Transparency in the Management of Oil and Gas Revenues (NO0034)

Norway will, in 2014-15,
- continue to live up to the EITI principles and support the EITI International
Secretariat and developing countries’ EITI implementation, through both bilateral
and multilateral programmes
- strengthen the Oil for Development programme (OfD), the largest development
programme of its kind in the world, providing support and guidance to more than 20
developing countries on management of petroleum resources
- strengthen the Oil for Development programme (OfD), the largest development
programme of its kind in the world, providing support and guidance to more than 20
developing countries on management of petroleum resources
- consider adopting a country-by-country reporting system for the extractive sector
- work to strengthen financial sector transparency generally, for instance by working
against typical tax haven practices of concealing beneficial ownership and financial
transaction information and by supporting tax information exchange

22. Transparency in the management of oil and gas revenue

Commitment Text:

 […]

commitment description

Norway will, in 2014-15,

•       Continue to live up to the Extractive Industries Transparency Initiative (EITI) principles and support the EITI International Secretariat and developing countries` EITI implementation, through both bilateral and multilateral programmes.

•       Strengthen the Oil for Development programme (OfD), the largest development programme of its kind in the world, providing support and guidance to more than 20 developing countries on management of petroleum resources.

•       Promote the development of a “transparency guarantee”, securing natural-resource-rich poor countries access to extractive company accounting information necessary to levy the right amount of tax.

•       Consider adopting a country-by-country reporting system for the extractive sector.

•       Work to strengthen financial sector transparency generally, for instance by working against typical tax haven practices of concealing beneficial ownership and financial transaction information and by supporting tax information exchange.

Responsible institution: Ministry of Foreign Affairs

Supporting institution(s): Ministry of Petroleum and Energy

Start date: 2014                 End date: 2015

Editorial note: The text of the commitments was abridged for formatting reasons. For the full text of the commitment, please see http://bit.ly/1QlVIja.

Policy Aim

Transparency in the oil and gas sector is a prominent policy issue in Norway. Transparency challenges in the Norwegian private sector’s activities abroad have sparked significant public debate^{[Note 116: See, for example, Siri Skaalmo and Espen Bjerke, “Statoil innrømmer korrupsjon,” Dagens Næringsliv (October 13, 2006), accessed September 11, 2016, http://www.dn.no/nyheter/2006/10/13/statoil-innrommer-korrupsjon. ]} and corresponded with substantial international engagement on related policy issues referenced in this commitment. The five benchmarks referenced in this commitment represent a broad range of issues in which Norway has a significant amount of experience and policy engagement, which is applied primarily to international policy and activities. The policy aims of each benchmark are listed below:

1.       Continue to live up to EITI principles and support the EITI Secretariat and implementation:
The Extractive Industries Transparency Initiative (EITI) is a global standard to promote the open and accountable management of natural resources. Participating countries commit to specific standards in revenue reporting. The EITI Secretariat is based in Oslo.

2.       Strengthen the Oil for Development program:
The Oil for Development program is a Norwegian international aid program which aims to contribute to the financial, social, and environmentally defensible administration of petroleum-based resource extraction in developing countries, primarily through the development of skills and capacities for developing country actors.

3.       Promote the development of a “transparency guarantee”:
A transparency guarantee is a commitment made by governments to proactively provide transparent information about international aid.^{[Note 117: See for example, the UK’s transparency guarantee at https://www.gov.uk/government/news/the-ukaid-transparency-guarantee. ]} The IRM researcher was unable to find discussion about this specific concept in Norway, but this is likely related to recent political debates regarding the effectiveness and accountability of Norwegian international aid.^{[Note 118: See for example, “Bistand Til Ren Energi Har Gitt Fa Resultater,” Office of the Auditor General of Norway, accessed September 11, 2016, http://bit.ly/1PT8QrG; and “Riksrevisjonens Undersokelse Av Bistand Til Godt Styresett Og Antikorrupsjon I Utvalgte Samarbeidslad,” Office of the Auditor General of Norway, accessed September 11, 2016, http://bit.ly/1O9gcZ6. ]}

4.       Consider adopting a country-by-country reporting system for the extractive sector:
Country-by-country reporting is a legislative obligation for Norwegian-owned companies registered in other countries to report profits, expenses, taxes, and employees for each country in which they operate. This is part of a larger effort to track money hidden in tax shelters around the world and is the focus of commitment 24, discussed below.

