U.S. transparency reversal stings Canadian, European oil firms

Fri Feb 3, 2017 9:09am EST
 
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By Ernest Scheyder and Nia Williams

HOUSTON/CALGARY (Reuters) - A reversal of U.S. transparency requirements for the natural resources industry could give American oil companies an edge over Canadian and European rivals who face some of the toughest rules in the world, according to company executives, legal experts and trade groups.

The U.S. Senate passed a resolution early on Friday to overturn the "resource extraction rule," an Obama administration regulation that required companies to disclose taxes and other payments to foreign governments.

President Donald Trump is expected to soon sign the resolution killing the rule, which had been aimed at discouraging shady dealing in far-flung nations.

The rule was among a handful of regulations ushered in during the final months of Barack Obama's presidency that the Republican-controlled Congress has targeted as overly burdensome for the U.S. economy.

Overturning the regulation leaves Canadian and European natural resource companies with far more stringent reporting standards for payments to foreign governments than U.S. behemoths like Exxon Mobil Corp and Chevron Corp.

Certain details of contract negotiations and terms of bids to access reserves must be divulged under the Canadian and European rules. That could provide American companies a glimpse of their rivals' negotiating tactics around the globe, without having to tip their hands in return.

"It definitely could put Canada at a disadvantage because we are fairly stringent on our rules, both domestically and internationally, on how our companies operate," said Mark Salkeld, chief executive officer of the Petroleum Services Association of Canada, an industry trade group.

European oil company Royal Dutch Shell Plc , meanwhile, pointed out that a U.S. reversal of the transparency requirements would go against the broader global trend in the notoriously murky industry.   Continued...

 
Filled oil drums are seen at Royal Dutch Shell Plc's lubricants blending plant in the town of Torzhok, north-west of Tver, November 7, 2014. REUTERS/Sergei Karpukhin