Publications

Achieving appropriate fiscal terms for upstream investment is about achieving an appropriate balance between risk and reward, about enabling an acceptable return to investors whilst optimising a governments economic rent.This paper considers some of the key global trends in upstream fiscal terms in an environment of higher oil prices (Figure 1). There has been a tightening of fiscal terms and an increase in participation of national oil companies in many prospective areas and more progressive fiscal systems to reflect changes in oil price. In some less prospective areas more incentives are being offered to stimulate exploration activity.The paper also considers some of the implications for international oil companies including a loss of value on existing assets and a desire to seek fiscal stability in an environment of hyper-inflation. The paper reflects on recent fiscal changes by region and suggests that the relative attractiveness of Asia Pacific countries to international oil companies has improved. This improvement may be one reason why international oil companies are spending more of their exploration budgets in the region.