Local content and corruption in the oil and gas industry

Filed under - Oil and gas

Published on 16 December 2014 as a U4 Helpdesk answer
What has been the experience of corruption in local content, particularly in oil and gas? Are there any practices or approaches on how anti-corruption has been integrated into local content programmes?

Purpose

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Content

  1. Introduction to local content in the oil and gas sector
  2. Corruption risks in local content policy in the oil and gas industry
  3. Anti-corruption mechanisms adopted in local content in the oil and gas sector
  4. References

Summary

Local content policies in the oil and gas sector aim to encourage the participation and development of domestic industries and labour, as well as to support the transferring of technology and capital. Local content rules are seen as a promising way of promoting social and economic development in resource-rich countries.

However, if not implemented carefully and if not subject to public oversight, local content can also be prone to corruption. Politicians and public officials may abuse their power and influence to use local content requirements to benefit their allies and/or family members, and international companies may pay bribes and kickbacks to local companies to serve as the “front” in bidding processes in order to gain access to oil agreements, among other irregularities

Preventing and curbing corruption in local content requires a set of measures aimed at enhancing transparency and accountability in the public administration, including rules on conflicts of interest, asset declaration, public access to information, as well as strong oversight mechanisms. More generally, to prevent corruption, some of the countries requiring local content in the oil and gas industry have included anti-corruption clauses in their licensing agreements, published contracts and implementation monitoring reports online, committed to disclose beneficial ownership and established clear rules on public procurement.

Author(s): Maira Martini, Transparency International, tihelpdesk@transparency.org
Reviewed by: Marie Chêne, Transparency International, tihelpdesk@transparency.org Craig Fagan, Transparency International, tihelpdesk@transparency.org
Publication date: 16 December 2014
Number: 15

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Country / Territory - International   |   South Sudan   
Region - Global   
Language(s) - English   
Topic - Oil and gas   
Tags - Development   |   Local governance   |   oil and gas   

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