Upstream fiscal systems in brief Report

Insight 26 November 2024

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Report summary

The upstream fiscal systems in brief provides our opinion and analysis on the latest stories and trends related to upstream petroleum fiscal systems. We report on four main themes: fiscal disruption that impacts existing assets, fiscal evolution where changes that affect new licences, details and implications of ongoing discussions and biddable terms where terms are part of a competitive bidding process.

Fiscal evolution: trusting in its prospectivity, South Africa’s upstream petroleum bill becomes law with a mandatory 20% state carry
- Fiscal evolution: Indonesia implements new Gross Split terms, Boon or bane for contractors?
- Fiscal disruption: UK budget provides a sigh of relief from investors, but a long way to go to restore confidence
Ongoing discussion: TotalEnergies exits discovery in South Africa after price agreement can’t be reached
Ongoing discussion: Senegal should tread lightly in possible contract renegotiations
Fiscal evolution: Argentina offers stability and tax breaks for investors with deep pockets
Biddable terms: Nigeria continues an African trend – better terms to attract new investment
Ongoing discussions: Angola set to increase incentives
Fiscal disruption: Australia PRRT debate is settled, but the winner is unclear
Ongoing discussions: A second Trump term impact on US upstream
Ongoing discussions: Argentina proposes CIT change
Biddable terms: first Bangladesh licensing round since 2012
Fiscal disruption: Equatorial Guinea reduces income tax to attract oil investments
Fiscal evolution: New US federal leasing rules
Fiscal disruption: Hydrocarbon Duty reduced for Mexico's PEMEX amid debt concerns
Ongoing discussions: Louisiana severance tax cuts
Ongoing discussions: New Mexico withholds some lease sales for higher royalty rates
Biddable terms: Zanzibar announces first licensing round
Fiscal disruption: UK extends energy profits levy (EPL) by one year
Ongoing discussions: Labour's tax proposal in the UK poses a significant threat to investment in the North Sea
Fiscal disruption: The Netherlands’ Schoonebeek to redevelop with a production-based levy
Fiscal evolution: Vietnam bolsters fiscal terms in their new Petroleum Law
Fiscal evolution: Modifications announced to India's OALP for bid round VIII and beyond
Ongoing discussions: US bonus depreciation phase-out
Fiscal evolution: Romania hikes oil and gas royalty rates
Fiscal disruption: Romania introduces turnover tax for upstream industry
Ongoing discussions: UK government publishes new measures arising from fiscal consultations
Fiscal disruption: Colombia's court strikes down royalty deduction changes
Fiscal disruption: Complex projects in Kazakhstan receive export duty holiday
Fiscal evolution: UK Government launches long-term fiscal review (excluding the EPL)
Fiscal disruption: Temporary solidarity contribution adopted across EU countries
- Europe
Ongoing discussions: BLM plans to bring oil and gas regulations into the 21 st century
- Fiscal evolution: UK introduces price floor for Energy Profits Levy (EPL)
- Ongoing discussion: The cap on deductions proposed for Petroleum Resource Rent Tax (PRRT) LNG payers
- Fiscal disruption: Romania n parliament to soften its application of EU s temporary law on solidarity contribution charged to energy companies
- Europe
- Ongoing discussion: Cost recovery challenged for Kashagan and Karachaganak megaprojects in Kazakhstan
- Russia and Caspian
- Fiscal disruption: Kazakhstan makes first use of ‘improved model contract’ for concessions
- Russia and Caspian
- Insight: Petroleum fiscal systems: 2022 in review
- Global
- Insight: Global upstream fiscal systems: 4 things to look for in 2023
- Global
- Ongoing discussions: Netherlands introduces temporary gas windfall tax and solidarity contribution charge
- Europe
- Fiscal evolution: Guyana increases the county's share for the first bid round since Liza-Payara discovery
- Latin America
- Insight: Windfall taxes - the search for a smart policy
- Global
- Fiscal disruption: UK increases and extends the energy profits levy (EPL)
- Europe
- Ongoing discussions: Malaysia proposes new CCS incentives
- South East Asia
- Fiscal disruption: Hungarian government changes upstream royalty rates for 2022 and 2023 and amends calculations for additional royalty
- Europe
- Fiscal evolution: Inflation Reduction Act
- North America
- Ongoing discussions: New Colombian government pushes for big tax increases
- Latin America
- Ongoing discussions: Argentina considers one-time Windfall Tax
- Latin America
- Fiscal disruption: India imposes windfall levy on oil producers
- Asia Pacific
- Fiscal disruption: Romania passes reforms to 2018 offshore law
- Europe
- Fiscal disruption: UK imposes energy profits levy (EPL) on upstream producers
- Europe
- Fiscal evolution: US royalty rates raising for new onshore leases
- North America
- Ongoing discussions: Norway's reforms sent to the Storting
- Europe
- US removing bonus depreciation: scratch or scar?
- North America
- Fiscal disruption: Ukraine reforms its onshore gas royalty rates
- Europe
- Fiscal disruption: Nigeria nominally increases the education tax
- Sub-Saharan Africa
- Fiscal disruption: Kazakhstan introduces price-based oil export duty exemption for offshore fields
- Fiscal disruption: Uzbekistan introduces new fiscal incentives
- Ongoing discussions: Implications Norway's oil and gas sector as Labour wins election
- Europe
- Ongoing discussion: Nigeria's Petroleum Industry Bill signed into law
- Sub-Saharan Africa
- Ongoing discussion: Ecuador pushes for investment by expanding their new PSC
- Latin America
- Insight: Global decommissioning anxiety rises
- Global
- Ongoing discussion: Nigerian parliament passes Petroleum Industry Bill
- Sub-Saharan Africa
- Ongoing discussion: South Africa’s updated petroleum resources bill sent to parliament
- Sub-Saharan Africa
- Fiscal webinar: carbon taxes and upstream subsidy debate
- Fiscal discussion: Ukraine targets fiscal reforms to support 2030 gas ambitions
- Europe
- Ongoing discussion: Kazakhstan evaluates oil export duty cancellation
- Fiscal disruption: the Netherlands finally improves the SPS investment allowance
- Europe
- Fiscal evolution: Malaysia introduces Enhanced Profitability and Late Life Asset PSC terms for 2021 licensing round
- Asia Pacific
- Fiscal disruption: Norway sets out carbon tax rise in climate action plan
- Europe
- What’s ahead for oil and gas fiscal systems in 2021?

