The document discusses regional comparisons of fiscal terms for petroleum production sharing contracts (PSCs) in Asia Pacific countries. It provides an overview of key fiscal elements such as royalty rates, cost recovery limits, profit oil splits between governments and contractors, state participation requirements, and domestic market obligations. Tables compare these fiscal terms across countries and note differences in elements like tax rates, incentives provided, and average estimated government take for each country.
The document discusses various fiscal systems for oil extraction between governments and oil companies. It covers concepts like royalties, cost recovery limits, profit oil splits, and government vs company take. Different systems like concession agreements, production sharing contracts, and R factor systems are examined in terms of how they divide revenues and allocate rents between landlord governments and tenant oil companies operating under contract.
Fiscal Risk Advancements in Petroleum ContractsYasir Karam
Study analysis of determination of fiscal risk implemented in several models of petroleum contracts, a study within licensing bid rounds contracting system of Iraq
INTERNATIONAL PETROLEUM CONTRACTS & PRACTICE IN NEGOTIATIONSpetroEDGE
This 5 days course (24-28 August 2015, Kuala Lumpur) will help you develop an in-depth understanding of the legal and contractual framework as applied in the upstream oil & gas industry. It opens with an explanation of the geopolitical forces which shape the modern oil industry and then covers the major technical, legal, financial, economic and fiscal issues that form current E&P agreements worldwide. You will learn the philosophy, evolution and fundamentals of international petroleum contracts.
The class include participants from both NOC’s, IOC’s contractors, which adds further realism to the exercises. The detailed training agenda can be downloaded here: http://bit.ly/1B2zMCL
For more information, email susy@asiaedge.net
PRODUCTION SHARING CONTRACTS (By Edwin Kimani & Kate Mavuti)Edwin Kimani
This slides, prepared together with Kate Mavuti (LLB, DipKSL, LLM Oil & Gas) analyses the complexity of production sharing contracts, typically used in the oil and gas industry in Kenya.
This document discusses oil and gas exploration and production contracts between national oil companies (NOCs) and private international oil companies (IOCs). It provides an overview of different types of contracts including concessions, production sharing contracts, joint ventures, and service contracts. It also gives examples of how these contract types have been implemented in specific countries, comparing the experiences of Indonesia, Venezuela, Nigeria, and Canada.
Investment decisions are among the most important decisions an organization can make as they are capital intensive, irreversible, and high risk. This document discusses the main elements of economic investment analysis including calculating a project's cash flow over its lifetime while accounting for inflation, time value of money, and uncertainty. It describes key decision criteria like net present value and internal rate of return to evaluate whether a project should be accepted or rejected based on whether its NPV is positive or its IRR exceeds the discount rate. The quality of the economic analysis depends on accurate cash flow projections and using the proper discount rate.
The document discusses various fiscal systems for oil extraction between governments and oil companies. It covers concepts like royalties, cost recovery limits, profit oil splits, and government vs company take. Different systems like concession agreements, production sharing contracts, and R factor systems are examined in terms of how they divide revenues and allocate rents between landlord governments and tenant oil companies operating under contract.
Fiscal Risk Advancements in Petroleum ContractsYasir Karam
Study analysis of determination of fiscal risk implemented in several models of petroleum contracts, a study within licensing bid rounds contracting system of Iraq
INTERNATIONAL PETROLEUM CONTRACTS & PRACTICE IN NEGOTIATIONSpetroEDGE
This 5 days course (24-28 August 2015, Kuala Lumpur) will help you develop an in-depth understanding of the legal and contractual framework as applied in the upstream oil & gas industry. It opens with an explanation of the geopolitical forces which shape the modern oil industry and then covers the major technical, legal, financial, economic and fiscal issues that form current E&P agreements worldwide. You will learn the philosophy, evolution and fundamentals of international petroleum contracts.
The class include participants from both NOC’s, IOC’s contractors, which adds further realism to the exercises. The detailed training agenda can be downloaded here: http://bit.ly/1B2zMCL
For more information, email susy@asiaedge.net
PRODUCTION SHARING CONTRACTS (By Edwin Kimani & Kate Mavuti)Edwin Kimani
This slides, prepared together with Kate Mavuti (LLB, DipKSL, LLM Oil & Gas) analyses the complexity of production sharing contracts, typically used in the oil and gas industry in Kenya.
This document discusses oil and gas exploration and production contracts between national oil companies (NOCs) and private international oil companies (IOCs). It provides an overview of different types of contracts including concessions, production sharing contracts, joint ventures, and service contracts. It also gives examples of how these contract types have been implemented in specific countries, comparing the experiences of Indonesia, Venezuela, Nigeria, and Canada.
Investment decisions are among the most important decisions an organization can make as they are capital intensive, irreversible, and high risk. This document discusses the main elements of economic investment analysis including calculating a project's cash flow over its lifetime while accounting for inflation, time value of money, and uncertainty. It describes key decision criteria like net present value and internal rate of return to evaluate whether a project should be accepted or rejected based on whether its NPV is positive or its IRR exceeds the discount rate. The quality of the economic analysis depends on accurate cash flow projections and using the proper discount rate.
We are currently in the midst of one of the deepest downturns in the upstream industry in recent years. Challenging times are ahead for those looking to invest capital and grow their companies in this environment.
Petroleum Economics is all about the allocation of scarce resources. Investment capital is certainly that scarce resource at the moment. In this environment, companies are looking for people to develop highly advanced skills in upstream petroleum economic and financial analysis
This document provides an overview of production sharing contracts (PSCs) and fiscal regimes for oil and gas exploration. It discusses the international scenario for PSCs, concessions, and service contracts. The key benefits of PSCs are that they encourage private investment, provide a revenue stream for investors, return asset ownership to the government, and provide a reasonable rate of return. PSCs also serve national interests, reduce government budget and administrative burdens, and generate new tax revenue. The document then examines international fiscal regimes and tools like rentals, bonuses, royalties, corporate income tax, and profit petroleum sharing. It analyzes the commodity price, regulatory, technical, and cost risks faced by contractors under India's PSC model.
Introduction-Alpha….. Betical PRINCIPLES of Petroleum Geology; Classification of fossil fuels as hydrocarbon resources and hydrocarbon producing resources; Oil/Gas Generation and Diagenesis; Types of Oil & Natural Gas Plays; Occurrence of Oil and Gas; umbrella terms given to petroleum: Conventional oil and Unconventional oil; Associated Gas and Non-associated Gas; In Situ Oil and Gas Resources versus Supply; Natural Gas Resource and Quality Types; Natural GAS; Oil and Gas Process; Oil/Gas Field Life Cycle; Oil Field Pyramid ; Giant Oil Field
The field development plan aims to maximize oil recovery from the Sirri-A oil field located offshore Iran. Key objectives include developing a reservoir model, evaluating development strategies, and determining cash flows. The reservoir is a limestone formation from the Cretaceous period. Analysis shows it has an initial oil in place of 1.78 billion stock tank barrels and is primarily driven by water. Development scenarios include a base case, increased well counts, secondary water injection, and tertiary WAG injection. The WAG scenario recovers an estimated 52.3% of the oil in place.
