Despite the geopolitical uncertainty that looms over the global oil and gas industry the continued imposition of taxes on income from oil and gas operations remains a certainty. In a global environment of constantly evolving tax and fiscal policy, the scope, impact and makeup of taxes are far from certain, according to EY's study.
Alexey Kondrashov, EY's Global oil & gas tax leader said, "Fiscal policy has never been more important to governments as they compete to attract large-scale investment. Revenues need to be maximized from hydrocarbon production and stable fiscal environments created for efficient resource development."
"Some countries are certainly better at achieving this stability than others, thus allowing reasonable returns for investors. Quality and economics of basins naturally evolve over the lifetime of the basin, but also shift in response to other challenges, such as declining production caused by the maturity of fields. Forward-thinking governments recognize this and continually review and revise their tax regimes to equate for these changes," said Kondrashov.
Governments are competing for exploration investments and are working on making oil and gas tax regimes attractive to investors. Many countries have or are altering their fiscal framework to provide incentives for unconventional oil and gas projects and hard-to-recover projects, EY added.