Strict transparency rules proposed in Europe

Oil and gas companies would have to report payments to host-country governments project by project under a measure approved Sept. 18 by a committee of the European Parliament.

Disclosure at the project level drew strong but ultimately futile opposition from the oil and gas industry when the US Securities and Exchange Commission last month made it part of transparency requirements under the Dodd-Frank Financial Reform Act of 2010 (OGJ Online, Aug. 22, 2010).

Companies with international operations say the need to report payments to foreign governments more detailed than country totals will put them afoul of contract provisions and create competitive problems. They say state-owned oil companies with interests outside their countries face no such disclosure requirements and will benefit from information about what other international companies have paid governments for rights to participate in specific projects.

The European Parliament’s Committee on Legal Affairs proposed rules, which must be agreed by European Union member governments, for large companies extracting oil, gas, and minerals as well as loggers of primary forests.

The committee rejected a proposal to exempt companies from the need to make disclosures forbidden by host countries.

Committee member Arlene McCarthy of the UK defended the move to require reporting of payments more detailed than country totals, the level supported by the industry and some EU governments.

“Project-level disclosure is the only way in which local communities in resource-rich countries are able to expose corruption and hold their governments accountable for using revenues towards development,” she said.

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