Unconventionals add complexity to oil and gas tax regimes - FOX Carolina 21

Unconventionals add complexity to oil and gas tax regimes

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SOURCE EY

- Governments are competing for exploration investments and making oil and gas tax regimes attractive to investors

- Many countries are altering their fiscal framework to provide incentives for unconventional oil and gas and hard-to-recover projects

MOSCOW, June 18, 2014 /PRNewswire/ -- Despite the geopolitical uncertainty that looms over the global oil and gas industry the continued imposition of taxes on income from oil and gas operations remains a certainty. In a global environment of constantly evolving tax and fiscal policy, the scope, impact and makeup of taxes are far from certain. This is according to EY's newly released annual Global oil and gas tax guide which summarizes the oil and gas tax regimes in 80 countries.

Alexey Kondrashov, EY's Global Oil & Gas Tax Leader says: "Fiscal policy has never been more important to governments as they compete to attract large-scale investment.  Revenues need to be maximized from hydrocarbon production to create stable fiscal environments for efficient resource development.  

"Some countries are certainly better at achieving this stability than others, thus allowing reasonable returns for investors. Quality and economics of basins naturally evolve over the lifetime of the basin, but also shift in response to other challenges, such as declining production caused by the maturity of fields. Forward-thinking governments recognize this and continually review and revise their tax regimes to equate for these changes," says Kondrashov.

According to the 2014 Guide, countries continue to develop tax policies specifically around unconventional as well as difficult-to-recover oil and gas in an effort to provide incentives for such projects. Governments see the potential of shale within their counties energy mix and want to create the right conditions for the industry to explore and unlock these opportunities.

Differentiated taxation is increasing on a global scale as governments learn more about the complexities and challenges the oil and gas industry faces. In order to address specific tax policies in their fiscal regimes, governments are considering different project economics for gas and oil, onshore and offshore projects, shallow and deepwater projects, and for pipeline and LNG project profiles.

Kondrashov concludes, "It is critical for governments to make oil and gas tax regimes competitive and attractive to investors going forward."

About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.

How EY's Global Oil & Gas Center can help your business
The oil and gas sector is constantly changing. Increasingly uncertain energy policies, geopolitical complexities, cost management and climate change all present significant challenges. EY's Global Oil & Gas Center supports a global network of more than 9,600 oil and gas professionals with extensive experience in providing assurance, tax, transaction and advisory services across the upstream, midstream, downstream and oilfield service sub-sectors. The Center works to anticipate market trends, execute the mobility of our global resources and articulate points of view on relevant key sector issues. With our deep sector focus, we can help your organization drive down costs and compete more effectively. For more information, please visit www.ey.com/oilandgas.



Pam Christie 

Andrey Podoynitsyn

EY Global Media Relations  

EY Head of Public Relations Russia

+44 (0) 78 332 94 562

+ 7 (9) 16 907 3884

pam.christie@uk.ey.com

 

andrey.podoynitsyn@ru.ey.com

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