Tullow Oil Raises Regime Change Fears in 2012 Annual Report
Tullow Oil has named bribery, corrupt practices and regime change as key risks that could potentially affect the company’s business in the oil industry.
In a 2012 annual report, Tullow Oil, the parent company of Tullow Uganda, outlined several risks that it said could affect their performance. The risks include bribery and corruption, oil and gas price volatility, information and cyber security, political and social risk, governance and social security and loss of key staff among others.
The mentions especially of bribery and corruption come at the time when there have been claims that Tullow made attempts to bribe Uganda government officials despite denials from the company. The allegations, which emerged during a court session in London, prompted President Yoweri Museveni who is alleged to have been the target of the bribe to summon an investigation to establish the truth.
Tullow said in the annual report that the company believes the risks could potentially adversely impact their employees, operations, performance and assets. The company says it would rollout a Code of Conduct training. It adds that corrupt actions or practices in the Group’s activities leading to prosecutions or investigations could sever its reputation leading to loss of shareholder value.
As such it said Graham Martin, Tullow Group’s General Counsel & Company Secretary, had been tasked with ensuring strong governance across all Tullow activities and continues to build trust and reputation with all stakeholders.
He is also expected to implement a mitigation system that involves consistent ethical standards established by applying the Code of Business Conduct and through contract and procurement procedures.
On political and social risks, the oil company announced that it would nurture long-term relationships with local governments, communities and key stakeholders. It said Aidan Heavey; the Group’s Chief Executive Officer would preside over the task of mitigating the risks.
The company said it also fears that changes in political regimes could lead to re-negotiation of licences and agreement terms or delays in grants of licences and approval of agreements. It said the tasks would be mitigated through early identification and ongoing monitoring of political and social risks and opportunities.
Aidan Heavey, Tullow’s Chief Executive Officer, said there were strategic priorities aligned with key risks to the company’s long term performance.
Tullow is one of the three oil companies presently operating in Uganda following a farm-down of two thirds of its Uganda interests to Total and China National Offshore Oil Corporation (CNOOC) at a cost of 2.9 billion dollars in February 2012. The firms are currently waiting for government to endorse their plan to extract oil from the Albertine region before embarking on major oil production activities.