Multinational oil and gas companies are working with the US and the UK on new voluntary anticorruption measures aimed primarily at resource-rich developing countries.
"The overall goal is to shine a light on resource flows; our vision is a comprehensive framework," said Janice Bay, deputy assistant secretary for International Finance and Development, US Department of State. She spoke before the International Association of Drilling Contractors last month in Washington, DC.
Anticorruption models are also relevant for Iraq, Bay suggested. She said the US government is determined that Baghdad's revamped oil sector be a model of transparency. Still, any decisions taken by a US-led interim authority will include input from indigenous Iraqis, she said.
The stakes are high.
Without transparency the US's hopes for a democratic Iraq may be doomed, warned Robin West, chairman, PFC Energy, at the IADC conference. "If the (Iraqi) oil sector is corrupt, it will seep into everything; it will corrode the entire process. If it is not transparent, we will certainly fail."
G8 summit
A broad statement supporting an international framework for multinational energy companies to follow is expected from the G8 Summit at Evian-les-Bains, France, June 1-3.
In the 2 weeks following the G8 economic summit, the UK will seek to spell out specific guidelines. It plans technical meetings with interested stakeholders, culminating in a high-level conference June 17 slated to include energy ministers, CEOs, investors, international institutions, and government representatives.
UK Prime Minister Tony Blair began this latest anticorruption effort last September at a world summit in Johannesburg. Nongovernmental organizations such as the Soros Foundation and Transparency International praised his Extractive Industries Transparency Initiative.
Mandatory vs. voluntary
But US-based producers and Washington say the UK's September 2002 plan, which promotes a mandatory "publish what you pay" approach, is ineffective. They argue that unless resource-rich countries are willing to publish relevant budget data, industry information is irrelevant and puts individual companies at a competitive disadvantage. A company may also get into legal trouble for violating confidentiality agreements if it publishes contract data, industry officials say.
"The key to good participation is not shifting the burden to companies," said William Whitsitt, president, Domestic Petroleum Council." Our job is to find and produce oil and gas. We cannot assume the government's responsibilities, but we can be active participants." Speaking before IADC, Whitsitt said DPC and the American Petroleum Institute are actively involved in the process because "corruption hurts everyone in industry."
US officials say they are hopeful the UK will endorse the voluntary approach industry prefers, but nothing is settled yet, and completing a final framework could take years. According to the latest UK government draft on the subject, British policymakers want to pursue "an internationally agreed approach to transparency, based on a voluntary compact between the host country and companies working in that country, along with support from civil society, international financial institutions, and other relevant players."