News

Maplecroft reports place environment and corruption among top risks for energy companies in Ghana, Côte d’Ivoire and Senegal

23/06/2010

The oil and gas resources being discovered in West Africa have become very attractive to the energy sector, which is seeking new foreign investments with easy links to European markets. However, oil and gas companies investing in Ghana, Côte d'Ivoire and Senegal need to be aware of operational and reputational risks arising from environmental and regulatory issues according to three new in-depth country risk reports released by Maplecroft, the risk intelligence and rating company.

According to the reports, oil and gas companies investing in off-shore drilling need to pay particular attention to the environmental impacts of operations. Proposed oil activities in Ghana and Côte d'Ivoire are concentrated offshore and risks include coastal erosion, marine pollution and impacts on fishing communities. There are also the risks of oil spills, which can impact food production, tourism, the health and livelihoods of those who inhabit the coastal regions.

The reports state that operators would be well-advised to adopt high operational standards and self-monitoring to make up for ongoing public sector capacity deficiencies and the risk that environmental degradation may create local resentment and attract international negative attention. These risks will need to be managed carefully, notably because of the presence of protected areas near to existing operations and offshore oil and gas blocks.

Despite Senegal having limited domestic proven oil and gas reserves, environmental risks still remain for companies involved in exploration and possible future extractive operations. Government reports indicate a lack of respect for planning laws and, for many years, a lack of implementation and enforcement of environmental impact assessment (EIA) requirements in coastal zones. If this continues and EIA requirements are not enforced in the oil sector, it is possible that there may be implications in terms of risks and impacts at sea and along the coast, particularly within the Senegalese fishing industry.

Energy companies operating in Senegal can also regularly encounter corruption. Maplecroft's Legal and Regulatory Environment Index (LREI) ranks Senegal as high risk, with particular weaknesses in the lack of judicial independence, widespread corruption affecting the legal system, as well as poor respect for property rights and the failure of legal measures in addressing child labour and discrimination.

In Côte d'Ivoire corruption is particularly notable in procurement processes. However, government efforts to improve overall transparency are underway with support from several multilateral donors. Côte d'Ivoire became a candidate country in the Extractive Industry Transparency Initiative (EITI) in May 2008 and it is due to become compliant and publish its first report in May 2010. EITI approval would cast national oil and gas operations in a favourable light and reduce scope for future reputational risks for investors and their operations.

Despite a number of anti-corruption initiatives and the creation of official bodies and civil society initiatives, corruption still poses a risk to oil and gas companies in Ghana. The country is rated "high risk" and scores 2.65 out of a possible 10 on Maplecroft's Business integrity and corruption index and moreover, in the 2007 World Bank Enterprise Survey for Ghana, 61% of respondents expected to give a gift to secure a government contract.

The three in-depth country reports provide comprehensive risk analysis broken down into individual chapters focusing on: government and geopolitics, macroeconomics, emerging powers, energy security, business integrity and corruption, societal and human rights issues, security and climate change and the environment. They not only provide expert analysis and country scores from Maplecroft's 100+ risk indices, but also feature innovative sub-national maps illustrating political, societal and environmental risks to the energy sector. In addition, stakeholder viewpoints and key recent events are also included.

In-depth reports are available for all countries, issues and sectors. For more information and pricing details contact - info@maplecroft.com. To see examples of Maplecroft's in-depth country reports register for trial access on the Global Risks Portfolio