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API: SEC disclosure proposal a step back for international competitiveness

WASHINGTON, December 11, 2015 – A proposed rule on disclosure requirements for America’s oil and natural gas industry released today by the U.S. Securities and Exchange Commission could harm U.S. competitiveness while possibly weakening a decade-old effort to implement payment transparency programs worldwide, according to API.

“The oil and natural gas industry strongly supports payment transparency to help citizens hold their governments accountable for how natural resource revenues are spent,” said Stephen Comstock, API director of tax and accounting policy.  “Our industry has been working hard to increase transparency for more than a decade, but this rule could interfere with ongoing efforts by making U.S. firms less competitive against state-owned firms not covered by this rule.” 

Comstock said the industry has been working globally since 2003 to implement the Extractive Industries Transparency Initiative, a program that has now been implemented in 49 countries and promotes good governance and transparency through collaboration between national governments, civil society and national industry players.

“The SEC rule would only apply to U.S. firms, placing them at a competitive disadvantage against government-owned oil giants not subject to the rule,” Comstock said.  “Not only could the rule hurt the millions of Americans who own shares in oil and natural gas companies, it could also cost jobs and damage America’s energy security by making it more difficult for U.S. firms to gain access to resources abroad.”

As proposed, the SEC rule requires publicly traded energy firms to release detailed payment information about foreign and U.S. projects that could be commercially sensitive, according to API.  Under this requirement, firms would have to reveal extensive data about how much they pay in licenses, taxes, royalties and other fees – potentially giving their competitors an upper hand when bidding for future energy contracts.

“API has provided the SEC a model that can be used to achieve the goal of increased transparency while also remaining faithful to its core mission to protect American investors,” Comstock said.  “We think that is the better approach and have encouraged the SEC to adopt it.”

API is the only national trade association representing all facets of the oil and natural gas industry, which supports 9.8 million U.S. jobs and 8 percent of the U.S. economy. API’s 650 members include large integrated companies, as well as exploration and production, refining, marketing, pipeline, and marine businesses, and service and supply firms. They provide most of the nation’s energy and are backed by a growing grassroots movement of more than 30 million Americans.