Petroleum Fiscal Systems and ContractsInhaltsangabe:Introduction: The petroleum fiscal system for a country is essentially the taxation structure, including royalty payments, that has been established by legislation. More broadly, the fiscal system includes all aspects of the contractual and taxation framework that governs the relationship between the host government and an international oil company. Worldwide, there are many different fiscal systems with different taxation and contractual terms. These vary from country to country and some countries use more than one system. Countries, for example, may offer concessionary system arrangements or service and production sharing agreements. Whichever system prevails, the issue for an oil company is how can it recover costs expended and how will the profit be divided. This depends upon tax regulations and the principles of the economics of the life of a field. The focus of this book is on the mechanics of the various kinds of fiscal systems and the factors that drive exploration and development economics. The emphasis is on practical aspects of petroleum taxation and industry/government relationships. There is also fertile ground for considering the philosophy of petroleum taxation which has changed the industry. Legal and operational aspects of contract/fiscal terms are also examined to provide a foundation in the dynamics of international negotiations. Both industry and government viewpoints are addressed in this book since a complete grasp of the subject requires an understanding of the aims and concerns of both sides. There are few things more discouraging for a government s national oil company than an unsuccessful licensing round. Yet prolonged, inconclusive negotiations can be equally frustrating for oil companies. This book has been written for those interested in petroleum taxation and international negotiations, and the way to carry out successful exploration and development projects. Much of the subject has evolved years ago whilst some aspects of taxation are timeless. Examples are included to give the reader a wide perspective about the implementation of fiscal systems. The terminology has changed over the years and will continue to develop. There is little standardisation of terms in the industry and the abundance of jargon can be rather daunting. The subjects covered in this book are often simple concepts wrapped up with industry and legal jargon. A glossary is provided to help with this. Much of the material provided [...] |
Contents
| 9 | |
| 15 | |
| 21 | |
| 28 | |
| 35 | |
| 44 | |
CONTRACT CONTENTS | 52 |
1 Government and Contractor take | 73 |
2 PDO approval flow chart | 146 |
1 Recoverable conventional oil by region | 157 |
PROJECT EVALUATION 39 3 CONTRACTS 46 4 GOVERNMENT AND OPERATOR TAKES COSTS | 160 |
1 Azerbaijani fiscal regime | 175 |
2 Dubai fiscal regime | 202 |
4 Example Iraqi service contract | 229 |
7 Malta fiscal regime | 243 |
9 Norway fiscal regime | 261 |
1 Contractor take cost recovery limits and government | 76 |
1 Present value of one time payment | 89 |
1 Profitability measures | 90 |
5 Value of information for development optimization | 96 |
9 Accuracy of estimates through project development | 102 |
1 Hierarchy of legislation and contractual agreements | 108 |
1 UK tax regime | 124 |
1 Legal framework | 143 |
1 Plentiful reserves in Iraq oil comes to the surface | 292 |
2 Location of auctioned licenses map printed in | 324 |
1 Main commercial terms of the Shamaran PSC | 339 |
4 Production profile example for West Qurna 1 | 341 |
2 Comparison of main terms of the TSC and the | 357 |
8 Cash flow for the TSC for West Qurna 1 after Peter | 358 |
HIGH RISK COUNTRIES 291 REFERENCES 363 APPENDICES | 365 |
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Common terms and phrases
agreement allowed approval Area Duration Exploration Bonuses Cost Recovery bopd Capex capital costs cash flow commercial Cost Recovery Depreciation Cost Recovery Limit Depreciation Profit Oil Depreciation Taxation Designated blocks development costs discovery Domestic Market Obligation drilling Duration Exploration Production economic estimated example Area Duration Exploration Obligations Royalty Exploration Production Relinquishment facilities favour of government Federal Oil fencing Domestic Market Figure funding gross revenues income tax investment IOCs Iraq Iraq’s Iraqi oil Joint Operations license Ministry of Oil MMbbl Negotiable net present value Non-Operators Obligation State Participation oil and gas oil fields Oil Ministry oil price OPEC operating costs Opex period possible example Area production profile Production Relinquishment Exploration Profit Gas Split Profit Oil Split Qurna Relinquishment Exploration Obligations reserves reservoir reservoir simulation Ring fencing Domestic risk service contracts Sliding Scale Split In favour Taxation Ring fencing