Fiscal Systems for Hydrocarbons - World Bank

40902

WORLD BANK WORKING PAPER NO. 123

Fiscal Systems for Hydrocarbons

Design Issues

Silvana Tordo

THE WORLD BANK

Public Disclosure Authorized

Public Disclosure Authorized

Public Disclosure Authorized

Public Disclosure Authorized

WORLD BANK WORKING PAPER NO. 123

Fiscal Systems for Hydrocarbons

Design Issues

Silvana Tordo

THE WORLD BANK Washington, D.C.

Copyright ? 2007 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First Printing: August 2007

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World Bank Working Papers are published to communicate the results of the Bank's work to the development community with the least possible delay. The manuscript of this paper therefore has not been prepared in accordance with the procedures appropriate to formally-edited texts. Some sources cited in this paper may be informal documents that are not readily available.

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ISBN-13: 978-0-8213-7266-1 eISBN: 978-0-8213-7267-8 ISSN: 1726-5878

DOI: 10.1596/978-0-8213-7266-1

Silvana Tordo is Senior Energy Economist in the Oil, Gas, and Mining Policy Division of the World Bank.

Library of Congress Cataloging-in-Publication Data has been requested.

Contents

Abstract

v

Acknowledgments

vii

1. Introduction

1

2. The Life Cycle of a Petroleum Project

3

3. Legal Arrangements in the Petroleum Industry

7

4. Fiscal Regimes for the Petroleum Sector: Tax and Non-Tax Instruments

11

5. Designing Efficient Fiscal Systems

13

6. Fiscal Systems' Measures and Economic Indicators

17

7. Designing Petroleum Fiscal Systems: Issues to be Considered

21

8. Conclusion

29

APPENDIXES

A Key Elements of Successful Petroleum Legal Frameworks

35

B Tax and Non-Tax Components of Petroleum Fiscal Systems

37

C Government Take

47

D Economic Impact of Alternative Fiscal Parameters

49

E Government Take and Project IRR at Different Levels of Cost Recovery Limit 55

F Field A, Fiscal Model 1: Alternative Triggers

61

G Government Take and Project IRR at Different Price Levels

63

H Government Participating Interest

69

Bibliography

71

LIST OF TABLES

1. Key Features of Concessionary and Contractual Systems

9

2. Main Differences between Concessionary Systems

and Production Sharing Contracts

10

3. Flexible, Neutral, and Stable Fiscal Regime

14

4. Key Project Parameters

22

5. Fiscal System Indices

23

6. Contractor's and Host Government's NPV Variation

25

iii

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