PRODUCTION SHARING AGREEMENTS VERSUS THE ROYALTY REGIMES: WHERE IS THE BALANCE?

1992 ◽  
Vol 32 (1) ◽  
pp. 481
Author(s):  
Richard Cottee
Keyword(s):  
Petroleum Industry ◽  
Mining Industry ◽  
Third Party ◽  
Petroleum Exploration ◽  
Veto Power ◽  
Regulatory Regime ◽  
Fixed Rate ◽  
Regulatory Scheme ◽  
Production Sharing ◽  
The Government

For many years the mining industry made its investment decisions safe in the knowledge that petroleum or minerals in the ground belonged to the State but upon severance of such petroleum from the ground the oil was vested in the miner. Commensurate with the ownership changing, a royalty was payable to the government at a fixed rate. With the enactment of the Petroleum (Australia-Indonesia Zone of Co-Operation) Act of 1990 (the 'Act'), serious consideration must now be given as to whether in the future this basic scheme may be dramatically and radically changed to a scheme based on a services contract whereby a certain percentage of the oil is paid in consideration of the miner 'managing the discovery and extraction of petroleum'.An increasing number of countries, including those such as Malaysia which have legal systems based on common law, have adopted petroleum sharing agreements as a basic method by which they 'encourage' petroleum exploitation. This paper:explores the major features of petroleum sharing agreements (which are now in use in the Timor Gap, Indonesia and Malaysia), and compares and contrasts those models with a regulatory scheme based on statutory leases with royalty payments (being the regulatory scheme used in Australia, New Zealand, Canada and elsewhere);reviews both the economic and legal consequences of the two regimes, assuming a constant Income Tax System.It concludes that whilst there are certain merits in both the royalty regulatory type regime and a production sharing regime it appears to the writer that on balance the royalty regulatory regime is much more beneficial to the industry than the alternate. This is particularly true given the fact that Australian governments generally should have sufficient confidence in their regulatory skills and Australian technology that it does not feel it necessary to be given a veto power for each and every decision made in respect of petroleum exploration or production.The major deficiencies of a production sharing arrangement are the fact that the risk taker does not obtain legal tide to the product until after it has either passed the point of tanker loading or been sold to some third party, and the concept of 'cost oil'. If the rates of government 'take' is so high that it is more profitable to obtain 'cost oil' for the company than to receive its 'share' under the production sharing agreement, then the petroleum industry as a whole will suffer gross inefficiency in that area.

AUSTRALIA'S ECONOMIC RESTRUCTURING AND ITS POTENTIAL IMPACT ON PETROLEUM EXPLORATION

1988 ◽  
Vol 28 (1) ◽  
pp. 344
Author(s):  
M.G. D'Arcy
Keyword(s):  
State Government ◽  
Public Funding ◽  
Petroleum Industry ◽  
Mining Industry ◽  
Economic Restructuring ◽  
Petroleum Exploration ◽  
Equal Treatment ◽  
Uniform Structure ◽  
Market Signals ◽  
The World

Changes in the structure of a modern economy are a natural function of altered world and domestic economic circumstances. It is important that the instrument of change be the marketplace. Governments around the world have not demonstrated a superior ability to 'pick winners'. There are many instances where governments have used public funds to foster the development of particular industries only to find that, as a result of economic circumstances, the favoured industries' reliance on public funding becomes chronic. The Government's role should be to ensure that market signals are transmitted and received clearly.In Australia structural change in the economy has been a fairly slow process. This has been brought about by the numerous obstacles that have existed in the marketplace. These have meant that, not only were market signals distorted or delayed, but when received did not motivate appropriate responses. For example, labour market rigidities, inequitable taxation policies, a fixed exchange rate, together with State Government charges, have posed real impediments to implementing the necessary adjustments to the Australian economy.The Australian mining industry and the petroleum industry, in particular, have always been geared to the world market and have increasingly constituted an important component of the nation's export receipts. With regard specifically the petroleum industry, the world price downturn of the past few years and the Government's decision to drop its import parity pricing will result in major changes in the Australian industry, particularly in the exploration sector. These signals suggest a world oversupply of petroleum with the corollary that additional reserves are not needed. A resultant downturn in exploration could develop into an irrevocable reversal and jeopardise the nation's strategically important petroleum industry.In light of the diminished circumstances of the sector it is essential that the petroleum industry receives equal treatment regarding taxation and other Government imposts. Failure to remove the discriminations against petroleum and to impose a uniform structure will result in a misallocation of resources and the possibility of a permanent winding down in exploration.

