Trafigura Reveals $4.3 Billion in Oil Payments to Governments

  • Trading house makes disclosures in first responsibility report
  • Data relate to payments made in 2013 to EITI member countries

Trafigura Pte Ltd. disclosed $4.3 billion in oil-related payments to state entities in 2013 as part of a push toward more transparency by the third-largest independent oil trader.

The firm said the funds were used to purchase crude oil, refined petroleum products and gas from national oil companies in countries that have signed up to the Extractive Industries Transparency Initiative, or candidate countries. It revealed payments made in Colombia, Ghana, Nigeria, Norway, Peru, and Trinidad and Tobago in its inaugural responsibility report.

The commodity trading industry, much of it centered in Switzerland where traders aren’t directly regulated, has long been noted for its opacity and lack of disclosure. While Trafigura is based in Singapore it has major operations in Geneva, as do closely held competitors Vitol Group -- the largest independent oil trader -- and Gunvor Group Ltd. In the past, the traders have cited competitive reasons for their furtive ways.

More to Do

Trafigura is the first major independent commodity trader to report oil-related payments to member-states of the EITI, a voluntary disclosure program for oil and mining companies aimed at rooting out and preventing corruption. The report “sets out an ambition to become acknowledged leaders in our sector in the way we manage corporate responsibility,” Chief Executive Officer Jeremy Weir said in a statement. “It also expresses our awareness that we have more work to do.”

Trafigura’s decision to report payments comes amid a schism among members of Switzerland’s tight-knit commodity-trading industry, which accounts for about 4 percent of the nation’s gross domestic product.

The country that’s home to more than 500 commodity-trading companies has decided not to impose mandatory regulations on the sector despite calls to do so by non-governmental organizations. Government officials have encouraged other trading houses to join Trafigura in disclosing payments under the EITI framework to improve transparency.

Disappointing Data

“While the number of countries covered and the level of granularity of the
data are still rather disappointing, we welcome this transparency effort as a
first step in the right direction,” said Oliver Classen of the Berne Declaration, a Swiss NGO that has led calls for more regulation.

Classen said the report “proves how easily and swiftly” a disclosure of payments could be done by Trafigura’s competitors. The Swiss government should include commodity trading in a pending transparency law, he said.

Trafigura’s disclosure included $2.5 billion of payments to Nigerian National Petroleum Corp. Those payments were an “aggregate swap of crude oil and corresponding delivery of refined products from and to national oil companies in EITI countries,” Trafigura said.

The company said it would continue to review its policy on payments to governments and disclosure under the EITI. Currently, it’s only disclosing payments to EITI member or candidate countries and only oil-related payments, not for metals, coal or other commodities the firm handles. Trafigura is the world’s second-largest metals trader.

At the EITI’s October board meeting a working group was established for oil traders and producers with trading divisions.

Trafigura handles about 3 million barrels of oil equivalent a day. It reported record first-half profit this year of $654 million as it gained from oil-price volatility and storing crude for future delivery.

Swiss commodity traders bought about $55 billion of crude from African national oil companies from 2011 to 2013, accounting for about a quarter of the volumes sold by governments of the 10-largest oil-producing countries on the continent, according to a report published last year by a group of NGOs that included the Berne Declaration.

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