THE PRACTICAL APPLICATION OF THE INCOME TAX ASSESSMENT ACT TO THE PETROLEUM MINING INDUSTRY

1984 ◽  
Vol 24 (1) ◽  
pp. 135
Author(s):  
R. K. Moore
Keyword(s):  
Income Tax ◽  
Oil And Gas ◽  
Capital Expenditure ◽  
Petroleum Industry ◽  
Mining Industry ◽  
Fixed Rate ◽  
Mining Operations ◽  
Tax Assessment ◽  
Port Facilities ◽  
Petroleum Oil

Division 10AA of the Income Tax Assessment Act provides a basis for deductibility of exploration and capital expenditure for the petroleum, oil and gas industries, with Division 10AAA allowing deductions for transport and port facilities. The taxpayer has the choice of electing out of Division 10AA so that, if he so wishes, he may claim income tax deductions under the normal depreciation provisions for plant depreciable. Within the framework of Division 10AA exploration expenditure may be written off in the year of expenditure to the extent of the net assessable income derived from any source. If there is any excess exploration expenditure it carries forward into an exploration pool and is available for deduction against future assessable income. For a deduction to be available for exploration expenditure, the Commissioner must be satisfied that the taxpayer is carrying on prescribed petroleum operations or a business which includes exploration or prospecting for the purpose of discovering petroleum. The Commissioner generally adopts the attitude that to enable the taxpayer to claim a deduction for exploration expenditure the taxpayer must have an interest directly or indirectly in the permit area.Capital expenditure can be deducted over a 10 year period at the fixed rate of 10 per cent per annum. Expenditure on transport and port facilities, if eligible, can also be deducted over a fixed instalment period of 10 years. Special provisions apply in relation to farm-ins and farm-outs, and where work is carried out by contractors. There is no specific incentive to invest money in the exploration business apart from the 27 per cent rebate found in Section 160ACA. The main provisions of the Income Tax Assessment Act affecting petroleum, oil and gas are summarized, some of the difficulties and the attitude of the Commissioner to the applications of the various sections are explained, and ways of treating certain expenditures are suggested. Topics such as drilling funds are discussed in detail.The Income Tax Assessment Act was basically written prior to the development of the petroleum industry and the Act itself adopts a rather simplistic approach which does not deal in depth with many of the important aspects of petroleum mining operations.

scholarly journals Benhaus - a landmark decision, one less hoop for contract miners but a clarion call for an overhaul of the South African mining regime

2020 ◽  
Vol 120 (8) ◽  
Author(s):  
K. Thambi
Keyword(s):  
South African ◽  
Value Chain ◽  
Income Tax ◽  
Mining Industry ◽  
Third Party ◽  
Mining Activities ◽  
The South ◽  
Mining Operations ◽  
Tax Legislation ◽  
The Right

SYNOPSIS The mining industry has evolved, such that the means of production that were once in the hands of major players or power houses have become equally accessible to smaller entrants, i.e. junior mining companies and contract miners. Contract mining involves contractual relationships between mine owners or mineral right holders and third parties to conduct mining activities on behalf of the right holders. The current mining income tax legislation has been a considerable obstacle to contract miners. Under its terms, they have been viewed as mining on behalf of third-party mineral rights holders. As such, expenditure incurred in relation to contract mining activities was often disallowed by the South African Revenue Service (SARS). However, the recent judgement of the Supreme Court of Appeal, Benhaus Mining (Pty) Ltd v CSARS 2020 (3) SA 325 (SCA) (Benhaus), rightfully or wrongfully, appears to provide clarity regarding the fate of contract miners' involvement in the mining value chain. The taxpayer, a contract miner, was held to be conducting mining operations within the meaning of S15(a) read with si of the Income Tax Act 58 of 1962 (the Income Tax Act). This paper looks at how contract mining has traversed the mining tax landscape, the implications of the Benhaus judgment, and stresses the necessity for clear policy reform to the mining tax regime and equally to legislation framed to give effect to these policies. Keywords: Contract mining, owner mining, tax, DMRE, mining regime reforms.

PRODUCTION SHARING AGREEMENTS VERSUS THE ROYALTY REGIMES: WHERE IS THE BALANCE?

