INNOVATION E: EMPLOYMENT (.- ?gf MINISTRY OF BUSINESS, 5. BRIEFING Information on the Extractive industries Transparency Initiative Date: 4 Fe t?rruari.r 2014 Priority: Routine Security in Confidence Tracking number: 1645 13?14 Classification: ACTION SOUGHT A :9 (RN 5W) Action sought Hun Simon Bridges Note the contents of thIs Minister of Energy and Resources CONTACT FDR A I ?4 TElephone lstcontact 04 901 33?? Rqsource ts AW DA Manager, Resource D4 901 1556 7 533(3) A A 3 ?cats Policy Policy Adviser DLLOWING DEPARTMENTSIAGENCTES HAVE BEEN CONSULTED Name MSD El NZTE lj Treasury com TEC El MFAT Doc El El Other I 7w ace-i Please specifyr is Lisa I. .I I. Mr" E: 7 Ministe 's 'e?ta?Corr?Ip'le e: Approved Declined 1 HEB Noted Needs change .- 0' I: I t? WWII Mil' Till-1:. 7'13 ?i IT See Minister?s Notes Withdrawn KBRIEFING NUMBER: 16451344 I . MBIE a BRIEFING: INFORMATION oN THE EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE. up COMMENTS EXECUTIVE SUMMARY . ave been able to vantf a an independent scoping ments required for New inis?try com?miSsioning an identify only likely costs and benefits. The nature . a. study. Should you wish to investigate further - ?d Zealand to comply with the ElTi Standard 1. Bl -. I. independent scoping study. 'tandard relates to the requirement to establish a opportunity to depolarise the current debate around - as USECI for freshwater resources With the establishment of i is considered largely successful in bringing together stakeholders A potential benefit if New 2 mold?stakeholder grou minerals and pe orga ations.@ The @i uld also need to consider the commitments, costsa and _risl_<_s gtbegqming E_lTl Comp?ant :h/e kes any formal commitments. 3 BRIEFING NUMBER: 1645 13?14 MBIE BRIEFING: INFORMATION ON THE EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE. IN GONFIDENCE RECOMMENDED ACTION The Ministry of Business, Innovation and Employment recommends that you: a Note the contents of this? briefing Noted and Agree to discuss with IVlinixs'trI,r officials an independent study of the costs and be'nefits of EITI compliance for NEW Zealand before any formal commitment is considered Agreed Disagreed i Andrew Miller Acting Manager, Resource Markets Peliev BRIEFING NUMBER: 1645-13-44 I 7 7 MEIIE BRIEFING: INFORMATION ON THE INDUSTRIES TRANSPARENCY INITIATIVE. IN GDNFIDENCE introduction 1. Your office has requested more information on the Extractive industries Transparency Initiative (EITI) following correspondence with the British High Commission. 2. This briefing note provides a high level summary of the the possible benefits to New Zealand should it become an EITI Compliant Country, and the complexities and costs of compliance. 3. Consideration of whether to become an EITI Candidate Country is a complex matter. We recommend that should you be interested in pursuing the matter further, a scoping study is undertaken before any formal commitment is made. Such a study can provide a high level of detail and inform estimates of the commitment the government would need to undertake in order to become an EITI Compliant Country. About the EITI 4. The EiTl is an international standard that ensures transparency?around countries? oil, as and mineral information on the EITI is attached as Annex 1. 5. The EITI was launched in 2002 with the objective of improvin ating to the governance of natural resources. Since then, the pe . EITI have increasingly applied to OECD countries as well as -. . Kingdom, France, and the United States have committed to the - .. - rently piloting the EITI. South?East Asia currently has three EITI - amor, and the Philippines. 6 A number of international stair 7 support the EITI. Non-governmental organisations Tra nsparen .- r'ters of the EITI in other Countries. Companies who oper include Newmow . - -. 'enti . gth?am publish regular reports that disclose revenues from the '5 na al resources. Companies report payments to government (Le. taxes, nt reports what it has received. A process of external validation reconciles published in an EITI Report. 8. . ntry can be an EITI Compliant Country, it must be an EITI Candidate Country. Being'an EITI idate Country requires the government to make unequivocal statements around its intentions to genome EITI Compliant. It also requires the government to establish a multi?stalteholder group to oversee EITI implementation. Once an EITI Candidate country has met the sign?up requirements it has two and half years to meet the remaining requirements for compliance to the EITI Standard. A country is designated as an EITI Compliant Country when the EITI Board considers the country has met all seven of the EITI Requirements. Further detail on becoming and EITI Candidate Country and EITI Compliant are attached as Annexes 2 and 3. 