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How governments tax petroleum Will it change

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The 'government take' on oil and gas consists of many components: ... oil ... heavy oils, oil sands, oil shale, coal bed methane, gas hydrates. Frontier ... – PowerPoint PPT presentation

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Title: How governments tax petroleum Will it change


1
How governments tax petroleum-- Will it change?
Pedro van Meurs Thursday, March 15,
2007 BEAR STEARNS Van Meurs Corporation Nassau,
Bahamas Tel (242) 324-4438 e-mail
info_at_vanmeurs.org
2
How governments tax petroleum-- Will it change?
YES
3
Government Take Trends
  • The government take on oil and gas consists of
    many components
  • bonuses
  • royalties
  • corporate income tax
  • production sharing
  • equity participation by governments
  • special taxes and profit shares, and
  • import duties, property taxes, etc.
  • The government take is the total of all these
    payments as a share of the profit (before
    government take).

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Government Take Trends
  • Three phases since 1974
  • 1974 1984 strong increases in government
    take
  • -- Increase in oil prices
  • -- Reduction in acreage through
    nationalizations
  • 1984 2003 decreases in government take
  • -- Decrease in oil prices
  • -- Expansion of acreage (political,
    privatizations, technology)
  • 2003 2007 increases in government take
  • -- Increase in oil prices
  • -- Reduction of acreage (partial
    re-nationalizations, political
    restrictions)

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Government Take Decline 1984 - 2003Increase in
political acreage availability
  • Eastern Europe
  • Former Soviet Union Russia, Kazakhstan,
    Turkmenistan, Azerbaijan
  • Venezuela, Peru, Brazil, Argentina,
    Bolivia, Cuba, Mexico
  • China, Mongolia, Myanmar, Cambodia,
    Vietnam, India
  • Saudi Arabia, Iran, Qatar
  • Remaining Kuwait ?, Iraq ?

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Government Take decline 1984-2003 Increase in
technical acreage availability
  • Rapid development of deep water technology
  • New and improved pipelines opened inland
    basins Bolivia, Siberia, Chad and Sudan
  • Improved LNG technology makes gas now a world
    wide commodity

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Government Take decline 1984 2003
  • Many nations lowered their government take
  • North Sea UK, Norway, the Netherlands,
    Denmark
  • North America Canada, USA,
  • Latin America Peru, Bolivia, Argentina
  • Asia Pakistan, Thailand, Malaysia.
  • North Africa Algeria, Egypt
  • Africa Nigeria, Congo, Gabon, Angola

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Government Take Increase 2003 2007Oil
  • Since 2003 oil and gas prices are increasing
  • Acreage expansion has now reached a saturation
    point - Most petroleum basins are now
    accessible. No more new previously unexplored or
    unavailable acreage is coming on the market.
  • In fact, political developments are now reducing
    acreage availability or making acreage less
    attractive Russia, Iraq, Iran, Venezuela,
    Bolivia
  • Result Government take on oil is increasing
    again

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Government Take Increase 2003 2007Oil
  • Increase in government take on oil is taking
    place along four different paths
  • Fiscal systems are adjusting automatically
    upward because of the progressive structure of
    some systems Angola, Malaysia, Trinidad and
    Tobago, Russia and India
  • Governments are changing fiscal terms UK,
    Alaska, Algeria and Kazakhstan. Alberta is
    now conducting a royalty review
  • Companies are bidding up government take in
    bid rounds Libya, India
  • Partial re-nationalizations Russia
    (Gazprom), Venezuela, Bolivia

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Government Take Increase 2003 2007Gas
  • Government take trend for gas is less clear.
  • Still considerable stranded gas reserves exist
    around the world.
  • Therefore government takes for gas in some
    countries may stabilize or continue to decline
    and governments may instead seek greater market
    access Qatar, PNG, Peru, Venezuela, Norway,
    and Egypt.
  • Nevertheless some other governments are
    increasing government takes on gas Nigeria,
    Russia, Bolivia and Algeria.

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Other important trendsLarge resource access
  • Private petroleum companies may gain access to
    large resources through political change
  • Middle East Iraq, Kuwait
  • Mexico

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Other important trendsGlobal tax developments
  • More homogeneous corporate income tax and
    continued decline of the corporate income tax
    rate.
  • Greater use of Value Added Taxes
  • Reduction of import duties and other cost based
    taxes

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Other important trendsIncreased diversity of
government take
  • Special terms for
  • natural gas
  • heavy oils, oil sands, oil shale, coal bed
    methane, gas hydrates
  • Frontier areas, deep water
  • Gas to Liquids (GTL)
  • Enhanced oil recovery or further field
    development contracts

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Conclusions
  • The main new trends for oil and gas fiscal
    systems are
  • a higher government take for oil
  • in some cases a higher government take for gas
  • lower corporate income tax
  • more diverse fiscal systems

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