Cambodians for Resource Revenue Transparency

East Timor Ends First Decade Fighting Oil Curse

crrt — Fri, 18 May 2012 02:12:46 +0000

Bloomberg Businessweek

May 17, 2012

By Shamim Adam and Ramsey Al-Rikabi

The Southeast Asian nation of East Timor celebrates 10 years of independence tomorrow night facing a challenge that has eluded emerging economies across the world: How to stop oil wealth wrecking your economy.

After a decade of contract delays, deadlocked oilfield negotiations with Woodside Petroleum Ltd. (WPL) and a political crisis that almost precipitated civil war, East Timor has moved from the poorest country in Asia, dependent entirely on international aid, to one with a $10 billion resources fund and almost entirely dependent on oil.

East Timor is trying to beat an economic trap called the resource curse where dependence on mineral exports hurts other industries by boosting the currency, and workers are drawn from agriculture and business, making the country reliant on imports of food and other goods. Success may make Prime Minister Xanana Gusmao’s 20-year development plan a guide for other oil- dependent nations such as Chad, Angola and Gabon.

“The real responsibility of the government is to ensure that the oil revenues are not just consumed in a quick binge — that’s the resource curse,” Columbia University professor Jeffrey Sachs said. “This country started out impoverished, war-torn, under a long era of colonial rule, so there’s a lot of building to be done.”

This year is a critical test for the nation, formally known as Timor-Leste. Gusmao, now prime minister, faces a general election in July and outgoing president and Nobel laureate Jose Ramos-Horta hands over his role this weekend to former army chief Jose Maria Vasconcelos, known by his nom de guerre Taur Matan Ruak. United Nations peacekeepers are scheduled to leave by the end of the year.

Coup Attempt

The last time they pulled out, in 2005, was followed a year later by a dispute within the country’s military that escalated into an attempted coup and violence across the country that killed 37 people and forced 155,000 people, or 15 percent of the 1.1 million population, from their homes.

“We were on the edge of a civil war, a failing state,” said Ramos-Horta, who also survived an assassination attempt by rebels in 2008. “We have to make sure that we have a stable and credible government.”

At the heart of East Timor’s future are offshore energy deposits that the country needs to wean it off international aid and build an economy before the biggest field currently producing, Bayu-Undan, starts to run dry in about 2023. Extending the revenue stream will require the government to break an impasse with Woodside, which leads a consortium including Royal Dutch Shell Plc (RDSA), ConocoPhillips (COP) (COP) and Osaka Gas Co. (9532) to develop the larger Sunrise gas field.

Timor Gap

While East Timor gets revenue from the fields under a UN- brokered agreement with Australia, about 500 kilometers (310 miles) to the south, it doesn’t control them because they lie partly in a disputed area known as the Timor Gap.

East Timor wants to pipe the gas to a processing plant on its soil that would liquefy the gas for shipment by tanker. Woodside, Australia’s second-largest oil and gas producer, and its partners including Royal Dutch Shell Plc, want to use a floating LNG plant.

“By early 2013 we’ll reach an agreement,” Ramos-Horta said in a May 4 interview in Singapore. “It’s in our common interest to develop that area in such a way that’s fair, equitable and brings real tangible benefits to our people.”

Ramos-Horta said East Timor would consider Woodside’s option as long as the company proved it was more economic for both sides and his country will “benefit from downstream activities, such as supply services based on East Timor.”

Onshore Options

Woodside Chief Executive Officer Peter Coleman said the company is prepared to consider alternatives including locating some production facilities in Australia or East Timor.

“I’m hoping 2013 is the year we agree,” Coleman said in a May 14 interview in Adelaide.

Sunrise, which was discovered in 1974, a year before Portugal ended two centuries of colonial rule, could produce 4 million metric tons of LNG per year, according to Deutsche Bank. That’s worth about $3.2 billion a year at current prices.

East Timor and Australia share royalties from the field 50/50. The project could cost $13.2 billion to develop and would export its first cargo by 2017, analysts at Deutsche Bank said in a May 11 report.

The government appointed State Street Global Advisors to manage its oil fund and said in a March 17 e-mail it plans to increase investment in global stocks by June to as much as $2 billion, or 20 percent of the fund. The MSCI World Index of stocks has since dropped more than 9 percent.

Assets in the fund, all invested in U.S. government bonds until 2009, were $9.9 billion in February.

Rampaging Militia

The money is needed to rebuild infrastructure, much of which was destroyed during a rampage by Indonesian militia who burned schools and hospitals and wrecked power lines across the country in 1999 after the Timorese voted in a referendum to end 24 years of Indonesian occupation.

East Timor’s Finance Minister Emilia Pires remembers trying to get through Indonesian immigration before independence.

“I was shaking, so scared,” she told bankers and investors in a May 5 presentation in Manila. “I went to the counter and was putting money and more money on top of it as a bribe so I could get through. And the guy looked at me and said no because my name was on the blacklist.”

