Home' Trinidad and Tobago Guardian : January 26th 2017 Contents JANUARY 26 • 2017 guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG17
For many years there have been
complaints that energy com-
modity trading companies op-
erate under an opaque cloud,
purchasing barrels of oil, LNG
cargoes and minerals from one
country and selling them to its customers,
sometimes, at a significant mark up, without
accounting for the value or volume of the first
trade. But, in recent times, this practice has
been challenged internationally and is slowly
changing with significant positive implications
The Extractive Industries Transparency In-
itiative (EITI) triggered this change when, in
2014, the Trafigura Group, one of the world's
leading energy commodity trading companies,
committed to the EITI Principles and, in 2015,
started publicly disclosing its first purchase
payments to State-owned Enterprises (SOEs)
in the energy sector.
The company now reports the actual value
and volume of products purchased from energy
SOEs in all EITI member-countries in which it
operates. With T&T being an EITI implement-
ing country, citizens now have access to this
valuable data. From 2016, Trafigura began to
also disclose aggregate direct/first purchases
payments made to SOEs in non-EITI countries.
In December 2016, Trafigura disclosed,
via its Responsibility Report, that in 2014
and 2015 it paid Petrotrin and T&T LNG Ltd
(a subsidiary of NGC) a total of US$507 mil-
lion or approximately TT$3 billion for 5,381
thousand barrels of refined products and 2.81
million barrels-equivalent of gas respectively
(see Table 1).
The company also reported that in 2013 it
paid Petrotrin and T&T LNG Ltd a total of
US$503.16 million for 3,880 thousand bar-
rels of refined products and 1.74 million bar-
rels-equivalent of gas.
Although Trafigura is owned by its em-
ployees and exempt from the legal disclosure
initiatives applicable to publicly listed com-
panies, its policy on payments to governments
commits it to voluntarily disclose payments
to governments and to participate in a pro-
cess to establish disclosure parameters for the
commodities trading industry within the EITI
This policy shows Trafigura's support for the
EITI principles and the main points of agree-
ment are summarised as follows:
1. The prudent use of natural resource wealth
is an important driver of sustainable economic
development and poverty reduction but, if not
managed properly, can create negative eco-
nomic and social impacts.
2. The management of natural resource
wealth is the domain of sovereign governments.
3. The benefits of resource extraction occur
as revenue streams over many years and can
be highly price dependent.
4. Public understanding of government reve-
nue and expenditure over time could encourage
public debate and inform choice of appropriate
and realistic options for sustainable develop-
5. There is need to enhance public financial
management and accountability.
6. Achievement of greater transparency must
be set in the context of respect for contracts
7. Financial transparency may create an en-
hanced environment for domestic and foreign
8. Accountability by government to its citi-
zens is important for the stewardship of reve-
nue streams and public expenditure.
9. Trafigura is committed to encouraging
high standards of transparency and account-
ability in public life, government operations
10. A consistent, simple and workable ap-
proach to the disclosure of payments and rev-
enues is required.
11. Payment disclosure in a given country
should involve all extractive industries com-
panies operating in that country.
12. In seeking solutions, all stakeholders
have important and relevant contributions
to make--including governments and their
agencies, extractive industries companies,
service companies, multilateral organisa-
tions, financial organisations, investors and
Thanks to these voluntary disclosures,
the Natural Resource Governance Institute
was able to identify Trafigura as a purchas-
er of Ghanaian oil as well as confirm that the
quantities reported by Trafigura matched those
reported by the Ghana EITI.
This is a clear example of the usefulness of
EITI reporting in empowering citizens through
disclosure of information hitherto not avail-
able to them.
Today, revenues from the purchases of
state oil by commodity traders are formally
included in Iraq's EITI Reports and several
other countries are expected to follow suit in
the near future.
It is also expected the other commodity trad-
ers will soon declare their support for the EITI
principles thus helping to shed more light on
payments to governments, through their SOEs,
that would otherwise be unreported and not
known to citizens. This is a welcome trend
that will support and improve transparency
and accountable management of revenues from
a country's natural resources.
T&T's ongoing implementation of the EITI
ensures that citizens will benefit from this new
trend of disclosures by commodity traders of
payments to SOEs and so gain a better under-
standing of the sector's global dimensions and
our government's overall revenue receipts.
Trafigura Group pays over $3 billion to Petrotrin and NGC
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