[Ringkasan]
Dokumen tersebut membahas mengenai wilayah kerja migas di Indonesia, mulai dari proses penetapan, evaluasi, penawaran, hingga penandatanganan kontrak kerja sama antara SKK Migas dengan kontraktor. Juga dibahas mengenai regulasi terkait, kompetensi kontraktor, mekanisme pengawasan, serta perbedaan antara kontrak bagi hasil konvensional dan gross split.
Oil and Gas Contract Law_Contratual Risks Operators and Contrators_Dez. 2014 Pedro N
1. The document discusses contractual risk in the oil and gas industry, specifically examining the Deepwater Horizon incident where issues of liability and indemnity led to disputes between the operator, BP, and contractor, Transocean.
2. It provides background on the oil and gas industry and common contract types. Dayrate contracts are most common, such as the one between BP and Transocean for the Deepwater Horizon rig.
3. Contracts address technical specifications, payments, warranties, remedies for breach, and risk allocation. However, warranties often do not cover fitness for purpose or third party damages. The Macondo incident involved failures of well integrity, pressure control, and the blowout preventer. BP
TYPES OF PETROLEUM CONTRACTS AGREEMENT; Product Sharing Contract/Agreement (PSC/PSA); Concession (or Tax-and-Royalty) Contracts; STABILIZATION; EGYPTIAN HYDROCARBON FISCAL REGIME;; Main Differences Concessionary & Production Sharing Contracts (PSCs); Participation/Joint Venture/ Association (or Arrangements); Service Contracts; WHAT CHOICES OF LAW ARE POSSIBLE? Rule of Capture; Law of the Sea Act 77 & the Rule of Capture; KEY ISSUES IN UNITIZATION AGREEMENTS; UNITIZATION CLAUSES; Discretionary Unitization Clauses; Non-Discretionary Unitization Clauses; Cross-border or International Unitization; EGYPT PETROLEUM FUTURE; UNDERSTANDING EGYPT; PRODUCTION SHARING CONTRACTS AND TAX BARRELS; Egypt Production Sharing Contract (PSC); Typical Egypt Development Lease
This document provides an overview of production sharing contracts (PSCs) between oil and gas companies and host countries. It explains that under a PSC, the contractor bears all exploration and development costs and risks in exchange for a share of production. Key points include: PSCs aim to balance host country and contractor returns; contractors operate exclusively but at their sole risk and expense; production is owned by the host country; costs are recovered from early production before a pre-determined split of profits between parties. PSCs are commonly used in countries like India, China, Russia and across Africa and the Middle East.
Le 02 natural gas exploration and productionNsulangi Paul
This presentation demonstrates activities concerning natural gas exploration and production. The contents point out activities associated with natural gas upstream such as searching and extracting natural gas either offshore or onshore fields.
Production Agreements, Oil Service Contracts & Joint VenturesElijah Ezendu
The document discusses different types of agreements for oil production and exploration between oil companies and governments. It describes production sharing agreements where the oil company bears costs of exploration and production in exchange for a share of output. It also discusses joint ventures where governments and oil companies jointly operate projects and share outputs. Service contracts are mentioned where the government maintains greater control and the oil company is compensated for services. The pros and cons of these different models are compared from the perspectives of both the host government and international oil companies.
The petroleum industry involves exploring for oil and gas deposits, extracting them from the ground, refining oil into fuel products like gasoline and diesel, and transporting and marketing these products. It is divided into upstream (exploration and production), midstream (transportation, storage, and processing), and downstream (refining and distribution) sectors. Globally, oil accounts for around 33-53% of energy consumption in different regions. The United States consumes around 25% of the world's oil production each year. The petroleum industry represents the world's largest industry in terms of revenue.
This document discusses enhanced oil recovery (EOR) methods that can be used to extract additional oil from reservoirs when traditional production methods become inefficient. It outlines three main EOR techniques: chemical injection, miscible displacement, and thermal recovery. Chemical and miscible displacement methods involve injecting gases or chemicals to mobilize remaining oil, while thermal recovery uses steam injection to reduce oil viscosity in heavy oil reservoirs. The overall goal of EOR is to maximize the amount of oil recovered from each reservoir or well.
Unitization is the process of developing an oil or gas field that spans multiple license or international boundaries as a single unit. It ensures optimal resource recovery and maximizes value for the involved parties and states. Historically, the "rule of capture" led to inefficient development as individual operators sought to quickly extract resources. Modern unitization agreements establish initial participation shares and include provisions for later redeterminations based on new technical data. They aim to facilitate cooperative development while equitably allocating costs and production among stakeholders.
Oil 101 - A Free Introduction to Oil and Gas
Introduction to Supply, Trading, Transportation
This Supply, Trading, and Transportation (S&T) overview includes discussions on What is S&T, what are some of the major risks associated with trading, and some historical perspective on the evolution of S&T.
The complete S&T Module includes lessons on crude oil and products supply fundamentals, derivative contracts and exchanges, as well as key business drivers in physical trading and financial hedging. Natural gas trading is beyond our scope though it has a similar commercial function, closely tied to the utility and power consumer market.
What is Supply and Trading?
To help answer that question, let’s look briefly at how Chevron defines S&T on their website.
“Chevron Supply and Trading (S&T) provides a critical link between the market and Chevron's upstream, downstream and chemicals companies. S&T provides commercial support to Chevron's crude oil and natural gas production operations as well as to the company's refining and marketing network.”
Introduction to Oil and Gas Industry from Upstream (Exploration & Production), Midstream (Transportation & Storage), to Downstream (Refining, Petrochemical, & Marketing)
Integrated Oil Field Development Plan - FDP. Criteria, strategy and process f...Giuseppe Moricca
Integrated Oil Field Development Plan - FDP.
The integrated oil field development plan describes process, explores options, and targets, aimed at the optimal oil and gas field development in line with the oil company strategy.
The spine in the process is the specialist teams who navigate, manage and integrate the subsurface and surface complexities, uncertainties and opportunities into a single development plan, maximizing the overall field recovery and asset value.
This document discusses shale gas, including its formation, extraction through hydraulic fracturing and horizontal drilling, presence worldwide and in India, benefits and concerns. Shale gas forms from natural gas trapped within shale rock formations thousands of feet underground. It is extracted through hydraulic fracturing and horizontal drilling. While shale gas is a viable energy source and cleaner than other fossil fuels, there are environmental and social concerns around its extraction methods and impacts. The document outlines the current state of shale gas production globally and potential for development in India.