Relations have improved with Indonesia, whose West Timor shares a land border on Timor island. In March 2011 former guerilla fighter Gusmao visited Jakarta, where he spent six years in prison in the 1990s, to sign an agreement that will see the former occupiers help train officials in tourism, trade and education, and invest in infrastructure.

Asean Goal

Reconciliation with its neighbor may help East Timor’s goal of joining the Association of Southeast Asian Nations in 2013.

“We have been very much supported by Indonesia,” said Ramos-Horta. “Right now, we’re the odd man out in the region.”

Meantime, East Timor is trying to use existing oil revenue to help rebuild. The country has adopted the U.S. dollar as its currency, partly shielding it from the resource curse.

The government is upgrading about 3,000 kilometers of roads and plans to build two ports in the next five years, Pires said.

“We are investing in basic infrastructure,” she said. “No one can do that for us. We have to do it. In four years, we turned the country around. We have grown by double digits in the past four years, and we plan to do that in the next decade.”

Still, the country has far to go. In the World Economic Forum’s ranking of global competitiveness published in September, East Timor came 131st out of 142, the lowest in Asia. Of the 22 countries in a May 2011 Bloomberg Economic Momentum Index for Developing Asia, a measure of ability to maintain steady and rapid growth over the next five years, East Timor was last.

“There are tremendous challenges ahead and the road is not a smooth one,” said Noeleen Heyzer, executive secretary of the United Nations Economic and Social Commission for Asia and the Pacific in Bangkok. “They are trying extremely hard to avoid the resources curse. Now, they should be capitalizing on fisheries, agriculture and tourism and not just oil and gas.”

Oxfam Files Lawsuit Against SEC Over Extractive Industry Rules

crrt — Thu, 17 May 2012 08:18:39 +0000

May 16, 2012

The Wall Street Journal

By Samuel Rubenfeld

One non-profit was mad as hell and couldn’t take it anymore–so it filed a lawsuit.

Oxfam America, an international relief and development organization, filed a suit Wednesday in U.S. District Court in Massachusetts against the Securities and Exchange Commission for delaying the issuance of a final rule governing a program created by the Dodd-Frank Act that mandates oil, gas and mining companies disclose payments to foreign governments.

Congress set a statutory deadline in the provision of April 17, 2011, for the issuance of the final rule of Section 1504, or the “Cardin-Lugar” provision. The SEC missed the deadline, and 13 months later still has not issued any guidance on when the rule will be finalized.

“We have been patient, but the Commission’s continued failure to issue a Final Rule implementing Cardin-Lugar frustrates Congress’s intent to increase transparency in resource-rich countries,” said Ian Gary, senior policy manager of Oxfam America’s oil, gas and mining program, in a statement.

“For those living in poverty in resource-rich countries, there’s no time left to wait. Oxfam America is simply asking for the SEC to follow the law,” he said.

The SEC declined to comment on the lawsuit, but noted that it received thousands of comments on the proposed rule, which it issued in December 2010.

“The Commission and its staff are working hard to adopt an effective rule as soon as possible,” said John Nester, an SEC spokesman, in an email.

Oxfam’s lawsuit is the latest escalation in a pitched battle between activists and the business community over the rule. While activists and Democratic lawmakers have sought a stronger interpretation of the legislation, industry has fought hard to weaken the proposed rules, if not push the SEC to start over from scratch.

The nonprofit said it told the SEC on April 16 it would file suit if it did not issue the rule within 30 days. Oxfam noted in its statement that it has made numerous submissions to the SEC and has had multiple meetings with its staff about the rule, noting that investors also need a strong rule.

“Investors have a right to know how and whether companies are exposed to political and expropriation risks in volatile resource-rich countries,” Gary said in the statement.

crrt — Thu, 17 May 2012 02:49:35 +0000

May 16, 2012

WSJ Blogs

Oxfam Files Lawsuit Against SEC Over Extractive Industry Rules

By Samuel Rubenfeld

One non-profit was mad as hell and couldn’t take it anymore–so it filed a lawsuit.

“For those living in poverty in resource-rich countries, there’s no time left to wait. Oxfam America is simply asking for the SEC to follow the law,” he said.

The SEC declined to comment on the lawsuit, but noted that it received thousands of comments on the proposed rule, which it issued in December 2010.

“The Commission and its staff are working hard to adopt an effective rule as soon as possible,” said John Nester, an SEC spokesman, in an email.

“Investors have a right to know how and whether companies are exposed to political and expropriation risks in volatile resource-rich countries,” Gary said in the statement.

Corporate social responsibility in Cambodia

crrt — Fri, 11 May 2012 04:16:48 +0000

The Phnom Penh Post Friday, May, 11, 2012

Frontier and emerging economies such as Cambodia present companies with a specific set of challenges and risk, both real and perceived, beyond those found in more developed markets.

A risk category getting everincreasing attention is that of “social risk” , roughly defined as the risk of waking up one moning to fine your company’s name in the media for the wrong reasons.

