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Transparency and open data in the oil industry

Unfortunately our world currently runs on oil, and despite research into green energy, there is currently no credible plan for a carbon-free economy before 2030. Until that time, oil and gas companies will continue to play a huge part on the world stage. But who is keeping these giants in check?

challenge

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Transparency and open data in the oil industry

Unfortunately our world currently runs on oil, and despite research into green energy, there is currently no credible plan for a carbon-free economy before 2030. Until that time, oil and gas companies will continue to play a huge part on the world stage. But who is keeping these giants in check?
326M
people impacted
$10.9B
potential funding
the problem
Nature and Context

We need to bring transparency to the industry by making data on oil companies freely available to all. Practical and socially progressive policy-making in the oil and gas sector is vital, and an informed public is best placed to hold decision-makers to task. Corruption risks exist across all business sectors, but some are more prone to corruption than others. The extractive industries are among the highest risk areas of business, accounting for one in five cases of transnational bribery according to the OECD (Transparency International).

Symptoms and Causes

Lack of International Standards

Oil and gas companies face asset expropriations and corruption by foreign governments in many of the countries where they operate. In addition, most of these companies operate in multiple host countries (Working Knowledge).

Profitability Attracts Greed

Natural resources have the potential to generate large revenues and profits, which makes them attractive for businesses. Competition often results in heavy lobbying and even undue influence on policymaking

Lobbying Distorts Policy

Lobbying and undue influence can distort policies and laws in favor of vested interests rather than the public good. Corporate bribery might lead state authorities not to enforce laws and turn a blind eye to illicit activities in the extractive sector (Transparency International).

Exploitation Causes Damage

 Reckless exploitation of natural resources also destroys the environment and deprives people of their livelihood, trapping them in poverty and fueling conflict over resources (Transparency International).

the impact
Negative Effects

Lack of Transparency Leads to Instability and Distrust

The political and economic dysfunction known as the “oil curse” is a complex, structural phenomenon, caused largely by poor management or investment of oil revenues by the governments of oil-producing countries. Because this syndrome is taking an increasing toll on oil operations, the oil industry has a strong economic incentive to take affirmative steps, collectively, to mitigate it (Carnegie).

Increasing Costs Lower Profits, Further Discouraging Implementation of Costly Transparency Programs

The capital cost of developing petroleum projects has increased 300 percent since 2003, according to industry analysts. Waste, inefficiency, and delays associated with operations in unstable environments are major drivers of these increasing costs. These higher costs are, in the end, largely passed on to the host country governments, but they also result in lower profits accruing to the project or oil company shareholders. The oil industry’s business plans tend not to accurately reflect these aggregated costs, nor to recognize the upsides possible if oil curse symptoms—Dutch Disease, acute corruption, and insecurity—were better mitigated (Carnegie).

Economic Impact

The oil and gas industry provides the energy that drives economic growth and social development, at a time when the environmental impacts of fossil fuels are being critically reevaluated against these benefits. In the past, the industry would have without question had a seat at the table in attempts to address the balance between costs and benefits for society’s long-term good. But today, it is not a foregone conclusion.

That’s because the oil and gas industry has a trust problem. Countless surveys reveal that energy companies are among the least trusted in the business world. According to the latest Edelman Trust Barometer – which surveyed 33,000 people across 28 countries – the energy sector fell well behind others such as technology or food and beverage (World Economic Forum).

This lack of trust could prove detrimental to economic benefits the industry it once provided, especially as alternative energy sources become more popular.

Success Metrics
  • Expand Anticorruption Policy at the Government Level

    • A transparent and accountable mining sector can contribute to sustainable development. This begins with corruption-free approvals – the very first link in the mining value chain (Transparency International).

    • Companies could, for example, consider minimum standards expected of a host government before they will bid on new concessions. They could also advocate with Western governments to develop tougher corruption and environmental standards that all oil companies must meet to compete for contracts in producing countries (Carnegie).

  • Implement Effective Internal Monitoring Systems

    • Companies need to establish and enforce internal integrity mechanisms, and be more detailed in their financial reporting externally (Transparency International).

who benefits from solving this problem
Organization Types
  • Oil Companies

  • Environmental Protection Agency

  • Governments of Countries Producing and Purchasing Oil

Stakeholders
  • Investors in Oil

  • Environmentalists

  • Oil Workers

  • Elected Officials

financial insights
Current Funding
Potential Solution Funding
ideas
Ideas Description

OpenOil started out as a series of wiki articles on the oil industries of specific countries in the Middle East. They still publish wikis and their inventory is growing, but they are now also a consultancy, publishing house, training provider and transparency advocate. In 2014, OpenOil and its partners launched the world’s first archive of oil contracts, which includes 385 government contracts from 54 countries. These contracts were already in the public domain, but were scattered across the internet or buried in piles of other noise. Now they have been neatly filed in one place and are accessible by the general public. OpenOil’s API means that the data is easy to search, allowing users to frame a question in order to get to the relevant information quickly without trawling through pages of text. It also allows automatic updating, so if a publication lists some information about offshore oil fields in a particular region and the data is updated by the OpenOil team, it will also update on the publication’s website.

Ideas Value Proposition
Ideas Sustainability
attributions
Data Sources
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