AUSTRALIAN PETROLEUM RESEARCH AND DEVELOPMENT: AN EXAMPLE OF PROBLEM-DRIVEN GEOSCIENCE RESEARCH MANAGEMENT

1996 ◽  
Vol 36 (1) ◽  
pp. 500 ◽  
Author(s):  
T.S. Loutit
Keyword(s):  
Research And Development ◽  
Competitive Advantage ◽  
Collaborative Research ◽  
New Technology ◽  
Petroleum Industry ◽  
Database Systems ◽  
Research Management ◽  
Petroleum Exploration ◽  
Systems Research ◽  
The Government

The Australian petroleum exploration research program is customer-driven and reflects the balance between the need for the petroleum industry to reduce exploration risk in the short term and the government need to improve the perception of prospectivity in the longer term. Higher prospectivity will lead to greater exploration investment and competition, whereas risk-reduction will increase the efficiency and effectiveness of the exploration industry. Thus the objectives of the primary customers may be significantly different, with government intent on increasing the amount of investment and competition between explorers, whereas industry is intent on keeping expenditure to a minimum and maintaining competitive advantage. Despite the differences, collaboration between all groups involved in exploration and exploration-related research in Australia is essential to solve the range of exploration problems and generate new paradigms. Collaborative research ventures are most successful when new ideas stimulate explorer and researcher alike to focus resources on the key questions despite factors such as competitive advantage. Government geoscience researchers must play a significant role in generating and marketing new concepts to help maintain Australia's supply of domestic petroleum products.The scale of the petroleum research undertaken, and the degree of collaboration between industry and research groups in Australia, is remarkable. There is a productive balance between groups developing and applying new technology and those undertaking regional geological and petroleum systems research. This balance has been reached because of the long-term commitment by the Australian Government, via legislation and funding, to ensure the preservation of exploration data in national geoscience database systems, and that basic and applied research at all scales, from basins to wells, is undertaken in support of petroleum exploration and development.Despite the success of a number of collaborative research projects, research and development resources are still under-utilised by the Australian petroleum industry. Government research agencies must develop a higher marketing profile to ensure that the utilisation of the resources is at a maximum.

scholarly journals Instruments to Challenge the Grant of a Patent as a Third Party: Suggestions for the Review of New Zealand's Patent System

2021 ◽  
Author(s):  
◽  
Juliane Buchinski
Keyword(s):  
New Zealand ◽  
Current System ◽  
Patent Law ◽  
Third Parties ◽  
Patent System ◽  
Third Party ◽  
Regulatory Regime ◽  
Negative Effect ◽  
The Government

<p>In recent decades, intellectual property law (in particular patent law) has had to face new challenges due to the accelerating development of technology. Patents can have a negative effect on a country's economy if too many invalid or overly broad patents are granted. Such patents have the potential to impose high costs on society without providing substantial benefits. If a patent regime cannot avoid the grant of such patents, or does not provide instruments to remove them from the register, the negative effect may stifle innovation instead of encouraging it. In 2008, in consideration of these problems, the government of New Zealand introduced a Patents Bill. This Bill is the culmination of the government's review process, which started in the late 1980s. The aim of the Bill is to update New Zealand's patent law in order to bring it in line with international practise and to reduce the costs to society arising from invalid and overly broad patents. The provisions of the Bill cover all principal aspects of the patent regime: standards of examination and procedures, challenges on the grant of a patent, and provisions for updating the regulatory regime for patent attorneys. This dissertation focuses on analysing how the quality of New Zealand's patents could be enhanced using the knowledge and experience of third parties. Because the current examination standards may allow the grant of overly broad patents, this dissertation analyses specifically which changes in the examination procedure could help prevent the grant of "bad" patents without overburdening the resources of the IPONZ. In the next step, the dissertation analyses third-party instruments under the current patent system and under the Patents Bill 2008, proving that neither approach by itself would be sufficient to bring about an effective patent reviewing system for New Zealand. The approach under the current system is too expensive and has the potential to delay the granting procedure, whereas the approach proposed by the Patents Bill 2008 limits the influence of third parties before the grant of a patent to such an extent that most patents may remain in the register. The overall aim of this dissertation is to suggest a new approach that includes aspects of both of the others in order to find a balanced solution and an optimal fit for the specific needs of New Zealand.</p>

