Sharing the oil wealth: a study of petroleum taxation yesterday, today and tomorrow
Wednesday 28 May 2008
Dr Carole Nakhle, a Research Fellow in Energy at the Surrey Energy Economics Centre, launches a new book entitled ‘Sharing the oil wealth: a study of petroleum taxation yesterday, today and tomorrow’. The purpose of the book is to illuminate the subject of petroleum taxation and to cast fresh light on the complex pattern of the taxation of oil and gas production which continues to evolve and adapt in response to a variety of critical factors such as volatile commodity prices, basin maturity, and resource nationalism.
Carole’s main argument is that petroleum taxation is a subject of complexity, variety and subject to continued evolution, being surrounded and shaped by multifaceted geological, technical and market factors together with unpredictable political influences. She challenges the assumption that perfect models of petroleum taxation can be designed and applied to countries and circumstances around the world, arguing that an ideal structure exists only in theory but can be nonetheless a useful benchmark against which to test proposed fiscal systems. As long as oil remains a major and increasingly scarce source of energy, the issue of the tax ‘take’ and the balance between government desire for revenue and the industry’s appetite for investment coupled with attractive returns, will remain central to the public debate.
The global oil and gas business is undergoing significant change, under the triple impact of geopolitics, competitive pressures and technology. Against this fast changing backdrop, the responses of governments, both in the producing and in the consuming countries (sometimes the same), have been to reassess their relationships with the oil industry.
Higher oil and gas prices have also encouraged host governments to scrutinise closely and reform their tax regimes to increase government take with a view of creaming off a greater proportion of the price upside. The International Oil Companies in their turn have had to rethink and rebalance their interface both with governments and national companies, particularly from India, China and the former Soviet Union.
The common thread running through all these upheavals is the matter of sharing the wealth between the investors and enterprises seeking a return on their money on the one hand, and the owners of the resource – the world’s oil producing nations and their governments – on the other. Petroleum taxation is the universal instrument through which governments seek to determine the crucial balance between the financial interests of the oil companies and the owners of the resource.
This book is of world wide interest to practitioners and policy makers directly engaged with petroleum taxation, as well as researchers and scholars interested in energy economics, policy and public finance.
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