The recent tumble in crude oil prices to $13 14/bbl has made many countries' petroleum fiscal regimes appear prohibitive.
A study of 70 government tax levels by Petroconsultants SA, Geneva, showed that Yemen, for example, changed from hot Spot to black spot in 3 years.
State take was estimated under each country's regime for three classes of field development designated marginal, economic, and upside, based on net present value of hypothetical projects.
Ireland came out on top in au three development classes, with a state take of only 25%. This low take is a bait set, after recent disappointing drilling results, to lure oil companies back for a frontier licensing round (OGJ, Jan. 24, p. 21).
Second lowest stake rake off for all three development classes was the U.K. Here the government was found to take 33%. Petroconsultants views the U.K.'s high position in its ranking as an exception to the rule that low taxes equates with low prospectivity.
LOWEST AND HIGHEST
Third, fourth, and fifth lowest tax rates for marginal developments were in Australia, Turkey, and Denmark with state takes of 33.7%, 38.6%, and 40.6%, respectively.
Turkey had the third lowest tax rate for economic fields, at 36.6%, while Paraguay was fourth with 39.5% and Denmark fifth with 41%.
For upside field developments, Paraguay had the third lowest state take at 36.6%, Turkey fourth lowest at 40.5%, and Argentina fifth lowest at 41%.
At the bottom of the rankings for marginal developments was Yemen, followed by Syria, Russia, Qatar, and Myanmar in ascending order. All had state takes of more than 100%, Petroconsultants said.
The ranking for economic field was much the same: Yemen, Syria, and Russia had state takes of more than 100%, while Algeria had 98.2% and Qatar 97.4%.
The bottom five for upside projects were Benin with an 88.4% state take, Norway 88.3%, Tunisia 87.7%, Indonesia 86.5%, and Russia 86.4%.
REVISIONS
"With oil prices predicted to remain at levels well below $20/bbl in the near to medium term, many potential developments across the world will appear marginal, and it must be expected that a number of countries will have to revise their fiscal terms in response to this," Petroconsultants said.
The Dutch government is negotiating with operators to revitalize exploration. Norway's Storting is believed to have less painful fiscal terms on its agenda during the spring session. Gabon, Angola, Malaysia, Indonesia, Ecuador, and Peru are also said by the analyst to be discussing lower state takes.
Countries such as U.K., which removed its special petroleum taxation, would not receive a large share of profits if oil prices revived.
"In such situations," Petroconsultants said, "it must be expected that additional taxes will be reintroduced, adding another layer of uncertainty to current company evaluations of prospects."
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