Such unhappy media events present risk to the investor’s reputation or a company’s brand as a result of investment or operations in a given market. These risk are why all of the tuna sold in North America and Europe is marked as “Dolphin Safe”.

Please fine Attached for more information.PPPost Fri May 11_ 2012 CSR in Cambodia

Reckless mining in Prey Lang takes toll on environment

crrt — Tue, 08 May 2012 07:01:57 +0000

The Phnom Penh Post

Tuesday May 8, 2012

Chemical substances used in about 3,000 mining drills operating in the Prey Lang forest in Kratie and Kampong Thom provinces are wreaking environmental havoc and making people sick, a report by the Cambodian Center for Human Rights released yesterday says.

Substances used by a number of Chinese-run companies, businessmen and villagers to mine gold have caused 70 per cent of the trees in the area to die, and the contamination of nearby rivers and lakes, according to the group.

“Starting a year ago, villagers and animals in the community began having a lot of health problems they never used to, and at least 50 buffaloes and cows have died from drinking river water,” the report states.

The Steung Chinet River, the Kampong Thmar River in Kampong Thom and a stretch of the Mekong River in Kratie have been contaminated, it says, without identifying the chemicals at fault.

CCHR co-ordinator for public forums Chhim Savuth alleged local authorities were being bribed by businessmen to let them mine as they pleased.

“The authorities are not finding measures against the anarchical digging from mining. Instead, soldiers and environment officers are collaborating with businessmen to destroy the natural resources,” he said.

In Kratie’s Sambor district, soldiers took monthly mining bribes from businessmen of 50,000 riel (US$12.50) for small machines and 80,000 (US$20) to 100,000 riel (US$25) for large machines, he alleged.

Chhum Yim, a representative of villagers in Sandan district, said residents had previously mined the area, but only with natural substances, adding that the chemicals used by companies since 2009 were having negative effects on the community.

Those effects were worsening day by day, he said.

“If the government does not take timely action, not only will our villagers have health problems, our natural resources will be destroyed,” he said.

Sandan district governor Sim Vanna said the companies had been granted licences by the government for mining, but denied any knowledge of local officials being bribed.

Sambor district governor Seng Sotha attributed the negative impact of digging to unlicensed villagers, saying they affected the environment.

crrt — Mon, 30 Apr 2012 02:57:03 +0000

crrt — Mon, 30 Apr 2012 02:27:20 +0000

Oil Expert Visits Liberia

crrt — Fri, 27 Apr 2012 01:59:57 +0000

Wednesday, 11 April 2012 20:07

Dr Eva Thorne, a renowned expert on oil, politics and security, is visiting Liberia to deliver presentations to the President, Cabinet, leaders of the Senate and Judiciary and other important national stakeholders about the opportunities and challenges of developing Liberia’s oil sector.

Dr Thorne, formerly Meyer and Walter Jaffe Assistant Professor of Politics at Brandeis University in Massachusetts, now an independent consultant, was invited to Liberia by the National Oil Company (NOCAL) and is spending the week giving detailed briefings to national leaders, legislators and policy-makers on how to make the most of the sector for the benefit of the Liberian people and avoid adverse effects that oil can cause to economic and political stability.

According to a release issued yesterday in Monrovia, the oil expert’s schedule began with a briefing to the President and Cabinet on Monday, followed by presentations to the Senate and Judiciary on Tuesday.

Please fine Attached for more information.11-04-2012_online_Oil Expert Visits Liberia

crrt — Tue, 24 Apr 2012 01:16:04 +0000

SEC should schedule vote on oil, mining disclosure rules, says Publish What you Pay

crrt — Mon, 23 Apr 2012 02:33:09 +0000

17, 04, 2012

Washington, D,C After one year of unlawful delay, Publish What You Pay U.S calls on Securities and Exchange Commission (SEC) Chairman Mary Schapiro to schedule the vote on final rules for oil and mining payment transparency. The rules will implement Section 1504 of the Dodd-Frank Act, also known as the “Cardin-Lugar provision,” which requires oil, gas and mining companies listed on U.S stock exchanges to publesh taxes, royalties and other payments made to U.S and foreign governments.

Congress set a deadline for the SEC to release final rules on April 17, 2011. The agency has not yet scheduled a meeting to vote on the rule despite the clear statutory deadline and calls for the prompt release of strong rules from sinior members of Congress, Secretary of State Hillary Clinton, investors and civil society groups from around the world.

“From both houses of Congress, to the U.S Secretary of State and the U.S Department of Interior, from the largest public pension fund in the United States, to religious groups, Libyan anti-corruption activists and Nigerian oil worker unions, the SEC has heard from every conceivable party on these rules,” says Isabel Munilla, Director of the US chapter of the global Publish What You Pay coalition.” It’s time for a vote . We call on Chairman Schapiro to resist oil industry pressure and protect US leadership, by scheduling a vote on the oil and mining tax payment disclosure rules.”

Please fine Attached for more information.MEDIA RELEASE- PWYP US Calls on Schapiro to schedule vote on 1504_17Apr2012