* Resource firms object to project-level reporting
* Companies say back transparency, but not red tape
By Barbara Lewis
BRUSSELS, Oct 24 EU commissioners are expected
on Tuesday to approve draft transparency rules for mining,
forestry and energy firms, which resource companies said could
impede access to oil, gas and other assets in disputed areas,
such as the Caspian.
In a letter to the European Union's financial regulation
chief, a group of companies objected to a proposal to include
reporting not just at government level, but on a
They said that was commercially and politically sensitive,
would not add transparency and the rules failed to define what
constituted a project.
It was signed by Anglo American , BHP Billiton
, Rio Tinto , Xstrata , BG Group, BP
, Repsol , Shell , Total .
"One example is oil or gas fields which cross borders, where
governments are understandably careful to safeguard the
confidentiality of the terms they offer to investors," said a
copy of the letter seen by Reuters.
"Further damage to competitiveness will be caused by the
additional cost and administrative burden of project-level
reporting," it said.
Disputed areas key to European energy supplies include the
Caspian, which the European Union has looked to as a means of
reducing dependence on Russian gas, and the eastern
Mediterranean, which has pitted Cyprus, scheduled to hold the EU
presidency next year, against Turkey.
LONG LEGAL PROCESS
On Tuesday in Strasbourg, the College of 27 EU Commissioners
is expected to formally adopt proposals for a review of the
Accounting and Transparency Directive, an EU source said. They
must then be approved by EU governments and lawmakers before
The proposed directives would make it legally binding to
disclose information, complementing the Extractive Industries
Transparency Initiative (EITI), announced by former British
prime minister Tony Blair in 2002. It establishes voluntary
guidelines for reporting company payments to governments.
Many resource companies -- including signatories of the
letter -- have backed the EITI.
But analysts said the reporting of projects included in the
new EU proposals replicated a part of the U.S. Dodd-Frank
package of legislation that the U.S. regulator the Securities
and Exchange Commission (SEC) was struggling to enforce.
"The SEC struggles to implement project-level reporting and
keeps delaying its proposals," said Daniel Brinkwerth of
consultants GPlus Europe.
EU commissioner in charge of financial regulation Michel
Barnier last week launched the bloc's new package of regulations
for financial instruments.
He said he could not imagine they would be less stringent
than the U.S. regulations and he was keen to avoid regulatory
arbitrage -- whereby companies exploit differences between
different legal regimes.
As holder of the rotating presidency of the Group of 20
leading economies, France has made toughening regulation a
priority, incurring stiff opposition from nations such as
Britain, anxious not to lose business from its City financial
"Understandably, Commissioner Barnier and the French
President want to do well in the international beauty
contest around the upcoming G20 summit," said Brinkwerth.
"But copying the one clause of Dodd-Frank which works the
least reveals a ready-fire-aim approach to policies at a time
when the European economy is already scrambling."