* Initiative to combat corruption in energy, mining
* EITI group approves applications
* Rights group criticises Ethiopian candidacy
* Yemen membership suspended (Adds U.S., Yemen, PNG, changes dateline)
OSLO/ADDIS ABABA, March 19 (Reuters) - Ethiopia, the United States and Papua New Guinea are on course to join the leading world initiative to combat corruption in the energy and mining industries.
The Oslo-based Extractive Industries Transparency Initiative (EITI) approved their applications on Wednesday, drawing swift criticism from human rights campaigners for admitting Ethiopia. The three now have three years comply with EITI standards.
Ethiopia has no proven petroleum reserves and a small mining industry driven by potash producers. Rights activists accuse it of political repression.
New York-based Human Rights Watch, which had asked the EITI board to reject the East African country's membership bid, said the EITI's reputation had been damaged.
"The EITI's decision to admit Ethiopia without insisting on reforms is an affront to the local activists who have been jailed or exiled for calling for a more transparent, accountable government," Lisa Misol, a senior researcher at HRW, said in a statement.
The Addis Ababa government did not comment on its successful bid.
Commercial oil finds in neighbouring Kenya have raised hopes of a strike in neighbouring Ethiopia.
International explorers in Ethiopia include London-listed Tullow Oil and Africa Oil which are drilling along the country's southern border with Kenya.
Home to Sub-Saharan Africa's second largest population, Ethiopia is among the continent's fastest growing economies. But the opposition and rights campaigners there accuse the government of stifling dissent and torturing political detainees, allegations the government strongly denies.
"In its discussions, the EITI Board stressed the importance of ensuring civil society engagement in Ethiopia's efforts to comply with the EITI Standard," the group said on its web site.
An earlier effort by Ethiopia to join was rebuffed in 2010.
At the Oslo meeting Yemen, an exporter of oil and gas and one of the poorest nations in the Middle East, was suspended as an EITI member.
It did not report in time its 2011 income from oil and gas, due to the turmoil of the Arab Spring, Clare Short, EITI chairwoman told Reuters. She said it was encouraged to keep trying to stay in the initiative and meet the rules.
United States membership commits its federal government to disclosing all the payments it receives for the exploitation of oil and minerals on federal lands, which would include the money it gets from offshore oil and gas exploration and production.
"The U.S. have all sorts of different reporting in their system, which is quite complex. Some is reported at the federal level, some is at state level, and Native Americans ... have different systems," Clare Short, chairwoman of the EITI, told Reuters.
"Getting an overview and getting some figures that people can look at and scrutinise ... will help people have better transparency and accountability."
Currently energy firms active in the U.S. may break out profits and production by regions of activities, like the Gulf of Mexico.
But they do not break out profits made on federal land in earnings reports or in filings to the Securities and Exchange Commission.
Abroad, U.S.-registed companies are already required to disclose payments made to governments for access to resources.
The EITI has stakeholders in the public and private sectors and requires resource companies to disclose payments made to governments and the latter to publish what payments they receive.
EITI terms are not legally binding, but member countries that fall short of requirements can be suspended from the process, leading to political embarrassment. Some 44 nations are EITI members. (Reporting By Aaron Maasho in Addis Ababa, Gwladys Fouche in Oslo and Pascal Fletcher in Johannesburg; Writing by Richard Lough, editing by William Hardy)