Fiscal Regimes is one of the most important factors to be considered for investment decisions in oil and gas industry. Royalty Rate, Cost Recovery, Contractor Share, Domestic Market Obligation, Investment Credit, Signature Bonus, Production Bonus, First Trance Petroleum and Corporate Tax Rate have a significant effect on the investment decisions.
The paper examines and compares the fiscal regimes in Australia, China, India, Indonesia and Malaysia. In order to analyze the advantages and disadvantages of each fiscal regime, the economic analysis of the same hypothetical fields with the applications of those different fiscal regimes are presented and discussed. Generic fiscal terms are used in the analysis since contractors usually can negotiate the special terms with governments.
The information of this paper is useful for oil and gas companies around the world when they want to decide where in Asia Pacific Region they want to invest their money. They can compare which fiscal regime gives them the most favorable return of their investment. In addition, the information is useful for the governments when they want to assess their fiscal regime competitiveness compared to other fiscal regime in that region. In depth analysis on fiscal regimes of those countries is very important for oil and gas industry and it will add to the knowledge base of this industry.
Conclusions are made of the effects of these different fiscal regimes on oil and gas company cash flow and profitability and how they affect company investment decisions in oil and gas industry and government policy.