US Transparency Reversal Stings Canadian, European Oil Firms

"When a potential investor comes in, they will look at the additional regulatory compliance costs that will impact Canadian companies and probably conclude there's better bang for their buck south of the border," he said.

Suncor Energy Inc, Canada's largest oil and gas producer, said reporting on payments to foreign governments is a minor administrative burden. "But generally speaking we support reporting payments to governments, as it contributes to greater transparency," said Sneh Seetal, a Suncor spokeswoman.

Canadian Natural Resources Ltd and Cenovus Energy Inc, two Canadian oil producers, declined to comment.

American oil companies, including Exxon Mobil, meanwhile, say the regulation had threatened to put them at a competitive disadvantage to huge state-controlled oil companies like Russia's Rosneft Ltd and China's CNOOC Ltd.

"As publicly-traded companies, we have to compete globally with state-owned companies who hold a large majority of proved reserves and have no similar transparency or reporting obligations," Exxon spokesman William Holbrook said.

Stephen Comstock, director of tax policy for the American Petroleum Institute, said revoking the U.S. extraction rule is "a necessary step by Congress to establish sensible regulations that balance increasing transparency without diminishing our industry's competitive advantage."

Exxon and the API said they support an alternative scheme whereby a host country would report to its citizens at a regular interval how much money in total was generated from extractive industries, without breaking out company details.

The U.S. oil industry also said the U.S. Foreign Corrupt Practices Act would still remain in effect, prohibiting bribery of foreign officials.

(Reporting by Ernest Scheyder in Houston and Nia Williams in Calgary; Additional reporting by Lisa Lambert and Sarah Lynch in Washington, D.C., Ron Bousso in London and Alissa de Carbonnel in Brussels; Editing by Richard Valdmanis and Paul Simao)