Transparency and accountability urged in extractive industries

A pioneering report on Philippine extractive industries has urged that more exploration activities for indigenous resources become essential as the world becomes more prosperous and as the population increases.

“We need a balance of transparency and competitiveness. The key to enhancing the competitiveness of the country and sustainability amidst a fast-growing economy and population is to promote transparency and accountability,” said Sebastian Quiniones, managing director of Shell Philippines Exploration B.V. (SPEX) and the recently appointed president of the Petroleum Association of the Philippines (PAP).

Quiniones represented the oil and gas industry in the multi-stakeholder group of the Philippine Extractive Industries Transparency Initiative (PH-EITI) in a recent forum that presented the key findings of the 1st PH-EITI Country Report, as an overview preceding its publication in February.

The EITI is a global standard of transparency that requires extractive industries such as oil, gas and mining, to publish what they pay to the government and the government to likewise publish what they collect from the said industries.

Avoiding the “resource curse”

Quiniones warned against the “resource curse” or having large amounts of natural resources that do not benefit the citizens of the host country. “A level playing field would attract investments especially in exploring and utilizing indigenous resources which is essential to our country’s sustained growth. We have to develop our own natural resources for our own people,” said Quiniones.

Quiniones is the managing director of SPEX, which is the upstream company of Shell in the Philippines in charge of operating the Malampaya Deep Water Gas-to-Power Project that supplies 30 percent of the country’s energy needs with cleaner-burning natural gas.

Shell, as a global leader in power, energy, and gas technology, is working to meet increasing energy demand and supply challenges by delivering smarter products and cleaner energy, smarter infrastructure, promoting smarter use and by developing new energy sources while addressing the impact on the environment, through advanced fuels and lubricants technology and unlocking sources of cleaner burning-natural gas.

SPEX also implements the Malampaya Phases 2 and 3 projects, which are part of Malampaya’s original field development plan to sustain the level of natural gas being extracted from the reservoir for electricity production.

Promoting transparency and accountability

The PH-EITI forum also tackled the direct and indirect benefits being contributed by companies in the extractive industries, such as providing the building blocks of progress through energy and raw materials, contributing revenue, and implementing social development programs that sustainably improve the well-being of communities they operate in.

Companies in the extractive industries that have signed on the PH-EITI accounted for at least P35 billion in government revenue in 2012. The total was generated by 30 mining companies and six oil and gas firms, which submitted their tax data and other information to the PH-EITI. Broken down, mining companies contributed P6.3 billion in revenue while oil and gas companies remitted P29.01 billion.

The PH-EITI was formed through President Benigno Aquino’s Executive Order (EO) No. 147 signed on November 26, 2013. The EO created the PH-EITI multi-stakeholder group, which is mandated to complete the country’s requirements to become a member of the industry’s global transparency initiative.

“The PH-EITI report is an important milestone for the Aquino administration, for the Philippines and the Filipino people,” said Department of Finance Undersecretary Gil S. Beltran. “The 1st PH-EITI Country Report will provide answers to the questions we often encounter when formulating policies and addressing issues where the extractive industries are concerned.”

The completed report is composed of two volumes and will be submitted to the EITI International Board.

The 1st PH-EITI Country Report is the product of the collaboration spearheaded by the government with members of the extractive industry and civil society. “We in the oil and gas sector, a nascent industry in the Philippines, want to ensure that as we mature, we do it in partnership with all stakeholders for the good of our world and our people. Hence we give PH-EITI our full and wholehearted support,” said Quiniones in an interview.