The document discusses production sharing contracts (PSCs), which are agreements between contractors and governments for oil and gas exploration. Under a PSC, the contractor bears all costs and risks of exploration in exchange for a share of production if commercial discoveries are made. The main elements of PSCs discussed are management committees, minimum work programs, and provisions for cost recovery and profit sharing between contractors and governments. Recent disputes between contractors and governments around cost recovery and royalty payments are also summarized.
This document discusses tax and accounting considerations for limited liability partnerships (LLPs). It explains that LLPs provide limited liability for members and are tax transparent. While trading profits face higher taxes through an LLP than a company, capital gains are taxed more efficiently. The document also describes how a hybrid structure combining an LLP and corporate member can help mitigate taxes, and outlines what financial statements LLPs must produce including treatment of members' capital and profits.
We are currently in the midst of one of the deepest downturns in the upstream industry in recent years. Challenging times are ahead for those looking to invest capital and grow their companies in this environment.
Petroleum Economics is all about the allocation of scarce resources. Investment capital is certainly that scarce resource at the moment. In this environment, companies are looking for people to develop highly advanced skills in upstream petroleum economic and financial analysis
This document provides an overview of production sharing contracts (PSCs) and fiscal regimes for oil and gas exploration. It discusses the international scenario for PSCs, concessions, and service contracts. The key benefits of PSCs are that they encourage private investment, provide a revenue stream for investors, return asset ownership to the government, and provide a reasonable rate of return. PSCs also serve national interests, reduce government budget and administrative burdens, and generate new tax revenue. The document then examines international fiscal regimes and tools like rentals, bonuses, royalties, corporate income tax, and profit petroleum sharing. It analyzes the commodity price, regulatory, technical, and cost risks faced by contractors under India's PSC model.
Introduction-Alpha….. Betical PRINCIPLES of Petroleum Geology; Classification of fossil fuels as hydrocarbon resources and hydrocarbon producing resources; Oil/Gas Generation and Diagenesis; Types of Oil & Natural Gas Plays; Occurrence of Oil and Gas; umbrella terms given to petroleum: Conventional oil and Unconventional oil; Associated Gas and Non-associated Gas; In Situ Oil and Gas Resources versus Supply; Natural Gas Resource and Quality Types; Natural GAS; Oil and Gas Process; Oil/Gas Field Life Cycle; Oil Field Pyramid ; Giant Oil Field
The field development plan aims to maximize oil recovery from the Sirri-A oil field located offshore Iran. Key objectives include developing a reservoir model, evaluating development strategies, and determining cash flows. The reservoir is a limestone formation from the Cretaceous period. Analysis shows it has an initial oil in place of 1.78 billion stock tank barrels and is primarily driven by water. Development scenarios include a base case, increased well counts, secondary water injection, and tertiary WAG injection. The WAG scenario recovers an estimated 52.3% of the oil in place.
[Ringkasan]
Dokumen tersebut membahas mengenai wilayah kerja migas di Indonesia, mulai dari proses penetapan, evaluasi, penawaran, hingga penandatanganan kontrak kerja sama antara SKK Migas dengan kontraktor. Juga dibahas mengenai regulasi terkait, kompetensi kontraktor, mekanisme pengawasan, serta perbedaan antara kontrak bagi hasil konvensional dan gross split.
Oil and Gas Contract Law_Contratual Risks Operators and Contrators_Dez. 2014 Pedro N
1. The document discusses contractual risk in the oil and gas industry, specifically examining the Deepwater Horizon incident where issues of liability and indemnity led to disputes between the operator, BP, and contractor, Transocean.
2. It provides background on the oil and gas industry and common contract types. Dayrate contracts are most common, such as the one between BP and Transocean for the Deepwater Horizon rig.
3. Contracts address technical specifications, payments, warranties, remedies for breach, and risk allocation. However, warranties often do not cover fitness for purpose or third party damages. The Macondo incident involved failures of well integrity, pressure control, and the blowout preventer. BP
TYPES OF PETROLEUM CONTRACTS AGREEMENT; Product Sharing Contract/Agreement (PSC/PSA); Concession (or Tax-and-Royalty) Contracts; STABILIZATION; EGYPTIAN HYDROCARBON FISCAL REGIME;; Main Differences Concessionary & Production Sharing Contracts (PSCs); Participation/Joint Venture/ Association (or Arrangements); Service Contracts; WHAT CHOICES OF LAW ARE POSSIBLE? Rule of Capture; Law of the Sea Act 77 & the Rule of Capture; KEY ISSUES IN UNITIZATION AGREEMENTS; UNITIZATION CLAUSES; Discretionary Unitization Clauses; Non-Discretionary Unitization Clauses; Cross-border or International Unitization; EGYPT PETROLEUM FUTURE; UNDERSTANDING EGYPT; PRODUCTION SHARING CONTRACTS AND TAX BARRELS; Egypt Production Sharing Contract (PSC); Typical Egypt Development Lease
This document provides an overview of production sharing contracts (PSCs) between oil and gas companies and host countries. It explains that under a PSC, the contractor bears all exploration and development costs and risks in exchange for a share of production. Key points include: PSCs aim to balance host country and contractor returns; contractors operate exclusively but at their sole risk and expense; production is owned by the host country; costs are recovered from early production before a pre-determined split of profits between parties. PSCs are commonly used in countries like India, China, Russia and across Africa and the Middle East.
Le 02 natural gas exploration and productionNsulangi Paul
This presentation demonstrates activities concerning natural gas exploration and production. The contents point out activities associated with natural gas upstream such as searching and extracting natural gas either offshore or onshore fields.
Production Agreements, Oil Service Contracts & Joint VenturesElijah Ezendu
The document discusses different types of agreements for oil production and exploration between oil companies and governments. It describes production sharing agreements where the oil company bears costs of exploration and production in exchange for a share of output. It also discusses joint ventures where governments and oil companies jointly operate projects and share outputs. Service contracts are mentioned where the government maintains greater control and the oil company is compensated for services. The pros and cons of these different models are compared from the perspectives of both the host government and international oil companies.
The petroleum industry involves exploring for oil and gas deposits, extracting them from the ground, refining oil into fuel products like gasoline and diesel, and transporting and marketing these products. It is divided into upstream (exploration and production), midstream (transportation, storage, and processing), and downstream (refining and distribution) sectors. Globally, oil accounts for around 33-53% of energy consumption in different regions. The United States consumes around 25% of the world's oil production each year. The petroleum industry represents the world's largest industry in terms of revenue.
This document discusses enhanced oil recovery (EOR) methods that can be used to extract additional oil from reservoirs when traditional production methods become inefficient. It outlines three main EOR techniques: chemical injection, miscible displacement, and thermal recovery. Chemical and miscible displacement methods involve injecting gases or chemicals to mobilize remaining oil, while thermal recovery uses steam injection to reduce oil viscosity in heavy oil reservoirs. The overall goal of EOR is to maximize the amount of oil recovered from each reservoir or well.