5.       Work to strengthen financial sector transparency generally:

An example would include working against typical tax haven practices. While this milestone clearly states its own policy aim, it is vaguely worded.

Status

Mid-term: Limited
As currently formulated, most of the milestones under this commitment were not specific enough to be assessed. Of the three milestones that could be assessed, milestone 4—a country-by-country reporting system—was fully implemented in early 2014. Future commitments should move beyond existing work and be more specific in their formulation.

End-of-term: Limited

1.     Continue to live up to EITI principles and support the EITI Secretariat and implementation:
Norway continues to participate in the EITI and to host the EITI Secretariat, and that participation is viewed positively by Norwegian civil society.^{[Note 119: Gro Skaaren-Fystro, “Experiences with EITI in Norway,” presentation by Transparency International Norway to the December 2015 Expert Meeting "One size fits all? What can we afford in Germany EITI," accessed September 11, 2016, https://www.transparency.de/fileadmin/pdfs/Weitere_Termine/Veranstaltungsarchiv/D-EITI/One_Size_fits_all/EITI_-_the_Norwegian_experience.pdf. ]} This benchmark is, however, too vaguely worded to determine if it is complete.

2.     Strengthen the Oil for Development program:
As of 2016, Norway continues to run this program, in collaboration with 12 countries,^{[Note 120: “Olje for utvikling,”NORAD, updated May 25, 2016, accessed September 11, 2016, https://www.norad.no/tema/okonomisk-utvikling-og-offentlig-forvaltning/olje-for-utvikling/. ]} despite criticism from civil society that the program advances Norway’s economic interests at the expense of local social and economic interests in partner countries.^{[Note 121: See for example, ”Norges interesser vs. Angolas utviklingsbehov,” RORG Network of Norwegian NGOs engaged in Development Education and Awareness Raising in Norway, updated March 14, 2016, accessed September 11, 2016, http://www.rorg.no/Artikler/3340.html. ]} This benchmark is, however, too vaguely worded to determine if it is complete.

3.     Promote the development of a “transparency guarantee”:
The Ministry of Foreign Affairs' (MFA’s) grants portal provides information on all aid grants contractually provided by the ministry and the national development agency.^{[Note 122: ”The Ministry of Foreign Affairs' Grants Portal,” Norwegian Ministry of Foreign Affairs, accessed September 8, 2016, http://udtilskudd.regjeringen.no/#/en/country?year=2016. ]} This is not complemented or motivated by a public promise or policy as the IRM researcher understands a “transparency guarantee” to imply.

4.       Consider adopting a country-by-country reporting system for the extractive sector:
This milestone was complete at the mid-term, as described under commitment 24.

5.     Work to strengthen financial sector transparency generally:
Norway engages in a significant amount of work to strengthen financial sector transparency internationally, including the above milestones and the work described in this report’s commitments 17, 18, 23, and 24, but is too broad to fully document here. This milestone makes specific mention of combatting tax havens, which has been a public policy focus of the Norwegian government. However, the government has been criticized for failing to properly differentiate between tax havens and “legitimate third country financial centers.”^{[Note 123: “Balansekunst om skatteparadiser,” Tax Justice Network Norway (May 24, 2016), accessed September 11, 2016, http://taxjustice.no/ressurser/balansekunst-om-skatteparadiser. ]} In any case, this benchmark is too vaguely worded to determine if it is complete.

Did it open government?

