Swiss commodities trader Trafigura has just announced that it will disclose its payments to the governments of the 48 countries party to the Extractive Industry Transparency Initiative (EITI), including payments made to national oil companies in exchange for oil and gas, beginning in 2015.

There are three reasons why this is exciting news.

First, the planned Trafigura disclosures will shed light on commodity trading and the sale of crude by national oil companies (NOCs), which occupy a remarkably opaque corner of the petroleum sector. The July 2014 report Big Spenders: Swiss Trading Companies, African Oil and the Risks of Opacity¸ released by NRGI and the Swiss NGOs Swissaid and Berne Declaration, revealed both the size and the secrecy of NOC oil sales. In countries like Azerbaijan, Equatorial Guinea, Iraq and Nigeria, NOC oil sales bring in more than half of total government revenues, yet little is known about these transactions. Swiss trading companies including Trafigura play a major role: they bought around 20 percent of the oil sold by Africa’s top-ten oil producing governments in 2011, 2012 and 2013—those sales were worth a staggering $55 billion. If executed well, the Trafigura reports will help to demystify how NOC oil sales are governed and how much revenue governments collect, which is critical data for parliamentarians, journalists and citizens pushing for greater accountability in the countries where oil is drilled.

Second, Trafigura’s move demonstrates that corporate reporting on payments associated with trading activities is absolutely viable. The company would not have volunteered to do something prohibitively expensive or that might damage its commercial interests. This provides yet another reason why the Swiss government should include trading activities in the mandatory reporting legislation that it’s planning to enact. Rather than simply copying the current EU regulations, which focus on payments stemming from exploration and production activities, Switzerland should pass a law that reflects its status as a global headquarters for commodity trading. While voluntary initiatives like the EITI can get the ball rolling, governments with jurisdiction over companies should pass legislation in order to broaden and solidify good reporting practices.

Third, Trafigura paired its decision to join the EITI with a commitment to actually become more transparent. While the EITI requires extensive reporting by its implementing countries, its corporate members need only make a modest financial contribution and endorse broadly worded principles. We commend Trafigura for taking a forward-looking stance rather than a purely defensive one. Now that
the EITI incorporates commodity sales, the time has come for other trading companies to affirm their commitment to transparency by both joining the EITI and actually disclosing more information. Doing just the former is not enough.

So overall this is very welcome news—but there are some concerns, and traders can certainly go farther to help those seeking accountability in resource-rich countries. For example, companies ought also to disclose their payments to those governments that don’t participate in the EITI. Why would transparency be less valuable to citizens in those places? If anything, the fact that a country does not participate in the EITI makes corporate reporting even more crucial—how else will citizens know what revenues their government is collecting?

Also related to scope, Trafigura has committed to report on its tax payments and the payments made when buying oil and gas from NOCs. However, trading companies like Trafigura engage with governments in many more ways than these. The company’s extensive joint ventures with Angola’s NOC, its participation in the Nigerian NOC’s fraud-ridden fuel import market, and the $700 million loan it has offered Ghana’s NOC all illustrate the breadth and diversity of these relationships. Transparency should be a cross-cutting practice, not an exceptional one.

There are several opportunities for changing oil trading’s reputation for secrecy. As the EITI now covers NOC oil sales, implementing countries should provide detailed and reconciled data on these transactions, and be held responsible for fulfilling this commitment. Trading companies like Trafigura can and should disclose payment data from their end, keeping in mind that the data is only useful if it is detailed and comprehensive. Finally, legislation in the countries where companies are domiciled can institutionalize these reporting practices; this is important because citizens in developing countries resource-rich need transparency from the actors least likely to voluntarily provide it. To advance on all three fronts, Trafigura’s encouraging move should be followed by further and broader action.

Alexandra Gillies is NRGI’s head of governance programs.