scholarly journals Economic Modelling of the Delay in Passing the Petroleum Industry Bill in Nigeria and Its Impact on Deep Offshore Investments and Government Take Statistics

2020 ◽  
Author(s):  
Oghenerume Ogolo ◽  
Petrus Nzerem
Keyword(s):  
Petroleum Industry ◽  
Economic Models ◽  
Economic Modelling ◽  
Government Revenue ◽  
Production Sharing ◽  
The Government ◽  
Petroleum Sector ◽  
The Impact ◽  
Offshore Region

Abstract The petroleum industry bill (PIB) in Nigeria aims to reform the petroleum sector of the country and increase government revenue from petroleum investments. Despite the benefits the bill offers to the country, its passage has suffered several setbacks. This research therefore studied the impact of the delay in passing the bill on deep offshore investments. Economic models were built using the fiscal terms in PIB 2009 and 1993 production sharing contract (PSC) arrangement to evaluate the impact of the bill. The model with the 1993 PSC fiscal terms was adjusted to capture the delay in passing the bill. The bill was assumed to be passed on a yearly basis for 10 years (2010 to 2019). The impact of the delay in passing the bill based on the reserve portfolio of firms in the deep offshore region of the country was also evaluated. The delay in passing the PIB reduced the government take. It was seen that for the non-passage of the bill, the government lost about $1227.2 MM. When the bill was passed in 2019, the government had been losing about $11.843 MM on a yearly basis due to the delay in passing the bill.

TRENDS AND OUTLOOK FOR EXPLORATION IN WESTERN AUSTRALIA

2001 ◽  
Vol 41 (1) ◽  
pp. 497
Author(s):  
W.L. Tinapple
Keyword(s):  
Western Australia ◽  
Petroleum Industry ◽  
Petroleum Exploration ◽  
North West ◽  
The North ◽  
The Government ◽  
Water Gas ◽  
Increased Activity ◽  
Western Australian ◽  
Positive Results

Petroleum exploration activity in Western Australia over the past decade has been on the increase, boosted by the positive results of many new discoveries, mainly on the North West Shelf but also in frontier areas. Significant discoveries in 1999–2000 resulted from new exploration concepts including deep plays in the Barrow/Dampier Sub-basins, heavy oil plays in the Carnarvon Basin, a deep-water gas play west of Gorgon, large gas/condensate plays in the Browse Basin, and a new gas play in the southern Bonaparte Basin. Discovery itself is a great incentive to the industry to further exploration; however, concerns over oil price, the Australian dollar, markets, policies and perceived prospectivity impact on exploration spending. The short-term outlook for WA is good as a result of existing work commitments including an average of 50 exploration wells to be drilled each year for the next three years. Onshore, where exploration has been subdued, there are signs of increased activity. The Western Australian government is playing a key role in promoting the State through gazettals, promotional activities— conferences and publications, acquiring precompetitive data and making petroleum data more accessible. The government funded Petroleum Exploration Initiatives program is continuing and efforts are being made to facilitate exploration. Sustained high oil prices, improvements in technology and efforts to expedite access to land are just some of the factors which will assist companies in their endeavours. In the longer term, continued growth in Western Australia’s petroleum industry is projected.