Tables and charts

This report includes 88 images and tables including:

Legislative Timeline
Global fiscal comparison (oil)
Regional fiscal comparison (gas)

Example onshore oil and gas project competitiveness: Argentina RIGI impact
Angola and Nigeria production
Upstream competitiveness index values for sub-Sahara countries
Top statutory corporate tax rates around the world
Example onshore oil and gas project competitiveness: Argentina CIT change has minimal impact
Summary of fiscal changes
Maximum contractor profit share
Investment metrics for medium-size, medium-cost, gas field under new and old fiscal frameworks
Remaining post-tax NPV before and after CIT change for different regimes
Summary of changes to BLM leases
Impact on PEMEX concessions
Impact of ordinary hydrocarbon duty changes on net cashflow
Proposed severance tax rates for producing wells
Proposed severance tax rates for orphaned and inactive wells
L48 comparison of effective base severance tax rates
Effective royalty and maximum state share for oil
Sub-Saharan Africa upstream competitiveness index
Schoonebeek redevelopment cash flow and production profile
Vietnam fiscal terms comparison – Petroleum Law 2022
Ca Voi Xanh’s economics
Chart 1: Post-tax NPV comparison for different LRP-HRP scenarios before and after changes
Chart 2: Windfall levy and stabilisation period change effects on post-tax NPV
Example drilling cost capitalization for integrated oil companies in 2024
Example tax shield of drilling cost capitalization for integrated oil companies in 2024
The diminishing tax shield of drilling costs
The diminishing tax-shield value of drilling expenditures
Table 1: Oil and gas royalty rates
Chart 1: Impact of increase in oil royalty
Chart 2: Impact of increase in gas royalty
Fiscal disruption: Romania Concession - Turnover Taxes
Colombian NPV10 value changes by legislation
Fiscal disruption: Kazakhstan Concession - Export Duty Holiday
Kazakhstan Concession- valuation impact of changes (remaining NPV10 at start-2023)
Comparison of 2017 gross split terms with 2024 gross split terms
Small shelf oil model field under different fiscal terms
Large deepwater gas model field under different fiscal terms
Small shelf oil model field under different fiscal terms and costs
Large deepwater gas model field under different fiscal terms and costs
Applicability of temporary solidarity contribution across EU member states
Fiscal disruption: Temporary solidarity contribution across EU countries
Fiscal disruption: Temporary solidarity contribution impact on EU countries
Incremental government cash flows (A$ billion)
Romania - valuation impact of changes (remaining NPV10 at start-2023)
Scenario Analysis: Kazakhstan PSC - Cost recovery dispute
Kazakhstan - Alternative Subsoil Tax (AST rates)
Fiscal disruption: Netherland Concession Windfall & Temporary solidarity charge
Asset by asset impact on temporary tax increase
Guyana government share comparison
Recent fiscal changes and proposals
Effective tax rate and capital tax relief
Extra profit tax (royalty rates) - oil and gas (2022 and 2023 only)
Fiscal disruption: Impact of fiscal changes in Hungary Concession
Economic impact of federal royalty increase on government acreage type wells
States receiving the most oil and gas disbursements from federal royalties
Fiscal comparison
IDC and bonus depreciation sensitivity
Impact on state taxes
Ukraine - onshore gas royalty rates
Impact of new royalty rate thresholds
Overall impact of education tax increase
Asset by asset impact of education tax increase
Oil export duty - price thresholds (nominal terms)
Impact of oil export duty exemption on key offshore projects
Uzbekistan - new incentives
Project IRR: non-taxpayer vs. taxpayer
Project net cash flow: non-taxpayer
PIA royalty rates
PIA tax rates
PIB legislative timeline
Global comparison of state participation
Global comparison of state share
Deepwater: state share and investor IRR
Onshore: state share and investor IRR
Potential impact of zero oil export duty on offshore project economics
Fiscal disruptions - Netherlands increased SPS investment allowance
Malaysia - new fiscal terms
Cost recovery ceiling - EPT vs R/C PSC
Contractor profit share - EPT vs R/C PSC
EPT vs R/C comparison - shelf model field
The cost of Norway's carbon price 2020 vs. 2030 (USD/tCO2)