Oil Trader Gunvor Agrees to Disclose Payments to Governments
(Bloomberg) -- Gunvor Group Ltd., one of the world’s largest independent oil traders, plans to join rival Trafigura Group in disclosing some of the billions of dollars it pays to governments and national oil companies each year.
By joining the Extractive Industries Transparency Initiative, the Geneva-based trader will disclose some of the oil and gas-related payments made in the 51 countries that are part of the program aimed at rooting out corruption. The move may ramp up pressure on fellow traders including Glencore Plc, Vitol Group and Mercuria Energy Group Ltd. to follow suit.
“Gunvor’s support of the EITI reflects our commitment as a trading house to uphold progressive policies and practices,” Chief Executive Officer Torbjorn Tornqvist said in a statement. “We recognize we have a role in promoting transparency and accountability.”
Trafigura, which handles about double Gunvor’s trading volumes of 2.5 million barrels a day, became the first oil trading company to join the EITI in 2014. It now discloses the payment total for all nations in which it operates.
The company said it paid $21.2 billion in 2016 to governments, including taxes, royalties and other dues. Of that, $1.1 billion went to EITI members, which include Nigeria, Colombia and Cameroon.
In Switzerland, where the commodities trading industry accounts for about 4 percent of economic output, the government decided in 2015 it wouldn’t force the companies to disclose payments to countries. However, lawmakers have encouraged traders to be more transparent on a voluntary basis.
A Glencore spokesman said the company is already compliant with the EITI on its mining and oil-extraction operations, but declined to comment on its trading business. The company expects to publish its 2017 transparency report within the next six weeks.
“The aims of EITI, and other stakeholders, will be best served through the development of an appropriate and consistent framework for reporting trading activities,” Vitol, the world’s biggest independent oil trader, said in a statement. “Vitol has been an active member of the working group established by the Swiss Government and EITI to establish this framework and intends to continue to fully support this process.”
A Mercuria spokesman said the trading house posts “all payments to governments in reference to the extractive industries” on its website.
By agreeing to publish payments under EITI, Trafigura has won allies at some Swiss and international non-governmental organizations, which are calling for more transparency and regulation of the traditionally publicity-shy industry that accounts for about 10,000 jobs in Switzerland.
In November, the U.S. announced it was discontinuing EITI implementation in a move the initiative’s Chairman Fredrik Reinfeldt called a “disappointing, backwards step.”
©2018 Bloomberg L.P.