Mainstreaming the EITI

COMMODITY TRADING TRANSPARENCY

What oil and gas data should be disclosed by companies

active in trading

EITI’s targeted efforts on commodity trading transparency

• 55 SOEs reporting in 35 EITI countries

• Targeted efforts in Albania, Cameroon, Chad, Cote

d’Ivoire, Ghana, Indonesia, Nigeria and Mauritania

• EITI working group on commodity trading transparency

• Key outcomes so far:

• More granular disclosures on oil sales using reporting

template

• Innovative reporting on buyer selection process

• Reporting on non-conventional trades (e.g. oil-backed loans)

• Findings and follow-up in country

EITI guidance for countries reporting on the sale of the state’s share of oil

EITI standard template for reporting on ‘first trades’ of oil

EITI’s targeted efforts on commodity trading transparency

EITI’s targeted efforts on commodity trading transparency

• Disclosures by buyers through EITI reporting in Albania,

Chad, Ghana, Iraq and Nigeria

• Some challenges identified: Administrative challenges

related to how data is recorded and identifying SOEs and

third parties acting on behalf of a government

• Some information may need to be disclosed by seller

(contract/invoice #, payment receipt date, etc.)

Commodity Traders vs. SOEs

• Clarity on the objectives is key

• Is the rationale for collecting data from traders just to

corroborate with data from SOEs?

• Adapted framework may be needed for reporting on oil,

gas and mineral sales by sellers and buyers

Work done by Nigeria EITI: Crude sales disclosures: 2015 Oil & Audit

• NEITI reports typically include information on cargo-by-cargo

lifting, bill of lading date, trading company, crude type, crude

volumes sold, unit price, crude value, LC number, pricing option

selected, API and Destination.

• Confirm that federation crude was sold to accredited customers,

correclty invoiced and payment made into JP Morgan.

• Match values from the sales with values swept into Federation

and cash call accounts

• Non-remittance of N490.5 billion from the sales of

domestic crude: Crude and product oil losses,

pipeline repairs and maintenance and subsidy

deduction.

• Pricing methodology was not consistently applied,

leading to a revenue shortage of $90.176 million.

• Inconsistent application of Central Bank exchange

rate leading to underpayment of N4.024 million

Some of the major findings

Lessons learned for disclosures by traders: Identity of Buyer

• NNPC annually publishes a list of approved buyers.

Disclosure of information by buyers could help to

confirmed that federation crude was sold to

accredited customers.

• Understanding more about the companies buying

crude can help to ascertain if they are

inexperienced “briefcase companies”.

• Middlemen who serve no commercial function

creates a marketplace with greater commercial,

reputational and legal risks for its legitimate

participants.

Beneficial ownership and PEPs

• NNPC awards crude oil term contract to local companies.

Beneficial ownership disclosure will show the real owners

behind the companies.

• Information on ownership and involvement by politically

exposed persons (PEPs) can expose risks of intermediaries

facilitating tax avoidance.

• Challenges: Different definitions of

beneficial ownership and PEPs, lack of

awareness and legal framework

mandating disclosures

Payment information

• Fees, charges and credits: Helps validate the actual

payment and compare with balance in the account.

• Invoice amount and sales amount: Establishes if there

are any variance

E.g TEMPO ENERGY NIGERIA LTD -

• Invoice value $47,612,248.33

• Sales value $44,763,749,59

• Difference - $2,848,498.73

Source: NEITI 2015 Oil and Gas Audit Template

• Payment Account: shows that payments are lodged

in the appropriate account. NB: Only the name of the

bank.

• Bill of Lading date and payment due date: Helps

establish when the sale took place, important if

prices change frequently.

Payment information

• Receipts date: Shows adherence to

payment due date, although may need

to be disclosed by seller.

• Moving towards systematic disclosures of sales data

by implementing countries/SOEs and buyers

• Updating disclosure requirements and guidance

based on lessons learned

• Addressing reporting challenges faced by buyers

• Results of targeted efforts to be

launched in March 2019

Next steps for EITI

www.eiti.org@EITIorg

Thank you!

Ines Schjolberg Marques: imarques@eiti.org

Murjanatu Gamawa: mgamawa@eiti.org