EITI London Conference

By Sam Laidlaw, Executive Vice President, Global Downstream
ChevronTexaco Corporation

EITI London Conference

London, England

I was privileged to represent ChevronTexaco at the inaugural EITI [Extractive Industries Transparency Initiative] conference, and I am delighted to be back two years later to review the significant progress that's been made.

In that time, there have been a number of initiatives promoting transparency and improved governance, but the EITI process has served as a uniquely useful focal point and energizing force.

EITI has always emphasized working through a voluntary process, a recognition that success is best achieved by flexibility to suit individual country circumstances, within a framework of basic principles and always having governments in the leading role. And that, I believe, is the reason the initiative has attracted so much international support and interest.

I would like to highlight two significant and practical demonstrations of government leadership, with close company support, in the initiative process.

First, ChevronTexaco was honored to be associated with the decision of the Angolan government to publish the signature bonus provisions on the renewal of the Block 0 concession. This also identified an important element for social contributions.

And second, we were pleased to follow the lead given by the governments of Nigeria and São Tomé in negotiating a transparency clause into our recent Production Sharing Contract. This sets a positive example we hope others will follow in developing new oil and gas regions.

These two major developments demonstrate the widening acceptance of the general principles driving the EITI framework; irrespective of whether specific countries are formally part of the initiative.

From our long experience working in Nigeria, we have learned not to underestimate the difficulties of tackling deep-seated problems addressed by the EITI process, and we cannot help but feel great admiration for the personal lead and dedicated determination shown by President Obasanjo and his administration.

A singular aspect of the EITI process has been the boost it has given to closer working relationships between the principal constituents - governments, international financial institutions, nongovernmental organizations and industry. All of us have our own roles to play and contributions to make, but together we have succeeded in forging a successful coalition of forces without the loss of individual identity or primary purpose.

EITI's chief goal is to encourage greater transparency over the accounting of revenues from the extractive sector. This is achieved by comparing gross revenues paid to gross revenues received - a process certified by an independent auditor who would have access to details on all levels of payments. We, therefore, consider auditor approval of an aggregated figure sufficient to meet the necessary EITI purpose.

ChevronTexaco believes the issue of aggregating vs. disaggregating when publishing company revenue payments is not central to EITI's mission and will not materially further the goals of EITI. Further, we believe it is for host governments to determine the level of detail of reporting, including the issue of aggregation or disaggegation.

As is standard practice in our industry, we will follow the guidance of the host governments in each case; however, we believe it is important that - for the sake of fairness - identical requirements for reporting be placed on all companies operating in any given country, whether they be public or private. Assuming host governments give approval, we will disclose down to country level, chronologically and on an annual basis, in those countries that are material to us.

We see the EITI process as one part of a broad movement to promote fundamental change in attitudes throughout the world towards transparency and improved governance, and we support the drive to engage more countries in that process. ChevronTexaco looks forward to being closely involved with whatever future structures are developed to move the EITI process forward.

Given the rich diversity of the countries involved, progress inevitably has been and will continue to be uneven. But the global balance sheet is undeniably positive, and significantly more progress has been made than many thought possible when we first met to launch the initiative.

The [U.K.] Department for International Development has done an excellent job in marshalling the process, and many others have made significant contributions as well. But the real credit for success achieved lies with the courage and determination of those heads of government who have led the drive to practical implementation of EITI principles.

Updated: March 2005