By Ernest Scheyder and Nia Williams
HOUSTON/CALGARY, Feb 3 (Reuters) - Canadian and European oilcompanies will find themselves at a competitive disadvantage totheir American rivals if U.S. lawmakers scrap tightertransparency requirements on the industry, as expected,according to company executives, legal experts and trade groups.
The U.S. Senate is poised to overturn the so-called"resource extraction rule", a regulation requiring U.S. naturalresources companies to disclose taxes and other payments toforeign governments, in a vote that could come as early asFriday.
The rule is among a handful of regulations ushered in duringthe final months of Barack Obama's presidency that Republicanlawmakers - who now control Congress - have targeted as beingoverly burdensome and bad for the U.S. economy. Democrats haveno way to keep the law in place as Republicans need only asimple majority to kill the measure.
But overturning the regulation, set to take effect nextyear, would leave Canadian and European natural resourcecompanies with the most-stringent reporting standards in theworld for payments to foreign governments - as U.S. behemothslike Exxon Mobil Corp and Chevron Corp get areprieve.
Certain details of contract negotiations and terms of bidsto access reserves are currently required under regulations nowin place in both Canada and Europe. Such information couldreveal to competitors negotiating tactics and other metrics thatmany companies consider proprietary, observers say.
"It definitely could put Canada at a disadvantage because weare fairly stringent on our rules, both domestically andinternationally, on how our companies operate," said MarkSalkeld, chief executive officer of the Petroleum ServicesAssociation of Canada, an industry trade group.
European oil company Royal Dutch Shell Plc,meanwhile, pointed out that a reversal in the United Stateswould go against the broader global trend toward transparency inthe notoriously murky industry.
"The trend that we have, with access to information, withbringing distant countries into our space all the time, we willhave to live with that. I don't think any single politicalsystem can turn that around," CEO Ben van Beurden told reporterswhen asked about the proposed change in U.S. regulation.
"BANG FOR THEIR BUCK"
Required by the 2010 Dodd-Frank Wall Street reform law, theU.S. Securities and Exchange Commission's extraction rule wasfinalized last summer.
Canadian and European regulations were modeled after theDodd-Frank efforts.
But the rule was quickly targeted by CongressionalRepublicans after victories in the November election thatbrought President Donald Trump and his anti-regulation,pro-energy agenda into the White House.
Trump has signaled a sweeping reduction in regulation tobolster the American drilling and mining industries, includingby undoing Obama's initiatives to combat climate change.
Vivek Warrier, a partner at Bennett Jones, a law firm inCalgary, said that could put Canadian companies at an evensteeper disadvantage.
"When a potential investor comes in, they will look at theadditional regulatory compliance costs that will impact Canadiancompanies and probably conclude there's better bang for theirbuck south of the border," he said.
Suncor Energy Inc, Canada's largest oil and gasproducer, said reporting on payments to foreign governments is aminor administrative burden. "But generally speaking we supportreporting payments to governments as it contributes to greatertransparency," said Sneh Seetal, a Suncor spokeswoman.
Canadian Natural Resources Ltd and Cenovus EnergyInc, two Canadian oil producers, declined to comment.
American oil companies, including Exxon Mobil, meanwhile,say that the regulation had threatened to put them at acompetitive disadvantage to huge state-controlled oil companieslike Russia's Rosneft Ltd and China's CNOOC Ltd.
"As publicly traded companies, we have to compete globallywith state-owned companies who hold a large majority of provedreserves and have no similar transparency or reportingobligations," Exxon spokesman William Holbrook said.
Stephen Comstock, director of tax policy for the AmericanPetroleum Institute, said revoking the U.S. extraction rule is"a necessary step by Congress to establish sensible regulationsthat balance increasing transparency without diminishing ourindustry's competitive advantage."
Exxon and the API said they support an alternative schemewhereby a host country would report to its citizens at a regularinterval how much money in total was generated from extractiveindustries, without breaking out company details.
The U.S. oil industry also said that the U.S. ForeignCorrupt Practices Act would still remain in effect, prohibitingbribery of foreign officials.
(Reporting by Ernest Scheyder in Houston and Nia Williams inCalgary; Additional reporting by Lisa Lambert and Sarah Lynch inWashington, D.C., Ron Bousso in London; Editing by RichardValdmanis and Lisa Shumaker)