9. Being EITI Compliant does not necessarily mean the extractive sector is fully transparent, but it means there are satisfactory levels of disclosure and openness in the management of the natural resources, as well as a functioning process to oversee and improve. disclosure. BRIEFING NUMBER: 164513?14 MBIE BRIEFING: INFORMATION DN THE EKTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE. IN CONFIDENCE 10. The has four key points of difference from other efforts to improve revenue transparency: a While the EITI upholds an international standard, how the standard is implemented is a flexible process that each country can determine for itself. This flexibility allows each country to adapt the implementation process to reflect local circumstances, needs or preferences. The ElTl can expand beyond publication of financial revenues and monetary flows. Countries implementing the have a multi-stalteholder group for dialogue about a broad range of aspects of the use of their country?s natural resources. This can include discussion relating to the environment, ownership and allocation, and benefits from revenues. The EITI requires bothcornpanies and governments to report on revenue flows relating to minerals and petroleum extraction. An independent reconciliation occurs between what companies report paying to the government, and what the government says it has received from companies. In doing this independent reconciliation, discrepancies and inaccuracies are uncovered and can be acted upon. disclosure; the threshold at which disclosure applies" Further information required 11. 12. are about Australia and Norway's experiences with the EITI could be aland commits to becoming an EITI Compliant Country. Such a study could . Ion and discussion with parties who may have an interest in the EITI, including Po its of New Zealand becoming an EITI "Compliant Country ficials have identified a number of potential benefits for New Zealand if it were to commit to becoming an EITI Compliant Country. The benefits identified are not an exhaustive list, and the scale of any benefits has not been quantified.- to adjust EITI requirements to best suit New Zeoiond 14. A potential benefit for New Zealand if it chooses to become an EITI Compliant Country is the ability for the government and mold?stakeholder group to consider how best to implement the EITI domestically. This flexibility gives New Zealand a wide scope. in which it can achieve EITI compliance. 15. Specific ways in which New Zealand can implement the EITI standard are best identified as part of an independent scoping study. BRIEFING NUMBER: 164513?14 7 7 MBIE BRIEFING: INFORMATION ON THE EXTRACTIVE TRANSPARENCY INITIATIVE. IN Replicating the success of the Land and Water Forum for resource extraction 16. Currently there are strongly held views in New Zealand about the merits and costs of petroleum and minerals extraction. This highlights the need for greater social consensus ovEr the role of petroleum and mineral extraction in New Zealand's economic. future. Currently polarised opinions impede discussions around what is responsible development and how New Zealand can best pursue resource extraction. 17. There are similarities between the conversations on minerals and petroleum development and previous conversations around freshWate'r resources in New Zealand. For freshwater resources, the government decided to trial a multi-stakeholder group to see if such an approach were effective at depo?larising the debate and building consensus where there were commonly held views. The Land and Water Forum (LAWF) was established in 2009 to bring together representativies from across the spectrum who had an interest in freshwater. The LAWF included members from dairy and commercial 1 -. users, environmental ?it. 18. For New Zealand the use of a multi-stairehoider spectrum to discuss the issue places the themselves. As experienced in the LA th' to break down barriersthe key benefits of becoming EiTl corn pliant nsparency of both the New Zealand government and business in Budget index.1 New Zealand is also ranked first equal by the non?government organisation nsparency international for perceived levels of publicsector corruption. If government information is not already published, the Official Information Act 1982 (with oversight from the Office of the Ombudsman) can be used by individuals to disclose activities and fiscal information. In keeping with good government practice and the business growth agenda, government agencies including New Zealand Petroleum and Minerals, Statistics New Zealand, and publish a number of documents on a regular basis that contextuaiise and discuss minerals and petroleum extraction. and related activity Publically listed companies in New Zealand are subject to a high level of scrutiny, as are companies operating in New Ze'aland that are listed in other countries. Privately owned companies (be. those not publically listed) are still required to register with the New Zealand Companies Office, and file shareholder and director details, as wait as annual returns. While not ail information is public?ally availabie,. the level of information that is available is still considerable. 