1992 ◽  
Vol 32 (1) ◽  
pp. 481
Author(s):  
Richard Cottee
Keyword(s):  
Petroleum Industry ◽  
Mining Industry ◽  
Third Party ◽  
Petroleum Exploration ◽  
Veto Power ◽  
Regulatory Regime ◽  
Fixed Rate ◽  
Regulatory Scheme ◽  
Production Sharing ◽  
The Government

For many years the mining industry made its investment decisions safe in the knowledge that petroleum or minerals in the ground belonged to the State but upon severance of such petroleum from the ground the oil was vested in the miner. Commensurate with the ownership changing, a royalty was payable to the government at a fixed rate. With the enactment of the Petroleum (Australia-Indonesia Zone of Co-Operation) Act of 1990 (the 'Act'), serious consideration must now be given as to whether in the future this basic scheme may be dramatically and radically changed to a scheme based on a services contract whereby a certain percentage of the oil is paid in consideration of the miner 'managing the discovery and extraction of petroleum'.An increasing number of countries, including those such as Malaysia which have legal systems based on common law, have adopted petroleum sharing agreements as a basic method by which they 'encourage' petroleum exploitation. This paper:explores the major features of petroleum sharing agreements (which are now in use in the Timor Gap, Indonesia and Malaysia), and compares and contrasts those models with a regulatory scheme based on statutory leases with royalty payments (being the regulatory scheme used in Australia, New Zealand, Canada and elsewhere);reviews both the economic and legal consequences of the two regimes, assuming a constant Income Tax System.It concludes that whilst there are certain merits in both the royalty regulatory type regime and a production sharing regime it appears to the writer that on balance the royalty regulatory regime is much more beneficial to the industry than the alternate. This is particularly true given the fact that Australian governments generally should have sufficient confidence in their regulatory skills and Australian technology that it does not feel it necessary to be given a veto power for each and every decision made in respect of petroleum exploration or production.The major deficiencies of a production sharing arrangement are the fact that the risk taker does not obtain legal tide to the product until after it has either passed the point of tanker loading or been sold to some third party, and the concept of 'cost oil'. If the rates of government 'take' is so high that it is more profitable to obtain 'cost oil' for the company than to receive its 'share' under the production sharing agreement, then the petroleum industry as a whole will suffer gross inefficiency in that area.

AVOIDING CAPITAL COST BLOWOUTS ON OIL AND GAS PROJECTS

2003 ◽  
Vol 43 (1) ◽  
pp. 665
Author(s):  
R.A. Hogarth
Keyword(s):  
Oil And Gas ◽  
Capital Expenditure ◽  
Mining Industry ◽  
Oil And Gas Industry ◽  
Capital Investments ◽  
Due Diligence ◽  
Capital Projects ◽  
Gas Industry ◽  
Return On Capital ◽  
High Level

Modern corporate practices have been slow to come to grips with the risks of large capital expenditure projects, particularly the processes of due diligence on investment submissions and high level monitoring of project implementation.Unlike the mining sector where major project cost blowouts have received intense public scrutiny, collection of data on this issue is difficult in the oil and gas sector and there remains a reluctance of companies to share horror stories. The increasing trend towards company acquisitions rather than exploration, the rates of return on capital investments reported by oil and gas companies and the data available on this issue within the mining industry point towards a potential problem for the oil and gas industry and one that, with appropriate corporate practice could be more readily identified.This paper puts forward the case for more effective corporate practices in relation to large capital projects in optimising return on capital and discusses the role of project owner senior management and the key factors impacting on capital expenditure blowouts.Effective project due diligence, monitoring of project implementation and integration management are put forward as the three key focuses for Boards and management in ensuring that cost blowouts are avoided.

scholarly journals A GIS Software Module for Environmental Impact Assessment of the Open Pit Mining Projects for Small Mining Operators in Kazakhstan

2021 ◽  
Vol 13 (12) ◽  
pp. 6971
Author(s):  
Mikhail Zarubin ◽  
Larissa Statsenko ◽  
Pavel Spiridonov ◽  
Venera Zarubina ◽  
Noune Melkoumian ◽  
...  
Keyword(s):  
Environmental Impact ◽  
Impact Assessment ◽  
Environmental Impact Assessment ◽  
Mining Industry ◽  
Open Pit ◽  
Open Pit Mining ◽  
Software Module ◽  
Mining Operations ◽  
Open Pit Mines ◽  
Gis Software

This research article presents a software module for the environmental impact assessment (EIA) of open pit mines. The EIA software module has been developed based on the comprehensive examination of both country-specific (namely, Kazakhstan) and current international regulatory frameworks, legislation and EIA methodologies. EIA frameworks and methods have been critically evaluated, and mathematical models have been developed and implemented in the GIS software module ‘3D Quarry’. The proposed methodology and software module allows for optimised EIA calculations of open pit mines, aiming to minimise the negative impacts on the environment. The study presents an original methodology laid out as a basis for a software module for environmental impact assessment on atmosphere, water basins, soil and subsoil, tailored to the context of mining operations in Kazakhstan. The proposed software module offers an alternative to commercial off-the-shelf software packages currently used in the mining industry and is suitable for small mining operators in post-Soviet countries. It is anticipated that applications of the proposed software module will enable the transition to sustainable development in the Kazakh mining industry.

