Fundamental petroleum fiscal considerations

Journal article

Business relationships between international oil companies (IOCs) and governments are among the most dynamic in the world. There is a heated debate – currently particularly intense in Mexico and India – over a fundamental feature of global agreements. On one side are those who believe basic ‘profits-based’ structures – found in the world’s production-sharing contracts (PSCs) and royalty/tax systems (R/Ts) – are the best. Others, however, propose a structure based simply on the division of production, or of revenues (revenuesharing contracts or RSCs).

The overriding concern behind this initiative is a lack of faith in the accounting for costs, and the spectre of cost overruns, goldplating, or even cheating. In India the positions have been formalized and explicitly articulated by two committees: the Rangarajan Committee and the Kelkar Committee. The impetus for this debate stems from controversies associated with the KG-D6 gas development, and the way PSCs and cost-recovery mechanisms function.

Authors: Johnston, D; Johnston, D

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: Oxford Institute for Energy Studies
• Journal: Oxford Energy Forum
• Issue: 99
• Pages: 21-25
• Publication date: 2015-03-09
• ISSN: 0959-7727
• Language: English
• Keywords: OIES