Unitization is the process of developing an oil or gas field that spans multiple license or international boundaries as a single unit. It ensures optimal resource recovery and maximizes value for the involved parties and states. Historically, the "rule of capture" led to inefficient development as individual operators sought to quickly extract resources. Modern unitization agreements establish initial participation shares and include provisions for later redeterminations based on new technical data. They aim to facilitate cooperative development while equitably allocating costs and production among stakeholders.
Oil 101 - A Free Introduction to Oil and Gas
Introduction to Supply, Trading, Transportation
This Supply, Trading, and Transportation (S&T) overview includes discussions on What is S&T, what are some of the major risks associated with trading, and some historical perspective on the evolution of S&T.
The complete S&T Module includes lessons on crude oil and products supply fundamentals, derivative contracts and exchanges, as well as key business drivers in physical trading and financial hedging. Natural gas trading is beyond our scope though it has a similar commercial function, closely tied to the utility and power consumer market.
What is Supply and Trading?
To help answer that question, let’s look briefly at how Chevron defines S&T on their website.
“Chevron Supply and Trading (S&T) provides a critical link between the market and Chevron's upstream, downstream and chemicals companies. S&T provides commercial support to Chevron's crude oil and natural gas production operations as well as to the company's refining and marketing network.”
Introduction to Oil and Gas Industry from Upstream (Exploration & Production), Midstream (Transportation & Storage), to Downstream (Refining, Petrochemical, & Marketing)
Integrated Oil Field Development Plan - FDP. Criteria, strategy and process f...Giuseppe Moricca
Integrated Oil Field Development Plan - FDP.
The integrated oil field development plan describes process, explores options, and targets, aimed at the optimal oil and gas field development in line with the oil company strategy.
The spine in the process is the specialist teams who navigate, manage and integrate the subsurface and surface complexities, uncertainties and opportunities into a single development plan, maximizing the overall field recovery and asset value.
This document discusses shale gas, including its formation, extraction through hydraulic fracturing and horizontal drilling, presence worldwide and in India, benefits and concerns. Shale gas forms from natural gas trapped within shale rock formations thousands of feet underground. It is extracted through hydraulic fracturing and horizontal drilling. While shale gas is a viable energy source and cleaner than other fossil fuels, there are environmental and social concerns around its extraction methods and impacts. The document outlines the current state of shale gas production globally and potential for development in India.
The document discusses production sharing contracts (PSCs), which are agreements between contractors and governments for oil and gas exploration. Under a PSC, the contractor bears all costs and risks of exploration in exchange for a share of production if commercial discoveries are made. The main elements of PSCs discussed are management committees, minimum work programs, and provisions for cost recovery and profit sharing between contractors and governments. Recent disputes between contractors and governments around cost recovery and royalty payments are also summarized.
This document discusses tax and accounting considerations for limited liability partnerships (LLPs). It explains that LLPs provide limited liability for members and are tax transparent. While trading profits face higher taxes through an LLP than a company, capital gains are taxed more efficiently. The document also describes how a hybrid structure combining an LLP and corporate member can help mitigate taxes, and outlines what financial statements LLPs must produce including treatment of members' capital and profits.
The document provides an overview of the legal and fiscal framework for petroleum operations in Timor-Leste and the Joint Petroleum Development Area (JPDA). It discusses the multi-year process of drafting the framework beginning in 2003, with the goals of administrative simplicity, attractiveness, and transparency. The framework establishes similar regimes and contracts (PSCs) for Timor-Leste and the JPDA, with the Timor Sea Treaty allocating ownership of JPDA resources. Key aspects of the framework and model PSC are also summarized.
The document discusses tax reclamation opportunities in the current global economic environment. It summarizes that (1) withholding taxes on cross-border investments can be recovered through tax reclamation processes, adding 50-100 basis points annually to portfolios; (2) increased compliance pressures are creating opportunities to recover historic taxes with statutes of limitation averaging 3-5 years; and (3) select markets like Switzerland, Germany, Australia and New Zealand offer high withholding rates and long limitation periods, presenting excellent reclamation value.
With the onset of higher personal tax rates, more complex rules on the tax deductibility of interest and an election round the corner, now is the time to be thinking about structuring your tax affairs.
BDO ran a seminar for private equity executives that demonstrated:
- How to structure your fund
- How to plan during the life of your fund
- Latest techniques for structuring transactions
- Minimising VAT leakage
Find out more in the slides of the presentation.
Gactel Turnkey Projects Limited is an Indian company that provides cooling towers and systems. It has experienced losses for the past three years due to total revenue being less than total costs. Expenses as a percentage of revenue and raw material expenses as a percentage of sales have increased significantly. The company also struggles with generating positive cash flow regularly and a high debt burden that exceeds assets. To improve performance, the company needs to reduce expenses, control raw material costs and borrowing to reduce interest payments, while pursuing aggressive sales to utilize growth opportunities in the market.
This document summarizes key aspects of three federal tax credit programs - Low-Income Housing Tax Credit, Historic Tax Credit, and New Markets Tax Credit. It provides an overview of the percentage credit and eligibility requirements for each. Additionally, it discusses the common structures used for partnerships and pass-throughs involving tax credit investors. Finally, it notes that the federal tax credit programs are currently under political threat, with proposals to lower credit rates or allow credits to expire without extension.
DTE Energy reported 2000 earnings of $468 million, or $3.27 per share, compared to $483 million, or $3.33 per share in 1999. Earnings were impacted by one-time charges including a residential rate reduction and merger costs. Excluding these charges, earnings rose 6.3% to $3.54 per share. Non-regulated businesses contributed $84 million in earnings, a 22% increase driven by increased production and new projects. DTE Energy expects continued growth from its non-regulated portfolio.
DTE Energy reported 2000 earnings of $468 million, down slightly from 1999. Earnings were impacted by one-time charges of $0.15 per share for a residential rate reduction and $0.12 per share for merger costs. Excluding these, earnings rose 6.3% to $3.54 per share. Non-regulated businesses contributed earnings of $0.59 per share, up 22% over 1999 due to new projects. While results were mixed due to weather and plant issues, cost controls and growth in commercial sales helped offset impacts.
This document discusses corruption in Nigeria's oil subsidy system. It begins with definitions of corruption and background on Nigeria's oil industry. It then explains that Nigeria heavily subsidizes fuel prices, spending over $23 billion from 2006-2011 on subsidies. However, much of the subsidy money goes to corrupt politicians, marketers, and smugglers rather than citizens. As a result, there are issues like fuel scarcity, black markets, pipeline vandalization, and fights at fuel stations. In conclusion, corruption in Nigeria's oil subsidy system has significant negative economic and social consequences for the country.