Ghana's petroleum industry: expectations, frustrations and anger in coastal communities

2020 ◽  
Vol 58 (3) ◽  
pp. 397-424
Author(s):  
Jesse Salah Ovadia ◽  
Jasper Abembia Ayelazuno ◽  
James Van Alstine
Keyword(s):  
Oil And Gas ◽  
Local Development ◽  
Petroleum Industry ◽  
Field Research ◽  
Gas Production ◽  
Oil Field ◽  
Oil And Gas Production ◽  
High Expectations ◽  
Petroleum Resources ◽  
Negative Impacts

ABSTRACTWith much fanfare, Ghana's Jubilee Oil Field was discovered in 2007 and began producing oil in 2010. In the six coastal districts nearest the offshore fields, expectations of oil-backed development have been raised. However, there is growing concern over what locals perceive to be negative impacts of oil and gas production. Based on field research conducted in 2010 and 2015 in the same communities in each district, this paper presents a longitudinal study of the impacts (real and perceived) of oil and gas production in Ghana. With few identifiable benefits beyond corporate social responsibility projects often disconnected from local development priorities, communities are growing angrier at their loss of livelihoods, increased social ills and dispossession from land and ocean. Assuming that others must be benefiting from the petroleum resources being extracted near their communities, there is growing frustration. High expectations, real and perceived grievances, and increasing social fragmentation threaten to lead to conflict and underdevelopment.

scholarly journals Mining Industry Impact on Environmental Sustainability, Economic Growth, Social Interaction, and Public Health: An Application of Semi-Quantitative Mathematical Approach

Processes ◽  
2021 ◽  
Vol 9 (6) ◽  
pp. 972
Author(s):  
Muhammad Mohsin ◽  
Qiang Zhu ◽  
Sobia Naseem ◽  
Muddassar Sarfraz ◽  
Larisa Ivascu
Keyword(s):  
Economic Growth ◽  
Energy Source ◽  
Coal Mining ◽  
Environmental Sustainability ◽  
Mining Industry ◽  
Provincial Government ◽  
Mining Operations ◽  
Human Needs ◽  
The Government ◽  
Operational Activities

The mining industry plays a significant role in economic growth and development. Coal is a viable renewable energy source with 185.175 billion deposits in Thar, which has not been deeply explored. Although coal is an energy source and contributes to economic development, it puts pressure on environmental sustainability. The current study investigates Sindh Engro coal mining’s impact on environmental sustainability and human needs and interest. The Folchi and Phillips Environmental Sustainability Mathematics models are employed to measure environmental sustainability. The research findings demonstrated that Sindh Engro coal mining is potentially unsustainable for the environment. The toxic gases (methane, carbon dioxide, sulfur, etc.) are released during operational activities. The four significant environment spheres (atmosphere, hydrosphere, biosphere, and lithosphere) are negatively influenced by Thar coal mining. The second part of the analysis results shows that human needs and interests have a positive and significant relationship except for human health and safety with Sindh Engro coal mining. Environmental pollution can be controlled by utilizing environmentally friendly coal mining operations and technologies. Plantation and ecological normalization can protect the species, flora, and fauna of the Thar Desert. The government of Pakistan and the provincial government of Sind should strictly check the adaptation of environmental standards. Furthermore, the researchers should explore the environmental issues and solutions so that coal mining becomes a cost-efficient and environmental-friendly energy source in Pakistan.

THE SAFETY OF TANKERS AND SINGLE POINT MOORING DURING LOADING OPERATIONS

Transport ◽  
2009 ◽  
Vol 24 (1) ◽  
pp. 54-57 ◽  
Author(s):  
Vytautas Paulauskas
Keyword(s):  
Theoretical Basis ◽  
Oil And Gas ◽  
Single Point ◽  
Offshore Platforms ◽  
Port Facilities

Single point mooring (SPM) is used when typical port facilities cannot be applied. Offshore platforms and terminals producing oil and gas are the places where SPM can be employed. Accidents with SPM equipment and ships occurring during loading or unloading operations are very dangerous and may cause serious losses due to the high prices of tankers and facilities and because of polluting the environment with poisonous materials. Any possibilities of decreasing risk and increasing safety are very important. This paper presents the analysis of dangerous situations with tankers and SPM, discusses theoretical basis for study and makes practical calculations and recommendations on decreasing accidence probability during loading operations.