THE PRACTICAL APPLICATION OF THE INCOME TAX ASSESSMENT ACT TO THE PETROLEUM MINING INDUSTRY

1984 ◽  
Vol 24 (1) ◽  
pp. 135
Author(s):  
R. K. Moore
Keyword(s):  
Income Tax ◽  
Oil And Gas ◽  
Capital Expenditure ◽  
Petroleum Industry ◽  
Mining Industry ◽  
Fixed Rate ◽  
Mining Operations ◽  
Tax Assessment ◽  
Port Facilities ◽  
Petroleum Oil

Division 10AA of the Income Tax Assessment Act provides a basis for deductibility of exploration and capital expenditure for the petroleum, oil and gas industries, with Division 10AAA allowing deductions for transport and port facilities. The taxpayer has the choice of electing out of Division 10AA so that, if he so wishes, he may claim income tax deductions under the normal depreciation provisions for plant depreciable. Within the framework of Division 10AA exploration expenditure may be written off in the year of expenditure to the extent of the net assessable income derived from any source. If there is any excess exploration expenditure it carries forward into an exploration pool and is available for deduction against future assessable income. For a deduction to be available for exploration expenditure, the Commissioner must be satisfied that the taxpayer is carrying on prescribed petroleum operations or a business which includes exploration or prospecting for the purpose of discovering petroleum. The Commissioner generally adopts the attitude that to enable the taxpayer to claim a deduction for exploration expenditure the taxpayer must have an interest directly or indirectly in the permit area.Capital expenditure can be deducted over a 10 year period at the fixed rate of 10 per cent per annum. Expenditure on transport and port facilities, if eligible, can also be deducted over a fixed instalment period of 10 years. Special provisions apply in relation to farm-ins and farm-outs, and where work is carried out by contractors. There is no specific incentive to invest money in the exploration business apart from the 27 per cent rebate found in Section 160ACA. The main provisions of the Income Tax Assessment Act affecting petroleum, oil and gas are summarized, some of the difficulties and the attitude of the Commissioner to the applications of the various sections are explained, and ways of treating certain expenditures are suggested. Topics such as drilling funds are discussed in detail.The Income Tax Assessment Act was basically written prior to the development of the petroleum industry and the Act itself adopts a rather simplistic approach which does not deal in depth with many of the important aspects of petroleum mining operations.

scholarly journals Instruments to Challenge the Grant of a Patent as a Third Party: Suggestions for the Review of New Zealand's Patent System

2021 ◽  
Author(s):  
◽  
Juliane Buchinski
Keyword(s):  
New Zealand ◽  
Current System ◽  
Patent Law ◽  
Third Parties ◽  
Patent System ◽  
Third Party ◽  
Regulatory Regime ◽  
Negative Effect ◽  
The Government

<p>In recent decades, intellectual property law (in particular patent law) has had to face new challenges due to the accelerating development of technology. Patents can have a negative effect on a country's economy if too many invalid or overly broad patents are granted. Such patents have the potential to impose high costs on society without providing substantial benefits. If a patent regime cannot avoid the grant of such patents, or does not provide instruments to remove them from the register, the negative effect may stifle innovation instead of encouraging it. In 2008, in consideration of these problems, the government of New Zealand introduced a Patents Bill. This Bill is the culmination of the government's review process, which started in the late 1980s. The aim of the Bill is to update New Zealand's patent law in order to bring it in line with international practise and to reduce the costs to society arising from invalid and overly broad patents. The provisions of the Bill cover all principal aspects of the patent regime: standards of examination and procedures, challenges on the grant of a patent, and provisions for updating the regulatory regime for patent attorneys. This dissertation focuses on analysing how the quality of New Zealand's patents could be enhanced using the knowledge and experience of third parties. Because the current examination standards may allow the grant of overly broad patents, this dissertation analyses specifically which changes in the examination procedure could help prevent the grant of "bad" patents without overburdening the resources of the IPONZ. In the next step, the dissertation analyses third-party instruments under the current patent system and under the Patents Bill 2008, proving that neither approach by itself would be sufficient to bring about an effective patent reviewing system for New Zealand. The approach under the current system is too expensive and has the potential to delay the granting procedure, whereas the approach proposed by the Patents Bill 2008 limits the influence of third parties before the grant of a patent to such an extent that most patents may remain in the register. The overall aim of this dissertation is to suggest a new approach that includes aspects of both of the others in order to find a balanced solution and an optimal fit for the specific needs of New Zealand.</p>

scholarly journals Geosensing techniques for mineral exploration and mine planning

