Pressure mounts over Statoil agreement

An offshore gas and oil rig.

Dar es Salaam. Pressure is mounting on the Norwegian oil company, Statoil, over the alleged leaked details of a contract between it and the government.

A consortium of four civil society organisations (CSOs) has teamed up and issued a statement on the controversy surrounding the leaked addendum to a production sharing agreement (PSA) between Statoil and the government.

The consortium comprises Interfaith Standing Committee on Economic Justice and the Integrity of Creation, HakiMadini, Policy Forum, as well as Oil and Natural Gas Environment Alliance (Ongea).

It wants all oil, gas and mining companies operating in Tanzania and the government to review all confidentiality provisions in the existing extractive resource contracts.

The CSOs say this is in the public interest and stress that the State should refrain from endorsing such provisions in any future contract.

The new development has been prompted by revelations that the leaked document was missing the proposed profit sharing agreement.

"The shallow reaction from the government and non-reaction at all from Statoil leaves ample room for speculation and suspicions. The government reaction issued through a press release by Tanzania Petroleum Development Corporation (TPDC) indicates that the terms of the said PSA are fair to the country quoting 61 per cent government take,'' reads the CSOs statement in part.

The statement adds that the 50.5 trillion cubic feet could not have been discovered, hence attributing all discoveries to Statoil. This, in the consortium's view, raises the question whether the deviation is a bonus to Statoil for the presumed achievement.

It also laments that the TPDC statement doesn't provide information on the underlying economic rationale and assumptions applied to justify neither deviation from model addendum to PSA nor the actual terms of the signed PSA.

The lobby groups also charged that the conspicuous silence by Statoil on the matter threatens not only its corporate reputation and integrity but also that of the home country (Norway) as champion of transparency in the extractive industry.

In an early analysis of the StatOil deal, Dar blogger Ben Taylor argues that if the contract is fully implemented, the government could lose between $400 million (Sh672 billion) and a whopping $1 billion (Sh1.68 trillion) yearly.

Last week, Kigoma North MP Zitto Kabwe raised the red flag again over the StatOil/Exxon Mobil deal, claiming that it would cost the country a staggering loss of $55 billion (Sh92 trillion) should it sail through.

Mr Kabwe, who is also the Public Accounts Committee (PAC) chairman, said the loss, massive as it is, is just gross value calculated without considering factors such as inflation in the 15 years of the licence period.

His claim that is contained in a 15-page document, came up as another UK-based gas firm, British Gas (BG), announced last week that it had produced higher-than-expected flows of gas from a test well off the coast of Tanzania-boosting the financial viability of its planned liquefied natural gas (LNG) export terminal.


Source:thecitizen

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NO. The spirit of confidentiality is to protect business secrets so that they may not fall in the hands of competitors, and not to protect the sickly conceived provisions which deprive one party to the contract economic or any other benefits through corruption.

Our Government officials and politicians are way short of national patriotism, they are selfish and crooks, to them, confidentiality is an opportunity to steal.

Sangarara said:

Our Government officials and politicians are way short to national patriotism, they are selfish and crooks, to them, confidentiality is an opportunity to steal.

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Infact, my concern, also a concern for other well-wishers of this beautiful country of ours, are those last two sentences above. And, things have gone from BAD to WORSE in the constitutional assembly, where members have deleted from the draft constitution the clauses related to accountability and ethics with regard to public resources.

Idimi said:

Infact, my concern, also a concern for other well-wishers of this beautiful country of ours, are those last two sentences above. And, things have gone from BAD to WORSE in the constitutional assembly, where members have deleted from the draft constitution the clauses related to accountability and ethics with regard to public resources.

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Politicians are a cause of all these, can you imagine chairman of PAC is commenting on serious issues like this on face book and his personal blog as if He does not constitutional platform where He can wreck the crooks involved?

What is my role in putting to an end this confidentiality the like of usiri in contracts? I think it a well-known problem but not attempt to address it because in one way or the other those who are responsibilty benefit from the clause.

Can my vote play a role?

maskini nchi yangu TZ of course Africa at large.

Sangarara said:

NO. The spirit of confidentiality is to protect business secrets so that they may not fall in the hands of competitors, and not to protect the sickly conceived provisions which deprive one party to the contract economic or any other benefits through corruption.

