Memorandum submitted by HM Treasury
INTERNATIONAL
COMPARISON OF
TAX ON
OIL PRODUCTION
The attached table is drawn from a study by
Wood Mackenzie, a leading international energy consulting and
research firm headquartered in Edinburgh. The study in question,
"Global Oil and Gas—Risks and Rewards" was produced
in early 2005, ie before the announcement of the increase in Supplementary
Charge in the UK Pre-Budget Report later that year.
The table shows the percentage of the profits
(measured by net present value at a 10% discount rate) taken by
government in the form of taxes, royalties, etc, based on a typical
100 million barrel oil field development. This is a convenient
way of comparing the effect of the different tax regimes which
vary considerably in their structural features and can be very
complex.
The comparison covers 65 different oil regions
around the world. It may be seen that the UK shelf had the fifth
lowest government take among the 65 before the increase in the
Supplementary Charge. We estimate that the effect of the 10% increase
in the Supplementary Charge was to increase the government take
by approximately 10% points. Thus the UK government take on the
basis of this study would now be around 51% for the base price
scenario and 49% for the high oil price scenario. This would put
the UK in 8th and 9th place respectively among the 65 in ascending
order of government take.
The UK's favourable position in the table is
a reflection not only of its moderate tax rate, but also its system
of 100% first year capital allowances for North Sea investment.
The UK also has other targeted reliefs and allowances such as
the Ring Fence Expenditure Supplement which safeguards the value
of allowances for new investors.
8 November 2006
101 mmbbl Standard Field: Government Take
NPV@10%: Existing Investor
| Base Price
| High Price
| Rank |
| Ireland | 25.00% | Ireland
| 25.00% | 1 |
| Papua New Guinea | 38.03% |
Papua New Guinea | 34.56% | 2
|
| South Africa | 40.42% | South Africa
| 35.35% | 3 |
| USA (GoM deepwater) | 40.75%
| USA (GoM deepwater) | 37.46%
| 4 |
| UK (shelf) | 41.13% | UK (shelf)
| 39.33% | 5 |
| UK (Southern Gas Basin) | 41.13%
| UK (Southern Gas Basin) | 39.33%
| 6 |
| Mozambique | 43.78% | Mozambique
| 40.46% | 7 |
| Pakistan | 47.68% | Pakistan
| 46.29% | 8 |
| Netherlands (offshore) | 49.64%
| New Zealand | 48.35% | 9
|
| New Zealand | 51.47% | Italy
| 48.81% | 10 |
| Philippines | 51.63% | Argentina
| 49.46% | 11 |
| Canada (East Coast) | 52.34%
| Netherlands (offshore) | 50.27%
| 12 |
| Bolivia | 52.43% | Morocco
| 50.44% | 13 |
| Italy | 52.68% | Chad
| 51.95% | 14 |
| Morocco | 53.67% | Canada (East Coast)
| 53.65% | 15 |
| Chad | 54.09% | Philippines
| 53.66% | 16 |
| Argentina | 56.15% | Bolivia
| 55.73% | 17 |
| East Timor-Australia JPDP | 57.49%
| Canada (Arctic) | 57.30% |
18 |
| Netherlands (onshore) | 59.82%
| Netherlands (onshore) | 59.17%
| 19 |
| Canada (Arctic) | 60.14% |
Australia (offshore) | 59.54% |
20 |
| Australia (offshore) | 63.03%
| USA (Alaska) | 59.69% | 21
|
| Colombia | 63.44% | Mauritania
| 64.50% | 22 |
| Peru | 63.85% | China (offshore)
| 64.53% | 23 |
| Denmark | 65.69% | Namibia
| 65.04% | 24 |
| Mauritania | 66.71% | Denmark
| 65.12% | 25 |
| Namibia | 67.33% | Colombia
| 65.79% | 26 |
| USA (Alaska) | 67.49% | East Timor-Australia JPDA
| 67.29% | 27 |
| China (offshore) | 68.80% |
Malaysia-Thailand JDA | 69.19% |
28 |
| Malaysia-Thailand JDA | 72.20%
| Peru | 69.45% | 29
|
| Tunisia | . 74.12% | Brunei
| 71.47% | 30 |
| Norway | 75.72% | Tunisia
| 71.49% | 31 |
| Bangladesh | 76.26% | Brazil (deepwater)
| 73.05% | 32 |
| Congo (Brazzaville) | 78.24%
| Brazil (shelf) | 73.20% |
33 |
| Syria | 78.49% | Venezuela
| 73.36% | 34 |
| Brunei | 78.50% | Congo (Brazzaville)
| 73.51% | 35 |
| Angola (deepwater) | 78.81%
| Syria | 73.99% | 36
|
| Equatorial Guinea | 80.18% |
Norway | 75.06% | 37
|
| Ecuador | 81.80% | Bangladesh
| 76.16% | 38 |
| Venezuela | 82.54% | Equatorial Guinea
| 76.61% | 39 |
| Brazil (deepwater) | 82.55%
| Ecuador | 78.38% | 40
|
| Brazil (shelf) | 82.75% |
Cameroon | 80.99% | 41
|
| Cameroon | 83.76% | Sudan
| 82.58% | 42 |
| Sudan | 85.41% | Angola (deepwater)
| 83.96% | 43 |
| Cambodia | 89.53% | Kazakhstan
| 86.77% | 44 |
| Gabon | 89.55% | Gabon
| 88.35% | 45 |
| Kazakhstan | 90.08% | Egypt
| 88.55% | 46 |
| Indonesia | 91.19% | Oman
| 88.55% | 47 |
| Angola (shelf) | 91.33% |
Indonesia | 88.76% | 48
|
| India | 91.72% | Cambodia
| 88.77% | 49 |
| Cote d'Ivoire | 92.40% |
Nigeria (deepwater) | 90.23% |
50 |
| Oman | 92.44% | Thailand
| 91.02% | 51 |
| Egypt | 92.44% | Algeria
| 91.09% | 52 |
| Nigeria (deepwater) | 92.79%
| Cote d'Ivoire | 91.27% |
53 |
| Algeria | 94.00% | India
| 91.48% | 54 |
| Thailand | 95.54% | Qatar
| 93.75% | 55 |
| Qatar | 97.88% | Angola (shelf)
| 94.07% | 56 |
| Vietnam | 98.36% | Vietnam
| 94.66% | 57 |
| Libya | 98.94% | Yemen
| 95.96% | 58 |
| Yemen | 99.42% | Azerbaijan
| 97.23% | 59 |
| Trinidad & Tobago | 99.90%
| Trinidad & Tobago | 97.34%
| 60 |
| Turkmenistan | 101.78% |
Libya | 98.76% | 61
|
| Myanmar | 102.71% | Myanmar
| 99.71% | 62 |
| Azerbaijan | 110.68% | Turkmenistan
| 101.51% | 63 |
| Malaysia | 111.13% | Malaysia
| 105.30% | 64 |
| Nigeria (shelf) | 112.08% |
Nigeria (shelf) | 111.03% | 65
|
| 
