* Industry says project reporting not useful
* Industry seeks $1 million disclosure threshold
* Project-level essential, threshold must be lower-campaigners
BRUSSELS, May 11 (Reuters) - Anti-corruption law on how EU oil, gas, mining firms and the logging industry report payments to governments could be nearing agreement, following a compromise proposal that tackles industry objections to disclosing individual projects.
Talks are ongoing between the Commission, member states and the European Parliament, but a Danish presidential spokesman said he believed a deal was possible before the end of the Danish EU presidency in June.
"On accounting, we hope for agreement before the end of the presidency," Jakob Alvi said.
A source, speaking on condition of anonymity, said debate was focused on coming up with an acceptable definition of what a project was and the financial threshold for disclosing payment.
"Project definition is the key issue, whether it's a licence or a contract and the threshold is linked to that," the source said.
Non-governmental organisations and members of the European Parliament have argued for reporting at project level, which they say can reveal payments that could otherwise be hidden.
Industry representatives have lobbied vigorously against, saying it would not provide meaningful data as, in most cases, taxes are not levied on a project basis.
A compromise under discussion would involve naming projects, but only listing payments to local and national governments.
Oil, gas and mining firms say they share the wish to eradicate corruption and many have joined the international Extractive Industries Transparency Initiative (EITI).
"For us, weak governance is an investment risk," Alan McLean, executive vice-present tax at Royal Dutch Shell , said in an address to the European Parliament. "Money disappears in countries with weak governance."
But he argued project-level reporting would create more problems than it solved.
"The issue is in defining project - which has many meanings for many companies, countries and sectors," he said.
Resource companies have also argued project-level reporting could pose problems in disputed areas, such as the Caspian, and jeopardise security of supply.
They say their arguments are not primarily about cost and their objections are on the basis of practicality. However, they also call for a minimum reporting threshold of $1 million.
Vicky Bowman, global practice leader, external affairs at mining company Rio Tinto , said the company already reported payments starting at that level and believed it represented a fair balance between undue administrative burden and fighting corruption.
"We are concerned that the cost-benefit of the legislation should be considered," Bowman told the European Parliament. "Every million spent on auditors or reconfiguring IT systems is a million not spent on investment, including in social programmes, or return to shareholders."
Campaigners, pushing for project-level reporting, said a threshold of $1 million was "ridiculous".
"It would mean so many payments which are crucial to local communities would be entirely lost to view. We have been pushing for a more meaningful threshold of around 15,000 euros ($19,400)," Joseph Williams, senior advocacy officer of the Publish What You Pay campaign group, said.
As it stands, the Commission has called for disclosure of "material" amounts, while the European Parliament has pushed for anything over 100,000 euros and member states have suggested more than half a million euros.
"Project level reporting is the only way in which communities and local governments can track their entitlements from the extraction and prospecting which takes place in their own back yard," Williams said further.
"Since projects have different risk profiles, investors also need payment information on high-risk individual projects that would otherwise be hidden by aggregated or country-level reporting".
Williams noted the U.S. equivalent law, under the Dodd-Frank package of legislation, had mandated project-by-project reporting - but the extractive industries lobby says the United States was struggling to implement it.
A spokesman for U.S. regulator the Securities and Exchange Commission (SEC) said he could not comment on "specifics".
Membership of the EITI is voluntary. No EU member state has joined, but the Commission has said the ultimate aim of revising EU accounting and transparency law is to strengthen the initiative and extend its scope to all resource-rich countries.