1 The Open Budget Index is published by the international Budget Partnership, with the latest'internationai rankings being published in 2012. BRIEFING NUMBER: 154513?14 MEIIE BRIEFING: ON THE EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE. IN CONFIDENCE New Zealand?s permit management system for minerals and petroleum activity is very transparent. makes publically available information on all currently held permits, including owner and operator details, and permit conditions. Poesible costs of New Zealand becoming an EITI Compliant Country 20. 21. 2.2. 23. 24. Officials have identified a number of possible costs and likely obligations for New Zealand if it were to commit to becoming an ElTl Compliant Country. Like the benefits, the costs identified are not an exhaustive list, and the scales of any benefits have not been quantified. While New Zealand is already operating many of the EITI requirements, agreeing to become a ElTl compliant country will require the government to go beyond current practices and institutions. Most notably, the establishment of a multiastakeholder group will require a number of commitments from the government, including resourcing requirements. A multi?stakeholder group is likely to be like the LAWF, a sector governance initiative. While the current government focus is?on increasing minerals and petroleum exploration and activity, ublic commentary and focus appears to be firmly on the environmental aspects of activity. The ishment of a ulti- stalceholder group will need to recognise this focus and accommodate it. - hich minimises or ignores the focus risks losing stakeholder participation group. Converse arefully consider the implications of requiring on?going external monitoring for this ell as the risk and consequences of not being ElTl compliant in the future. BRIEFING NUMBER: 164513-14 MBIE BRIEFING: INFORMATION ON THE EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE. IN CONFIDENCE AnneX?s Annex 1: EITI Factsheet BRIEFING NUMBER: 164513-14 MBIE v- ERIEFING: INFORMATION ON THE EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE. IN CONFIDENCE Extractive Industries Transparency Initiative What "is the The Emanueindustresira?nspareniey l?i?atitle (EITI) is a. global ?eoal'rtion'of governments. companies and civil society working togetherto imlareveegenn?eis?s: and atgeuntableimanagern?rt 4 of Ine?tur?aiiresey this. Why do we need the Natural resources. such as oil. gas metals and minerais belong 105 country 9 means of these resources can iead to economic growth and social development However, when noorlv managed it has too often led to corruption and even con?ict Mme openness around how a country manages ITS. naturai resource wrealli'i IE necessal To ensure that these can bene?t all citizens Efilfa ctsheetZOi 3 ?seven-requirements - [harder-tow recognisena: fuii'epenaessei managed I in disclose iaxes?andla?t?er HQ mining smaniesm 949%. The?e?pca?fr must - .aboutthe? se? . dam. state-ownershin licensing infer-nation, staan and irf?rasfr?c'ture investments ibis 2H to include additional information such as- - Transparencyan only lead to accountability there-is un?e?tanci'rng of Whatw?gu?r?s" mean and pubiic?de?oaiecakgout'howtne aquarsz mseh?emal?n 'smuidhemanagezd. Therefore. me;EfFl'Stan defereguires f?a?tEFlReno?'s ar?comi?arEE-ien?ibie, cont-Winona pnBlic debate. EITI factsheei What are the bene?ts of the Governments fellowing anintemation?aliy recognised transparency era-to reform and antiecorrup?onandi leads to improvements to thetax? coil?ection processrand enhanced trust m?a?volat?e?secton Companies .zbene?t'from ,agieveiplaying j?eld-?inwhich ail compo anaemia-[mired information-They aISoigene?t from an improvedand morestable investment climate in whichtiiey can more e?ecthrelye'ngage with citizens enclcivll snei?t'y, Gtizens and civil society'bene?t from receiringreliabie information abaucthe sectorvand a: multi-slakeholder platform wh ere they-,canxhetter hold the governm entanci co moanies to account. . Energy security is enhanced by amoretiensparent and level playing ?eldIhiS-in'creased stability encourages investment in production - and this improve-sine reliability of supply. How does it work? Er?! implementing countries each have their own national secretariat and multi?stakeholder group with members from government, cor-no.5. was and socier Representatives from Inunhenzentmg countries save on the mternatrenai EITI l-JOmd The EITI International Secretariat serves the car.an and manages the daily Othallcm of the EITI at a global level The EITI Standard Licenses 8: contracts Revenue Expenditure distribution 1/ management hf if! a .