Gactel Turnkey Projects Limited is an Indian company that provides cooling towers and systems. It has experienced growth but has faced financial losses in recent years due to high expenses outpacing revenue. Expenses as a percentage of revenue have exceeded 100% for the past three years. Borrowing increased dramatically in 2010, contributing to higher interest payments that have exceeded operating profits. The company has high debt relative to assets, indicating weak solvency. To improve its financial position, the company needs to control expenses, borrowing, and interest costs in order to generate positive cash flow.
The document discusses how extending local supply chains can maximize a firm's economic impact in three key ways:
1) It magnifies a firm's direct impacts like jobs and tax revenues by also capturing indirect impacts through local supplier expenditures and wages, as well as induced impacts from employee spending.
2) Extending to second- and third-tier local suppliers can have an even greater cumulative effect on the local economy.
3) Case studies of breweries and mines illustrate how strategically developing local agricultural and other suppliers strengthened those businesses while generating broader economic benefits and social license to operate.
Update on germany’s “relocation of functions” rules, sept2012Deloitte Danmark
The document is an invitation to a seminar on transfer pricing and international tax to be held on September 12, 2012 in Munich. The seminar will provide an update on German developments regarding arm's length license rates and rules on the relocation of business functions. Stephan Rasch from Deloitte Munich will discuss approaches to determining arm's length license rates, including cost plus, CUP, acquisition price, TNMM, and profit split methods. He will also cover limitations in Germany on the use of databases to determine rates for unique intangibles. The seminar will discuss trends in German tax audits regarding the allocation of risks in controlled transactions.
At UVS our mission is to MAXIMIZE "VAT Recovery" within the scope of the laws, while providing a low cost, efficient solution to all our clients.
Please visit us @
www.universalvatservices.com
Thank You
The document outlines Timor-Leste's petroleum taxation framework. It establishes that the Petroleum Taxation Act (PTA) supplements the overall administration framework provided by UNTAET 2000/18. The PTA applies ring fencing of taxable income and expenditure by contract area. It sets tax rates including a 30% income tax rate and a supplemental 22.5% petroleum tax once a project achieves a 16.5% internal rate of return. The Timor-Leste Petroleum Tax Division administers the taxation system through a self-assessment approach with audits.
This document discusses various types of oil and gas contracts: concession contracts, joint venture contracts, service contracts, production sharing contracts, and hybrid contracts. It provides details on the key aspects and advantages and disadvantages of each type. Concession contracts and production sharing contracts are the most commonly used models. An ideal contract aims to balance the interests of both the investor and the country where the resources are located.
This investor presentation by Multiplus S.A. provides an overview of the company as the leading loyalty coalition network in Brazil. It has 7.6 million members through partnerships with 133 companies. Multiplus has a unique business model that is scalable with low capital expenditures and generates recurring free cash flow and high returns. The company aims to improve customer experience, operational efficiency, and shareholder return through strategies like acquiring new members and partners, managing breakage, offering new redemption options, and co-marketing with partners.
This document summarizes worldwide experiences restructuring railways across five key issues: industry structure, ownership and control, infrastructure access, regulatory oversight, and community service obligations. It reviews approaches in multiple countries and discusses options like public ownership, outsourcing, concessions, and privatization. The document also discusses ensuring efficient separation of infrastructure from operations. Overall, the summary provides a high-level overview of global experiences restructuring railways and considering issues like competition, investment, and regulation.
Dokumen ini membahas masalah infrastruktur terkait dengan Zona Selamat Sekolah (ZoSS), pelican crossings, dan akses ke sekolah di kota Denpasar, Bali. Dokumen ini menjelaskan definisi dari fasilitas tersebut dan lokasi proyek yang akan didesain untuk meningkatkan keselamatan siswa. Dokumen ini juga membahas masalah yang ada terkait fasilitas tersebut dan langkah selanjutnya untuk merancang solusi infra
This document discusses developing multimodal transport in the North Java Corridor. It identifies the main economic centers and activities in the corridor and notes the need for infrastructure to meet the needs of these economic activities. It then discusses the current transport context and ideal modes for different cargo types. Key obstacles to efficient freight transport by road, rail, sea and lack of intermodal connectivity are identified. The document recommends targeting specific commodities for shifting to rail and sea transport. It outlines the right infrastructure, policies and reforms needed over the short, medium and long term to improve multimodal transport in the corridor.
Dokumen tersebut membahas strategi pembangunan transportasi multimoda di Pulau Jawa dengan memanfaatkan peran strategis perkeretaapian untuk menghubungkan wilayah-wilayah strategis seperti pelabuhan, bandara, dan kawasan industri. Pembangunan jalur ganda dan elektrifikasi di beberapa rute utama di Pulau Jawa diharapkan dapat meningkatkan kapasitas angkutan kereta api."
The document discusses plans to develop transportation infrastructure in Indonesia. It notes that Tanjung Priok Port is the largest in Indonesia and handles about 60% of cargo traffic. Plans are outlined to expand Tanjung Priok and develop a new port called NewPriok to meet growing demand. Integrating NewPriok with a logistics park is discussed to boost trade and employment. Developing multimodal transportation between ports, including a Pendulum Nusantara shipping route, is presented as a way to reduce domestic logistics costs and stimulate domestic trade.
Dokumen tersebut membahas mengenai angkutan multimoda dan peran angkutan penyeberangan dalam mendukung sistem transportasi multimoda di Indonesia. Secara ringkas, angkutan multimoda menggunakan minimal dua moda transportasi berbeda berdasarkan satu kontrak, sedangkan angkutan penyeberangan berperan sebagai penghubung antar moda transportasi darat, laut, dan udara untuk meningkatkan aksesibilitas wilayah.
Dokumen tersebut membahas pendekatan sistem yang aman dalam menangani masalah infrastruktur dan kecelakaan di Indonesia. Pendekatan ini melibatkan berbagai unsur seperti jalan dan kendaraan yang aman, pengguna jalan yang patuh, pendidikan publik, peraturan dan penegakan hukum, serta kerja sama lintas sektor untuk mengurangi kematian akibat kecelakaan.
This document discusses strategies for improving road safety for vulnerable road users in Indonesia. It recommends implementing a "Safe System" approach with four key elements: safe speeds, safe roads, safe road users, and safety management. For each element, the document provides examples of specific countermeasures, such as setting speed limits below 40km/h, building separated cycling and walking infrastructure, conducting educational campaigns on risks like not wearing helmets, and establishing inter-agency partnerships to coordinate road safety efforts. In conclusion, it proposes a six-point plan to apply the Safe System approach in Bandung, Indonesia focusing on speed management, crossing facilities, footpath quality, cycling infrastructure, promotional campaigns, and inter-agency coordination.
Dokumen ini membahas upaya peningkatan keselamatan pengguna jalan rentan di Bandung melalui pengelolaan kecepatan, penyeberangan yang aman, trotoar yang terpelihara, fasilitas bersepeda, kampanye promosi, dan koordinasi antar instansi.
