From ‘leader’ to ‘laggard’
“The US has been at the forefront on the transparency issue, with more than 30 countries following in its footsteps
to pass similar legislation,” said Isabel Munilla, senior policy
advisor for extractive industries at Oxfam America. “
State-owned companies from Brazil, China, and Russia are all
now required to disclose their payments. If the Senate follows suit in overturning this rule, the US will go from a leader into a laggard,” she said.
Comstock noted that a federal court vacated the SEC’s
first rule implementing foreign government payment disclosures by domestic extractive industries under the 2010
Dodd-Frank Wall Street Reform and Consumer Protection
Act’s Sec. 1504 in response to a lawsuit brought by API and
the Independent Petroleum Association of America (OGJ
Online, July 2, 2013). The SEC decided not to appeal the
court’s decision the following year (OGJ Online, Sept. 4,
It decided to rewrite the rule instead. API submitted a letter suggesting ways the federal securities regulator could do
this that would support transparency without harming US
companies’ ability to compete overseas or undermine US job
growth (OGJ Online, Nov. 8, 2013).
The SEC announced that it would begin to prepare fresh
extractive industry foreign payment disclosure requirements
the following May, and proposed a new rule late in 2015 (OGJ
Online, Nov. 11, 2015). It was adopted in June 2016. API said
there still were major problems under the new requirements
(OGJ Online, June 29, 2016).
Speakers at a recent Carnegie Institute for International
Peace forum suggested that Mexico’s energy system reforms
could help set a new transparency and accountability standard
if they are implemented aggressively and executed well (OGJ
Online, Jan. 25, 2017). “Transparency disclosures on their own
are essential, but there also needs to be accountability. The rule
of law also is essential,” observed Natural Resource Governance
Institute (NRGI) Pres. Daniel Kaufmann.
TAEP: Texas upstream economy
expanded in December
Two consecutive years of economic contraction in the Texas
upstream industry ended as 2016 drew to a close, the Texas
Alliance of Energy Producers (TAEP) says.
TAEP’s Texas Petro Index (TPI), a composite index based
upon a comprehensive group of upstream economic indicators,
gained 2. 6 points month-over-month in December to 150.6,
marking the first monthly increase since it peaked at a record
313.5 in November 2014. However, the index was still down
21.1% from its December 2015 level.
“By the end of 2016, every indicator that makes up the TPI
had turned the corner with the exception of natural gas produc-
crease was due to higher crude oil realizations, higher natural
gas sales volumes primarily from the Gorgon project, and low-
er operating expenses. Partially offsetting these effects were
higher tax items, lower crude oil sales volumes, higher depre-
ciation expenses, and lower gains on asset sales.
US downstream operations in the quarter were breakeven
compared with earnings of $496 million a year earlier. The
decrease in earnings was due to lower margins on refined
product sales and higher tax items. Refinery crude oil input in
the quarter decreased 21% to 721,000 b/d from the year-ago
period mainly due to planned turnaround activity at the company’s refinery in Richmond, Calif.
International downstream operations in the fourth quarter
earned $357 million, down from $515 million a year earlier.
The decrease was primarily due to lower margins on refined
product sales, partially offset by lower operating expenses.
Refinery crude oil input of 801,000 b/d in the quarter was up
18,000 b/d from the year-ago period.
US House passes resolution to
revoke SEC’s foreign payments rule
The US House of Representatives approved legislation under
the Congressional Review Act that would nullify a Securities and Exchange requirement for US oil and gas and other
extractive industries to disclose payments to foreign governments.
H.J. Res. 41, which Rep. Bill Huizenga (R-Mich.) introduced on Jan. 31, cleared the House by 235 to 187 votes on
Feb. 1, largely along party lines. “Last night’s vote helps reset
the regulatory process,” Huizenga said the following day. US
Sen. James M. Inhofe (R-Okla.) has introduced a similar CRA
resolution in the US Senate.
An American Petroleum Institute official expressed approval of the House’s action. “Today’s House vote is a necessary step by Congress to establish sensible regulations that
balance increasing transparency without diminishing our
industry’s competitive advantage,” API Tax Policy Director
Stephen Comstock said on Feb. 1. “The SEC’s rule requires
disclosure for American companies but not foreign entities,
fundamentally harming American workers and shareholders.”
The requirement also undermines global payment transparency efforts and is inconsistent with other major international
reporting regimes, such as the Extractive Industries Transparency Initiative (EITI) and the European Union’s disclosure
rules, he continued. The oil and gas industry strongly supports
transparency and has been a leading advocate for greater transparency for decades through the EITI, Comstock said.