EITI Brief

BRIEF

THE EITI, NOCs & THE FIRST TRADE
THE EXTRACTIVE INDUSTRIES TRANSPARENCY
INITIATIVE AS A TOOL FOR IMPROVING
THE TRADING CLIMATE WITH NATIONAL
OIL COMPANIES (NOCs).
EITI International Secretariat

March 2015

This brief is issued by
EITI International Secretariat
Ruseløkkveien 26, 0251 Oslo, Norway
+47 222 00 800
[email protected]

Further information
If you would like further information on this topic, please contact the persons mentioned below.

Bady Balde
Regional Director for Central Africa and Madagascar
[email protected]

Alex Gordy
Country Manager
[email protected]
Front page image: Port oil refinery and terminal. © Shutterstock

2 EITI THE EITI, NOCs & THE FIRST TRADE

TABLE OF CONTENTS

EXECUTIVE SUMMARY

4

MACRO DRIVERS

4

THE EITI

5

NOC DISCLOSURES

5

OPPORTUNITY/COST FOR TRADERS

6

NEXT STEPS

7

DIVERSE LANDSCAPE

7

INDONESIA

8

IRAQ

10

NORWAY

12

REPUBLIC OF THE CONGO

14

EITI THE EITI, NOCs & THE FIRST TRADE 

3

EXECUTIVE SUMMARY
Amidst growing calls for greater transparency
and accountability in oil trading, the Extractive
Industries Transparency Initiative (EITI) has
emerged as a practical, flexible and cost-effective
response. A key feature is that the EITI is owned and
implemented by producer countries, emphasising
collaboration between government, industry and
civil society organisations.
While the EITI does not comprehensively address
commodity trading, disclosures required by
national oil companies (NOCs)1 are bringing
more openness to the “first trade” – the original
transaction between the NOC and an oil trader.
Much is needed to improve governance of global
commodity trading. Disclosure requirements in
the home jurisdictions of trading companies may
contribute, but the EITI’s work in addressing the first
trades by NOCs is essential.

EITI implementing countries are increasingly
engaging trading companies in this process.
Four examples – Indonesia, Iraq, Norway and the
Republic of the Congo – illustrate differing levels of
disclosure and highlight the important role trading
firms can play – and the benefits they can derive –
by supporting the EITI.
Oil traders can earn both reputational and
commercial benefits. Despite concerns over
divulging potentially sensitive commercial
information, all four examples demonstrate that
time delays in disclosures and the participation
of industry has not disadvantaged participating
companies. By supporting the EITI at country level,
oil traders have a seat at the table in developing
clear and consistent reporting mechanisms, and
in informing policy debate in partnership with
government, oil producers and civil society.

MACRO DRIVERS
In many resource-exporting countries,
governments derive the largest share of revenue
from their share of production received “in-kind”
rather than as cash payments. In many oil and gas
producing countries, the NOCs trade this profitoil on behalf of the government. They often act
simultaneously as commercial operators, holders of
government equity stakes, regulators and providers
of social goods like subsidised products. With
some 80% of world petroleum reserves controlled
by state companies and 15 of the 20 largest oil
companies state-owned2, their role in global oil
markets has grown significantly since the era

when the “seven sisters” dominated the global oil
industry3.
Public concern over the role and accountability of
NOCs has grown in line with their expanding share
of oil production globally and with rising oil prices
over the decade to 2014. International organisations
like the IMF, OECD and World Bank, and civil
society organisations like the Natural Resource
Governance Institute (NRGI)4 have highlighted the
need for greater transparency in what are often
weak governance mechanisms to support greater
accountability and improved performance.

1

While the EITI Standard only covers state-owned enterprises, we are studying national oil companies for the purposes of this
article on oil trading in particular.

2

IMF (2012) “Fiscal Regimes for Extractive Industries: Design and Implementation”, Fiscal Affairs Department.
http://www.imf.org/external/np/pp/eng/2012/081512.pdf

3

See for instance http://energyseminar.stanford.edu/sites/all/files/eventpdf/Thurber%20energy%20seminar%20NOCs%
2006Feb2012%20final_0.pdf

4

OECD guidelines on SOE governance; NRGI the Case for Transparency in NOC Crude Sales, NRGI the Governance of Oil Sales;
NRGI How Governments Sell their Oil, NRGI When the Price Is Right; The Berne Declaration and NRGI, Big Spenders Swiss trading
companies, African oil and the risks of opacity.

