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Petroleum Tax Competition Subject ot Capital Rationing

Petter Osmundsen, Kjell Løvås and Magne Emhjellen

No 6390, CESifo Working Paper Series from CESifo Group Munich

Abstract: The recent dramatic fall in oil prices has led to extensive capital rationing in international oil companies, and subsequent fierce competition between resource extraction countries to attract scarce investment. This situation is not adequately addressed by the large literature on international taxation and multinational companies, since it fails to take account of capital rationing in its assumption that companies sanction all projects with a positive net present value. The paper examines the effect of tax design on international capital allocation when companies ration capital. We analyse capital allocation and government take for four equal oil projects in three different fiscal regimes: the US GoM, UK upstream and Norway offshore. Implications for optimal tax design are discussed.

Keywords: taxation; international companies; project metrics; project valuation; oil projects (search for similar items in EconPapers)
JEL-codes: H21 H25 F23 Q40 G12 G31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-ene and nep-pub
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
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