The document discusses community consultation for an integrated urban road safety program in Indonesia. It outlines steps for planning consultation, including conducting surveys of local schools to gather student travel data and stakeholder issues. The surveys would collect information on travel modes, home locations, parking/drop-off areas, crossing locations and speeds. Local organizations, governments or universities could assist with data collection to help plan infrastructure improvements and identify early issues. The goal is to inform, consult and engage stakeholders during the project planning phase.
Dokumen tersebut membahas kerangka kerja monitoring dan evaluasi untuk proyek infrastruktur. Ia menekankan perlunya mengidentifikasi keluaran-keluaran proyek, merencanakan pelaksanaan dan pemantauan berdasarkan anggaran dan jadwal, serta mengevaluasi pencapaian tujuan jangka pendek dan panjang proyek.
Dokumen ini membahas program Integrated Urban Road Safety yang diusulkan untuk kota Medan, Pekanbaru dan Bandung di Indonesia, yang bertujuan untuk mengurangi kecelakaan pejalan kaki dengan memperbaiki kondisi trotoar dan menyediakan fasilitas penyeberangan jalan yang lebih aman. Program ini akan menerapkan perbaikan infrastruktur seperti perpanjangan trotoar, pulau median, dan ruang henti khusus untuk mengurangi konflik lalu lintas
Dokumen tersebut membahas pendekatan sistem yang aman dalam menangani masalah infrastruktur dan kecelakaan di Indonesia. Pendekatan ini melibatkan berbagai unsur seperti jalan dan kendaraan yang aman, pengemudi yang terampil, penegakan hukum, serta edukasi masyarakat untuk mencapai tujuan mengurangi kematian akibat kecelakaan.
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Fiscal rita jolly (formatted)
1. Gas Development Master Plan
Regional PSC Competition of Fiscal Terms
Presented by:
Rita Jolly
Petroleum Development Consultants, UK
Shangri-La Hotel, Jakarta
21 June 2012
2. Contents
• Petroleum Fiscal Systems
• Elements of Fiscal Terms
• Indonesia Evolution of Fiscal Terms
• Regional PSC Country Comparison
• Designing Fiscal Terms
2
3. Petroleum Fiscal Systems
Petroleum Fiscal System
Contractual Concessionary
Production
Service Royalty/Tax
Sharing
Contracts
Contracts
Risk Service
Contracts
Pure Service
(the service fee is
linked to the profit)
3
4. Petroleum Fiscal Systems
Concessionary System
• Allows private ownership to mineral resources
• Oil company have exclusive right to explore and produce at its
own risk and expense
• Oil company owns production
• Oil Company pays royalty, surface rent and taxes
• Investor typically responsible for abandonment
Contractual System
• The State retains ownership to mineral resources
• Contractor gets share of production
• Contractor does not own the production
• Contractor shares the risk with the Government
• The State/NOC is typically legally responsible for abandonment
4
5. Main Difference Between Concessionary System
and PSC System
Concessionary Production
Systems Sharing Contracts
Ownership of nation’s
Held by sovereign state Held by sovereign state
mineral resources
Title transfer point At the wellhead At the export point
Company entitlement Gross production less royalty Cost oil/gas + profit oil/gas
Entitlement percentage Typically 90% Typically 50–60%
Ownership of facilities Held by company Held by the state
Typically less government More direct government
Management and control
control control and participation
Government participation
Less likely More likely
(carried working interest)
Ring fencing Less likely More likely
5
6. Petroleum Fiscal Systems
Production Sharing Contracts
• PSC’s are most widely used form of contracts
• Host country grants FOC right to explore and are
negotiated per acreage
• Each contract will address how FOC costs will be
recovered
• The FOC is considered a Contractor to the Government
• The Contractor takes a % of production to recover costs
and a profit split with the government from production
of oil
• PSC environment has a tendency for FOC to over explore
because in effect the government picks 65% to 85% of
the costs
6
7. Petroleum Fiscal Systems
Tax/Royalty Contracts
• Mostly occur in developing countries and account for about
50% worldwide
• Government imposed royalty and tax
• Alternative taxes may be imposed
• Applicable to all licences with fixed guidelines
Risk Service Contracts
• Most often in Latin America
• FOC explore, develop and produce reserves with no
restraints from the Host country
• FOC is reimbursed for its investment and paid for the
services only if there is a commercial production.
7
8. Simple Flow-chart comparison of Fiscal Terms
Royalty Tax PSC Service
Gross
Gross
Production Contract
Production Gross
Production
Royalty
Royalty
Cost Oil Cost Oil
Less Costs
Profit Oil State
Production
Income
Tax Contractor
State Contractor Fee
Profit Oil Profit Oil
Company’s
Production Income
Income
Tax Tax
Contractor Contractor
Profit After Profit After
Tax Tax
8
9. Fiscal Terms Around the World
Royalty/Tax PSC
EUROPE Bulgaria Italy Albania
Czech Republic Netherlands Malta
Denmark Norway Poland
France Poland Turkey
Greece Portugal
Hungary Romania
Ireland Spain
UK
AFRICA Chad Namibia Algeria Kenya
Congo (K) Nigeria Angola Libya
Madagascar Senegal Cameroon Mauritania
Malawi South Africa Congo (Br) Montenegro
Mali Cote D’Ivoire Sudan
Morocco Egypt Tanzania
Equatorial Guinea Tunisia
Gabon Uganda
Ghana
MIDDLE Abu Dhabi Ajman Turkey Bahrain Qatar
Kazakhstan Iraq Syria
EAST Jordan Turkmenistan
Libya Yemen
FAR Australia Thailand Bangladesh Mongolia
Brunei Timor Gap B Cambodia Myanmar
EAST/ASIA Korea China Nepal
Pakistan (on) India Pakistan (off)
PNG Indonesia Sri Lamka
New Zealand Laos Timor Gap A
Malaysia Vietnam
AMERICAS Argentina Costa Rica Belize Ecuador
Bolivia Falklands Cuba Peru
Brazil Venezuela Guatemala Uruguay
Canada Colombia USA Guyana Venezuela
Jamaica
9
11. Elements of Petroleum Fiscal Systems
PSC Fiscal Terms Royalty/Tax Fiscal Terms
• Work Commitment • Work Commitment
• Bonus Payments • Bonus Payments
• Royalties • Royalties
• Cost Recovery (Cost Oil) • Government
• Profit Oil Participation
• Government • Domestic Market
Participation Obligation
• Domestic Market • Indirect Taxes
Obligation • Corporation Tax
• Indirect Taxes
• Corporation Tax
Indonesia led the world in development of Production Sharing
Contracts (1954)
11
12. Gas Fiscal Terms
There are more fiscal systems in the world than there are countries
due to:
Negotiation of Terms
Numerous vintages
Trends in Gas Taxation 2003- 2008
Increases in tax percentage for gas have been much less than oil because
there are still considerable gas reserves around the World
Government takes for gas in some countries stabilized or continued to
decline and governments seek instead greater market access: Qatar,
Venezuela, Norway and Egypt
However, government takes for gas have also increased in some
jurisdictions: Algeria, Bolivia, UK, Trinidad and Tobago
Trend for gas taxation systems are becoming more different from oil taxation
systems.
