Category: Oil and Gas business

Main fiscal tools in the oil and gas sector are:

1. Royalties
2. Ring fencing
3. Resource rent tax
4. Fees on blocks
5. Bonus bids
6. PSC
7. Cost recovery limit
8. Division of profits on oil and gas production
9. Taxes and environmental bonds and other operational bonds

Resource nationalism is a concept to describe a country’s policies that has as an objective to maximize government take and control over its natural resources, by amending the fiscal and other existing legal regulations. Such changes enacted by governments vis-à-vis oil and gas companies are done one-sidedly to the benefit of the government and the detriment of the O&G corporations.

Traditionally as commodity prices rise, national governments have sought to boost their share of the proceeds, either to save or to spend. When prices fall, by contrast, they have tended to loosen their fiscal regimes to encourage investment and extraction.