- - collection if 3, i a- Government discloses revenL?Ies or: Wes k??u . Jul-C?. .. disciose payments -_Social and infrastructure investments (required) Transfers to local government (required) Production data (required) Licensing Emmi?? information transparency (required) (encouraged) Transit payments Bene?cial (encouraged) ownership (encouraged) State ownershi (required;3 lie ?ndings are communicated company'payments are disclosed to create public awareness and together?with contextual ebate about how the country informationand independenth ould manage its resources assessed in an EITI Report. er. A national group (government, industry 8: civilsociety) decides how their EITI process should work. ElTIfa-ctsheet2013 The ElTl Requirements A government intending to implement the Standard steps before. applying to the international EITI Board for EITI announcing a'clear statement of the-government's commitment, sets objectives for what the country wants to achieve with their-El a to reach EITI Compliant status and establishing a multi-stakeholder'gre companies and civil society. EITI REQUIREMENT 1 The EITI requires effective oversight by the mold-stakeholder group. EITI REQUIREMENT 2 - The EITI requires timely publication of em Reports. EITI REQUIREMENT 3 The EITI requires El'l'l Reports thatinclude contextual information about the extractive industries. EITI REQUIREMENT4 The ElTl requires the production of comprehensive ElTl Reports that include full government disclosure of extractive industry revenues and disclosure of all material payments togovernment-by oil, gas and mining companies. em REQUIREMENT 5 The ElTl requires a credible assarance process applying international standards; I 6 EITI REQUIREMENT 6 The EITI requires ElTl Reports that are compreh?nsible, actively promoted, publicly accessible. and contribute to public debate. EITI REQUIREMENT 7 The EITI requires that the multi-stakeholder grouptakes steps to act on lessons learned and review the oUtcomes and impact of ElTl implementation. ElTlFactsheeth 3 Progress of the EITI 2 39? Flscalpe?uds coveredan Reports US $200 bn ?39 Total Worth of revenue discl used- l2 Compliant countries 97 Fiscal period: covered in Reports bn it? Totalwardi-ofmvanuedlsdascd 25 Compliantcourwles 1-80 Fiscal pariods covered In ElTIReporxs US Sl tr .- offmuezlledased 41 countries implement the EITI Supported by a large international coahhon 2 5 - Civil society organisations participate in the EITI directly and through Compllant countrles- a dead arly participate in the process thelFublish What-You Pay campaign, which is SUpported by more than Albania: Azerbaijan: Emma F350: Camemonr Central Africa? ntry a - . 'n implementing countries, 400 non-governmental-organisations worldwide. cote d?lvoire, Ghana, Iraq, Kazakhstan, Republic, Liberia, 'intema? - 9 . - industry associations.The EITI Mali, Mauritania, Mongolia, Mozambique, Niger, Nigeria, Nomay, has won th . vestment institutions that Peru, Republic ofthe Congo, Tanzania, Yemen and collectively-ma Zambia. International organisations supporting the EITI include theWorld Bank, international Monetary Fund-and the regional development banksihese organisationsprov-ide technical and ?nancial su pport'to implementing countries and support Eli?l outreach. A'number of governments support the EITI including: Australia, Belgium, Canada, Denmark, Finland, France, Germany, italy, Japan, the Netherlands, Norway, Spain, Sweden, Switzerland, the UK a nd the US. Thae governments provide poiitica I, technical and ?nancial support, both internationally and at the country level. They also provide whi?r?nancial suppo it through direct bilateral supportto El'l?l implementing countries orthrough a multi-donor trust fu nd managed by the World Bank. 1 6 EITI Candidate countries: Afghanistan, Chad, Democratic Republic of Congo, Guatemala, Guinea, Honduras, Indonesia, MadagascacthePhilippines, Sierra Leone, sac Tom? and Principe, Senegal,-Sdlornon lsla and Tobago and Ukraine. Several other countries haveslgnalled . . I . their intention to implement the EM and arewotking toward. .5 1? - - completing the sign-up steps, including: Colombia, Ethiopia, France, Germany, Italy, Papua New Guinea, the UK and theUS. 35 countries have produced ElTl Reports. 1 81 ?scal periods e- EITI has also been endorsed by therefrician Union, the European covered in EITI Reports. Union, GB, GED, the International liZl'rganisation of Lia?ancophonie and the United Nations. Over us 5 1 trillion in revenues disclosed inElTlReports a - .. . Websiteww.eiti.org Compliant countries - a avisit the EITI website or Ema? ?am?iwem'y . Candidate countries mar @ElTlorg- Telephone 447222 on 800 Fax +0 228 30 802 Address on International Secretariat, . Announced commitment 16, to implement the Elli 0251 Oslo, Norway . . Suspended countries Annex 2: Immediate steps for New Zealand to be an EITI candidate Country Following completion of these actions, NZ will have 24 months to implement the requirements of becoming EITI compliant.