New EITI Standards require countries to verify production data by all mining companies

Dec 18, 2023 News

---

Kaieteur News – The Extractive Industries and Transparency Initiative (EITI), a global watchdog institution for the mining industries, have issued new standards which compel implementing countries to verify production data reported by companies.

00This organization has a strong focus on promoting the understanding of natural resource management, strengthening of public and corporate governance and providing the data to inform greater transparency and accountability in the extractive sector.

Notably, mineral-rich Guyana became a member of EITI in October, 2017. The country has been extracting gold, diamond, bauxite, manganese and more recently oil and gas- all non-renewable resources.

The 2023 EITI Standards now require countries to disclose proven economic oil, gas or mineral reserves along with verification methods for production data accuracy. The body noted that this new requirement is aimed at mitigating corruption risks associated with “reserves speculation” as well as potential revenue leakages.

According to the new standards, “Implementing countries are required to disclose existing mechanisms to monitor and verify the accuracy of production data and document findings, including any weaknesses related to the comprehensiveness and reliability of publicly available production data.”

It must be noted that the main driver of this country’s economy is the oil and gas sector. Since the startup of oil production in 2019, the sector has raked in just over US$3 billion, as at September, 2023, according to data from the Bank of Guyana (BoG). The country is yet to however implement an independent system to monitor the daily production rates. Currently, three Floating Production Storage and Offloading (FPSO) vessels are being operated offshore Guyana by American oil giant, ExxonMobil. The Government said now that the legal framework has been established for the prudent management of the sector, it will not turn its attention to acquiring its own tools to monitor the number of barrels being produced daily.

In the absence of independent meters to monitor the daily oil production, stakeholders fear that the country could lose thousands of barrels daily. Presently, the nation relies on production statistics provided by ExxonMobil.

It must be noted however that these new standards will not only apply to the oil and gas sector, but the traditional mining sectors as well.

According to the EITI, “The objective of this requirement is to ensure public understanding of extractive commodity (ies) production levels and the valuation of extractive commodity output, as a basis for assessing expected government revenues from the extractive industries and the potential for government revenue leakages linked to under-reported production.”

Consequently, the 2023 Extractive Industries Transparency Initiative Standards states: “(a) Implementing countries are required to disclose timely production data, including production volumes and values by commodity. Data must be further disaggregated by project, where available. An estimate of production resulting from artisanal and small-scale activities must be disclosed where applicable and available.”

Additionally, it notes: “(b) The sources of and the methods for calculating production volumes and values must be disclosed. Implementing countries are required to disclose existing mechanisms to monitor and verify the accuracy of production data and document findings, including any weaknesses related to the comprehensiveness and reliability of publicly available production data.”

Meanwhile, implementing countries will also be expected to present production data using national and international commodity classification standards.

EITI also sets out new requirements for companies operating in the mining industry. It now encourages those firms to disclose realised sales volumes and values by project.

About the EITI

Extractive Industries Transparency Initiative (EITI) was first announced at the World Summit on Sustainable Development in Johannesburg in 2002 (the Earth Summit 2002) and was officially launched in London in 2003. EITI is currently being implemented in 57 countries in Africa, Asia, Europe, the Pacific, North and South America, and the Caribbean.

The EITI Standard sets out the requirements which countries need to meet in order to be recognised, first as an EITI implementing country and subsequently assessed against the EITI Standard. The Standard is overseen by the EITI Board, which comprises members from governments, extractive companies, and civil society.

 

---

• EITI, Mining, Monitor, oil, production, standard, verify

---