4 EITI THE EITI, NOCs & THE FIRST TRADE

THE EITI
In contrast to the growing number of ‘home-country
rules’ emerging in major listing jurisdictions such
as Canada, China the EU and US, the EITI is a global
standard to promote openness and accountable
management of natural resources in producing
countries – where companies operate, rather than
where they are listed. The Dodd–Frank Wall Street
Reform and Consumer Protection Act section 1504
requires country-by-country disclosure of payments
to governments for all companies domiciled or
listed in the US, while the EU Transparency Directives
require the same for companies domiciled or
listed in the EU, subject to European country-level
implementing laws required by end-2015. Meanwhile
China’s Guidelines for Social Responsibility in
Outbound Mining Investments encourage Chinese
mining companies to publish payments to
governments on a country-by-country basis. At both
international and national levels, it is structured as
a multi-stakeholder group (MSG) bringing together
government, industry and civil society and is
implemented by 48 countries ranging from Ghana,
Indonesia, Iraq, Kazakhstan to Nigeria, Norway, the
Republic of the Congo and the United States. It
is supported by 90 of the world’s largest mining,
oil and gas companies, 17 supporting countries,
21 international organisations and 95 blue-chip
institutional investors representing over
US$ 19 trillion in assets under management.

The world’s third-largest commodities trader,
Trafigura, became the first dedicated trading firm to
support the EITI in 20145, committing to disclosures
commensurate with the EITI in all implementing
countries.
The EITI Standard, adopted in 2013, ensures not
only disclosure of taxes and other payments
made by extractive industry companies to the
government that implements it, but also in
extractive industry licensing, production, revenue
collection, revenue allocation and the role of NOCs.
The national MSGs in each of the 48 implementing
countries constitute forums for the evolving
international debate on enhanced transparency
and accountability in extractive industries and
serve to strengthen government and company
systems, inform public debate and enhance trust.
While countries voluntarily commit to implement
the EITI, once a country joins, all companies are
required to disclose their material payments to
the government, and all government agencies
that receive these payments are required to
disclose their revenues. Indeed EITI disclosure is
mandated by law, decrees, regulations or PSAs in
most implementing countries. An Independent
Administrator then reconciles these figures using
international reporting standards in the country’s
annual EITI Report, with an assessment of the
comprehensiveness and reliability of the figures.

NOC DISCLOSURES
The EITI Standard’s fourth requirement on
comprehensive disclosure of all material payments
to government in mining, oil and gas also covers
sales of the state’s share of production and other
‘in-kind’ revenues. This section (requirement 4.1.c) is
the most relevant to oil traders:

“ 

 here the sale of the state’s share of production
W
or other revenues collected in-kind is material,
the government, including state owned
enterprises, are required to disclose the volumes
sold and revenues received. 

”

Once the MSG agrees on the (material) threshold
above which payments are deemed significant

enough to be included in the report, the government
and its NOCs must disclose all volumes sold and
the revenue received. Indeed they must disclose
these figures in as much detail – or disaggregation
– as all other payments published under the
EITI in the country (encouraged under 5.2.e). All
government and NOC sales deemed material must
be covered, from exports to sales to domestic
buyers and refineries. Oil sales are typically above
the materiality threshold, which defines payments
deemed significant enough to cover. For traders,
this means that NOCs will disclose the sales side
of a transaction, which may not be as adequately
contextualised as they would with traders’ input.

5 http://www.trafigura.com/media/1599/20141112-trafigura-payments-to-governments-policy.pdf

EITI THE EITI, NOCs & THE FIRST TRADE 

5

The process can go beyond these minimum
requirements. The MSG can agree to require
disclosures and publication of data by type and
grade of product, price, market and sale volume.
The EITI Standard encourages the MSG to include
buyers in the process, and to task the Independent
Administrator with reconciling government and
NOC disclosures with disclosures from buyers.
The data from buyers can be used to verify the
disclosures from the government and NOCs, and
ensures that all parties are transparent about their
activities.
The EITI also requires governments to reveal a more
comprehensive picture of how their NOCs operate.
The EITI Reports should include a clear description
of the institutional arrangements governing the
state’s role in the extractive industries, ranging

from the legal framework and fiscal regime (under
requirement 3.2) to the financial relationship
between government and its NOCs. This includes
the rules and practices covering payments, retained
earnings, reinvestment, third-party financing,
loans and loan guarantees (under 3.6.a). Finally,
the NOCs must report all non-commercial (quasifiscal) spending covering social services, public
infrastructure, fuel subsidies and national debt
servicing (under 3.6.b). Given the flexibility afforded
to MSGs to go beyond minimum requirements,
the EITI has issued a guidance note (number 18)
on state-owned enterprise participation in EITI
reporting to support and frame the MSGs’ work on
such reporting. Such disclosures are set within the
context of respect for contracts and relevant laws
of course (under principle 6).

