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China upstream fiscal summary

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29 June 2018

China upstream fiscal summary

Report summary

Upstream licences for the international oil companies (IOCs) are awarded under Production Sharing Contract (PSC) terms through licensing rounds and direct negotiations. The PSCs predominantly apply to offshore projects, while most of the onshore licences are awarded to the national oil companies (NOCs) under concession terms. State companies have the right to take a minimum working interest of 51% in any commercial development. Past exploration costs incurred by an IOC are not reimbursed by the state, but may be recovered from the share of production. Cost recovery ceilings and profit oil splits vary by area and hydrocarbon type, based on a sliding scale rates linked to production. Profit oil splits are negotiable, while cost recovery ceilings are set for each licensing round. Resource tax, corporate income tax, special oil levy, export duty and a range of bonuses, rentals and fees are payable.

Table of contents

  • Executive summary
    • Basis
    • Licence terms
    • Government equity participation
    • Fiscal terms
      • Ring fencing
      • Bonuses, rentals and fees
      • Indirect taxes
      • Royalty
      • Export duty
      • PSC cost recovery
        • Cost recovery ceiling - oil
      • PSC profit sharing
        • Contractor profit share - onshore
        • Contractor oil profit share - offshore
        • Contractor oil profit share - offshore
      • Additional petroleum taxes
        • Special oil levy
        • Special oil levy
      • Corporate income tax
      • Fiscal treatment of decommissioning
      • Product pricing
      • Summary of modelled terms
        • Assumed terms by location - oil and gas
    • Recent history of fiscal changes
      • Timeline details
    • Stability provisions
    • Split of the barrel and share of profit
    • Effective royalty rate and maximum government share
    • Progressivity
      • State share versus Pre-Share IRR - gas
    • Fiscal deterrence

Tables and charts

This report includes 33 images and tables including:

  • Revenue flowchart: China PSC
  • Timeline
  • Split of Barrel - oil
  • Split of barrel - gas
  • Share of profit - oil
  • Share of profit - gas
  • Effective royalty rate and minimum state share - onshore, oil
  • Effective royalty rate and minimum state share - onshore, gas
  • Effective royalty rate and minimum state share - shelf, oil
  • Effective royalty rate and minimum state share - shelf, gas
  • Effective royalty rate and minimum state share- deepwater, oil
  • Effective royalty rate and minimum state share - deepwater, gas
  • Maximum government share and maximum state share - onshore, oil
  • Maximum government share and maximum state share- onshore, gas
  • Maximum government share and maximum state share - shelf, oil
  • Maximum government share and maximum state share - shelf, gas
  • Maximum government share and maximum state share - deepwater, oil
  • Maximum government share and maximum state share - deepwater, gas
  • State share versus Pre-Share IRR - oil
  • Investor IRR versus Pre-Share IRR - oil
  • Investor IRR versus Pre-Share IRR - gas
  • Bonuses, rentals and fees
  • Indirect taxes
  • Fiscal stability: Table 1
  • Economic analysis: Image 6
  • Current licence, equity and fiscal terms: Table 3
  • Cost recovery ceiling - gas
  • Current licence, equity and fiscal terms: Table 5
  • Current licence, equity and fiscal terms: Table 6
  • Current licence, equity and fiscal terms: Image 1
  • Current licence, equity and fiscal terms: Table 7
  • Effective special oil levy rate
  • Current licence, equity and fiscal terms: Table 8

What's included

This report contains:

  • Document

    China upstream fiscal summary

    PDF 839.39 KB

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