(EnergyAsia, March 5, Thursday) — Oil companies in resource-rich nations increasingly realise they must win over investors and focus on national development to deal with the global financial downturn, said non-government organisation (NGO) Revenue Watch Institute.

At last month’s global conference of the Extractive Industries Transparency Initiative (EITI) in Qatar, companies voiced anxiety about losing revenue in the downturn and setting aside regulatory reforms that could lead to long-term fiscal and national growth.

The institute’s director, Karin Lissakers, said: “State-owned oil companies are a pivot-point in this crisis. They are realising that transparency in revenue management and reporting has become an economic necessity.

“Without sound corporate governance and disclosure policies, companies will lose the trust of the investors and lending institutions they need to operate successfully.

“Open reporting practices can safeguard future windfalls against the volatility that is wreaking havoc today.”

With more than two dozen countries now in the EITI, and Azerbaijan named as the first compliant country, Revenue Watch is urging resource-rich nations to use the momentum of the transparency movement to secure their prospects for long-term growth.

The Revenue Watch meeting brought national oil companies from countries including Azerbaijan, Qatar, Kazakhstan and Norway together with experts from the World Bank and Stanford University, and international business leaders including EITI Chairman Peter Eigen, George Soros of the Open Society Institute, and Karina Litvack of F&C Asset Management.

Mr Soros warned producing countries against energy deals that favour quick profit over sound practice.

He told delegates: “The commodity downturn is likely to be temporary, but the deals bind you for decades. Don’t give away the store for short-term gains. Better to leave a valuable asset in the ground than accept terms that will yield your country little revenue or other benefits over the long term.”

The attendance of Iraqi oil minister Hussain al-Shahristani at the EITI conference also underscored the importance of adding a major Middle East oil producer to the initiative. 

Revenue Watch expressed its continued enthusiasm about the progress of Iraq toward becoming an EITI candidate.

Revenue Watch Institute is a part of the EITI governing board and was actively involved in its founding in 2002.

Revenue Watch Institute promotes the responsible management of oil, gas and mineral resources for the public good. With effective revenue management, citizen engagement and real government accountability, natural resource wealth can drive development and national growth. 

RWI provides the expertise, funding and technical assistance to help countries realise these benefits.