1989 ◽  
Vol 20 (2) ◽  
pp. 131
Author(s):  
P.A. Gray ◽  
J.F. Doyle ◽  
P.H. Scaiffe
Keyword(s):  
Developmental Stage ◽  
Geophysical Methods ◽  
Petroleum Industry ◽  
Mining Industry ◽  
Coal Industry ◽  
Mine Planning ◽  
Petroleum Exploration ◽  
Production Environment ◽  
Wide Range ◽  
Geophysical Techniques

Geophysical techniques have been applied to petroleum exploration since early in the 20th Century. More recently geophysical methods have been applied in detail to mineral and coal exploration. As a generalisation, geophysical techniques have not been applied in the areas of mine planning, development and production.A variety of geophysical methods have been improved or adapted within BHP to provide accurate, cost effective services to the mine manager on time scales that are realistic for day to day planning and production. Considerable success has been achieved with in-seam seismic, cross-hole seismic and surface seismic techniques. Electrical and magnetic methods have also been beneficial for specific applications.The identification and evaluation of mineral deposits increasingly uses a range of advanced geophysical techniques. Geophysical techniques are now also emerging as key factors in mine planning and production. The purpose of this paper is to show how BHP is developing a variety of geophysical techniques to improve the eSfficiency of exploration, mine planning and production both for minerals and coal. Emphasis is placed on the benefits of these advanced geophysical techniques on day-to-day mine operations. This, of course is only one company's perspective viewpoint, but since BHP has such a wide diversity of operations, this viewpoint may have general applicability.BHP has had a long history of using geo-expertise in a wide range of operations over the past 40 years. This expertise developed in the minerals and coal industries but has subsequently developed into the petroleum industry. In regard to the coal industry alone, several notable geophysics firsts can be attributed to the coal geology groups within BHP. These firsts include: The application of surface seismics to coal exploration; Geophysical logging ? BHP were instrumental in bringing BPB Instruments Ltd to Australia; Radar ? early experiments were undertaken at Cook Colliery; Development and application of high resolution surface seismics in Queensland and New South Wales; Development and routine application of in-seam seismics; Cross-hole seismic/in-seam seismic tomography ? application of a production oriented package to coal and metalliferous mines.In the development of these techniques for the mining industry, a number of common factors are present which have resulted in them being commercially successful. BHP's background as a large resources company has obviously provided the initial impetus to develop smarter geophysical techniques, but this is only one factor which has made them successful. The old adage of a new product or technique being 1% inspiration and 99% perspiration also applies to the development of these techniques.Probably the most important single factor to consider for the successful development of innovative geophysical techniques is that they require a multi-stage team effort over at least two years, (typically 4-5 years for the more complex developments) and that failures can be expected throughout this period. Also the expectations of production personnel are often too great during this developmental stage, which leads to a perception that the technique in question is not useful even after all the 'bugs' in the system have been removed. The onus is on researchers to clearly outline both the potential benefits and possible failures of a new technique during its developmental stage, so that it will subsequently be more readily accepted in the mining production environment.

