This document provides an overview and summary of Barry Rodgers' World Fiscal Systems for Oil & Gas project. The project aims to compare fiscal systems around the world, identify trends in government shares, and determine best practices. It analyzes over 60 fiscal systems across 6 categories. The summaries show increasing diversity and complexity in systems as well as special terms for unconventional and gas resources. Government shares range widely, from under 30% to over 90%. The document also finds that many systems could be improved by reducing risk, incentivizing reinvestment, and better aligning fiscal terms with resource characteristics and policy objectives. It compares Alberta's system to others and notes some challenges around commodity prices and cost escalation.

1. Fiscal Systems ComparisonWorld Fiscal Systemsfor Oil & GasPresentation for ESNAEdmontonBarry RodgersOctober 30th, 2012Rodgers Oil & Gas ConsultingEdmonton, Alberta, Canadawww.bgrodgers.com// barry@bgrodgers.com// (780) 634 -3405 // Cell: (780) 905 -3622

2. WFSOG Scope –6 Volumes
•North America
–Wells: Vt & Hz
•World -Fields
–Deep Water
–Arctic
–Shallow Water
–Onshore
•Conventional
•Unconventional
–Oil Sands
–Shale Oil
–Shale Gas
–CBM
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3. 1.Report Fiscal Changes & Trends
2.Compare Government Shares
3.Identify Fiscal Best Practices
WFSOG -Objectives
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4. WFSOG –Intention …
1.TO ASSIST PRODUCERS AND INVESTORS IN IDENTIFYING THE FISCAL COSTS OF DOING BUSINESS AROUND THE WORLD;
2.TO HELP GOVERNMENTS IN:
A.DETERMINING THE GOVERNMENT SHARE and,
B.IDENTIFYING FISCAL PRACTICES THAT WORK BEST IN ACHIEVING VARIOUS POLICY OBJECTIVES; and,
3.TO SUPPORT NEGOTIATORS AS THEY WORK TO BRING HOST GOVERNMENTS AND INVESTORS TOGETHER TO DEVELOP THE ENERGY SUPPLIES THAT WE ALL NEED.
4.TO PROMOTE FISCAL SYSTEM RESEARCH
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5. Major Fiscal Trends
Fiscal Environment:
1.Increased Diversity and Complexity
2.Special Terms for Unconventional Resources
3.Special Terms for Gas Resources
4.Haves and Have-Nots -Wider Range
Fiscal Design:
1.Lack of Risk Appreciation
2.Absence of Re-Investment Incentives
3.“Mismatch” -Fiscal Termsvs Policy & Resources
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6. FISCAL ENVIRONMENT

7. Diversity & Complexity
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•The Canadian province of British Columbia has 17 different sets of fiscal terms for various classes of oil and gas.
•Internationally, there are:
•28 Royalty Types, Scales, or Formulas
•20 R-Factors
•35 Profit Oil/Cost Structures
•12 Price-Sensitive Windfall Profit Features
•31 Forms of State Participation

8. Unconventional Development
Oil Sands
–Strong SAGD Economics
–No Longer the High Cost Producer
Shale Oil
–North America -Cost Advantage
Shale Gas
–North America -Cost Advantage and Price Disadvantage
–International -Price and GT Advantage
Oil Shale
–Some PossibilitiesEmerging!!
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9. Special Terms for Gas
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60 Jurisdictions have Special Terms for Gas
ArgentinaEgyptMaliSierra LeoneAustraliaEthiopiaMoroccoSouth SudanBelizeFranceNicaraguaSudanBeninGhanaNigerTanzaniaBruneiGuatemalaNigeriaThailandCambodiaIndiaOmanTrinidad & TobagoCameroonIndonesiaPakistanTunisiaCanada - AlbertaIraq - KurdistanPapua New GuineaUnited KingdomCanada - British ColumbiaKazakhstanParaguayUSA-ArkansasCanada - Nfld. & Lab. (Proposed)KyrgyzstanPolandUSA-LouisianaCanada - Nova ScotiaLaosPortugalUSA-MichiganCentral African RepublicLatviaQatarUSA-North DakotaChadLiberiaRussiaVenezuelaChinaLibyaSao Tome & PrincipeVietnamColombiaMadagascarSaudi ArabiaZambiaCote de I'voireMalaysiaSenegalGas-Favourable Fiscal TermsJurisdictions with

10. Wider Range: Distribution of Government Share
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•28% of Systems with GT < 50%
•28% of Systems with GT > 75%
0
5
10
15
20
25
GT < 30
GT < 35
GT < 40
GT < 45
GT < 50
GT < 55
GT < 60
GT < 65
GT < 70
GT < 75
GT < 80
GT < 85
GT < 90
GT > 90
Number of Fiscal Systems
Government Share Range

