Taxation in Oil & Gas - Thematic Research
Summary
Major oil and gas taxation trends such as incentives for gas projects and intergovernmental corporate tax competition will be crucial to future value creation for oil and gas producers. Taxation is a key determinant of value in the oil and gas industry. Fiscal regimes can attract or deter new investment, determine whether new projects can move forward, and dictate company cash flows.
Specific fiscal regimes applied to the upstream sector can differ significantly in the burden faced by companies. For the same field scenarios, the most attractive fiscal regimes yield an IRR of 35% of more, while the toughest yield IRRs of less than 10%. Assessing the attractiveness of the fiscal regime is therefore a key criterion in the decision of where to operate for maximum value.
The 2018 US tax reform means that US-focused producers generally face more favorable fiscal terms than peers who are more internationally diversified. Notably, Chevron appears best placed among the supermajors due to its increased focus on the US and lower exposure to higher-tax areas. However, such tax advantages do have to be balanced against other factors such as cost and resource availability.
However, significant incentives mean that Russia’s major gas producers, Gazprom and Novatek, are better positioned than many of their peers in terms of their future tax burden. Although Russia’s standard fiscal terms rank among the toughest in the world, the government has offered massive tax breaks for major projects. Among the biggest beneficiaries are new fields in the North of the Yamalo-Nenets region, which will provide gas to support Novatek’s LNG projects and Gazprom’s exports to Europe.
Novatek faces the lowest burden among leading independents, while Gazprom places third among the top 15 integrated producers for lowest remaining fiscal take (the percentage of future field cash flows allocated to the government through royalties, production shares and other taxes).
The latest thematic research report "Taxation in Oil & Gas - Thematic Research", reveals a high degree of variation in the upstream fiscal regimes and tax burdens faced by leading integrated and independent oil and gas producers.
Scope
Reasons to Buy
Summary
Major oil and gas taxation trends such as incentives for gas projects and intergovernmental corporate tax competition will be crucial to future value creation for oil and gas producers. Taxation is a key determinant of value in the oil and gas industry. Fiscal regimes can attract or deter new investment, determine whether new projects can move forward, and dictate company cash flows.
Specific fiscal regimes applied to the upstream sector can differ significantly in the burden faced by companies. For the same field scenarios, the most attractive fiscal regimes yield an IRR of 35% of more, while the toughest yield IRRs of less than 10%. Assessing the attractiveness of the fiscal regime is therefore a key criterion in the decision of where to operate for maximum value.
The 2018 US tax reform means that US-focused producers generally face more favorable fiscal terms than peers who are more internationally diversified. Notably, Chevron appears best placed among the supermajors due to its increased focus on the US and lower exposure to higher-tax areas. However, such tax advantages do have to be balanced against other factors such as cost and resource availability.
However, significant incentives mean that Russia’s major gas producers, Gazprom and Novatek, are better positioned than many of their peers in terms of their future tax burden. Although Russia’s standard fiscal terms rank among the toughest in the world, the government has offered massive tax breaks for major projects. Among the biggest beneficiaries are new fields in the North of the Yamalo-Nenets region, which will provide gas to support Novatek’s LNG projects and Gazprom’s exports to Europe.
Novatek faces the lowest burden among leading independents, while Gazprom places third among the top 15 integrated producers for lowest remaining fiscal take (the percentage of future field cash flows allocated to the government through royalties, production shares and other taxes).
The latest thematic research report "Taxation in Oil & Gas - Thematic Research", reveals a high degree of variation in the upstream fiscal regimes and tax burdens faced by leading integrated and independent oil and gas producers.
Scope
- Overview of taxation as a theme in the oil and gas industry
- Detailed analysis on global upstream fiscal regimes
- Detailed attractiveness scores for over 140 fiscal regimes
- Assessment of effect of price and cost changes under different fiscal regimes
- Assessment of key oil and gas companies’ competitive position in relation to taxation.
Reasons to Buy
- Understand different types of fiscal regime and taxation affecting the oil and gas sector
- Identify key trends affecting the future of taxation in oil and gas
- Compare attractiveness of global fiscal regimes
- Benchmark leading companies’ fiscal regime exposure.
Table of Contents
- PLAYERS
- TRENDS
- Oil and Gas themes
- Macroeconomic themes
- ANALYSIS OF OIL AND GAS TAX REGIMES
- Upstream Fiscal Regimes
- Types of Upstream Taxation
- Global Upstream Fiscal Comparison
- Impact of Price and Cost Fluctuations on Fiscal Take
- Incentives for Technically Challenging Developments
- Global Regime Scores
- Timeline
- VALUE CHAIN
- COMPANIES SECTION
- Integrated Oil and Gas Producers
- Independent oil companies
- APPENDIX: OUR THEMATIC RESEARCH METHODOLOGY