OPPORTUNITY/COST FOR TRADERS
These four case studies of EITI reporting related to
NOCs and initial oil trades reveal a broad range of
scenarios and highlight the contribution oil traders
can make both in strengthening reporting and in
deriving benefit from these emerging transparency
trends. Participation in the EITI also yields important
reputational benefits for traders. Indeed they are
supporting citizens in EITI implementing countries
to ensure high standards of transparency and
accountability in the trading of natural resources. Yet
there is an equally strong business case for traders to
support the EITI. The EITI complements the various
mandatory disclosure requirements for extractive
companies around the world such as the DoddFrank Act 1504 in the United States, the Transparency
Directive in the European Union, and the Guidelines
for Social Responsibility in Outbound Mining
Investments in the People’s Republic of China.
Unlike those, compliance with the EITI Standard is
a requirement for companies in their country of
operation, not origin. There is a growing body of
trading data in the public domain – through direct
and indirect disclosures through the EITI as well as
unilaterally by reporting agencies as in the case of
the Republic of the Congo. The EITI process is a tool
for appropriately contextualising data disclosed
by both NOCs and traders. It minimises the risk of
the data – and the deals supporting them – being
taken out of context and potentially being unduly

6 EITI THE EITI, NOCs & THE FIRST TRADE

questioned. Working with the EITI gives oil traders
a permanent means of shaping the development
of disclosure standards and informing the policy
debate in partnership with government, oil
producers and civil society. Trafigura was the first
dedicated commodities trader to officially declare
support to the EITI, joining oil-producing members
like BP, Chevron, Shell and Total that operate
significant in-house trading arms of their own.
Becoming an EITI Supporting Company does
not require additional reporting or disclosure of
payments beyond that required for all companies
operating in countries that implement EITI. A
Supporting Company publicly supports the EITI
and helps promote the Standard globally and in
countries where it operates. In practice, and as is
revealed in Trafigura’s existing annual reporting,
global oil traders only buy a small share of their
physical crude oil from NOCs. While smaller than
other trades, these “first trades” carry significant
risk, both reputational and commercial. Having
become an EITI supporting company in 2014,
Trafigura published its policy on payments to
governments in consultation with the Oslo-based
EITI International Secretariat and will publish these
figures in its next annual report in December 2015.
This effort by the world’s third-largest commodity
trader has demonstrated that such transparency
disclosures are commercially viable.

NEXT STEPS
Discussions to extend trading-related reporting
requirements and NOCs’ disclosures of
disaggregated sales data in producing countries in
16 EITI countries including Chad, Indonesia, Nigeria
and the Republic of the Congo are on-going. This
is an opportune time for commodity traders to join
the debate by actively supporting the EITI. In EITI
implementing countries that choose to include
buyers in the reporting requirements, traders’
disclosure of payments to governments becomes
mandatory regardless of corporate policies at
the global level. In parallel, as global commodity
traders including Trafigura, Gunvor and Louis
Dreyfus Commodities expand their access to global
capital markets through equity and fixed-income
debt issuance, formulating transparency policies
increasingly yields direct financial rewards in terms
of cost of financing. Leading commodity traders
publicly formulating new transparency policies,

including Gunvor’s announcement that it was
“considering joining the EITI” and Vitol’s intention
to comply with the Netherlands’ implementation of
the EU Accounting Directives.6 The EITI International
Secretariat is thus expanding its outreach to Swissbased commodities traders in 2015, particularly
through the industry Swiss Trading and Shipping
Association (STSA), to demonstrate what EITI
reporting of “first trades” means in practice for
commodity traders and how the EITI provides a
forum for key stakeholders to discuss the topic.
The International Secretariat is also updating its
guidance for countries implementing the EITI and
supporting the sharing of best practice in NOC
disclosures. The following four case studies reveal
that best practice may not always come from
countries one would suspect, like Norway, and that
the breadth of EITI experiences could benefit from
more consistent implementation.

