INTERNATIONAL PETROLEUM FISCAL SYSTEMS July 2016 Kuala Lumpur, Malaysia

Transcription

1 In collaboration with INTERNATIONAL PETROLEUM FISCAL SYSTEMS Your Expert Course Director: TIM JAMES Principal Economist Robertson CGG Company Beardall-Parry Department What past participants said about Tim: Tim is a very accommodative coach. Thanks! Salamander Energy Training provided by Tim makes us feel like expert ourselves even though it is not our background Front End Enginer, Petronas Carigali Sdn Bhd

2 Course Overview We are currently in the midst of one of the deepest downturns in the in recent years. Companies have to adjust to the new realities of a lower oil price and the possibly painful cost adjustment that goes with it. When the oil price was $100 per barrel, both sides in production sharing contracts or concessionary fiscal systems were making good returns and were therefore perhaps not too concerned that fiscal structures were optimised. But things are different now. It is essential that companies understand the finer nuances of the petroleum fiscal system to ensure they are structured optimally in this price environment. What are the implications for cost recovery in this price environment? Are the fiscal terms structured in a way to ensure my company gains from any cost reduction exercise it undertakes What the entitlement reserve bookings looking like for year end? As an IOC (International Oil Company), is now the time to negotiate new terms with the government? How do we do it? As an NOC (National Oil Company) should I be looking at negotiating a carry to reduce capital exposure? This course will enable delegates to answer the above questions and many more! It explores the structure and mechanisms of production sharing contracts (PSC s), concessionary tax/royalty systems, and risk service contracts and includes the economic principles that underpin them. Studying the underlying processes and commercial drivers, participants will examine case studies to illustrate the economic structure of these complex agreements. This course brings the theory to life, allowing course attendees to design their own fiscal system and build and interpret their own PSC model based on a real life field development. Course objectives: Learn about the history, evolution and structure of fiscal systems Investigate cost recovery and profit sharing in a PSC Understand the interaction with royalties Examine fiscal mechanisms and ring fence calculations Identify taxation liability and allowances Design and optimize a fiscal system in a competitive bid scenario.and argue the case! Construct a production sharing contract spreadsheet model Interpret model outputs to enhance investment decision making Understand petroleum economic fundamentals to aid PSC negotiations and licence round bidding Who should attend? This five day practical course is an ideal course for delegates wishing to develop a deeper understanding of petroleum fiscal systems and the economic principles that underpin them. Delegates should have a reasonable knowledge of Microsoft Excel and bring a laptop loaded with Microsoft Office to the course. Typical course participants are likely to be: Production Sharing Partners Economists working in the Lawyers involved in the Analysts working in the Auditors working in the Technical personnel working in the Business Development and Commercial Managers Delegates will be provided with electronic copies of all workshop solutions and examples, and a comprehensive hard copy course manual.

3 Introduction Why do we need fiscal systems? The relationship between NOC, IOC and government The evolution of fiscal systems An overview of Global Fiscal Systems Production Sharing Contracts Tax & Royalty Systems Risk Service Contracts Pure Service Contracts Global examples to illustrate and compare different systems 5-DAY COURSE AGENDA DAY 1 Production Sharing Contract Legal basis and the Model Production Sharing Contract Calculating Cost Recovery, Excess Cost Recovery and Profit Share Bonuses (signature, commerciality & production bonuses) Case studies: Angola, Indonesia, Equatorial Guinea, Egypt, Gabon, India, Congo Brazzaville, Vietnam, Sudan, Oman, Trinidad & Tobago Delegate cost recovery exercise DAY 2 DAY 3 Tax & Royalty Systems Government Royalties and overriding Royalties Corporate Income Tax (CIT) Depreciation, Capital Allowances Treatment of tax losses Double taxation and tax treaties Field Based taxes Supplementary/ Windfall taxes Liability & Payment phasing Import/Export Duty Environmental taxes The treatment of abandonment costs Case studies: Namibia, Brazil, UK, Poland, Netherlands, Thailand, Norway, Tunisia, Australia, Nigeria Delegate exercises to calculate Royalties & CIT Sliding Scales Different methods of sliding scale (production, R-factors, rate of return, hybrids) Step vs Incremental methods Understanding the issues around each method Selecting an appropriate sliding scale to influence activity Progressive vs Regressive systems Selecting an appropriate scale for self-adjusting mechanism Global examples Case studies: Angola, China, Equatorial Guinea, Vietnam, Bangladesh, Algeria, Nigeria, Sao Tome, Tunisia, Libya, India, Romania, Faroes, Tunisia, Nigeria Service Contracts Why service contracts? Service contracts vs PSC vs Tax/Royalty systems Case Study: Malaysia Risk Service Contract Government Take Government aims when designing a fiscal system What do we mean by government take Measuring and comparing countries How to calculate marginal government take Carried Interests Case Studies to illustrate fiscal incentivisation/disincentivisation: Norway, Libya, UK, Bahamas Review of fiscal systems including a selection from those of: Tanzania Australia Angola Ghana Brazil Argentina Colombia Indonesia Vietnam India Namibia Malaysia Norway USA Canada PNG Ringfencing The taxation ringfence The PSC ringfence Ringfencing and its impact on asset value Case Studies: UK, Faroes, Denmark, Australia, Italy, Ireland, Angola, Cambodia, Cuba, Malaysia,Angola, Nigeria

