Oil traders could face new rules on purchases
Geneva, April 23, 2012
Oil traders buying from national oil firms could face new disclosure rules within a year as part of an effort led by the Extractive Industries Transparency Initiative (EITI), the group told Reuters on Monday.
The EITI, which has already implemented similar measures in oil producers Iraq and Norway, said that the rules would apply to all companies trading with EITI signatories.
This would include Swiss-based traders Vitol and Glencore as well as UK-based traders such as BP even though their host states are not currently implementing the EITI.
"The EITI is discussing a number of things and one is the extent to which trading should be covered. This is an area that needs improved governance," said Jonas Moberg, head of the EITI secretariat.
"There are many countries with very extensive allegations of mismanagement, corruption and mispricing of resources."
Talks are still at an early stage and a decision on whether the rules will be optional or part of a minimum requirement for participants will be made within a year, he added.
Major producers among the EITI's 35 implementing countries include Iraq and Nigeria, although there are significant omissions such as OPEC members Iran and Angola.
Moberg said that EITI, which has stakeholders in the public and private sector, is currently in discussions on membership with other producers such as Libya.
Non-governmental groups on Monday called for global measures on transparency for oil trading that go beyond the EITI proposals.
"It is not enough to cover oil trading within the EITI. Home countries have the responsibility to require their companies for such a disclosure," said Oliver Classen, co-author of a new book by Swiss NGO Berne Declaration entitled 'Commodities: Switzerland's Most Dangerous Business'.
The book argues that a lack of regulation and transparency as well as low taxes in Switzerland has attracted trading companies "as a dunghill attracts flies".
Revenue Watch's head of governance Alexandra Gillies said that the publication of price, volume and crude oil grade for every oil cargo sold should be a requirement.
It is relatively rare for oil traders like Glencore to buy directly from national oil companies as most exporters prefer to deal directly with refiners. Exceptions include African producers such as Nigeria and Libya.
Nigeria is expected to release the results of its 2012 crude oil term allocations within the next few weeks. – Reuters