DIVERSE LANDSCAPE
The landscape of EITI implementing countries spans
a broad range of different market structures and
scopes for EITI reporting. To date Indonesia, Iraq,
Norway and The Republic of Congo feature among
the EITI members that disclose some information
on the revenues derived from state oil and gas
sales, with others set to follow. In countries like
Chad, the NOC sells to only a handful of buyers,
while in others like Iraq, sales data is collected and
reconciled from close to 40 buyers. The diversity
of ownership, regulation and market structures
means that the reporting burden on implementing
countries is uneven, depending on the level of
state participation in the oil sector and the relevant
institutional arrangements. In all, 19 EITI countries
had published reports by early 2015 in which NOCs
play a significant role in their extractive industries.7
The following four examples reveal the width
and breadth of market structures and differing
approaches to EITI reporting on oil sales.
6

As quoted in Bloomberg: http://www.bloomberg.com/news/articles/2014-11-18/trafigura-raises-disclosure-bar-as-traders-facegreater-scrutiny

7

Albania, Azerbaijan, Cameroon, Chad, Côte d’Ivoire, Democratic Republic of Congo, Ghana, Indonesia, Iraq, Kazakhstan, Kyrgyz
Republic, Mauritania, Mozambique, Nigeria, Norway, Republic of the Congo, Timor Leste, Trinidad and Tobago and Yemen.

EITI THE EITI, NOCs & THE FIRST TRADE 

7

INDONESIA
Indonesia is a pertinent first example of limited
disclosures of oil sales figures. Sales of Indonesia’s
share of oil production accounted for roughly 50%
of total oil revenues in 2011, according to its 2011 EITI
Report. Although prepared under the former, less
comprehensive, EITI Rules, the report nonetheless
covers sales of the government’s “in-kind” share of oil
and gas. Established in 1968, Pertamina is Indonesia’s
sole NOC and ranks as the country’s second-largest
crude oil producer8, according to the overview of
Pertamina’s history, role and mandate included in
the EITI report. Originally tasked with oversight of
production-sharing agreements (PSAs) as well as
carrying out exploration and production activities,
refining, transport and marketing of Indonesian
oil and gas, reforms in 2011 limited Pertamina’s
involvement to being a contractor to PSAs and a
holder of state equity stakes in oil and gas fields.
The 2011 Law on Oil and Gas segregated Pertamina’s
former regulatory, monitoring and controlling
functions to the executive agency BP Migas (now
SKK Migas) and the regulator BPH Migas.
Although the 2011 EITI Report does not explain
the rules and practices covering the financial
relations between the government and NOCs
(this will be included in the forthcoming 2012 EITI
report), Pertamina publishes annual reports with
information about its operations and subsidiaries,
including cash-flow statements, which are audited
by the State Audit Board (BPK-RI). Production sharing
between oil producers and government takes place
“in-kind”, which means that Pertamina receives the
government’s share of output as physical crude from
the PSA operator. While most of this oil is transferred
to Pertamina’s domestic refineries, with proceeds
remitted by Pertamina to the Treasury account in
the central bank (Bank Indonesia), the remainder is
sold on international markets through the NOC’s
marketing arm Pertamina Energy Trading Ltd. (Petral),
incorporated in Hong Kong but operating out of
Singapore, or through other private marketing
companies appointed by SKK Migas. The proceeds
of such oil exports are transferred to Indonesia’s
account at the Federal Reserve Bank of New York and
subsequently used by the government to pay for its
obligations in the oil and gas sector (reimbursement
of VAT, regional taxes and retributions, DMO fee,
contractor under lifting etc.) and overseen by SKK
8

After Chevron.

