Oil Prices and Fiscal Regimes
Fiscal regimes in oil deal essentially with the upstream, that is exploration and production, They may, or may not, be defmed in a single law. More often than not, the components of fiscal regimes in oil are actually found dispersed in different laws and rulings, and their beneficiaries may include municipalities, provincial administration and the centrd government. In order to be entitled to explore a plot of land and to exploit the reservoirs that might be discovered the oil company will enter in some kind of legal arrangements with the natural resource owner. These arrangements – a licence, concession, lease, service contract, profit or production-sharing agreement – normally also include besides royalties and taxes
some specific payments and several other conditions. In this paper these conditions will be considered as part of fiscal regimes even when the natural resource is privately owned and, therefore, the oil companies have to acquireprivate leases. The reason is that from the lessee’s standpoint it is the total payment, whether made to the government andor the private owners, that matters.