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Think tank commends Tullow, Kosmos for transparency but …

  • SOURCE: | qwesa2big
  • The Africa Centre for Energy Policy (ACEP), a think-tank in the energy and extractives industries has commended Kosmos Energy and Tullow Oil for satisfying some major requirements for deepening transparency and accountability in the oil and gas industry.

    In a release signed by Mr Mohammed Amin Adams, Executive Director of ACEP to the GNA, it said it is encouraged by the recent disclosure of information by the companies on their operations in Ghana’s Jubilee Fields but there is more room for improvement on benchmarks.

    The statement noted that while Kosmos made significant disclosures in its 2012 Form 10-K as a requirement for being a listed company on the New York Stock Exchange, Tullow, on its part made these disclosures in its 2012 Corporate Responsibility Report and the 2012 Annual Report and Account.

    It said Kosmos for instance disclosed a sales volume of 5,905,000 barrels of oil, sales revenue of US$ 667,951,000, declared an average sales price of US$ 113.12 per barrel, an average production cost of US$ 16.11 per barrel, total cost and expenses at US$ 638,053,000 and income before income tax as US$ 34,156,000.

    Tullow Oil on the other hand declared Royalties and carried interests amounting to 464,051 barrels of crude, Corporate tax of US$ 40,664,000, other taxes as US$ 52,843,000, other government payments as US$ 314,000, average sales price of US$ 108 pb (from 2012 Annual report and account) and sales revenue of US$ 958,600,000.

    ACEP’s analysis was that, it found that Kosmos Energy’s report focused more on the fundamental project economics that could support independent verification of payments to the Government of Ghana; but Tullow Oil provided information on how much has actually been paid to the Government, both of which are important requirements for deepening transparency and accountability in the oil and gas industry.

    It said while there exists significant material differences in the disclosures
    between the two companies, the disclosures according to ACEP marked an important development in corporate governance in Ghana’s oil and gas industry, a practice that must be commended.

    It however, was worried about the observation contained in the 2010/2011 Ghana Extractive Industries Transparency Initiative (GHEITI) Report on Oil and Gas, which alluded that the oil companies failed to cooperate with the Independent Aggregator during the reconciliation process by their unwillingness to provide information beyond the payments to the Government.

    It added that the Aggregator indicated that even though his “terms of reference for the assignment however required the Reconciler to analyze and comment on some details including operating cost, capital allowance computation, prices and liftings by GNPC and the IOC’s”, the companies were unwilling to provide these relevant information.

    ACEP was worried that companies could provide information to institutions abroad while undermining institutions in their host operation nations.
    “This is unacceptable and undermines Ghana’s institutions mandated to uphold the integrity of the petroleum industry,” the statement said.

    It noted that the disclosures were not made project-by-project basis suspecting it could be due to lack of ring-fencing rule in Ghana’s regulatory regime.
    The release expected that future disclosures would reflect project reporting as they move towards the development of their second project, the TEN Fields.

    “This will not only show the revenue performance of each project but will more importantly provide a useful basis for tax assessment and the determination of Additional Oil Entitlements (AOE),” it said.

    It indicated with the development of implementing rules for the United States Dodd Frank Reforms Act and the endorsement of the final version of the European Union’s Accounting and Transparency Directives, “ACEP is confident that the disclosure requirements by these oil companies will become more comprehensive and comprehensible, without compromising national disclosure standards.”

    Source: GNA
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