8 EITI THE EITI, NOCs & THE FIRST TRADE

Migas. Once such obligations are deducted, the
balance is then remitted onshore to the Treasury
account at Bank Indonesia.
The 2011 EITI Report includes some information on
these transactions, on which future reports under
the Standard are expected to expand.
• Operating oil companies reported on total
production volumes, disaggregated by PSA,
which were then reconciled with production
figures from the Ministry of Energy and Mineral
Resources. Total production was reported as
327 million barrels in 2011.
• The report also reconciled the figures for
physical volumes transferred by oil producers
to government with those received by
government for its “in-kind” share of production,
disaggregated by PSA, which amounted to
187 million barrels in 2011. There was only one
discrepancy of 248 barrels in one PSA.
• The regulator SKK Migas disclosed revenues
received from selling this oil both domestically
and in export markets, which were then
reconciled with Ministry of Finance figures after
relevant deductions noted above. While these
are essentially government-to-government
transfers, all figures are disaggregated by market
(export and domestic) and by PSA. The EITI
Report sets domestic oil sales revenues at
USD 17 billion and export proceeds at
USD 5 billion in 2011, with no discrepancy.
Upcoming reports covering 2012 and 2013, under the
EITI Standard, will go further in disclosing oil sales
figures. This will include explanations of the rules
and practices covering financial relations between
the government and Pertamina and an assessment
of NOCs’ audit and quality assurance procedures
(under requirement 5). Beyond these mandatory
requirements, the MSG could also choose to have
SKK Migas publish the names of companies buying
oil and could require buyers to disclose transaction
figures to reconcile oil sales figures. It could also
require figures to be disaggregated by product type,
price, date of sale and more granularity in identifying
export markets. In light of the government’s plans
to reform Petral’s oil trading role, the MSG could also
expand EITI reporting on license allocations by
SKK Migas to those covering oil trading.

Table 1 – Overview of oil sales reporting in Indonesia’s 2011 EITI Report.
Transaction

Disclosure or Reconciliation

Disaggregation of data

Oil volumes transferred from
producers to Pertamina

Reconciled

Disaggregated by PSA

Volume of oil sold by Pertamina
to domestic refineriess

Disclosed by SKK Migas

Disaggregated by PSA

Volume of oil sold by Pertamina
to international markets

Disclosed by SKK Migas

Disaggregated by PSA

Revenues transferred from
Pertamina to the state treasury

Reconciled

Disaggregated by market
and PSA

Figure 1 – The role of the NOC in the oil trade in Indonesia.

Indonesia

State treasury

SKK Migas

International
oil traders

Operators

Pertamina

Domestic refineries
(owned by
Pertamina)

State-owned
entreprises

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IRAQ
Iraq has gone beyond basic EITI reporting
requirements by including reconciled oil sales
figures in its reports. Iraq’s extractive industries are
wholly state-owned and subject to audits by the
Board of Supreme Audit. Central to government
finances, oil and gas account for roughly 50% of
GDP, 99% of exports and 97% of fiscal revenues. The
Ministry of Oil (MoO) handles all aspects of policy,
regulation, exploration, production and marketing
of oil and gas, while four NOCs9 produce the oil and
the State Organization for Marketing of Oil (SOMO)
handles exports on the government’s behalf. Given
the state’s dominant role, the four EITI Reports
published covering fiscal years 2009-2012 include
reconciliation of oil sales disaggregated by buyer
and the four main export regions10. The reports
also include a description of the sales process, with
a crude oil sale contract template in the annex,
SOMO and MoO’s trader selection process and
average monthly prices.
The reports contain detailed descriptions of
the domestic sales process. Oil for domestic
consumption is transported through state-owned
Oil Pipelines Co. to domestic refiners, where it is
processed into finished products and marketed
by state-owned Iraqi Oil Distribution Co. Proceeds
from domestic sales are then remitted by the stateowned Oil Products Distribution Co. to the Ministry
of Finance. Although the 2012 EITI Report does
not include net revenue from oil products sales to
the domestic market or total extractive industries
revenue, reports do include reconciliation of:

Exports accounted for 80% of oil output in 2010
(690 million barrels) and 84% in both 2011 and
2012 (787.5 million barrels and 886.9 million barrels
respectively). Oil export revenues more than
doubled over the four years covered by Iraq’s
EITI reports, from USD 41 billion in 2009 to
USD 94 billion in 2012. Meanwhile domestic oil
sales revenue dropped over the three years for
which such data was included in EITI reports, from
USD 2.4 billion in 2009 to USD 1.7 billion in 2011.
Information on the geographic spread of exports in
2012 reveals that over half (52%) of exported oil was
sold to Asia, 22% to Europe and 26% to the United
States. The report also disaggregated oil exports by
buyers, of which there were 43 in 2012, by month,
by producing company and by field.
Iraq has set an example in previous reports
by disclosing crude oil export revenues and
reconciling these flows with company sales data
and its 2012 report, the first under the EITI Standard,
includes information on “in-kind” revenues (under
requirement 4.1.c). While the 2012 report clearly
defines the price-setting mechanism for exported
crude, future reports could go further in disclosing
information on factors linked to domestic oil
sales revenues. They could also build on existing
reconciled sales figures by buyer by further
disaggregating figures shipment-by-shipment
with information relating to crude grades, sales
prices and dates of sales, as well as specific export
markets.