12
14. Indonesia – Evolution of Fiscal Terms
First Generation PSCs 1960 - 1975
Cost Recovery 40%
Second Generation PSCs 1976 - 1988
Profit split post tax:
Abolition of Cost Oil Third Generation PSCs
65% State
35% Contractor Profit Oil increased to 85% 1988 onwards
Profit Gas 70% or 65% Fist Tranche Petroleum 15% to
Investment incentives 20% of 20%
Carry forward of
unrecovered costs production subject to a guarantee Cost Recovery 80% - 85%
to the government of 49% of
revenue over life of field CT rate 48% or 44%
Oil price set by State for Interest recoverable Investment credit 17% to 20%
tax calculations DMO oil 10% of export price
Cost Recovery period improved
from 14 to 7yrs
Signature bonus $1mm to 1978 Pre-Tax PO share of 34.1% Progressive sharing split
$5mm subject to CT of 56%
1984 – CT 48%, dividend tax 20%; Deregulation in certain areas
Production bonus ranged Profit split reset at 28.86% to
from $15mm to $50mm contractor; Investment credit
reduced to 17% subject to govt Contractor provide
guarantee of 25% of gross revenue abandonment
DMO 25% ay 0.2c/bbl over life of field
14
15. Indonesia – Evolution of Fiscal Terms
Forth Generation PSCs 1995
FTP 15%
Fifth Generation PSCs Post 2001
Cost Recovery 85%
FTP 10% to BP MIGAS and not
Profit split post tax: shared New PSCs 2008 onwards
Oil 85%/15% Cost Recovery 90%
Cost Recovery 90%
Gas 60%/40% Profit split post tax:
Profit split post tax:
CT 44% Oil 75%/25%
Oil 80%/20%
DMO 25% oil at full first Gas 60%/40%
5yrs, 25% thereafter of Gas 70%/30%
export price CT 44%
CT 44%
Investment credit:
oil 17%
No investment credit
gas 55%
DMO 25% oil at full first 5yrs,
25% thereafter of export price
DMO floor % of total oil production DMO 25% proven gas reserves
DMO floor % of total gas Depreciation 5 to 10 yrs DB
production at avg contract price
No interest
15
16. Indonesia – Evolution of Fiscal Terms
Equity Share - Gas
1995 Eastern
New Contracts * Province PSC 1995 1985 - 1994 Old
Tax Rate 44% 44% 44% 48% 56%
Share of Production after Tax:
Government varies 60 70 70 70
Contractor varies 40 30 30 30
Contractor's Share of Production before Tax
44.64 - 62.5
35/(100-44) 71.43
15/(100-44) 53.57
15/(100-48) 57.69
15/(100-56) 68.18
* General combined "C&D" tax rate fell to 42.4% in 2009 and 40% in 2010. However, gross sharing rates have not been adjusted for
these new PSCs.
16
17. Indonesia – PSC Fourth Generation
Contractor Government
PO - 28.8462% PO - 71.1538%
Gross Revenue 100
5.8 14.2
First Tranche Petroleum 20%
Net Revenue 80
28
Cost Oil 35%
15 37
Profit Oil 52
Taxable Income 20.8
-10
Tax 48% 10
10.8
After Tax Cash flow 61.2
15%
===Contractor Take State === 85%
17
18. Indonesia – PSC Current gas
Contractor Government
PO – 53.571% PO – 46.429%
Gross Revenue 100
First Tranche Petroleum 10% 10
Net Revenue 90
28 Cost Oil 90%
33.2 Profit Oil 62 24.8
Taxable Income 33.2
Tax 44% 14.6
-14.6
18.6 After Tax Cash flow 49.4
25.8% ===Contractor Take State === 74.2%
18
20. Regional PSC Country Comparison
Fiscal Systems in Selected Asia/Pacific Countries
Exploration Development Exploitation Extension
Fiscal System Retention (yrs) Bonuses
(yrs) (yrs) (yrs) (yrs)
THAILAND II RT 6+3 4 20 10 Negotiable
THAILAND III PSC 5 5 5 gas only Oil 25 Gas 20 Negotiable
Offshore 17 30 Onshore 23
BRUNEI RT 30 Negotiable
Onshore 8 Offshore
MALAYSIA PSC 5 Oil 15 Gas 20 Negotiable Negotiable
VIETNAM PSC 5 20 - 25 Negotiable Negotiable
PHILIPPINES SC 1 - 10 30 Negotiable Negotiable
CHINA PSC 7-8 15 Negotiable
PAKISTAN
PSC Negotiable
(Offshore)
MYANMAR PSC 3-5 20 Negotiable Negotiable
CAMBODIA PSC 8 4 30 5 Negotiable
INDONESIA PSC 6 - 10 20 - 25 20 - 30 Negotiable
20
21. Regional PSC Country Comparison
Fiscal Systems in Selected Asia/Pacific Countries
Profit Oil Contractor
Royalties Cost Recovery Excess Oil State Participation DMO
Share
THAILAND II 12.5%
5% - 15% (deep sea
THAILAND III Oil 50% Gas 60% 50%
reduced by 30%)
Cum prod <
Oil 8% - 12.5% Gas 50% will repay past
BRUNEI 80% 1.5tcf 40% >
8% costs
1.5tcf 60%
10% + 0.5% Research 20% - 100% Varies with THV Gas 30% - 80%< THV
MALAYSIA 25%
levy R/C Factor 0-3 THV 0.75tcf 10% - 40% >THV
15% will repay past
VIETNAM 65% - 70% (V)
costs
PHILIPPINES 7.50% 60%
Oil 0% - 12.5% Gas
CHINA 0% - 3% (0% post 35% - 60%
Nov 2011)
PAKISTAN oil 20% - 80% (V) Gas
0% - 12.5%
(Offshore) 20% - 90%
oil 50% - 70% Gas Oil 10% - 55% Gas
MYANMAR 10% 20% Gas
80% - 90% 60%
CAMBODIA 5% - 12.5% 40% - 65% (V)
oil 80% Gas 70% post 10% will repay past
INDONESIA FTP - 10% 90% 25%
tax costs
21
22. Regional PSC Country Comparison
Resource Rent Avg Government
VAT Export Duty Income Tax Witholding Tax Incentives
Tax Take
THAILAND II 50% Yes (A) 59%
Tax holiday 8yrs,
THAILAND III 10% 10% for next 7yrs Yes (D) 31%
thereafter 20%
BRUNEI 55% 20% Yes (A) 48%
38% JDA 0% to
MALAYSIA 10% 70% (Pr) Yes (H,D) 57%
20%
Oil 7% - 29% Gas
VIETNAM 10% 32% - 50% 15% Yes (T,RD,I) 45%
1% - 10%
PHILIPPINES 30% 15% - 32% Yes E 31%
20% - 40% above
5% on oil 17% on
CHINA $40/bbl; CCT 7% 25% 10% Yes (I) 26%
costs ???
