Corruption and theft in the global oil and gas sector

Our Think WIDER Webinar Series – New perspectives on domestic revenue mobilization continues on 18 April 2023 at 16:00 (UTC+3) with a presentation and a panel discussion on corruption and theft in the global oil and gas sector.

About the session

Estimates of global foreign bribery suggest that 20% of transnational bribes are linked to the extractive sector. Corruption is prevalent in the oil, gas, and mining industries. Another often overlooked issue in the extractives sector is organized theft. At USD 133 billion annually, oil is the largest stolen natural resource globally, while fuel is the most smuggled natural resource.

The awarding of exploration licenses for oil blocks is a very delicate moment for countries with oil and gas resources. Exploration licenses awarded by public authorities give the license holder the exclusive right to explore for oil and gas within the specified block.

A recent WIDER Working Paper covering 119 countries over the period 1990–2014 shows that within six months of awarding a license the number of shell companies with accounts in tax havens increased by 11% on average. This suggests a link between the issuance of oil exploration licenses and the founding of shell companies in tax havens, indicating a heightened risk of corruption in the award of the license, as well as a potentially large loss in revenue to the state.

Two other UNU-WIDER studies examine global oil theft and how it can be reduced. Oil theft equates to 5–7% of the global market for crude oil and petroleum fuels. It is so engrained in the energy supply chain that thefts are priced in by traders and tolerated by many shipping companies as petty theft. The proceeds of oil theft often finance other organized crime, triggering violence within communities, and disrupting international trade, resulting in an even greater loss of revenue for governments from the oil sector.

This one-hour event shares research findings and policy recommendations on these topics that have major implications for extractive abundant countries in the developing world, their revenues, and their prospects for achieving the Sustainable Development Goals (SDGs).

Findings from the research are presented by Etienne Romsom (EnergyCC) and Giovanna Marcolongo (Bocconi University). Steve Kayizzi-Mugerwa, Senior Consultant and Researcher at Zziyika and Associates LLC joins as a discussant. The event is chaired by UNU-WIDER Non-Resident Senior Research Fellow Tony Addison, Professor of Economics, Development Economics Research Group, University of Copenhagen.

About the speakers

Etienne Romsom is the President of EnergyCC, the mission of which is to encourage collaborative projects on the extractive sector to scale up climate action. He is a former Global Executive Vice President for DNV GL and Managing Director of Shell Exploration & Production in Kuwait, where he developed and led complex projects in oil and gas. He has authored two WIDER Working Papers on global oil theft (see here and here), and co-authored two WIDER Working Papers on hydrocarbon gas flaring and venting (see here and here).

Giovanna Marcolongo is a postdoctoral Fellow at the CLEAN (Crime and Law Economic Analysis) unit at Bocconi University where she works on topics on crime economics and political economy. Her recent research has focused on the participation of organized crime in the legal economy and on the role of shell companies in tax havens as facilitators of corruption. She completed her PhD in Economics at Boston University in 2020.

Steve Kayizzi-Mugerwa is Senior Consultant/Researcher at Zziyika and Associates LLC, US. He studied at Gothenburg University, Sweden. He has been an official of the African Development Bank, staff member at the IMF, research fellow at UNU-WIDER and consultant for the UNDP and the EU. He has taught and/or researched at Georgetown, University of Capetown, Makerere and Nairobi, and has provided advisory services to several African countries and international development agencies. He was most recently a member of the Indepedent Evaluation Office Team that evaluated the IMF's response to the COVID-19 pandemic, focusing on African countries.

Tony Addison is a Professor of Economics in the Development Economics Research Group of the University of Copenhagen. He was a Chief Economist and Deputy Director of UNU-WIDER in Helsinki, Finland, in 2009-2019. He was previously Professor of Development Studies at the University of Manchester; Executive Director of the Brooks World Poverty Institute (BWPI) of the University of Manchester (from 2006-2009); and Associate Director of the Chronic Poverty Research Centre (CPRC).