• Crude oil and natural gas quantities supplied to
Electricity Generation Directorates, for 2012,
• Net revenue from sale of oil products to the
local market, for 2009-2012,
• Natural gas quantities supplied to state-owned
companies that consumed natural gas, for 2012.

9

South Oil Company, North Oil Company, Missan Oil Company and Midland Oil Company, established and regulated under the
Public Companies Law No. 22 of 1997.

10 North America, Europe, Asia and the special bilateral deal with Jordan.

10 EITI THE EITI, NOCs & THE FIRST TRADE

Table 2 – Overview of oil sales reporting in Iraq’s 2011 EITI Report.
Transaction

Disclosure or Reconciliation

Disaggregation of data

Volume of oil transferred
between producers and SOMO

Reconciled

By company

Volume of oil sold by SOMO to
international markets

Disclosed by SOMO and traders
and reconciled

Disaggregated by trading
company

Volume of oil sold by stateowned operators for domestic
consumption

Undisclosed

N/A

Revenues transferred from
international trading companies
to the state treasury

Disclosed

Disaggregated by trading
company

Revenues transferred from Oil
Products Distribution Company
for domestic sales to the state
treasury

Undisclosed

N/A

Iraq
Figure 2 – The role of the NOC in the oil trade in Iraq.
State-owned
operators

International
oil traders

Northern Oil
Company
Iraq Oil
Marketing
Company
(SOMO)

Midland Oil
Company

Development
Fund for Iraq

State
treasury
South Oil
Company

Missan Oil
Company
Oil Pipelines
Company

Domestic
refineries

Oil Products
Distribution
Company

Domestic
market

State-owned entreprises

EITI THE EITI, NOCs & THE FIRST TRADE 

11

NORWAY
The first OECD country to implement the EITI,
Norway provides an illustration of oil sales
disclosures that are not reconciled with figures from
buyers. While not publicly disclosing details of the
“first trade”, Norway claims to have credible checks
and balances on oil sales procedures. Oil and
gas production from the Norwegian continental
shelf accounts for the single largest sector of the
Norwegian economy, 22.4% of GDP in 2013. Of
the 56 companies with operating licenses, 37 of
which operate one or more licenses, the state
holds a direct stake in a third of the licenses. The
three largest taxpayers in the sector are stateowned Statoil, which also has a 33% free-float split
between the Oslo and New York stock exchanges,
ExxonMobil and Total.
Norway’s 2013 EITI Report provides extensive
details on the rules and practices surrounding the
financial relationship between government and
state enterprises. Norway does not structure its oil
developments as PSAs and thus the government
does not collect “in-kind” revenues. Rather, the
government structures its participation as direct
financial investments at varying levels, at around
20% equity stakes on average, on par with any other
commercial shareholders and participates in both
costs and production. The state-owned Petoro has
managed the portfolio of state equity stakes since
2001. Statoil, which is 67%-owned by the government
through the Ministry of Petroleum and Energy,
operates as a commercial developer. Dividends paid
by Statoil to the state form only a small component of
government revenues from the sector, at only 3.5% of
total government revenue in 2013.
The state’s share of total oil and gas production in
2013 reached 1.034 million barrels of oil equivalent
per day, according to Petoro’s annual reporting11,
which is then marketed and sold by Statoil on the
government’s behalf, with revenues then remitted
to the Government Pension Fund Global’s account
at the central bank (Norges Bank). These cash flows
are then reported annually under the EITI process.
According to its 2013 annual report, Petoro, which
monitors Statoil’s oil sales but does not provide

disaggregated details by buyer, reported revenue
from oil sales at NOK 157.8 billion, of which NOK
33.6 billion was reinvested. The government’s net
earnings from oil sales were thus NOK 124.8 billion,
or roughly 40% of total government revenues from
the sector.
The EITI Reports cover how Statoil markets the
state’s share of oil output and include reconciliation
of figures for both foreign- and local-currency
payments from Statoil and Petoro to Norges Bank.
These payments are generated by combining
Statoil’s sales of the state’s oil with other payments
by Petoro – mainly tariff revenues, dividends
and net profit interest – and are then compared
with Norges Bank figures. However there is no
reconciliation of volumes and revenues for state
oil sold with figures from buyers, who are not
covered by the reporting process. While figures on
volumes and value are comprehensively verified,
the information is only disclosed in aggregate
with only very limited details on oil trading.
Although the Independent Administrator, Deloitte,
certifies its own work according to International
Auditing Standards (under ISRS 4400), it does not
provide quality assurances for the underlying data
given that the EITI Report is not an audit under
international standards.12
Beyond aggregate disclosures of oil sales figures, the
2013 EITI Report provides details on ownership of
petroleum assets, including those concerning NOCs.
It describes the Petroleum Register (requirement
3.9), which is an online license repository (www.npd.
no) that discloses detailed and updated information
on first-tier ownership of all licenses, alongside other
sources on ownership information. The register
includes all blocks in which the state holds a stake,
covers work-plans and investment obligations and
is updated for transactions in real-time. The EITI
Report also describes the government’s equity
stake in Statoil, which was unchanged in 2013, while
Statoil discloses its to 20 shareholders on its website.
The state does not extend loans or loan guarantees
to any companies in Norway’s mining, oil and gas
sectors.

