So what stops Kenya publishing its contracts?

The World Bank has just recommended among other things that Kenya should publish its oil and gas contracts. The government could modify the terms of its contracts, said the consultants from Challenge Energy, to allow publication and create greater transparency.

Great! Except… the copies of the model contract we find show no obligation to keep the contract confidential in the first place! So by framing the issue as one where the government must – and should – modify the agreement to allow publication, the World Bank is, perversely, reinforcing a concept of currently prevailing confidentiality that has no basis in the model agreements.

This might seem like a fine distinction. But in the debate around transparency we frequently find “if only” statements, of which the least that can be said is that they are not helpful. We’d love to publish, if only we could, it’s just that the contract, our partners, other undisclosed circumstances don’t allow us to…

Down the East African coast, Mozambique’s mining minister Esperanza Bias  in May said that of course all efforts should be made to create transparency. But it shouldn’t be understood that this will include publishing the contracts, she added in a press conference at, of all places, the EITI summit in Sydney, because “business is business”. That conveniently ignored the fact that Mozambique’s model agreements also do not prevent publication. Like many modern petroleum contracts, obligations of confidentiality are subject to requirements under applicable law – in this case the law of Mozambique. In other words, if Mozambique’s parliament passed a law requiring publication, that requirement on the government would release it from any contractual obligation not to publish.

With Kenya the case is even less distinct. In two versions of the model agreement that we have found, including this one published by the University of Dundee, the clause around confidentiality states only (clause 37.1) that “All the information which the contractor may supply to the Government under this contract shall be supplied at the expense of the contractor and the Government shall keep that information confidential”. Information supplied by the contractor. It is highly questionable whether the contract itself, signed by both parties, normally containing no commercially proprietary information belonging to the contractor, would count as supplied by the contractor.

Secondly, clause 37.2 states: “Notwithstanding sub-clause 37 (1), the Minister may use any information supplied, for the purpose of preparing and publishing reports and returns required by law”. In other words, even if you were to accept that the contract itself fell under a category of information supplied by the contractor, if law required either party, then this obligation would be waived. In the case of the Kenyan model agreement the applicable law pertaining to the whole contract is Kenyan law itself. Therefore we reach a situation similar to Mozambique – there is nothing in the contract which would prevent the Kenyan government publishing the contracts if parliament passes a law saying they should. They would not need to negotiate this with the oil companies.

The only remaining question is whether the signed agreements contain the same provisions as the model agreements. We cannot know for sure – since of course the signed contracts are secret, which is the whole debate! But the fact that two separate versions of the model agreement prepared a decade apart contain exactly the same clause on confidentiality would suggest it is unlikely these particular clauses have been changed from the model.

These might seem like lawyerly word games with little relevance for the nascent industry, or the huge expectations it is arousing, or the millions of Kenyans hoping for a better life from their coming oil and gas industry. But it isn’t.

One interpretation, the World Bank’s, says Kenya should publish the contracts at some time in the future when they have been able to modify the agreement, for which they would certainly need to negotiate with the companies. We are in a world of wishes and plans and if-onlys. This is further reinforced by more statements by the consultant proposing that “Kenya publish new and existing production sharing contracts only to the extent permissible under the applicable confidentiality provisions.” So what are the restrictions then under the confidentiality provisions?

The other says they could publish today if they wanted. Or, if they really wanted to play safe, they could pass a law in parliament making it law. In either case, the prerogative to do this already rests with the Kenyan government, which needs no approval from its commercial partners.

It’s a big difference.

Below is the entire text of the confidentiality clause, just for the record…

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37. CONFIDENTIALITY

(1) All the information which the contractor may supply to the Government under this contract shall be supplied at the expense of the contractor and the Government shall keep that information confidential, and shall not disclose it other than to a person employed by or on behalf of the Government, except with the consent of the contractor which consent shall not unreasonably withheld.
(2) Notwithstanding sub-clause 37 (1), the Minister may use any information supplied, for the purpose of preparing and publishing reports and returns required by law, and for the purpose of preparing and publishing reports and surveys of a general nature.
(3) The Minister may publish any information which relates to a surrendered area at any time after the surrender, and in any other case, three (3) years after the information was received unless the Minister determines, after representations by the contractor, that a longer period shall apply.
(4) The Government shall not disclose, without the written consent of the contractor, to any person, other than a person employed by or on behalf of the Government, know-how and proprietary technology which the contractor may supply to the Minister.

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