4 DAY 4 DAY 5 How do we assess value? Review of economic parameters Discounted cashflow Calculation of Net present value (NPV), Internal Rate of return (IRR), Profit to Investment ratio (DPIR) Economic limit, payback The pros and cons of the different metrics we can sue to assess value Booking reserves: the concept of tax barrels Delegate exercise to calculate economic metrics Fiscal System Design Workshop An exercise to set the terms in a production sharing contract. Terms will have to meet corporate hurdles and need to be attractive to the host government. This will be based on a Microsoft Excel model. Delegates will be provided with sets of input assumptions and economic scenarios on which to calculate suitable economic metrics and carry out appropriate sensitivity analysis. Based on their analysis, the delegate will recommend a set of fiscal terms and argue their case! Production Sharing Contract Fiscal Modelling Workshop A PSC based case study modelling the Vietnam fiscal terms in Microsoft Excel Understanding the PSC fiscal structure & algorithms of the contract Determining the field, economic & fiscal data and building the input decks Step by step construction of the PSC model Running the economic cases & evaluating the results Analysis of the sensitivities Model solution provided to delegates after the course Summary and Closing Remarks After the course delegates will be sent fully functioning electronic copies of the fiscal model solutions as well as all excel based examples studied during the course. Your Expert Faculty: TIM JAMES Principal Economist Robertson CGG Company Beardall-Parry Department Tim has extensive oil and gas knowledge having worked in various economic, finance and commercial roles for 20 years. Tim, a qualified Chartered Management Accountant, is currently Principal Economist in Robertson s Petroleum and Reservoir Engineering Group based in Wallingford, Oxfordshire, UK. He has experience of fiscal jurisdictions and the commercial environment globally having undertaken numerous economic assignments ranging from the evaluation of farm in opportunities, licence round fiscal bidding advice and Competent Persons Reporting through to full corporate acquisition valuations. Tim is an experienced economics trainer to the oil, national oil companies and governments directing regular petroleum economics, fiscal and risk courses globally. Prior to joining CGG, Tim was Director of Economics for Beardall Parry & Associates economics consultancy, and before that was with Premier Oil for nine years, first in their Pakistan office and then as Commercial and Finance Manager for the NW Europe region. Experience at Premier Oil included a variety of project, commercial, asset management and finance roles covering areas such as field valuations for development, acquisitions and disposals, building economic models in both Microsoft Excel and Merak PEEP, management of gas contracts, management of budgets, statutory financial reporting and crude sales and marketing. What past participants have said about previous economics training courses by PetroEdge: - Very good course for non-economists for understanding the basics of Petroleum Economics & PSCs Executive Analyst, PETRONAS Great course, has opened up my eyes and share a lot of light on many grey areas of my knowledge of the Legal Executive, Brunei National Petroleum Company The course was an ideal introduction to the economics that drive the upstream Petroleum decision making process and the external influences that can impact upon these decisions. Middle East & Asia Pacific Regional Accounting Centres Director, Baker Hughes A good course and overview with a very knowledgeable trainer Petroleum Engineer, APA Group General overview on Petroleum Economics & PSC modelling workshop brings enlighten and comprehensive understanding regarding the subject Senior Project Engineer - Project Management Division, SKK Migas PetroEdge courses are focussed and well designed to be applicable to a narrow-medium audience-therefore good value. Sales Manager, CGG Multiclient & New Ventures A thoroughly interesting and comprehensive understanding of the practise of context of economics in the petroleum Senior Compliance Officer, NOPTA This course has broaden my ideas on the production sharing concepts and I think it will be effective if applied in the Mining Industry Policy Officer, Department of mineral policy & Geohazards Management (PNG)