11 https://www.petoro.no/petoro-aarsrapport/2013/om/nokkeltall
12 As Deloitte notes: “The objective of this report is to enhance transparency within the petroleum industry. Our procedures are not
designed to identify fraud or misstatements made by licensees and government bodies. The report includes only those items
specified and do not include financial statements of the entities that have been reported as a whole.”

12 EITI THE EITI, NOCs & THE FIRST TRADE

Table 3 – Overview of EITI disclosures and publicly available information in Norway.
Aspect/Transaction

Disclosure or Reconciliation

Disaggregation of data

Production volume in fields with
State’s Direct Financial Interest

Disclosed by Petoro and in the
Petroleum Registry.

Annual production
disaggregated by field.

Transfer of State Direct Financial
Investment from operators to
Statoil

Not disclosed, but can easily
be calculated from production
volume data disclosed by Petoro
and in the Petroleum Registry.

Annual production
disaggregated by field

Sale of State Direct Financial
Investment by Statoil

Proceeds disclosed by Petoro

Aggregate value

Transfer of funds from Statoil to
the Central Bank

Reconciled (in EITI Report)

Aggregate values

Figure 3 – The role of the NOC in the oil trade in Norway.
Norway

Government
Pension Fund
Global

Operators
International and
domestic oil traders

Operators of fields
where the State has
a direct financial
investment
Statoil

Domestic refineries

EITI THE EITI, NOCs & THE FIRST TRADE 

13

REPUBLIC OF THE CONGO
A pioneer of more timely disclosures on NOC oil
sales is the Republic of the Congo, which provides
quarterly figures within a year of sales. The
country’s latest EITI Report covering 2013 confirms
the economy’s high reliance on oil revenues, which
accounted for 76% of total budget revenue. While
the Republic of the Congo has published EITI
Reports covering ten fiscal years, those reports
covering 2011, 2012 and 2013 provide information
on the legal and regulatory frameworks governing
the mining, oil and gas sectors. They clearly
delineate the role of state-owned SNPC (Société
Nationale des Pétroles du Congo) in managing the
state’s interest in the oil sector and the monitoring
systems for the NOC’s operations. Created in 1998
with the mandate of managing the state interests
(both direct and indirect) in the oil and gas
industry, SNPC is wholly state-owned and operates
under the Ministry of Hydrocarbons. The SNPC
represents the state’s interests in all third-party
contractual negotiations, including those with
oil traders, through its five subsidiaries (Sonarep,
SFP, ILOGS, CORAF, CRS-Distribution) covering the
entire oil industry value chain. The NOC receives
oil through PSAs, direct state equity stakes and
royalties from concessions granted to international
oil companies. It signs PSAs on behalf of the
government and shares the costs of production
in-kind – through “cost oil” – and shares in the
profits – through “profit oil”. PSAs are approved
by a law, which is subject to publication in the
Officiel Journal of the Republic. According to the
2013 Report, only “some” PSA in the hydrocarbon
sector are published on the EITI Congo website.13
Alongside PSAs, SNPC also holds stakes in jointventures with oil companies to develop several
significant oil fields (including Azurite, Djambala,
Emeraude, Foukanda, Kitina, Moho-Bilon-do,
Mwafi, Nkossa and Nsoko) and receives a share of
oil output as a result. Finally, SNPC also collects
royalties from state concessions to oil companies
“in-kind”, as physical crude oil.

