US$10 million on local community development (what we commonly refer to as Corporate Social Responsibility).

It reports also, that it has spent US$225 million on local suppliers, which counts for a substantial part of the local content spending. Another US$459 million has been paid out as employee salaries while a further US$518 million has been paid by the company directly to its host governments as taxes and royalties.

By its example, Tullow has dismissed the widely peddled myth that corporate openness hurts businesses and has a tendency to erode their competitiveness.

Describing its reporting principles and standards, Tullow says in its 2014 report that it uses the International Petroleum Industry Environmental Conservation Association's (IPIECA) oil and gas industry guidance on voluntary sustainability reporting, as a guide for its reporting. It also uses the Global Reporting Initiative's (GRI) G4 reporting framework as a benchmark.

The Annual Report & Accounts, the company says, includes a summary of the issues covered in its Corporate Responsibility Report and, as required by the 2013 amendments to the UK Companies Act, includes a strategic report with disclosures on human rights, gender diversity and greenhouse gas emissions.

Tullow clearly is redefining Corporate Social Responsibility by working strictly to rules and standards, and ensuring that resource owners equitably share in the benefits of extraction.

The only blot on this seemingly brilliant and exemplary performance however, has been the company's tight-lip on its achieved price for its Jubilee lifting. Also disappointing has been its reluctance to disclose its price projections used in determining the viability of its Jubilee investments.

At a recent encounter with the Ghanaian media, the price projection used in the project feasibility studies came up. This was against the back-drop of threats of redundancy issued by Tullow on account of the decline in world crude oil price. Some industry analysts had claimed that even at US$48 per barrel, Jubilee is still profitable on the basis of the price assumptions used in establishing the project viability; but Tullow will not discuss the issue, and offered no explanation for avoiding the question.

Again, the lack of update on how a botched water project executed in the Jomoro area in the name of Corporate Social Responsibility has been remedied is a complete let-down. Tullow Oil had, as part of its corporate social responsibility programme, constructed boreholes for some communities within its catchment area, Jomoro to be precise.

As a result of this project, the beneficiary communities were not selected for a small town water project executed by the World Bank in the Western Region around the same time. Unfortunately, some of the boreholes drilled by Tullow did not yield any water, and even those that were successful yielded unwholesome water. In the short term, Tullow sought to remedy the situation by supplying water to the affected communities in tankers, a decision which Tullow itself agrees is not sustainable. It would have been helpful if Tullow had reported on how it has, or intends to solve the problem in the long term.