Petroleum geological activities in West Greenland in 1998

1999 ◽  
pp. 46-56
Author(s):  
Flemming G. Christiansen ◽  
Anders Boesen ◽  
Jørgen A. Bojesen-Koefoed ◽  
James A. Chalmers ◽  
Finn Dalhoff ◽  
...  
Keyword(s):  
Seismic Data ◽  
Working Group ◽  
Petroleum Exploration ◽  
Geological Survey ◽  
Original Series ◽  
West Greenland ◽  
Phillips Petroleum ◽  
Petroleum Resources ◽  
The Government ◽  
Year 2000

NOTE: This article was published in a former series of GEUS Bulletin. Please use the original series name when citing this article, for example: Christiansen, F. G., Boesen, A., Bojesen-Koefoed, J. A., Chalmers, J. A., Dalhoff, F., Dam, G., Ferré Hjortkjær, B., Kristensen, L., Melchior Larsen, L., Marcussen, C., Mathiesen, A., Nøhr-Hansen, H., Pedersen, A. K., Pedersen, G. K., Pulvertaft, T. C. R., Skaarup, N., & Sønderholm, M. (1999). Petroleum geological activities in West Greenland in 1998. Geology of Greenland Survey Bulletin, 183, 46-56. https://doi.org/10.34194/ggub.v183.5204 _______________ In the last few years there has been renewed interest for petroleum exploration in West Greenland and licences have been granted to two groups of companies: the Fylla licence operated by Statoil was awarded late in 1996; the Sisimiut-West licence operated by Phillips Petroleum was awarded in the summer of 1998 (Fig. 1). The first offshore well for more than 20 years will be drilled in the year 2000 on one of the very spectacular structures within the Fylla area. To stimulate further petroleum exploration around Greenland – and in particular in West Greenland – a new licensing policy has been adopted. In July 1998, the administration of mineral and petroleum resources was transferred from the Danish Ministry of Environment and Energy to the Bureau of Minerals and Petroleum under the Government of Greenland in Nuuk. Shortly after this, the Greenlandic and Danish governments decided to develop a new exploration strategy. A working group consisting of members from the authorities (including the Geological Survey of Denmark and Greenland – GEUS) made recommendations on the best ways to stimulate exploration in the various regions on- and offshore Greenland. The strategy work included discussions with seismic companies because it was considered important that industry acquires additional seismic data in the seasons 1999 and 2000.

scholarly journals Mining Industry Impact on Environmental Sustainability, Economic Growth, Social Interaction, and Public Health: An Application of Semi-Quantitative Mathematical Approach

Processes ◽  
2021 ◽  
Vol 9 (6) ◽  
pp. 972
Author(s):  
Muhammad Mohsin ◽  
Qiang Zhu ◽  
Sobia Naseem ◽  
Muddassar Sarfraz ◽  
Larisa Ivascu
Keyword(s):  
Economic Growth ◽  
Energy Source ◽  
Coal Mining ◽  
Environmental Sustainability ◽  
Mining Industry ◽  
Provincial Government ◽  
Mining Operations ◽  
Human Needs ◽  
The Government ◽  
Operational Activities

The mining industry plays a significant role in economic growth and development. Coal is a viable renewable energy source with 185.175 billion deposits in Thar, which has not been deeply explored. Although coal is an energy source and contributes to economic development, it puts pressure on environmental sustainability. The current study investigates Sindh Engro coal mining’s impact on environmental sustainability and human needs and interest. The Folchi and Phillips Environmental Sustainability Mathematics models are employed to measure environmental sustainability. The research findings demonstrated that Sindh Engro coal mining is potentially unsustainable for the environment. The toxic gases (methane, carbon dioxide, sulfur, etc.) are released during operational activities. The four significant environment spheres (atmosphere, hydrosphere, biosphere, and lithosphere) are negatively influenced by Thar coal mining. The second part of the analysis results shows that human needs and interests have a positive and significant relationship except for human health and safety with Sindh Engro coal mining. Environmental pollution can be controlled by utilizing environmentally friendly coal mining operations and technologies. Plantation and ecological normalization can protect the species, flora, and fauna of the Thar Desert. The government of Pakistan and the provincial government of Sind should strictly check the adaptation of environmental standards. Furthermore, the researchers should explore the environmental issues and solutions so that coal mining becomes a cost-efficient and environmental-friendly energy source in Pakistan.

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