Our Government officials and politicians are way short of national patriotism, they are selfish and crooks, to them, confidentiality is an opportunity to steal.

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So our officials are mis using the term confidentially for their own benefits.

MANI said:

So our officials are mis using the term confidentially for their own benefits.

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Exactly, they take it as an instrument for hiding their evil practices, while for a matter of fact it is a sacred business instrument.

Sangarara said:

Exactly, they take it as an instrument for hiding their evil practices, while for a matter of fact it is a sacred business instrument.

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Now what's the way foward in order to escape from these vultures.

Sangarara said:

NO. The spirit of confidentiality is to protect business secrets so that they may not fall in the hands of competitors, and not to protect the sickly conceived provisions which deprive one party to the contract economic or any other benefits through corruption.

Our Government officials and politicians are way short of national patriotism, they are selfish and crooks, to them, confidentiality is an opportunity to steal.

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not only that THEY LACK PATRIOTISM BUT THEY HAVE LOST ANY CHANCE OF BEING TRUSTED AGAIN .

MANI said:

Now what's the way foward in order to escape from these vultures.

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train our young ones the beauty of mobilizing community development, love for humanity and the duty to care and share.

Kongosho said:

On point, wana abuse sana.

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They are doing Purposely .

Sangarara said:

NO. The spirit of confidentiality is to protect business secrets so that they may not fall in the hands of competitors, and not to protect the sickly conceived provisions which deprive one party to the contract economic or any other benefits through corruption.

Our Government officials and politicians are way short of national patriotism, they are selfish and crooks, to them, confidentiality is an opportunity to steal.

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Your comment above is not entirely correct.

1. TPDC position is that these contracts can be accessed by whoever follow the laid down procedures. It follows that individual from company A can follow procedures and access contract between company B (a competitor) and the Government of Tanzania.

2. Confidentiality only make sense if you are trying to protect an innovation, a new technology that lowers cost, a new product not known to the public, marketing strategies in the offing or still on the drawing board and the like. It makes little sense to invoke confidentially on matters such as production sharing agreement (PSA) already agreed and signed, transparency of which is key to improving governance in the sector. I mean, I just cannot visualize a situation in which Statoil is losing to competitors by the act to make PSA accessible to all. Are you suggesting British Gas, for instance, will use Statoil PSA as a cheat sheet in negotiating its own PSA and weaken Statoil position in the process?

3. Statoil is topping the list of companies committed to corporate transparency, whatever that means (Corporate transparency: Measuring mud | The Economist ). In this regard, who do you think is invoking and enforcing confidentiality? Statoil (who is facing competition in the game) or Government of Tanzania?

And in Norway, where Statoil is coming from, you just cannot invoke confidentiality claiming to protect your competitive edge at the expense of good governance.

Guys,
Can you tell me how much money needed to investigate the presence of gas/oil in offshore oilfield?
We may read those figures and think these people are earning a huge chunk of money while its nothing compared to the investment cost!

Zungu Pule
I do not see the difference between what you are saying and what I had put, except that you have specifically commented on the kind of contract between Statoil and our Government.

My position remain, if those agreements have a confidentiality provision, it is there to protect some business interests, it could be those of statoil or our Governments and not with the motive of covering up corruption avenues.

Otherwise why would you think PSA would not have confidentiality issues while it is obvious these contracts are still subject to revisions?

Did CAG office have rise any official statement regarding the matter?If not,why?
What actions have been taken so far to the TPDC personnel who deviate from the original government model plann?
Is there any possible alternatives to renew the contract before things get worse?

Papa D said:

Guys,
Can you tell me how much money needed to investigate the presence of gas/oil in offshore oilfield?
We may read those figures and think these people are earning a huge chunk of money while its nothing compared to the investment cost!

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international capital budgeting/investment appraisal follows that;accept the project if net present value is greater than zero,.no capitalist can inject the funds in the project without a feasibility study and assurance of profits...

Sangarara said:

I do not see the difference between what you are saying and what I had put, except that you have specifically commented on the kind of contract between Statoil and our Government.

My position remain, if those agreements have a confidentiality provision, it is there to protect some business interests, it could be those of statoil or our Governments and not with the motive of covering up corruption avenues.