- - The government is required to ISSUE: an unequivocal public statement of its intention to implement the EITI. - The government is required to appoint a senior individual to lead on the implementation of the ElTi. I The government is required to commit to work with civil society and companies, and establish a multi? stakeholder group to oversee the implementation of the EITI. I The multi?stakeholder group is required to maintain a current workplan, aligned with the requirements established by the EITI Board. BRIEFING ?13-?14 MBZIE BRIEFING: INFORMATION ON THE EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE. IN CONFIDENCE Annex 3: Table comparing EiTl Compliance requirements and New Zealand?s current status in relation to the requirements. BRIEFING NUMBER: 1645 13?14 MBIE BRIEFING: INFORMATION ON THE E-XTRACTIVE TRANSPARENCY INITIATIVE. IN EITI Requirement New Zealand?s current compliance What is still required a The EITI requires-.effeCtive oversight by a multi~stakehold? group. 6 Establish a multi?stakeholder group. This could take a similar form as the Land and Water Forum. The multi?stakeholder group will need to establish an agreed workplan with set timeframes. The multi-stakeholder group will require government commitment and oversight. The EITI requires timer publication of EITI Reports. already published on ElTl compliant - - crrnation that could be include l?v?lBlEJr New Is, the Treasury, the New Zealand Companies Off Nonrgovernmen . provide informa including compame stock exchange- it periodical EITI Report is still required to be published (which can draw on information from other reports and sources). The. ElTi requires ElTl R'eportsathat'include contextual information about the-extractive industries. This information should include a summary desoription of: the legal framewo rk-and ?scal regime; together with-an overview-of:-the- extractive industries - the. extractive industries?" contribution to the economy productibn data - state participation in the extractive industries ?.revenue allocations and theasustaina'bilitv of?revenues - license registers and license allocations; -'any applicable provisions related to bene?cial ownership and contracts New Zealand governmen A a number of contextual rape and petroleum extraction in i - . an . specific req?uirementjsidenti?ed left re alrea dv met through the various 1'0 ns produced by New?Zealand Petrole office of the Parliamentary Commissions Environment and the Waite ng?i Tribunal hav? provided contextual information relating to extractive industries. Bl ?ElTl Requirement New Zealand?s current compliance What is still required The EITI requires the production of'comprehensiveJE Reports that include full government disclosure of extra: industry revenues, and disclosure of all-material payme to government-by oil,?gas and mining companies; Zealand alreadyr makes?this information so that transactions reiating- to anies are not identi?ed. iv A periodical Report is still required to be published (which can draw on information from other reports and sources}. The disaggregation of transactions will likely require voluntary agreement from companies, including privately owned companies, or a change to existing laws. The requires a credible assurance process applying internationalstandards". The EITI Report must be endorsed by the. mum?stakeholder group. requires EITI Reports that are. comprehensible, actiVel?y promoted, publicly-accessible, and contribute to public debate. The EITI requires that the multi?sta kehoidergrouptakes steps to act'on lessonleearned'and and impact of' implementation. group. met until New Zealand becomes an EITI Candidate and 3 OF BUSINESS, INNOVATION EMPLOYMENT HIKINA BRIEFING International Energy Relationships and Transparency Initiatives Date: 14 February 2014 Priority: Routine Security In Confidence Briefing number: 1856 13?14 Classi?cation: ACTION SOUGHT Action sought De??ge /3 Hon Simon Bridges Note the contents of this briefin?w Minister of Energy and Resources V4 CONTACT FOR TELEPHONE DISCUSSIUN (IF Name Position A 15t contact Andrew Crisp DCE, nfras? b0 mes PadlAlexander Mes $3494 2513 SQWB) I 1/ 5 emu: (D THE [w AGENCIES HAVE BEEN CONSULTED M53 1) Treasury El comu Other 0 Please specify Mlnister's Offic "tggomplete: El ApproVed Declined Needs change . the 9' i Overtaken by Events 1 flu. FEW El See Minister?s Notes El Withdrawn COMMENT . ?ii-"Curran; INFRASTRUCTURE AND Resouece Manners 33 BOWEN STREET. P0 Bax 147s. WELLINGTON 6140 New ZEALAND .INFOQMBIE.GDVT.NZ +54 4 472 ousc - +64 4 499 0969 on +64 4 473 7010 EXECUTIVE SUMMARY Out of Boone Officials recommend gaining a greater understanding oft though consider there are more pressing priorities, in prior to focusing on an international transparen MBIE-MAKO-14526740 PREPARED BY PAUL ALEXANDER BRIEFING RECQMMENDED ACTION The Ministry 'of Business, innovation and recummends that you: a Note the proposed priorities for ihternatipnal engagement set out in this in?ating,- and that "the Extractiues Industry Transparency (initiative, whilst Worth investigating- ?f?urthe'r, Would be better pursued Once stakeholder processes have evplvegl further. i '7 7 I Paul Alexander . .7 Minister a Policy Director 7 Min? Resources, Energy Co m'rn u?nicatiunj?s Bfa'riCh' PREPARED BY PAUL ALEXANDER BRIEFING NUMBER: 185613-14 Introduction 2. Foltowing on from the conversation With MBIE officials on Monday 10 February prompted by the brief on the Extractive Industries Transparency initiative (EITI), this brief sets out some broader contextas discussed: Out of Scope I ., Transparency initiatives and investor perceptions of New Zeaiand as a destination for petroleum and minerals development, and howthe EITI fits:r and Out of Scope PREPARED BY PAUL ALEXANDER 1856 13?111 . . 