Editorial

Oil price crash: what now for fiscal terms?

Listen to our webinar to discover the impact of fiscal terms on project economics when oil prices are low

With analysis from Graham Kellas, senior vice president of global fiscal research, Ashima Teneja, head of Asia Pacific upstream, David Barrowman, vice president of fiscal consulting, and Andrew Harwood, research director for Asia Pacific upstream oil and gas. 

Over the past few weeks, the coronavirus outbreak has dampened global energy demand, causing oil prices to crash. As a result, much of the world's oil supply has been pushed into the red

Petroleum investors, producers, suppliers and governments are coming together to find solutions to the current industry crisis. What changes can they make to weather this storm? Fiscal terms will be a key area of consideration. 

Editor's note: This article is part of our ongoing analysis of the impact of coronavirus and the oil price crash. Visit our coronavirus and oil market in crisis hubs for more.  

Fiscal terms can respond automatically to oil price shocks but some make production uneconomic and push the breakeven price for new investment up to unacceptable levels. Some governments are dependent on oil taxes for their budget; others need to keep the supply sector afloat. In this webinar, our global upstream experts explore which changes to fiscal terms will work in this price environment in major oil-producing countries, and which won't. 

When does production become economic?

Before and after factoring in fiscal terms

Using Wood Mackenzie Lens to explore our global upstream data set, our upstream experts have analysed all oil and gas producing assets and looked at what price production becomes uneconomic (when revenue is less than the operating costs, pre-tax). And then included the government share of revenues, such as royalties, taxes, and profit-sharing, to understand the impact of fiscal terms on the economic viability of production. 

Listen to the 50-minute webinar to find out more about: 

  • The impact of different fiscal policies on project economics at low prices
  • The strengths and weaknesses of possible fiscal responses
  • What we can learn from previous price crashes and the impact of fiscal responses

Fill in the form on the page to access the recording and slides.