The Merak Fiscal Model Library 2020.4 release includes the following new models.
Ecuador PSA (2018)
The Ecuador PSA (2018) model is added to the library based on the XII Bid Round. The highlights of the model are:
- Contractor participation percentage is valued based on the price of reference, adjusted for the quality of crude oil in the contract area and the hydrocarbon production limits.
- During the exploration and extension period, the contractor will contribute to the development of national technical education and grant scholarships related to the industry of hydrocarbons.
- During the term of this contract, the contractor will pay for the use of water and natural construction materials found in the contract area.
- Laws Amazónica and 40—Applicable to contractor’s share of production, which is equal to 4% of the sales price (minimum of USD 2/bbl) + USD 0.05/bbl.
- Labor participation tax—Out of 15% of the profit, 12% goes to the government and 3% to employees.
- Depreciation over five years for exploration and production units for production phase. Investments in transport and storage depreciates over ten years in straight line.
- Income tax rate is 25% but can go to up to 28% when shareholders are based in tax havens.
- Sovereign adjustment applies when contractor’s benefits are higher than the state’s benefits.
- The calculation of benefits is made annually. The adjustment in production is applicable within a year after the identification of the imbalance in profits.
- Corporate income tax and labor participation tax are ringfenced to block level.
- VAT is assumed to be paid on total capital at a rate of 12%.
Nigeria Marginal Fields R/T (2006)
The Nigeria Marginal Fields R/T (2006) model is added to the library based on Marginal Fields Operations Regulations, 2005. The highlights of the model are:
- Farm-in bonus—This is the tiered production farm-in bonus paid based on cumulative production volumes.
- Hydrocarbons royalty—Oil royalty rate is determined by production volume on a direct sliding-scale basis.
- Gas royalty rate is defined as follows: onshore (7%), offshore (5%).
- NDDC levy is incurred on annual costs at a rate of 3%.
- Education tax rate: 2% based on assessable profit levied on oil and gas separately.
- Petroleum profit tax applies only to oil profits at a rate of 55%.
- Tangible costs are depreciated according to the schedule below (five-year straight line).
- VAT is assumed to be paid on total capital at a rate of 5%.
The Merak Fiscal Model Library 2020.4 release include the following fiscal update to model.
Argentina R/T (2004)
- The previously approved reduction of the corporate tax rate from 30% to 25% that was scheduled to be effective from 1 January 2020 is suspended for one year until 1 January 2021. Therefore, the corporate tax rate remains at 30% for the calendar year 2020.
- The scheduled increase of dividend withholding tax from 7% to 13% is also suspended until 1 January 2021.