4? i 6, 0?w?m.m - 4526740 P'Ramm?a a? PAUL Amman!)ng NUMBER: 1856 13-314 -1- . a . Bl E-?MAl?mu 1 4626.?40 PREPARED BY PAUL ALEXANDER BRIEFING NUMBER: 1856 131-14 Out of Scope Assessing the bene?ts of the Ti initiative within sociai iicen as priorities 1?4: 15. Within this context the EITI provides one mechanism to demonstrate a focus on effective stakeholder management, and transparency of government and extractive sector processes and information, though it would not necessarily be the place to start with such initiatives in New Zealand. This is for several reasons: a For many countries Who have signed up, a driver may be clear demonstration of measures to address on rruption, or perceived lack of transparency of process in government and in terms of buSiness taxes and payments to government. New Zealand consistently compares wail, in many cases exceptionally Well in relation to a lack of corruptionl, and integrity ofthe public service. New Zealand also topped the open budget index in 20122. ded to meet rating in As the report to you on EITI indicated, there may be some technical changes business reporting requirements, and noting the number of private com sector in New Zealand. :3 Stakeholder processes remain formative (as evidenced 5 part of your visit in order to gain a We would agree that it would be 1 . process. in particular, learning more clearer understanding ofthe . I 1 New Zealand was equal first with Denmark in the 2013 Global Anti?Corruption Perceptions Index 2 PREPARED BY PAUL ALEXANDER BRIEFING NUMBER: 185613-14 19. in conclusion, the ElTl appears a potential longer term programme to consider, and it 'will be helpful to gain more context from your visit to the Secretariat as to the approach taken by other developed countries where petroleum development is at a similar stage. However, officials recommend developing the focus on domestic social licence initiatives focused on regions where exploration activity is happening or likely to happen, rather than prioritising a transparency?related international initiative at this point. Current work on the regional benefits of development is a high priority, as well as ensuring messages are clear about petroleum development being part of a balanced energy portfolio, and how low emissions options such as natural gas, and renewables policies, position New Zealand well globally. Officials do not recommend commencing the process this. year, but would like to discuss further with you the priorities to improve the social licence to operate in New Zealand. PREPARED BY PAUL ALEXANDER BRIEFING NUMBER: 1856 13-14 Lji ?5345216746 BY PAUL ALEXANDER 8521551113 NUMBER: 11156 13-14 v, :5 h, (3. 310103) r; ~24: MBl?E-?M?a?owmszamn PREPARED BY ALEXANDER BRIEFING Nutmeg: 1856 13-1-4 Visit by Hon Simon Bridge Minister of Energy Raw Norway, the - Canada an [rah ZEDM- HON SIMON BRIDGES, VISIT TO THE UNITED STATES. NORWAY AND CANADA 17 6 MARCH 2014 Extractive Industries Transparency Initiative 07:15 03:00 (TBC), Friday 21 February You will be meeting With either Jonas Moberg, Head of Secretariat, or Eddie Rich, Deputy Head of Secretariat. Objectives - Gain a better understanding of the EITI 0 Gauge the potential costs and benefits of New Zealand a future - Gain a better understanding of the Norwegian roleu 5; regulatory regimes and whether any lessons th learnt? Background .1 0 be transferred to New 'Zealand. . oping nations. Norway, theIUnited Kingdom, es have committed to the ElTl. Adstralia and The EITI was I and accou ?g the perc be "31,9 International stakeholders who operate in New Zealand support the . - . n?go?vernmenta?l organisations Transparency International and Oxfam upporters of the EITI in other countries. Companies who operate in the inerals and petroleum sector who support the EITI in Other? countries include Newmont Mining Corporation (owners of Newmont Waihi Gold), Statoil ASA, and Royal Dutch Shell. Pic (Shell)- Countries implementing the EITI Standard publish regular reports that disclose revenues from the extraction of the country's natural resources. Companies report payments to government (is. taxes. royalties) and the government report's what it has received. A process of externai validation reconciles these figures which are published in an EITI Report. Before a country can be an EITI Compliant Country, it must be an ElTl Candidate Country. Being an EITI Candidate Country requires the government to make unequivocal statements around its intentions to become EITI Compliant. It also requires the government to establish a mold-stakeholder group to oversee EITI implementation. Once an EITI Candidate country has met the sign?up requirements it has two and half years to meet the remaining 41 of 323 