Oil Producers Have Tax Cuts In Their Futures - Bloomberg

Oil Producers Have Tax Cuts In Their Futures - Bloomberg



...Morgan Stanley surveyed nine countries, other than the U.S., where oil majors have typically been active. They found that the government’s share of net present value in its remaining resources averages about 63% under current fiscal terms for those countries 1 . The U.S. figure, meanwhile, is just 36%.



...OPEC exists pretty much as a mere adjunct of Saudi Arabia at this point, with that country’s latest round of haggling with non-member Russia over production cuts being the latest reminder. And with “peak oil” having morphed into speculation about peak demand, the old assumption that the value of petrostates’ underground hoards would only appreciate over time has been overturned. So just as companies are competing to be the lowest-cost, Morgan Stanley’s analysts point out that there is an incentive for countries to do the same.



...Rystad Energy, a research firm, has calculated breakeven prices for new offshore projects in various countries as well as in the Permian basin, both before and after factoring in the fiscal take.

Tax And Fracks

Variance in fiscal regimes can make a big difference to the return on a new project at different oil prices

... absent the fiscal impact, the range from low to high in terms of breakeven costs is relatively small at about $20 a barrel, with Saudi Arabia at the low end with sub-$24 and Nigeria up at just over $43. Once you factor in the governments’ take, that range doubles, spanning $33 to almost $74.