Oil, gas firms to reveal payment information under EU draft law
Brussels (Platts)--10Apr2013/747 am EDT/1147 GMT
EU-listed and large private oil, gas and mining companies will be forced
to reveal more about their payments to governments under new EU rules
agreed informally late Tuesday by EU negotiators.
Some big oil companies, including Shell, had lobbied Brussels hard to
water down the proposed new rules, arguing that forcing EU companies to
report payments to governments at project level would be costly and
artificial without helping to promote good governance.
The EU said the new rules would improve knowledge in local communities
about how their resources were being exploited.
"Local communities in resource-rich countries will finally be better
informed about what their governments are being paid by multinationals
for exploiting oil and gas fields, mineral deposits and forests," EU
internal market commissioner Michel Barnier said in a statement late
Tuesday as he welcomed the deal.
Such payments include taxes on profits, royalties and licence fees, the
EC said.
"The agreement will bring in a new era of transparency to an industry
which is far too often shrouded in secrecy and help fight tax evasion
and corruption as well as create the framework so both companies and
governments can be held to account on the use of revenues from natural
resources," Barnier added.
The EC included project level reporting in October 2011 proposals for
extractive industries -- oil, gas and mining -- to publish what they pay
governments in their annual accounts.
This approach is similar to the US Dodd-Frank Act adopted in 2010, which
requires companies registered with the US Securities and Exchange
Commission to report payments to governments by country and project.
The disclosure requirement is part of changes to the EU's accounting and
transparency directives.
The accounting directives define a large company as one meeting two or
more of the following: turnover of more than Eur40 million, total assets
of more than Eur20 million, and more than 250 employees.
"Large oil [and] gas companies...will be obliged to disclose full
information about every single project whose payments to the
governmental authorities exceed the threshold of Eur100,000 ($130,000),"
the European Parliament's center political group ALDE said late Tuesday.
The EU negotiators included representatives from the EP, the European
Commission and the Irish EU presidency, representing the EU's national
governments in the EU Council. The informal agreement has to be formally
approved by the full parliament and EU Council before it can become
binding.
MIXED REACTION
Reaction to the agreement was mixed. Anti-poverty group ONE said the
accord represented a major step forward in the fight against corruption.
"This law will shine a light on the often murky world of oil, gas and
mining deals in Africa, helping ordinary people see where the money paid
for their countries' natural resources is really going and potentially
lifting millions out of extreme poverty," ONE's Brussels director Eloise
Todd said. "Many people in Brussels and across Europe have worked hard
for over two years to make this breakthrough happen," Todd said.
UK MP Jo Swinson said in a Twitter response to the accord: "Success! So
delighted that EU has reached vital agreement on extractives
transparency so big companies must publish what they pay to
governments."
Shell, which has argued that reporting payments at project level caused
more problems than it solved, said it would continue to work closely
with all stakeholders to manage the practical implementation of these
rules.
"Shell has consistently supported a mandatory global reporting rule for
all companies engaged in extractive activities," a company spokesman
told Platts Wednesday.
"It is in our interest to promote accountability and good governance
wherever we operate. Shell has been involved in constructive engagement
with relevant stakeholders," he said.
Shell executive vice-president for tax Alan McLean said in April last
year that the company supported reporting at a government rather than
project level, arguing that in most countries tax is paid on a national
corporate basis rather than for individual projects.
He added that the proposed rules would also apply to payments in the EU,
which could see Shell having to report on every oil and gas field in the
North Sea it is involved with.
--Siobhan Hall,
siobhan_hall@platts.com
--Stuart Elliott,
stuart_elliott@platts.com
--Edited by Maurice Geller,
maurice_geller@platts.com
© 2013 Platts, The McGraw-Hill Companies Inc. All rights reserved.
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