Fit?3311 (tutti!) HON swom BRIDGES, VISIT TO THE UNITED STATES, nonwmr AND CANADA 17 FEBRUARY a 6 MARCH 2014 requirements for compliance to the EITI Standard. A country is designated as an EITI Compliant Country when the Board considers the country has met all seven of the EITI Requirements. Being EITI Compliant does not necessarily mean the extractive sector is fully transparent, but it means there are satisfactory levels of disclosure and openness in the management of the natural resources, as well as a functioning process to oversee and improve disclosure. The EITI has four key points of difference from other efforts to improve revenue transparency: - While the EITI upholds an international standard, how the .. . implemented is a flexible process that each country A A 'e for itself. This flexibility allows each country to adap - a The EITI can expand beyond publica' monetary flows. Countries impl to the environment, revenues. government says it has received from independent reconciliation, discrepancies and overed and can be acted upon. ccur "e rs a a significant proportion of natural resources are exploited anies that are not listed in the US or the EU. The ElTl requires cosure of all payments made by companies with material activities relating to minerals and petroleum extraction. Companies and individuals who have only a small interest in minerals and petroleum extraction can generally be exempt from disclosure; the threshold at which disclosure applies is determined by each country. Resources Markets Poiicy Ministry of Business, innovation and Empioyment February 2014 42of 323 MINISTRY OF BUSINESS, INNOVATION El: EMPLOYMENT HTKINA WHAKATUTUIH AIDE MEMOIRE Update on New Zealand?s position on the Extractive IndUstries Transparency Initiative for your meeting with the British High Commissioner Date: 12 November 2014 Priority: High Security In Confidence Tracker number: 092W Cla Information for Minister Hon Simon Bridges I 9 Minister of Energy and Resources ,4 DAV Contact for telephone . 1St Name A (CWWB 7 contact Andrew Miller @Wan L964 901 1556 I swig) esour PC?in ea Tins?or, fee?(2m: i rce Markets A olicy wigs; departmentslagencies have been consulted @?eewy NZTE mso [3 mo El MFAT El El DIA El TPK El MOH Other: NIA Minister's office to complete: Approved Declined Noted El Needs change Seen Overtaken by Events See Minister?s Notes I: Withdrawn Comments: MINISTRY OF BUSINESS, INNOVATION EMPLOYMENT HTKINA WHAKATUTUKI AIDE-MEMOIRE Update on New Zealand?s position on the Extractive Industries Transparency Initiative for your meeting with the British High Commissioner Date: 12' November 2014 Priority: High Security in Confidence Tracker number: 0921 14?15 Classification: Purpose 7 This aide memoirs provides you with an update on New Zealand' SW 3 0% industries Transparency Initiative in preparation for your i the Commissioner on Wednesday 12 November 2014. Acting Manager, Resourc n: more) MeInlg Ish High Commissioner v' . Wm with the British High Commissioner, Jonathan Sinclair, on Wednesday 12 Andrew Miller to ber 2014. Mr Sinclair has been High Commissioner since August 2014. 1 Sinclair has indicated he would like to discuss the Extractive industries Transparency initiative (ElTl). Talking points for this meeting are provided in Annex 1. The ElTl 3. The is an international standard that aims to improye transparency and accountability of oil. gas and mineral resource industries. 4. Countries implementing the standard publish regular reports that disclose revenues from the extraction of the country's natural resources. Companies also report payments made to governments and the government reports what is has receiVed. The process of external validation reconciles these figures which are published in an annual Report. 5. The EITI Secretariat is based in Norway and is overseen by an international board, with members from governments, companies and non?governmental organisations. Countries implementing the each have their own national secretariat and multi? stakeholder group. MAKE) NO: 21114203 Brie?ng No: 0921 14?15 Prepared by: In Con?dence 2 T. Launched in 2002, the perceived benefits of Implementing the have inoreas'ingiy appealed to Organisation for Economic Co-operation and Development countries as Well as devaloping nations. Current members. 3. A growing nUmber of countries are either compliant. candidate for becoming compliant or investigating compliance with the Standard. There are currently 31 compliant countries (predominantly in Africa) and 17 candidate countries. 9. This year the United States and the United Kingdom were accepted by the Board as Candidate Countries. Other countries have expressed interest in joining the including France and Australia. it). The Australian government has completed a comprehensive pilot study to consider how Australia's governance arrangements deliver outcomes consistentwith El'l@iples, and to test the applicability and Usefulness of the in the Australian cont ey are yeg? iTl. 11. While some countries have expressed their intention to i to undertake its own separate transparency regi - -. decide whether they will fully implement EITI Standards. Steps to becoming an EITI Compliant Country 12. A country that has completed the four si becomes an EITI Candidate Country. unequivocal statements around its i stakeholder group to oversee - ?13. Once a candidate has remaining redu'ireme a) . 