Washington (Platts)--21Sep2009/623 pm EDT/2223 GMT

Two US senators this week plan to introduce a bill to make it easier to track revenues that US oil and natural gas companies pay foreign governments for exploration and production rights and royalties.

Senators Richard Lugar, Republican-Indiana, and Benjamin Cardin, Democrat-Maryland, propose requiring companies listed on US stock exchanges to disclose their payments to foreign counties as part of their regular Securities and Exchange Commission reporting.

"Many in the energy arena welcome this kind of transparency," said Andy Fisher, a spokesman for Lugar. The Indiana senator serves as head Republican on the Senate Foreign Relations Committee.

Showing what foreign governments receive in royalties and fees from US companies could help curb corruption in those countries related to minerals leasing and could increase the transparency of the US market, Fisher said.

Sue Walitsky, a spokeswoman for Cardin, said disclosure of payments would cover anything the companies pay to the host countries, whether in the form of royalties for production, fees, rentals, or other payments.

A committee report initiated last year by Lugar considered the effect of mineral resources production on the quality of life for average citizens in developing countries. The October 2008 report found that minerals-extraction activities in these countries often impoverished local populations, propped up autocratic governments and sometimes helped radicalize local populations.

Karen Matusic, a spokeswoman for the American Petroleum Institute, said that US producers supported more public access to information, but preferred that the host countries make that information available themselves.

"We don't think a unilateral approach is the best way to do it," Matusic said. Forcing only US companies to disclose their payments to foreign governments would make those governments less willing to deal with American companies, placing the nation's producers at a disadvantage with their foreign competitors, she said.

Fisher acknowledged the need for US companies to be competitive "will be part of the debate as the bill moves forward."

Besides requiring the companies to disclose their payments, the Lugar-Cardin bill would also encourage the administration to push other countries to adopt similar requirements and would require the Interior Department to adopt rules for transparency laid out by the Extractive Industries Transparency Initiative.

The initiative calls for regular publication of oil, gas and mining payments to companies and governments, the use of auditing to determine the accuracy of the reports, and a variety of other measures to make public financial information related to minerals extraction.

--Jean Chemnick, jean_chemnick@platts.com