Royalties and Taxes to Governments, the Silence of Oil Companies

The relationship bond between the big oil (and mining) companies and the governments and administrations of countries where they operate has always been intricate. Only a few days ago, Italian news sources reported on the measures requested by the Milan prosecutors from ENI (an Italian integrated energy company) in relation to its affairs in Kazakhstan and on the Kagashan mega-oil field. These are sensitive issues even on the American side of the Atlantic, where, as Business Week reveals, the “Big Oil” companies (with Texas-based Exxon at the front) have initiated a fierce lobbying battle against some of the provisions of the Dodd-Frank Act, the Wall Street reform approved by Barack Obama in the summer of 2010. Under question is a regulation which allows for the Securities and Exchange Commission to be brought in to require regular and detailed reports from listed companies on Wall Street regarding the amount of taxes and royalties paid to governments around the world. In the background, there is also a battle being waged by different non-profit organizations, who maintain that the transparency of those sums could be useful in reducing corruption in institutionally “fragile” countries, like Nigeria or Iraq. Knowing how much the cash receipts amount to and where they have gone, it is argued, would be an optimal start to understanding how that money was subsequently used. But the oil companies don’t seem to be listening. According to Exxon’s vice-president, Patrick Mulva, the Dodd-Frank Act regulation would have the effect of suppressing the competitiveness of stars and stripes companies in favor of their Chinese, Russian, Brazilian or Indian competitors. The latter, knowing the data, could make better offers or even convince the leaders of the countries involved to stay away from American companies or the West in general.