Ethical Performance
inside intelligence for responsible business


oil firms agree transparency pact

January 2003

Eleven oil companies are to break new ground in transparency by declaring how much money they pay to three governments on a new oil project in theCaspian Sea.

The companies, led by BP, will jointly declare oil revenues received each year by the governments of Azerbaijan, Georgia and Turkey from the £2billion ($3.2bn) Baku-Tbilisi-Ceyhan (BTC) pipeline project, on which work will begin this spring.

The 1100-mile (1770km) pipeline will run from the Caspian to the Mediterranean, allowing easier access to world markets.

The companies, which include Conoco Phillips (US), Eni (Italy), Inpex (Japan), Statoil (Norway), TotalFinaElf (France) and Unocal (US), hope greater transparency over payments will help to meet concerns that governments are able to misuse oil revenues because their citizens have no way of knowing how much money is paid.

Earlier this year the Global Witness pressure group called on oil companies to declare how much they pay to governments, saying voluntary agreements on transparency needed the support of all major oil companies, not just a few, in order to work.

BP, which is leading the BTC pipeline project and has the largest stake, has already upset the government in Angola by announcing it will declare taxes and fees paid on oil projects there.

‘We have decided to apply BP standards to this project, and that involves transparency on payments,’ said BP’s regional affairs director Barry Halton.

‘We talked to the other partners about that and they agreed to do it, which is why we will disclose all payments.’

The governments will receive around 85 per cent of all profits from the pipelines when oil begins to flow in spring 2005.

The pipeline has been criticized by an international coalition of 60 environmental and human rights groups, including Friends of the Earth and the Kurdish Human Rights Project, which claim there has been little local consultation. They also allege the pipeline will be of minimal benefit to local people and could stir up conflict near Turkey’s Kurdish south-eastern region, where a 15-year separatist rebellion recently ended.

However, BP says the route chosen for the underground pipeline avoids sensitive areas and has involved consultation that is ‘unprecedented’ in the region.

‘We’ve done two years of consultation that has involved contact with every single person who owns land or farms near the route,’ said Halton.

‘We have genuinely tried to take on everybody’s concerns, and that has resulted in significant route diversions to avoid areas of archaeological, social and environmental sensitivity. We’ve not had to ask anyone on the route to move, which we think is a major achievement, and we are paying compensation for any disruption during building work.’

The oil companies have a £12million community investment budget for ‘sustainable development’ projects along the pipeline route, which will be carried out in partnership with international and local non-governmental organizations. They say the pipeline will create 10,000 jobs, mostly for locals, during construction, and up to 600 permanent jobs once built.

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