11. The Extremes: Haves vs Have-Nots
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0%
10%
20%
30%
40%
50%
ITALY-ON(Gen)
MADAGASCAR: ON(Block3104)
LITHUANIA: ON(General)
ZIMBABWE: Modeled Terms
SOUTH AFRICA: ON(Gen)
GERMANY: ON(Gen-MinimumTerms)
CANADA - BRITISH COLUMBIA: 3RD…
SWITZERLAND: ON(Gen-LAT)
BULGARIA- ON(New'10Terms)
PARAGUAY: Hydrocarbon Law…
HUNGARY: (Gen Post '10 Terms)
SPAIN: ON(Gen)
TURKEY: ON(Concession Terms)
IRELAND-ON(Standard Terms)
CZECH REPUBLIC: ON(Gen-LAT)
TAJIKISTAN: Bokhitar PSC
PORTUGAL-ON(Gen)
SLOVAKIA: ON(Gen-LAT)
ROMANIA: ON(Gen)-Domestic
MOLDOVA: General Terms
ISRAEL: ON(Current)
TURKEY: ON(Prop'07)
POLAND: ON(General Terms)
SLOVENIA: Grove Energy Terms
SERBIA: GEN-LAT
Government Share -Lowest 25
50%
60%
70%
80%
90%
100%
UAE-ABU DHABI - Concession
RUSSIA: ON(Gen)
VENEZUELA: ON(General Terms)
NIGERIA: ON-Current Terms with…
ANGOLA-ON(Cabinda-…
UKRAINE: ON(General Terms '10)
ARGENTINA-ON-Low-Royalty
TANZANIA-ON('08PSC)
SAUDI ARABIA-ON (Saudi-Kuwait…
QATAR: ON(Negotiated Contract…
LIBYA-Oil: ON-EPSA IV - Example…
OMAN: ON(PSC Terms 2006)
ALGERIA: ON(Zone D)
MALAYSIA: ON (R-Factor)
UZBEKISTAN: PSA Terms
INDONESIA: ON(Round '11 (East…
IRAQ-Kurdistan-Talisman-PSC
MYANMAR: ON(Modeled Terms)
VIETNAM-ON(Regular > 2010)
ECUADOR: AGIP Service Contract…
BRUNEI-PSA(Typical ON Terms)
CROATIA: ON(PSA Terms)
TRINIDAD&TOBAGO: ON-Con. -…
Bolivia-YPFB-Service Contract…
CAMEROON: ON(Typical PSC'05)
Government Share -Highest 25

12. Systems with GT Range 50% -75%
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13. World Government Share Summary
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14. FISCAL DESIGN

15. Lack of Risk Appreciation
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Most Fiscal Systems Add Risk
Contribute to Front End Loading
–Signature Bonuses
–Upfront Fees
–Fixed Royalties & Severance Taxes
–Low Cost Petroleum Limits (PSC’s)
–Slow Depreciation
Also:
Very little fiscal recognition of geological risk and incentives for reinvestment.

16. Lack of Reinvestment Incentives
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General Lack of Incentives to Encourage Reinvestment.
Increases the Risk of Leakage
Increases the Need to Capture the Economic Rent Directly
Increases the Desire to Front-End Load

17. Policy Mismatch -ROR vsGT (SW)
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0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
South Africa-General
United Kingdom-(2011Terms)
Ireland-Off(SW)
Bahamas-Off(Gen)
Netherlands-(MineAct'10)
Bulgaria-SW('10Terms)
Sierra Leone-Off(SW)
Nigeria-SW:HB159
New Zealand-Off(Gen)
Canada-NFLD&LAB
Russia: CaspianSea
India-NELP(SW-R9<400)
Denmark-Off: New Terms
Uruguay-Round II (> 25API)
Guyana: CGX 2011
United States-GOM<400 ('08)
Chile-Concession Terms
Liberia-Block14
Mauritania-OffSW(Block 1)
Brazil-Above Salt (< 400 m)
Senegal-Concession Terms
Norway
China-OffSW(Typ. Contract)
Thailand-SW (GulfofThailand)
Kazakshtan-Off(Gen - 2011)
Angola-Off(SWPSC-B9Bid)
Nigeria-SW-NNPC Part
Venezuela-(Incent Terms)
Argentina-Off(Gen)
Undiscounted Government Take (GT0)
Internal Rate of Return (IRR)
IRR (%)
GT0 (%)

18. Key Messages: Fiscal System Design
Many Fiscal Systems Can be Improved by:
1.Reducing Complexity
2.Better Fiscal System Design
3.Recognizing the Environment
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19. How Alberta Compares-It’s About Government Policy -
Consider
Russia, USA –Louisiana,
the United Kingdom, and Australia

20. Systems with GT Range 50% -75%
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21. How Alberta Compares
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22. Alberta -Observations
•Government Share:
–Consistent w Government Policy to Achieve High Levels of Activity
•Fiscal System
–Complex.
–Gas can be More Transparent
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Challenges:
1.Low Netback Prices
Gas & Oil Sands
Excess Supply
USA Domestic Supply
2.Cost Escalation
3.Social License/ Environment

23. World Fiscal Map for Oil
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24. WFSOG -Acknowledgements
•World Fiscal Systems for Oil & Gas –2012 is published jointly by:
–Van Meurs Corporation
–Rodgers Oil & Gas Consulting
–PFC Energy
The co-producers acknowledge special assistance from Barrows Company and from the Ernst & Young Oil and Gas Centre and Moscow Office.
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