caa a22 4500 605538891 CHVBK 20210128100904.0 cr unu---uuuuu 210128e20151201xx s 000 0 eng 10.1007/s11053-014-9262-8 doi (NATIONALLICENCE)springer-10.1007/s11053-014-9262-8 Weijermars R. Harold Vance Department of Petroleum Engineering, Texas A&M University, 3116 TAMU, 501 Richardson Building, 77843-3116, College Station, TX, USA aut Natural Resource Wealth Optimization: A Review of Fiscal Regimes and Equitable Agreements for Petroleum and Mineral Extraction Projects [Elektronische Daten] [R. Weijermars] This review highlights the challenges of fiscal system optimization considering both the host government and extraction company perspectives. Countries around the world face an arduous task in determining the optimal fiscal system to maximize the capture of economic rents of natural resource extraction activities. The extraction industry is equally challenged to meet global commodity demand because the capital investments required for developing new hydrocarbon fields and ore mines are on the rise, while tax takes on extraction activities tend to rise too in many frontier jurisdictions. Normal profit must remain for the extraction companies, and returns must be large enough to replace for resource depletion. Companies use the benefits of resources produced in one country to finance capital investments for future field development in another country. One viewpoint is that profits are expatriated to the detriment of the host country and to the benefit of another country or the world supply chain as a whole. Another viewpoint is that all resource holders benefit because a foreign entity always starts in a new resource holding nation by investing in the development of an oil field or solid mineral mine using the profits from previous projects in other countries. A key question is What is a fair taxation regime for natural resource extraction in a particular geological setting and a given geographical location, taking into account subsurface uncertainty about the quality and volume of the resource, infrastructure needs and proximity to the world's major markets and trade centers? Tax distortion could go both ways: either incentivize, attract and stimulate or des-incentivize, repel and deter resource development. Additional factors to consider are external uncertainties such as political and fiscal stability, sovereign risk and even local weather conditions (mostly in offshore and Arctic petroleum operations). Governments must tax the upstream rents of petroleum and mineral resources, but not to the level that suppresses extraction activities. All stakeholders want at least an equitable share of the profits. Defining what is equitable is a matter of intensive negotiations, renegotiation of prior agreements and sometimes litigation and international arbitration. Several case studies, covering both petroleum and solid mineral extraction projects, are included to highlight the key points involved in fiscal policies designed to optimize the utility of geological resource endowments. For example, the offshore tax regime employed in the US pivots the trade-offs between fiscal incentives and long-term resource supply to ensure energy security. This review concludes with a call for further research. International Association for Mathematical Geosciences, 2015 Fiscal regimes nationallicence Oil and gas extraction projects nationallicence Mining projects nationallicence Equitable agreements nationallicence APR : Africa Progress Panel Report nationallicence Bbl : Barrel nationallicence bcf : Billion Cubic Feet nationallicence BG : British Gas nationallicence boe : Barrel of Oil Equivalent nationallicence BP : British Petroleum nationallicence C-ENRD : Center for Equitable Natural Resource Development nationallicence COW : Contract of work system (Indonesia) nationallicence CRIRSCO : Committee for Mineral Reserves International Reporting Standards nationallicence DD&A : Depreciation, Depletion and Amortization nationallicence DL : Deloitte nationallicence DOI : Department of the Interior (U.S.) nationallicence DRC : Democratic Republic Congo nationallicence EC : European Commission nationallicence E&P : Exploration and Development nationallicence EIA : Energy information Administration nationallicence EIB : European Investment Bank nationallicence EITI : Extractive Industries Transparency Initiative nationallicence ENRC : Eurasian Natural Resources Corporation nationallicence EU : European Union nationallicence EUR : Estimated Ultimate Recovery nationallicence FASB : Federal Accounting Standards Board nationallicence FEP : Fiscal Entitlement Payment nationallicence GAO : Government Accountability Office (US) nationallicence GDP : Gross Domestic Product nationallicence GEM : Global Economic Model (WoodMackenzie) nationallicence GOM : Gulf of Mexico nationallicence GT : Grant Thornton nationallicence IMF : International Monetary Fund nationallicence IRR : Internal Rate of Return nationallicence JORC : Australasian Joint Ore Reserves Committee nationallicence KPI : Key Performance Indicator nationallicence KPO : Karachaganak Petroleum Operating nationallicence LMTI : Linaburg-Maduell Transparency Index nationallicence LNG : Liquefied Natural Gas nationallicence MCM : Mopani Copper Mine (Zambia) nationallicence MMbbls : Million Barrels nationallicence MMS : Mineral Management Service (US) nationallicence MPRDA : Mineral and Petroleum Resources Development Act (South Africa) nationallicence NAM : Nederlandse Aardolie Maatschappij (Netherlands) nationallicence NPV : Net Present Value nationallicence NSR : Net Smelter Return nationallicence OCSA : Outer Continental Shelf Act nationallicence OCSLAA : Outer Continental Shelf Land Act Amendment nationallicence OECD : Organization of Economic Cooperation Development nationallicence ONGC : Oil and Natural Gas Corporation (India) nationallicence OPEX : Operating Capital Expenditure nationallicence PRMS : Resources Management System nationallicence PSA : Production Sharing Agreement nationallicence PWC : Pricewaterhouse Coopers nationallicence RAND : Research and Development Corporation (US) nationallicence RGI : Resource Governance Index nationallicence ROCE : Return on capital Employed nationallicence ROI : Return on Investment nationallicence RTA : Royalty and Taxation Agreement nationallicence RWI : Revenue Watch Institute nationallicence SCA : Service Contract Agreement nationallicence SEC : Securities and Exchange Commission (US) nationallicence SME : Society for Mining, Metallurgy, and Exploration nationallicence SG&A : Selling, General and Administrative Expense nationallicence SPT : Special Participation Tax nationallicence SWF : Sovereign Wealth Fund nationallicence UAE : United Arab Emirates nationallicence UK : United Kingdom nationallicence UN : United Nations nationallicence US : United States nationallicence WACC : Weighted Average Cost of Capital nationallicence Natural Resources Research Springer US; http://www.springer-ny.com 24/4(2015-12-01), 385-441 1520-7439 24:4<385 2015 24 11053 https://doi.org/10.1007/s11053-014-9262-8 text/html Onlinezugriff via DOI BK010053 XK010053 XK010000 Metadata rights reserved Springer special CC-BY-NC licence nationallicence 1 research-article jats NATIONALLICENCE NATIONALLICENCE NL-springer NATIONALLICENCE 856 40 https://doi.org/10.1007/s11053-014-9262-8 text/html Onlinezugriff via DOI NATIONALLICENCE 100 1- Weijermars R. Harold Vance Department of Petroleum Engineering, Texas A&M University, 3116 TAMU, 501 Richardson Building, 77843-3116, College Station, TX, USA aut NATIONALLICENCE 773 0- Natural Resources Research Springer US; http://www.springer-ny.com 24/4(2015-12-01), 385-441 1520-7439 24:4<385 2015 24 11053