IMF Working Papers

Modeling the Impact of Taxes on Petroleum Exploration and Development

By James L. Smith

November 27, 2012

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James L. Smith Modeling the Impact of Taxes on Petroleum Exploration and Development, (USA: International Monetary Fund, 2012) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Commodities, Corporate income tax, Marginal effective tax rate, Oil, Oil prices, Prices, Production sharing, Tax policy, Taxes

Keywords: Cash flow, Corporate income tax, Distortions, Economic value, Fiscal regime, IOC NPV, IOC place, IOC's profit, Marginal effective tax rate, Middle East, Net present value, Oil, Oil price, Oil prices, Oil production, Petroleum exploration, Price movement, Production sharing, Taxation, WP

Publication Details

  • Pages:

    46

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2012/278

  • Stock No:

    WPIEA2012278

  • ISBN:

    9781557754455

  • ISSN:

    1018-5941

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