Modeling the Impact of Taxes on Petroleum Exploration and Development

James Smith

No 2012/278, IMF Working Papers from International Monetary Fund

Abstract: We present a simple model of petroleum exploration and development that can be applied to study the performance of alternative tax systems and identify potential distortions. Although the model is a highly simplified, it incorporates many factors and some of the key tradeoffs that would influence an investor’s investment behavior. The model recognizes the role of enhanced oil recovery and treats the impact of taxation on exploration and development in an integrated manner consistent with an investor’s joint optimization of investments at both stages of the process. The model is simple and user-friendly, which facilitates application to a broad range of problems.

Keywords: WP; net present value; cash flow; petroleum exploration; oil production; taxation; distortions; IOC place; IOC's profit; price movement; fiscal regime; IOC NPV; oil price; economic value; Oil; Oil prices; Corporate income tax; Marginal effective tax rate; Production sharing; Middle East (search for similar items in EconPapers)
Pages: 46
Date: 2012-11-27
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Citations: View citations in EconPapers (10)

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