Oil & Gas Specifics

full all chapter5 chapter6 chapter7 chapter8 chapter9

chapter4 chapter5 chapter6 chapter7 chapter8 chapter9

Transparency and Accountability

Policy, Legal and Contractual Framework

Sector Organization and Institutions

Fiscal Design and Administration

Revenue Management and Distribution

Sustainable Development

  • Fiscal gearing mechanisms are widely applied in the oil sector, and usually come in the form of additions to or adaptations of other base-level fiscal instruments. The most accurate gearing mechanisms are those which are based on actually achieved investor profitability rather than some proxy for profitability. This particular class of gearing mechanisms is typically faulted on the grounds of perceived administrative complexity.


  • Price determination for fiscal purposes can be complicated. The goal is to set or agree a price which is as close as possible to that which would be realized in a genuine third party, arms-length market sale. The goal is most easily accomplished in the case of oil where well established international markets exist, and price quotes, together with price adjustments for crude oil quality and transport differentials are almost continuously available.


  • In the case of gas, competitive markets exist in only the US and the UK – readily observable prices for fiscal purposes do not exist outside those markets and are often set on a project by project basis. Further, the marketing of natural gas and some minerals may be integrated all the way from the wellhead or mine-mouth through processing or smelting and transport all the way to final consumer, with different tax regimes applicable along the integrated chain. Good practice generally calls for netting the price paid by the final consumer back to wellhead in such a way that rents accrue at those resource extraction points.


  • In the petroleum industry, tax audit is helped by the common practice of investor joint ventures whose rules provide not only for detailed, and increasingly standard, accounting for costs but also for partner audits of the joint venture operator.


  • The petroleum fiscal regime is generally administered by the taxation authority in close collaboration with the National Oil Company and the sector ministry.


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