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Euromoney Learning Solutions

Petroleum Fiscal Regimes

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Description

Explores the history, objectives & mechanisms of global petroleum fiscal regimes

This course explores the history, objectives and typical mechanisms of global petroleum fiscal regimes. Through a range of case studies, you will learn how complex and often unique agreements are structured in the petroleum industry and examine the mechanics of royalties, taxation, depreciation, cost recovery and profit sharing. You will also build your own detailed fiscal spreadsheet models through a series of hands-on exercises that brings the theory to life.

By the end of the course, you will have a thorough understanding of the history, evolution and structure of fiscal regimes and the key fiscal levers with respect to project value.

Attend this practical and interactive 3-day course and:

  • Learn about the history, evolution and structure of fiscal regimes
  • Understand the mechanics of royalties, taxation, depreciation, cost recovery and profit sharing
  • Improve your knowledge of Risk Service Contracts (RSCs)
  • Understand other common features including bonuses, State Participation and sliding scales
  • Examine the workings of ring fencing and consolidation
  • Compare different fiscal regimes
  • Understand reserves booking under different types of regimes
  • Construct RT and PSC spreadsheet models
  • Understand the main fiscal levers with respect to project value

Course Objectives

  • Learn about the history of fiscal regimes
  • Understand the mechanics of royalties, taxation, depreciation, cost recovery and profit sharing
  • Understand other features including bonuses, State participation and sliding scales
  • Examine the workings of ring fencing and consolidation
  • Construct RT and PSC spreadsheet models
  • Understand the key fiscal levers with respect to project value

Agenda

Day 1

An introduction to production sharing contracts and upstream economic analysis

  • The history and evolution of production sharing contracts (PSC’s)
  • The basic PSC, contractor and government relationship
  • The PSC flowchart, content and format

The fundamentals of upstream economic analysis

  • Discounted cashflow
  • Discount rate, discount factor and discount method
  • The cost of capital and the hurdle discount rate
  • Capital budgeting techniques (NPV, IRR, DPIR, payback)
  • Valuing an asset, making development & investment decisions
  • Inflation, cost escalation, real versus nominal cash flows
  • Managing risk

Cost recovery

  • Cost recovery mechanism
  • Recoverable costs
  • Cost oil, cost gas and NGL’s
  • Excess cost recovery
  • Cost recovery calculation and examples

Case studies

Profit sharing

  • The profit pool
  • Profit sharing
  • Profit gas and profit oil
  • Profit sharing calculation and examples

Case studies

Day 2

Bonuses

  • Signature & commerciality
  • Production
  • Cost recoverability
  • Bonus calculation and examples

Case studies

Sliding scale fiscal mechanisms

  • Production rate
  • Production volume
  • R-Factor
  • Step versus incremental methods
  • Sliding scale calculations and examples

Case studies

Taxation

  • The basis of the taxation liability
  • The CT ring fence
  • Chargeable income
  • Capital allowances
  • Other allowances
  • CT rates, losses and abandonment costs
  • Liability and payment phasing
  • Taxation calculations and examples

Case studies

Ring fences

  • PSC ring fence
  • Taxation ring fence
  • Ring fence calculations and examples

Case studies

The economics of PSC’s

  • Contractor cash flow
  • Government cash flow
  • Comparison with royal and taxation systems

Case studies

Day 3

Production Sharing Contract Fiscal Modelling Workshop

  • A PSC based case study modelling the fiscal terms in Microsoft Excel(TM)
  • Understanding the PSC fiscal structure and algorithms
  • Determining the field, economic and fiscal data and building the input decks
  • Step by step construction of the PSC model
  • Running the economic cases and evaluating the results
  • Analysis of the sensitivities
  • Electronic copy of model solution provided to delegates

Who should attend

  • Petroleum economists
  • Business development managers
  • Lawyers
  • Financial analysts
  • Accountants and auditors
  • Government officials

Experts

With over 20 years' hands-on experience as a Petroleum Economist in the upstream oil and gas industry, Peter has a detailed understanding of the technical and financial aspects of the industry as well as the key determinants of project value and risk. He leverages his in-depth experience of numer...

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