Earlier this month we posted on the way a well-intended measure to foster transparency in U.S. oil and natural gas companies’ dealings with foreign governments could put American firms at a competitive disadvantage in the global marketplace. Key points:
Reporting rules requiring public disclosure of detailed information submitted to foreign governments by U.S. companies, potentially pertaining to every single well drilled abroad, could hand proprietary material to global competitors.
Disclosure requirements would apply only to companies listed with the U.S. Securities Exchange Commission (SEC), exempting a number of the biggest international oil and natural gas companies – including foreign state-owned entities that control 78 percent of the world’s proven reserves.
William O’Keefe amplifies on the Fuel Fix.com blog:
“American energy companies competing against foreign firms for the rights to develop resources must place bids with the governments where those resources exist. The governments in resource rich countries across the world receive numerous bids for projects to develop their various resources and then select the one which benefits them the most. Imagine the disadvantage American companies would face if they were required to reveal the dollar amounts on the bids they were placing.”
O’Keefe sharpens the point:
“Companies not under SEC jurisdiction (i.e. all non-American companies like China’s CNOOC and Venezuela’s Petróleos) could review the bids U.S. firms are placing and tweak their own offers to be slightly better. That is analogous to playing 5-card draw where all of your cards are dealt face up but your opponents’ cards aren’t. The end result means less business for U.S. companies.”
He writes that there’s a disconnect between the administration’s words on jobs and energy and its actions:
“The potential SEC regulation is dangerous in its disregard for an industry that’s so crucial to domestic job and revenue growth. If anything, we should be taking advantage of opportunities for American businesses to be more successful since that translates into increased into increased domestic investment, especially when you consider our $15 trillion and growing national debt.”
The bottom line is transparency is important, but the application of the rules must be fair to all. Otherwise, as O’Keefe writes, there could be less business for U.S. companies, putting economic growth and jobs at risk.
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