Int’l Anticorruption team advises Guyana… Establish independent team to monitor oil production

Apr 29, 2018 News

Peter Drucker was right when he wrote: “What gets measured gets managed.” This has been found to be an apt statement, especially when it comes to ensuring the accurate metering and reporting of petroleum production by oil companies.
In fact, several anticorruption agencies have been warning nations on the road to first oil, like Guyana, to be vigilant when it comes to the determination of the volume of oil produced.
The Canada-based organization, Publish What You Pay (PWYP), has published a detailed report documenting how many countries have suffered for failing to have an independent team monitoring the oil being metered and assessed by oil companies.
Publish What You Pay is the world’s leading coalition of civil society organizations united in the call for a more transparent and accountable extractive sector.
With more than 800 members, a global secretariat and 40 national coalitions that span the globe, PWYP has committed to working together to ensure that citizens have a say over whether their resources are extracted, how they are extracted and how their revenues are spent.
In its latest report, PWYP explained that the determination of the volume of petroleum produced is easier than most minerals as the methodologies for measurement are widely accepted. It noted however that “careful government monitoring is essential”.
In this regard, the organization said that the Norwegian government, for example, employs five individuals to ensure the accurate metering of petroleum production and export.
In fact, the Norwegian Petroleum Directorate notes that “even small deviations in the volume of production can have a significant impact on government revenues.”
In their example, an error of just 0.35 percent at one of their metering stations would amount to a loss of four million NOK (US$660,000).
PWYP also stated that ensuring fair taxation depends not only on tracking the volumes of the resource produced, but also that they are applied against each relevant fiscal instrument.
Furthermore, the anticorruption entity stressed that the solution to protecting government revenues from under-reporting of production by oil companies is effective monitoring of both the quantity and quality of the natural resources extracted and exported.
It said that while this may seem obvious, in many jurisdictions reporting on production is based on self-assessment and there is little government oversight. A failure to address this it said, has resulted in oil producing nations losing billions of dollars in profits.
It highlighted that Tanzania paid dearly for this and only recently began tracking the quantity and quality of mineral and oil production with the creation of the Tanzania Audit Agency.
Zambia was also rowing in the same and recently launched a project to independently monitor its resource production.

Discover more from Kaieteur News

Subscribe to get the latest posts sent to your email.

Latest News