EU official: US should follow our lead, issue ‘strong’ oil rules

From McCarthy's Friday letter to the SEC:

I believe that in the interest of creating global rules and standards for global extractive industries it is important that the EU and the US introduce strong common and equivalent transparency rules for the extractive industries.

We are now coming to a critical decision making junction in the drive for greater global transparency. As you complete your rule making process and the European Parliament prepares to vote in September, the decision you take on 22nd August will provide an important signal to legislators and regulators globally and your intention to introduce tough rules in the spirit of the Dodd Frank legislation.

The policies are aimed at increasing transparency to help undo the “resource curse,” in which some impoverished countries in Africa and elsewhere are plagued by high levels of corruption and conflict alongside their energy and mineral wealth.



The 2010 Dodd-Frank law requires SEC-listed oil, gas and mining companies to reveal payments to governments related to projects in their countries, such as money for production licenses, taxes, royalties, and other aspects of energy and mineral projects.

McCarthy, the vice chairwoman of the European Parliament’s committee on economic and monetary affairs, challenges industry claims that detailed reporting requirements will create competitive harms.

“As Lord Browne, the former Chief Executive of BP, pointed out in his Op-Ed in the Financial Times (April 25, 2012), the rules would not force disclosure of information during negotiations, which is the most sensitive period for dealings,” states McCarthy, who met with SEC officials in July.

Oil companies say they support disclosure, but they argue the SEC rules will place Western firms at a disadvantage when competing for contracts against state-controlled Russian and Chinese firms that won’t be bound by the requirements.

Companies such as Exxon, Shell and Chevron are seeking several forms of leeway, including exemptions in cases where host governments prohibit the disclosure.

But McCarthy argues that once the U.S. and EU implement the disclosure rules, the requirements will cover 90 percent of the world’s “extractive” companies. She also notes that global reporting standards are under discussion at the G20, stating, “global rules are not only possible but entirely feasible.”