Initiatives in UK Offshore Decommissioning Following the Wood Review: Applicability for Decommissioning in Norway

2021 ◽  
Author(s):  
Rune Vikane ◽  
Jon Tømmerås Selvik ◽  
Eirik Bjorheim Abrahamsen
Keyword(s):  
Swot Analysis ◽  
Oil And Gas ◽  
Petroleum Industry ◽  
Lessons Learned ◽  
Regulatory Regime ◽  
Regulatory Body ◽  
Cost Estimates ◽  
Substantial Impact ◽  
Gas Recovery ◽  
The Uk

Abstract The 2014 Wood Review is a report reviewing UK offshore oil and gas recovery and its regulation, led by Sir Ian Wood. The report identifies and addresses key challenges in the UK petroleum industry, among them the lack of a strong regulatory body and a decommissioning strategy. The UK petroleum industry is mature, and Norway may benefit from UK's experiences in decommissioning. The article investigates the applicability of the Wood Review recommendations for decommissioning in Norway. The analysis of the recommendations in the Wood Review is carried out by a SWOT-analysis of the general recommendations with a high potential impact on decommissioning as well as the five recommendations specific to decommissioning. The recommendations in the Wood Review were broadly accepted by UK authorities and formed the basis for numerous initiatives aimed at improving policies and practices in UK decommissioning. The key initiatives are presented to illustrate how the Wood Review recommendations has been interpreted. A summary of the key differences between the petroleum industries and the regulatory authorities in Norway and the UK is provided for background. Decommissioning in Norway face similar challenges to those identified in the Wood Review. The analysis indicates that several of the UK initiatives following the recommendations in the Wood Review has the potential of improving decommissioning in Norway. Differences in regulatory regimes between the regions may complicate the implementation of some of the initiatives following the Wood Review in Norway. In most cases only minor changes to regulations and/or practices are required. Recent UK initiatives with a high impact on decommissioning include increased focus on sharing of information and lessons learned, increased collaboration, the development of a decommissioning strategy, benchmarking of decommissioning cost estimates for all projects and the development and publishing of annual UK decommissioning cost estimates. There are indications that the Norwegian Petroleum Directorate (NPD) and the Norwegian Ministry of Petroleum and Energy (MPE) are falling behind their UK counterparts in key areas. Norway has limited experience with decommissioning, and scrupulous analysis of lessons learned in other regions is essential. Decommissioning of Norwegian offshore infrastructure is a major undertaking and even minor improvements may have a substantial impact on personnel risk, risk to the environment or the total decommissioning expenditure. The Norwegian regulatory regime has been an integral part of the Norwegian petroleum industry's success in previous decades, and changes to the regime require careful deliberation. The recent implementation of initiatives aimed at improving decommissioning regulations and practices in the UK represents a unique learning opportunity for Norwegian authorities. The analysis suggest that Norway may benefit from adopting some of the UK initiatives following the Wood Review recommendations.

High-Purity, CO2-Free Hydrogen Generation from Crude Oils in Crushed Rocks Using Microwave Heating

2021 ◽  
Author(s):  
Qingwang Yuan ◽  
Xiangyu Jie ◽  
Bo Ren
Keyword(s):  
Microwave Heating ◽  
Environmental Impacts ◽  
High Purity ◽  
Oil And Gas ◽  
Hydrogen Generation ◽  
Petroleum Industry ◽  
Petroleum Reservoirs ◽  
Crude Oils ◽  
Hydrogen Yield ◽  
Free Hydrogen

Abstract While the demand for hydrocarbon resources has been continuously increasing in the past 150 years, the industry is, however, criticized for carbon dioxide (CO2) emissions and concomitant global warming concerns. The oil and gas industry also face growing pressures in the ongoing energy transition. Generating and producing hydrogen (H2) directly from petroleum reservoirs has the potential to mitigate environmental impacts while revolutionizing the traditional petroleum industry and enabling it to become a clean hydrogen industry. This paper proposes a novel approach to generate high-purity, CO2-free hydrogen from the abundant oil and gas resources in petroleum reservoirs using microwave heating. In this work, laboratory experiments were conducted to validate this scientific proof-of-concept and examine the roles of crushed rocks, catalysts, and water/oil ratio in hydrogen generation from crude oils in a reactor. A maximum of 63% ultimate hydrogen content is obtained in the generated gas mixtures, while the original CO2content in all experiments is negligible (<1%). Catalysts can promote hydrogen generation by accelerating rate and locally enhancing microwave (MW) absorption to create ‘super-hot spots'. Water also participates in reactions, and additional hydrogen is generated through water-gas shift reactions. The water-oil ratio in porous rocks affects the ultimate hydrogen yield. Overall, this research demonstrates the great potential of using MW heating to generate high-purity, CO2-free hydrogen from in situ petroleum reservoirs. Further research and wide application of this technology would potentially transform petroleum reservoirs to hydrogen generators, thus mitigating the environmental impacts of traditional petroleum industry while meeting the increasing demand for clean hydrogen energy. This technology would also benefit the safe transition towards a decarbonized society.

Sign in / Sign up

Export Citation Format

Share Document