We develop a new scale for measuring attractiveness of Petroleum Fiscal Regime

2. • This paper provides a
scientific methodology for
countries with petroleum
resources to develop an
optimal fiscal regime for
attracting investment from
international oil companies
• It will establish a level playing
field for developing countries
to compete with each other
and with developed nations
for investment from
multinationals oil companies
Summary

3. Background/How this Research Standout
• Attractiveness or otherwise of Petroleum Fiscal
Regime (PFR) is one of the important factors
affecting the investment decision outcome of
multinational oil companies in host nations.
• What makes a PRF attractive?
• Economists modeled this issue using decline
curves, neoclassical economic models, and
scenario analyses. However, their analyses
focus mainly on neutrality and progressivity of
PFR.
• It argued here that whilst economic analyses
have utility values, it fail to capture other
attractive features of PRF such as adaptability,
certainty, clarity, simplicity, transparency, and
administration which can be perceived by oil
and gas experts.
• Our rigorous scientific
method that captures all
relevant factors in a fiscal
algorithm is a seminal step
that can assist developing
coutries in countering the
advantages possessed by
powerful nations
• The new method can be
adopted by petroleum
negotiators and
researchers to help secure
the future of developing oil
producing nations in
competitive investment
game.

4. Our Effort
• We reviewed literature and generated fourteen (14) items that form
a Scale which capture broad features regarding PFR attractiveness.
• Oil and Gas Experts were deployed in Malaysia who evaluated the
scale for validity and reliability.

5. • A robust measurability scale
has been developed
consisting of fourteen items
covering fiscal administration,
fiscal certainty, fiscal
efficiency and fiscal
equity/neutrality.
• We tested the scale for
validity and reliability for
global application in countries
possessing oil and gas
resources.
Outcome – The Attractive Petroleum Fiscal
Regime Scale

6. • Each of the four dimensions
were found to have strong
internal consistency reliability
and well-built convergent and
discriminant validities.
• The goodness of fit indices
(Model-Fit) confirmed that the
data fits the robust
measurement theory -
principles for judging efficient
tax system devised by
Scotland’s most famous
economist , Adam Smith.
Outcome – The Attractive Petroleum Fiscal
Regime Scale

7. Conclusion – Policy Utility Values
We have taken a seminal step towards establishing a robust
optimum measurement scale that has the potential to revolutionise
how oil and gas countries develop their petroleum fiscal regimes.
The validated scale can serve as an index for designing or revising
petroleum fiscal policies among oil producing countries.

8. Conclusion - Next steps/future work
The results of our research is pioneering in
that they are the first stage of devising a
global attractiveness scale to be used in
conjunction with the existing economic
models that appraise petroleum fiscal
schemes.
The findings strongly suggest that a global
scale can be agreed across all nations with
oil and gas resources.
The next stage is to test its applicability on
a worldwide basis.
We suggest for carrying out this research.
• The scale can further be validated
in developed and other developing
oil producing nations.
•It can also be used as an index to
compare the attractiveness of PFR
of two or more producing nations
through descriptive analysis using
survey data.
•The new scale can also be useful
when attractive PFR is regressed as
an independent variable to predict
oil and gas investment climate,
along side other predictors such as
tax incentives, political stability and
legal certainty.