Public accountability: Marginal

1.     Continue to live up to EITI principles and support the EITI Secretariat and implementation:
Norway has met all EITI requirements for reporting cash flows and has not had any deviations in the five years of its participation in the initiative.^{[Note 124: “EITI Key Documents for Norway,” accessed September 11, 2016, https://eiti.org/implementing_country/15#key-documents.]} EITI Norway has included the creation of a multi-stakeholder group, which is viewed by some members of civil society to be a positive contribution to public accountability.^{[Note 125: Gro Skaaren-Fystro, “Experiences with EITI in Norway.” ]} Publish What You Pay  (PWYP) Norway is a member of this group and is the Norwegian civil society organization whose mandate most closely aligns with EITI. PWYP Norway has suggested that Norway’s participation in EITI be discontinued and has suggested more rigorous approaches to strengthening financial transparency in Norway’s extractive industry, which would be best implemented in other fora.^{[Note 126: “Should we ‘shut down’ EITI in Norway?,” Publish What You Pay Norway (April 22, 2016), accessed September 11, 2016, http://www.publishwhatyoupay.no/nb/node/16874. ]} This might suggest that Norway’s participation in EITI has had limited, if any, impact on public accountability in Norway.

2.     Strengthen the Oil for Development program:
Given the international focus of the Oil for Development program, the IRM researcher did not find evidence that this program created or improved opportunities to hold officials accountable for their actions. None of the stakeholders interviewed in the preparation of this report were able to comment on the program, and desk research on Norwegian civil society websites only returned commentaries on international impacts.  

3.     Promote the development of a “transparency guarantee”:
The investigative journalists and transparency activists interviewed in preparation of this report did not suggest that aid transparency was a priority area for Norway, and none reported having used or investigated the aid statistics published by the MFA, though they knew of their existence.^{[Note 127: Guro Slettemark (Executive Director, Transparency International Norway), interview by Christopher Wilson, in-person meeting, Offices of the International Law and Policy Institute, March and September 2016; Nils Øy (Special Adviser, Norwegian Press Association), interview by Christopher Wilson, in-person meeting, Offices of the Norwegian Association of the Press, September 1, 2016; and Siri Gedde-Dahl (Chair, Norwegian Committee for Access to Information (Offentlighetsutvalget)), interview by Christopher Wilson, in-person meeting, Offices of the Norwegian Association of the Press, September 1, 2016.]} Since the IRM researcher found no evidence that this milestone was pursued, it is not understood to have impacted public accountability.

4.       Consider adopting a country-by-country reporting system for the extractive sector
This legislation has been adopted, which was a positive significant step for transparency, but controversial amendments are currently being discussed, and the law’s future is uncertain. See further details in commitment 24.

5.       Work to strengthen financial sector transparency generally:
With the exception of the activities and outcomes described in the above milestones (especially 1 and 4), the IRM research did not identify any ways in which the state of public accountability in Norway was impacted through Norway’s support to international financial transparency. Though the issue of tax havens has sparked significant debate between Norwegian government and civil society actors,^{[Note 128: Frian Aarsnes, “Investorer og skatteparadiser,” Bistands Aktuelt (May 9, 2016), accessed September 11, 2016, http://www.bistandsaktuelt.no/arkiv-kommentarer/2016/investorer-og-skatteparadiser. ]} the IRM researcher was not able to identify any way in which this debate, or specific policy processes such as those referenced above, impacted public accountability in Norway. 

Carried forward?

The fifth benchmark of this commitment, to strengthen financial sector transparency generally, can be understood to be carried forward in the Norwegian government’s third national action plan, particularly the below two commitments which relate to international financial transparency:^{[Note 129: ”Norway’s third action plan Open Government Partnership (OGP),” Ministry of Local Government and Modernisation, accessed September 4, 2016, http://www.opengovpartnership.org/wp-content/uploads/2001/01/Norway_2016-17_NAP.pdf.]}

Commitment 8. Study how relevant information related to country-by-country reporting from subsidiaries and support functions in third countries should be presented in the accounts, as well as possible supervisory schemes. (Country-by-country reporting.)

Commitment 9. Register for ultimate beneficial ownership: The purpose is to increase access to information about who owns and who has a controlling interest in Norwegian companies, as well as to follow up on our international obligations through the Financial Action Task Forces and our EEA membership.