5 INTERNATIONAL PETROLEUM FISCAL SYSTEMS R E G I S T R A T I O N F O R M KUALA LUMPUR MALAYSIA JULY 2016 EARLY BIRD RATE Register by 17 th June 2016 STANDARD RATE SGD 5,699 SGD 5,899 petroedge recognises the value of learning in teams. Group bookings at the same time from the same company receive the following: 3 or more at 5% off 5 or more at 7% off 8 of more at 10% All other promotions including early bird are exclusive of the group discount. In-House Training Yes, I would like to organise this training on-site and save on total course fees! For further information about On-site Solutions, please or info@asiaedge.net DELEGATE 1 Mr Ms Mrs Dr Others: Name : Job Title : Department : Head of Dept. : DELEGATE 2 Mr Ms Mrs Dr Others: Name : Job Title : Department : Head of Dept. : Company : Address : Country : Postcode: Attention Invoice to : Fax No. : 4 EASY WAYS TO REGISTER Phone: Fax: Online: info@asiaedge.net DELEGATE DETAILS Please note - Indicate if you have already registered by Phone +Fax + +Web - If you have not received an acknowledgement before the training course, please call us to confirm your booking. PAYMENT METHODS By Cheque/ Bank Draft Make Payable to Asia Edge Pte. Ltd. By Direct Transfer Please quote your invoice number with the remittance advise Account Name: Asia Edge Pte. Ltd. Bank Code: 508 Account Number: Swift Code: OCBCSGSG All bank charges to be borne by payer. Please ensure that Asia Edge Pte Ltd receives the full invoiced amount. PAYMENT POLICY Payment is due in full at the time of registration. Full payment is mandatory for event attendance. By submitting this registration form, you have agreed to Asia Edge Pte Ltd s payment terms CANCELLATIONS & SUBSTITUTIONS You may substitute delegates at any time. For cancellations received in writing more than seven (7) days prior to the training course, delegates will receive a 100% credit on the amount paid which can be used in another Asia Edge Pte. Ltd. training course for up to one year from the date of issuance. The credit is transferable to other persons in the same company and applicable against any future Asia Edge Pte. Ltd. public course. For cancellations received seven (7) days or less prior to an event (including day 7), no credit will be issued. In addition, a cancellation fee equivalent to 15% of the course fee will be charged. In the event that Asia Edge Pte. Ltd. postpones or cancels a course, delegate payments at the date of cancellation or postponement will be credited to a future Asia Edge Pte. Ltd. course. This credit will be available for up to one year from the date of issuance, and it is transferable to other persons in the same company and applicable against any future Asia Edge Pte. Ltd. public course. Asia Edge Pte. Ltd. does not provide refunds for cancellations and postponements or waive fees for unpaid invoices upon receipt of registration. PROGRAM CHANGE POLICY Please note that speakers and topics were confirmed at the time of publishing; however, circumstances beyond the control of the organizers may necessitate substitutions, alterations or cancellations of the speakers and/or topics. As such, ASIA EDGE PTE LTD reserves the right to alter or modify the advertised speakers and/or topics if necessary. Any substitutions or alterations will be updated on our web page as soon as possible. ASIA EDGE PTE. LTD. Company Registration No: No C Copyright@ 2015 ASIA EDGE PTE LTD. All rights reserved. This brochure may not be copied, photocopied, reproduced, translated, or converted to any electronic or machine-readable form in whole or in part without prior written approval of ASIA EDGE PTE LTD