14. . I a :15: in Country when the EITI Board considers the Requirements. These requirements include ctive oversight by the government established multi? rated by the Land and Water Forum, a mold-stakeholder forum could be mental in progressing social consensus related to petroleum and minerals extraction. at ering representativas from aoross the spectrum to discoss the issues places the responsibility of finding consensus back onto the stakeholders themselves. is. New Zealand already has a number of mechanisms and instruments to promote openness and transparency in the energy sector. Becoming EITI compliant would be an external validation .of the transparency of both the New Zealand ?government and business in New Zealand. A number of international stakenotders who operate in New zealand support the EITI. Companies who support the El-Tl in other countries include Newmont Mining Corporation (owners of Newmont Waihi Gold}, Statoil ASA. and Royal Dutch Shell Pic (Shell). Costs 18. achieving EITI compliance Would require the New Zealahd government to make commitments beyond its current practices. 1.9-. Institutions such as a mold-stakeholder group. would need to be established and the government would need to make a number of assurances including resource commitments. twinno no: 211 14203 Brie?ng No: 0921 144? Prepared 5 .. . in Con?dence 3 20. A multi-stakeholder group would need to recognise the government's current policy of increasing petroleum and mineral exploration activity while also recognising the public?s emphasis on the environmental aspects of the activity. 21. 5 9(2)(Qi(i) 22. Independent international validation is required for EITI compliance. In the event that a compliant country does not measure up to ongoing assessment for validation, the EITI can and cities remove the country's status as EITI compliant. New Zealand?s position on the EITI 23. New Zealand has yet to consider the implications of becoming ate and implementing the EITI Standard. 24. A comprehensive identification of all likely implication Ze and Candidate Country requires more detailed analysis at dec' icipate is made. 25. Scoping and feasibility studies are co EITI Candidate Countries. Typically - - transparency in extractive in ustri .. implementation in their cou sidering becoming ision?making regarding scope of possible EITI 26. that OECD countries have benefited from becoming ..- . could include formal consultation and The Op . . . 2 - and joined the Open Government Partnership (0GP). In July g' I an; a ced the OGP New Zealand Action Plan 2014-2016. I the OGP are already implementing the EITI. Our commitments with other in the OGP may have some impact on our involvement implementing the Man Eng Open-Government Partnership is an international initiative to promote open and transparent government. Established in 2011. the OGP allows governments and civil societies to cooperatively create transparent government reforms and improve relations between citizens and their states. 30-. OGP members must work with civil society to develop a two-year action plan of commitments that will outline how they intend meeting at least two of the five 0GP ?grand challenges?. Next steps 31. You agreed in February 2014 [briefing 1645 13?14] to meet with MBIE officials to discuss a scoping study of the costs and benefits of New Zealand signing up to the EITI. 32. Officials will work with your office to identify a suitable time to discuss New Zealand's position on the EITI, and whether to proceed with a scoping study. MAKE) NO: 21114203 Brie?ng No: 0921 14-15 Prepared by: . In Con?dence 4 An hex 1: Talking points on the EITI for your meeting with the British High Commissioner - i have asked officials to give me advice on whether New Zealand should be considering a scoping study of the costs and benefits of New Zealand implementing the - Based on the advice I have already received, it seems the mainly benefits countries with significant oil and mineral operations, or countries which have headquarters of major extractives companies. New Zealand has a very small extraotives sector (approx 1 percent of GDP) and while we have some major mdltinationals based here Shell. Newmont) they are not headquartered here. What would be the benefit of implementing the EITI for New Zealand? - In considering whether to adopt the EITI, it would be very useful for us to have an update on the state of EITI implementation in other OECD countries. is the United Kingdom in a position to give us a paper on this? I am interested in the balance between the 'accounting side? of th MAKE) ND: 21114203 Briefing No: 119211471? Prepared by: 5 In Confidence