+ ES 3%
PAKISTAN
40% Yes (D) 32%
(Offshore)
MYANMAR 30% Yes (H) 30%
CAMBODIA 30% Yes E 27%
INDONESIA 44% Yes (I,A,Cr,U) 37%
22
23. Notes
Key
D Deep water
H Tax holiday
V Sliding Production
E Costs expensed
A Accelerated depreciation
I Investment Incentive
Cr Tax credit
P Profit linked
T Reduced Tax rate
RD R&D fund
U Unconventional Resources
23
24. Regional Fiscal Terms Comparison
Fiscal Terms in selected
Asia/Pacific Countries (OIL)
Country State Take % Fiscal System
• Indonesia • 86 – 88 • PSC
• China • 84 – 88 • PSC
• Brunei • 84 – 86 • RT
• Vietnam • 82 – 88 • PSC
• Malaysia • 82 – 85 • PSC
• Myanmar • 80 – 84 • PSC
• Indonesia (gas) • 66 – 70 • PSC
• Thailand • 60 – 74 • RT
• Cambodia • 60 – 66 • RT
• PNG (gas) • 52 – 62 • RT
• Philippines • 52 – 58 • SA
• New Zealand • 44 - 48 • RT
24
28. NO GAS COMPARISON STUDIES??????
Commercial
Fiscal Systems
Assumptions
Location Development
Scenarios
Fiscal Economic
Gas Field Size
Comparison Analysis
28
29. Designing of Fiscal Terms
Government
FOC Objectives
Objectives
• Impact on oil/gas output • Investment Risk
• Encourage Marginal Fields • Minimise front end loading
• Pace of development • High Returns
• Timing of abandonment • Tax stability
• Sensitive to Price • Risk/Reward portfolio
• Stability / flexibility • High Risk Takers
• Concessionary/Contractual
• Maximise Revenue
• Social Economic benefits
• Limit undue administration
• Low Risk Takers
29
30. Designing of Fiscal Terms
The following basic questions have to be addressed before a country
decides on its gas strategy:
How much gas is available?
What are the types and composition of the gas produced?
What are the potential markets for selling the gas at the highest added
value?
How the local gas industry can be organized and what is the impact of the
global outlook for gas?
Different cost environments: deep water, onshore, LNG encouraging FOC
efficiency
Most recent forecasts estimate that the world gas demand by 2035 may reach 4,250-
4,500 Bcm(150 to 160 Tcf), an increase of 40 to 50% relative to 2008, with a share of
gas in the primary energy mix of 21%. Around 80% of the increase in gas demand may
come from non-OECD countries, namely from developing countries. Reserves and
resources are sufficient to support such gas developments if the appropriate country
gas policies are decided allowing the required investments to be made in a timely
fashion in the entire gas supply chain.
30
31. Designing of Fiscal Terms
Egypt represents today one of the most successful gas stories in the world demonstrating the impact
of selecting the right country policy. The introduction of a drastically revised gas policy in the 1980s,
with amendments to the legal, fiscal and contractual framework designed to encourage gas
exploration and to promote gas utilization in the country led to a series of discoveries holding quite
large gas reserves. Today they are developed and in production by many operators for supplying
mostly the local markets with the balance exported.
Egypt 1980 2000 2010
Proved gas
80 1,400 2,200
reserves (Bcm)
Domestic Gas
2 20 45
demand (Bcm)
Strategy Gas clause New gas pricing
Nigeria, on the contrary, ist he example of a country with major gas resources which did not adopted
the appropriate gas policy for a long time. The most obvious consequence is that today a large share
of the associated gas is still flared while the country is not producing enough electricity, a use where
the gas is so valuable. Only quite recently in 2008, a modern gas policy was decided which may
change this energy picture when implemented.
31
32. Designing of Fiscal Terms
Vietnam, where the petroleum law was amended in 2000 to introduce more favourable provisions
for gas relative to oil, in terms of extended exploration–including a retention period of up to 7 years–
and exploitation duration, royalty reduction along with the right to negotiate specific gas
development and exploitation agreements.
Indonesia, where the new Oil and Gas of 2001 covers both upstream and downstream activities–
which is not the case in most petroleum laws–and highlights the new priority to be given to
domestic gas uses versus gas exports along with the introduction for gas of a new “domestic market
supply” obligation
2000 – introduced more favourable provisions for gas
“If discovering gas with commercial value, while lacking the consumption market as well as
conditions on pipelines and suitable treatment facilities, contractors may retain the areas where gas
is found. The duration of retention of such an area shall not exceed five (5) years and may, in special
cases, be extended for two (2) more years. Pending the consumption market and the conditions on
pipelines and suitable treatment facilities, the contractors shall have to proceed with the work
already committed in the petroleum contracts.”
Article 32 as amended provides that the applicable royalty rate will be fixed in the petroleum
agreements within a more attractive range for gas: between 0 and 10% instead of 4 to 25 % for oil. In
a similar way the cost recovery gas limit and the profit gas sharing may be more favourable to the
PSC-holder.
Australia which was one of the first country to introduce the concept of a retention lease for
allowing the exploration permit-holder of an oil or gas discovery to benefit in specific cases of a
longer exploration and appraisal phase for discoveries. In addition, the possibility of joint gas
development projects combining the resources and infrastructure with third parties is encouraged
“to jointly develop or complete an access agreement for use of facilities or technology which
provides an acceptable rate of return.”
32
33. Designing of Fiscal Terms
State FOC PSA Terms
Exploration Stage Monitor Unable to recover Cost Oil
Exploration
Reserves
If Commercial recover
Production Stage Participation costs early State Participation
High Give away revenue Trade off upside for Sliding scale
Price downside
Low
Costs Depend on participation Flex Recover costs early
Maximum cost oil
Linked to Rate of
Return
DMO Secure revenue Profitability Link to world market
Infrastructure/Transport Costs – cost recovery Maximise Cost Oil for
Early recovery
Sovereign Early payback Maximise Cost Oil
33
34. Fiscal Systems comparison based on Value of
Discovery After Tax
Source: Dr Alfred Kjemperud
A 25mmb field in Ireland gives the same profit after tax for the
oil company as a144mmb field in Indonesia
34
35. Low
Government Take
High
Less
attractive
to FOC
Summary
from FOC
High Interest
35