Otherwise why would you think PSA would not have confidentiality issues while it is obvious these contracts are still subject to revisions?

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Try and read carefully what I wrote in my entry. There is more to it than specific mention of Statoil and Government (this suggests you are trying to shift the goal post). And I suppose you are losing control of your own argument. And my attempt here is to show that your argument is flawed (I know you are not gonna accept it in public).

I took issue with this line: NO. The spirit of confidentiality is to protect business secrets so that they may not fall in the hands of competitors, and not to protect the sickly conceived provisions which deprive one party to the contract economic or any other benefits through corruption.

Everyone is saying confidentiality is not warranted in these types of contracts (PSA in particular) because it makes it easier for unscrupulous officials to embezzle. And you are saying confidentiality is not bad (the spirit) and it is there to hide information from competitors and only that some officials take advantage of it. That if we have angels running the country, then confidentiality is justified! Now, we are not talking the same language here. I tried to argue against your suggestion that PSA need to be confidential in order to protect business. And according to TPDC, these contract can be accessed anyway - which defeat your idea of protecting business from competitors. I also argued that Statoil is topping the list of companies committed to corporate transparency. And if anything, it is not Statoil invoking confidentiality despite the fact that it is the one which might lose out to competitors. It is the government that is invoking confidentiality in the first place and NOT just taking advantage of warranted confidentiality. Now, government is trying to protect which business against which competitor?

I leave you with a quote from The Economist article, the link to which I included in my earlier entry (All the signs suggest that you didn't read it. It is common for people here to "react" to arguments before understanding the very arguments.)

"On the third measure, however, most firms remained tight-lipped. This does not mean they have done anything illegal. Suppose a mining firm pays $10m to a government for a licence to dig. The fee may be legitimate, but the government may wish to keep it secret, to make it easier to embezzle. A company that is completely transparent may find it hard to win any more contracts from dodgy governments, which, alas, control a lot of the world's natural resources. Statoil, Norway's state-controlled oil-and-gas firm, was by far the best performer (see table), yet it scored only 50% on this measure. More than a third of firms scored zero; the average was a meagre 4%."

Idimi said:

Infact, my concern, also a concern for other well-wishers of this beautiful country of ours, are those last two sentences above. And, things have gone from BAD to WORSE in the constitutional assembly, where members have deleted from the draft constitution the clauses related to accountability and ethics with regard to public resources.

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An American institution called ONE GROUP has just released a report from their research which reveals that Africa south of Sahara loses a whoping 1trn US dollars a year through these shody contracts on gas and oil. This corruption causes 3.6 million deaths a year, and millions of children missing education and health facilities. Its just mind boggling what is wrong with us

Zungu Pule

Well I hadn't captured you exact stance on this.

While my position remains intact, it is your argumentation which is flawed, the mere observation that every one is against confidentiality clauses in such contracts or that Government officials are corruptive does not justify that confidentiality is a cause for corruption, no matter who says it, let alone The economist.

We have had in this country leaders who took no a penny in a time when even the western world did not have transparency in their exploitative agenda for the so called third world.

Corruption is a result of moral and ethical decay and not the manner Contracts are being Managed, there are corruption in USA, UK, Germany etc who are the champions of promoting transparency.

you better get your acts together before you jump in here with your preconceived conclusions on how people argue, go back and check my post if at all you are here for deliberation, otherwise you got me very wrong.

I repeat it, THE SPIRIT OF CONFIDENTIALITY IS NOT TO COVER UP CORRUPTION.

check if you are attempting well as well.

Sangarara

Oh okay. You are talking about the spirit (utopia, imagined world) while I am talking about the real world we live in and the way human beings invoke practices in pursuit of their practical goals (career, salary, good life etc). And this is regardless of whether it is the West or East calling for transparency. Confidentiality breeds corruption, with or without moral decay and with or without business secrets to protect. This was long established. And transparency is now considered one of the effective mechanisms to promote good governance. And whatever happens in the "Western World" does not make anything right. Neither does it justify confidentiality because "the spirit is not to cover up corruption". That whether there is corruption in the US, Germany etc. does not justify invoking confidentiality on matters of public interests in Tanzania or anywhere for that matter.

So, in the "spirit of confidentiality", what business secrets are being protected in the contract between Statoil and Government of Tanzania, for example?