The EITI Report also includes several promising
elements related to oil trading. SNPC sells most
(roughly 90%) of its oil on international markets,
remitting the proceeds to the Treasury. The
remainder (around 10%) is transferred to SNPC’s
refining subsidiary (CORAF) and sold at a subsidised
price on the domestic market. In July 2014 figures
showing how Congo’s NOC collected and sold its
oil in 2013 were published. These reports reveal
the amount of oil SNPC receives from operators
in line with their PSAs, the prices at which the
oil is then sold to SNPC and the revenues then
transferred to the Treasury, on a quarterly basis.
The 2013 EITI Report includes reconciled quarterly
figures of oil transferred to SNPC disclosed by both
oil companies and the NOC. It also discloses the
total volumes of oil produced and transferred to
SNPC as well as the allocations between domestic
refining and international exports, including
revenues earmarked for the repayment of loans
used for infrastructure development. In total, SNPC
received 49 million barrels of oil from operating oil
companies. The quarterly figures are disaggregated
by crude oil grades (with Congo producing four
blends – Azurite, Djeno, Nkossa and Yombo) and by
sales price determined shipment-by-shipment. The
quarterly disclosures include the corresponding
payment to the Treasury, net of SNPC’s fees, but
these disclosures are unilaterally disclosed by the
NOC and not reconciled with Treasury figures.
While the Republic of the Congo has led in
disclosure of oil sales, there is less clarity on the
financial relationship between the government
and SNPC, particularly on the practices covering
the use of retained earnings, reinvestment, thirdparty financing, loan repayments and transactions
between SNPC and its subsidiaries refining and
selling oil domestically. The financial relationship
between SNPC and its refining subsidiary CORAF
also remains unclear, with reports showing oil
deliveries from SNPC to the refiner but not any
payments from CORAF to the government.

13 PSAs are published on the EITI Congo website http://www.itie-ongo.org/index.php?option=com_
content&view=article&id=102&Itemid=127 (accessed on 30 January 2015).

14 EITI THE EITI, NOCs & THE FIRST TRADE

More work could also focus on reconciling
quarterly SNPC disclosures with annual EITI Reports
to explain any discrepancy between the two.
Although EITI Reports include some information
on the provisions for repaying loans used for
infrastructure development, they do not cover
information clarifying the terms of the loans, their

tenure or the counterparties involved. Finally,
while the Independent Administrator Fair Links
states the “EITI declarations received allow us to
reasonably conclude”14 a set level of payments, it
could go further in providing more concrete quality
assurance in line with the EITI Standard.

Table 4 – Overview of EITI disclosures in the Republic of the Congo’s 2013 EITI Report.
Transaction

Disclosure or Reconciliation

Disaggregation of data

Oil transferred between
producers and SNPC

Reconciled in the quarterly
reports.

By PSA in the quarterly reports.

Volume of oil sold by SNPC
to international markets

Disclosed by SNPC in quarterly
and annual EITI Report.
(No participation or reconciliation
with buyers).

Disaggregated shipment by
shipment in the quarterly reports.

Volume of oil transferred by SNPC
to its domestic Refinery (CORAF)

Disclosed by SNPC in quarterly
and annual EITI Report.

Quarterly and annual
aggregate figure.

Revenues received by SNPC
from the sale of oil

Disclosed by SNPC in quarterly
and annual EITI Report.

Disaggregated by shipment and
by blend in the quarterly reports.
Aggregate figure in the EITI Report.

Revenues received by SNPC
from the sale of oil for domestic
consumption.

Not disclosed.

Revenues transferred from
SNPC to the state treasury
(or to sequester account
earmarked for loan repayments)

Reconciled.

Disaggregated by date of transfer
and by shipment of oil in the
quarterly reports. Aggregate
figure in the EITI Report.

14 EITI Congo 2012 Report Fair Links September 2013, page 6. Fair Links made a similar statement for 2013 data.

EITI THE EITI, NOCs & THE FIRST TRADE 

15

Figure 4 – The role of the NOC in the oil trade in the Republic of the Congo.

epublic of the Congo

State treasury

Operators

State-owned enterprises

Société Nationale
des Pétroles du Congo
(SNCP)

Congolaise de Raffinage
(Coraf)

16 EITI THE EITI, NOCs & THE FIRST TRADE

International
oil traders

The EITI (Extractive Industries Transparency
Initiative) is a global standard that improves
transparency and accountable governance
of oil, gas and mineral resources. The
standard is implemented by governments,
in collaboration with companies and civil
society.
Countries implementing the EITI disclose
information on issues such as tax payments,
licenses, contracts, production and national
oil companies.

www.eiti.org
Twitter: @ EITIorg