Kosmos Energy has been a leader on contract transparency for many years. Since publishing their first set of contracts for Ghana in 2011, the company has established a policy that they “prefer to make the material terms of [their] Petroleum Agreements (PAs) and Production Sharing Contracts (PSCs) publicly available”. They have filed all of their PAs and PSCs with the United States Securities Exchange Commission and published links to all of these contracts on their website. Sophie Durham, Senior Advisor in External Affairs and Social Performance explains their experience so far.
Can you explain briefly why Kosmos started publishing contracts?
In our view, transparency begins with openly sharing the terms of our business dealings with host governments, so that a more informed national dialogue around resource governance can take place in the countries where we work. To this end, we have filed all of our Petroleum Agreements (PAs) and Production Sharing Contracts (PSCs) with the U.S. Securities and Exchange Commission and provide a link to these documents on our website. We also provide a summary of the key terms of all our contracts on our website. Citizens and civil society organisations can read these contracts for themselves to understand each party’s obligations and to hold companies and government to account. We believe that natural resources are more likely to be managed in the best interests of a country’s citizens if there is this transparency.
Did you have any concerns about confidentiality and commercial sensitivity? If yes, how were these overcome?
Of course, companies have to be careful about disclosing confidential or commercially sensitive information. Every company faces different circumstances. We have worked closely with our legal department on our approach and are comfortable.
What impacts has contract publication had for Kosmos?
Contract transparency has helped us to build trust with governments and civil society in the countries where we work. It enables more informed, open discussion about resource governance and our activities offshore, and gives a clear understanding of roles and responsibilities. Ultimately, it helps citizens to hold companies and government to account, making it more likely that resources will be managed in the interests of a country’s citizens. We believe that this in turn creates greater stakeholder support for our activities, and in the long run, a more stable and supportive operating environment.
Our approach also supports our strong opposition to corruption and helps to mitigate real and reputational risks in this area. And it has earnt us reputational benefit, at the national and international level, helping, we believe, to establish Kosmos as a partner of choice.
Finally, investors have told us they support our approach to transparency as a way to help mitigate above-ground risk.
How might individuals and companies working in the oil sector use contract repositories like resourcecontracts.org?
Resourcecontracts.org is a very helpful website, serving as a single place to find any contracts that have been placed in the public domain. Repositories like that improve transparency, and shortcut the research process for anyone looking into resource governance or a particular country, company or project. That helps stakeholders to put the data that transparency generates to practical use – crucial if we are to turn transparency into good governance outcomes.
What advice would you have for companies that are thinking about disclosing contracts for the first time?
Each company faces its own circumstances and we cannot speak to what others should do. We have seen great benefits from our approach, and with time it seems that more and more companies are seeing the advantages of this too.
About the author: Sophie Durham is a Senior Advisor in External Affairs and Social Performance at Kosmos Energy. She leads the company’s approach to transparency, stakeholder engagement and social performance in several countries in West Africa and works on corporate-level initiatives.