United Kingdom-based Tullow Oil this week became the first extractives company to release detailed government payments on a project by project basis, a year ahead of new transparency requirements for the industry.

The European Union's Accounting and Transparency Directive, which was approved last year, requires oil, gas, mining, and logging companies listed or registered in the EU to publish government payments on a project level. That law is to take effect in 2015. The voluntary Extractive Industries Transparency Initiative (EITI) also calls for project-level disclosures, which has the support of the U.K.

The goal of the transparency efforts is to require more detailed information from extractives companies about payments they make to host countries, in order to provide more accountability and traceability as to how much money is coming into the often resource-rich, but poverty-stricken economies of host countries.

Tullow noted that last year, it also acted ahead of regulations by publishing tax and other payments made to governments and other major stakeholders in its annual corporate responsibility report. This year the company said it aligned its disclosure with the coming EU directive, by reporting its tax disclosure on a cash basis, disclosing payments where the obligation arose from, and publishing category-level payments, including items like production entitlements, income taxes, and royalties.

In order to provide “a fuller understanding” of government payments it makes, Tullow also published voluntary disclosure of Value Added Tax (VAT) payments, withholding tax, Pay-As-You-Earn, and other taxes.

Tullow's 2013 annual report outlines U.S. $1.6 billion paid to major stakeholder groups. In 2013, the oil company paid $881 million to African governments. Details on the company's disclosures can be found on pages 176 to 179 of its annual report.

Simon Thompson, chairman of Tullow Oil, said greater transparency will not solve all of the economic problems faced by host countries, but represents “a critical first step” in converting oil wealth into sustainable economic development.

“By being absolutely transparent about payments that we're making to governments that really enables the citizens of the countries where we're operating to hold us to account but also to hold their governments to account for the use of the oil revenues that are generated,” Thompson said in an interview posted on the company's website.

The company said it makes $900 million a year in payments to governments, 87 percent of which are in Africa, where Tullow CFO Ian Springett said the company does the bulk of its business.  In the case of Uganda, Thompson said oil reserves are worth roughly U.S. $100 billion. The Ugandan government share of 70 percent after net costs would be worth about $40 billion to $50 billion, he said, compared to Uganda's GDP of about $17 billion and international aid of roughly $2 billion in 2011.

“You can instantly see that oil has the potential to absolutely transform the economy of Uganda,” Thompson said.

The non-profit Publish What You Pay Uganda said the most difficult issue facing the African nation as it embarks on commercial oil production is getting information about what companies are paying for, and how much those payments are.

“How can we organize a campaign if we don't have facts to base it on? With hard data we can hold our government – whether at the local or national level – to account for how they have spent the revenues and check that extractive companies are paying a fair price for the resources they extract,” PWYP Uganda national coordinator Winnie Ngabiirwe said in a statement. “The openness exhibited by Tullow Oil is commendable and should be emulated by both governments and other companies.”

The transparency group Global Witness also praised Tullow's move, and said it will weaken competitors' arguments elsewhere that similar laws are too cumbersome or harmful to competitiveness. The group pointed to efforts by the American Petroleum Institute, which represents companies like ExxonMobil and Chevron, to weaken the U.S. law requiring extractive companies there to publish project-level payment information. That provision, part of the Dodd-Frank Act, is under review by the U.S. Securities and Exchange Commission.

“Tullow's welcome disclosure blows a hole in the argument made by some oil companies that project-level reporting will impose a heavy burden on business,” Dominic Eagleton, a senior campaigner for Global Witness, said in a statement. “This should encourage the Securities and Exchange Commission to create a strong payment disclosure rule that allows citizens to identify which companies are making payments and the amounts they contribute.”

“Instead of trying to weaken transparency rules designed to combat corruption and poverty in resource-dependent countries, the oil majors should follow Tullow's lead and embrace the fact that project-by-project reporting is now the new global standard,” Eagleton continued.

An article this week by the Thomson Reuters Foundation reported that Norway's Statoil and U.K./Australia's Rio Tinto previously released revenue payments on the country-level basis, but Tullow is the first extractive company to do so on the project-level basis as well.