Afghanistan upstream fiscal summary Report

Country Report 04 July 2023

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Report summary

Afghanistan has a relatively transparent and standard form of Production Sharing Contract (PSC) fiscal regime. The actual contracts are known as Exploration and Production Sharing Contracts (ESPCs) and include royalty, profit sharing and corporate income tax. Profit oil splits vary with project profitability (the R-Factor), there is no cost recovery ceiling. Royalty is the main biddable item. Profit sharing rate is dependent on R-factor achieved. Bonuses and rental fees are included in the contract. There is no obligatory state equity participation.

Basis
Licence terms
Government equity participation
Fiscal terms
- Bonuses, rentals and fees
- Indirect taxes
- Royalty
- Ring fencing
- Base
- Rate
- Payment schedule
- PSC production sharing
- Ring fencing
- PSC cost recovery
- Base and rate
- Recoverable costs
- Unrecovered costs
- Payment schedule
- PSC profit sharing
- Base and rate
- Corporate income tax
- Ring fencing
- Base
- Income
- Deductions
- Rate
- Payment schedule
- Fiscal treatment of decommissioning
- Product pricing
- Summary of modelled terms
Recent history of fiscal changes
Stability Provisions
Split of the barrel and share of profit
Effective royalty rate and maximum government share
Progressivity
Fiscal deterrence
Investor IRR versus pre-share IRR - oil