Insight
Fiscal competitiveness: when $50 is only $25
*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
Companies are preserving capital and high grading opportunities as they work to reduce breakevens on new projects. Only the lowest cost and highest return investments will get the green light in this environment. But generating profits at current prices is not simply down to a company's ability to control costs. Governments have a role to play too. With capital scarce, the level and timing of the government's share of revenue comes to the fore. Terms must be competitive if the government is to have any success in attracting new investment. As a result, governments around the world are reviewing their fiscal terms and they have some big decisions to make. How do we remain 'competitive', while retaining a 'fair share'? Do we target the fiscal system on revenues or profits? Do we fix the fiscal terms to allow companies to bid them? How do we assure investors that terms will remain stable in the future? We consider each of these issues in this Thought Leadership report.
Table of contents
- Executive Summary
- Being ‘competitive’
- Getting a ‘fair share’
- Revenue or profit sharing?
- Fixed or biddable fiscal terms?
- Fiscal stability
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Conclusions
- References
Tables and charts
This report includes the following images and tables:
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Fig 1: Effective Royalty Rate (ERR): government’s share of revenue before costs can be recoveredFig 2: Fiscal attractiveness vs prospectivity – global comparison of regimesFig 3: Fiscal policy and Expected Monetary Value (EMV)
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Fig 4: ‘Fiscal deterrence’ under revenue and profits based fiscal systemsFig 5: Breakeven gross revenue share and price/cost sensitivity under new Indonesian systemFig 6: Mexico’s 2nd Shallow Water Round (2017): winning bidsFig 7 Annual oil price inflation/deflation
What's included
This report contains:
