New performance standards have been announced (5/23) for oil, gas and mining companies, requiring them to be much more transparent in their business dealings.
The Extractive Industries Transparency Initiative approved the new performance standards at a meeting in Sydney, Australia. Created in 2003, the initiative includes government, business and civil society representatives.
Among those supporting the tougher standards is Alexandra Gilles, head of governance at the Revenue Watch Institute, which monitors extraction industries.
She said, "Extractive Industries Transparency Initiative, or EITI, is a voluntary standard of disclosure in the oil, mining and gas sectors. The countries sign-up to the EITI and in doing so agree to release certain kinds of information about their extractive sectors."
Up until now, the initiative simply required the release of revenue data.
"So the governments had to disclose how much money they received from oil, gas and mining companies and the companies had to disclose how much they paid to the governments. And then those two sets of figures were reconciled by an independent auditor. So, it was a really important step forward in terms of advancing transparency and knowing how much money enters into these governments, she said.
But Gilles said that wasn't enough to ensure complete transparency.
"As we know, the oil, gas and mining industries are very complicated and involve a whole series of decisions that have to be made in order for countries to really benefit from these resources."
Under the new standards companies will release information on production volumes, corporate social responsibility payments and money transfers from national to local governments. They also call for countries to disclose all the licenses they've awarded.
"This sounds really basic," she said, "but in a number of countries, such as Kazakhstan and Mozambique, we don't even know which companies hold licenses."
She said that in the past, the EITI did a poor job of monitoring national oil companies. She describes them as the dominant players in such countries as Iraq and Nigeria.
"In resource rich countries, there are over one billion people living on less than five dollars a day. So, there's this huge development challenge to turn oil, gas and mine resources into development outcomes in order to reduce poverty and increase economic growth. Now that only happens if these resources are managed properly,"
Nearly 40 countries, including the United States, are part of the Extractive Industries Transparency Initiative. For some, there'll be about a year-long transition period to meet all the new requirements.