Rationalising PSC Fiscal System Principles for Sustainable Future

PSC fiscal system serves as a framework to determine the sharing of petroleum revenues between stakeholders. Understanding its behavior is essential, given the nature and duration of upstream projects. The paper rationalizes fiscal systems that can promote a balanced, progressive, and robust revenue-sharing mechanism. The impact and efficiency of three typical fiscal regimes are assessed by observing how they react to different scenarios and outcomes, which could be either better or worse than the initial expectation. The three typical fiscal regimes are fixed-rate, production sliding scale sharing, and profitability-based sharing. The early days’ fixed rate sharing system is rigid and does not effectively address the different scales of upstream project investments and the associated uncertainties. The production sliding scale sharing is a partially progressive system that addresses production level variation but does not respond to the variation of other value drivers such as actual cost, price volatility, and project schedule. The profitability based fiscal term represents a progressive win-win system that is more robust, self-regulating, and balances stakeholders’ value objectives. Profitability-based sharing also promotes subsequent field developments. New investment lowers the profitability ratio, which in turn increases contractor profit share percentage. This mechanism results in higher incremental value to the contractor when developing the next field. Compared to the fixed-rate and production sliding scale based sharing, the profitability based sharing could provide a fiscal balance system that is self-regulating, progressive, and more robust. It fits nicely with the oil and gas industry known for the inherent risks and wide range of uncertainties throughout the life of the project. The profitability-based system could be further enhanced to encapsulate the multiple claw-back provisions by switching from the traditional stair-step sharing to a steeper linear sharing with the appropriate ceiling, floor, and triggering points. The linear representation of profitability-based sharing could also complement the various available PSC management control provisions to mitigate the potential cases of opportunistic gold-plating. The sensitive feature of linear sharing could help deter such manipulation. (334)

Contesting the Social Contract

This article investigates how Istrian business owners challenged the Croatian government’s motivation for and enforcement of fiskalizacija, an automated VAT reform adopted in 2013 as Croatia prepared for EU membership. Fiskalizacija threatened local economic agency and sowed distrust in government. The analysis of this tax reform demonstrates how Istrians envisage their economic agency, rights, and responsibilities. I argue that it is not just the construction of fiscal systems, but how such a system is projected onto society that is fundamental to the development of state-society relations. The way in which a tax reform is put into effect, including the enforcement practices of state agents, shapes how citizens perceive the social contract to be constituted by fiscal regimes.

Into and Out of Citizenship, through Personal Tax Payments

This article builds on observations of self-employed Romanian migrants and their encounters with UK fiscal obligations to position tax as a distinct node in the worker-citizen nexus. Speaking to anthropological critiques of neoliberalism, I argue that economic activity is not merely the ethical imperative of a political order premised on self-reliance. It is also a practical test of migrants’ abilities to translate the moral capital of ‘hard work’ into the categories and bureaucracy of fiscal contribution. Analyzing migrants’ compliance with immigration controls and fiscal regimes, seen as a duty to ‘account for oneself’ in moral and financial terms, this article theorizes tax returns as a key junction in the worker-citizen nexus—one that can allow migrants into, but also confine them to the margins of, European citizenship.

Economic Evaluation of Fiscal Regime on EOR Implementation in Indonesia: A Case Study of Low Salinity Water Injection on Field X

There are currently two fiscal regimes designated for resource allocation in Indonesia’s upstream oil and gas industry, the Production Sharing Contract Cost Recovery (PSC) and Gross Split. The Gross Split in the form of additional percentage split is designed to encourage contractors to implement Enhanced Oil Recovery (EOR) in mature fields. Low Salinity Water Injection (LSWI) is an emerging EOR technique in which the salinity of the injected water is controlled. It has been proven to be relatively cheaper and has simpler implementations than other EOR options in several countries. This study evaluates the LSWI project’s economy using PSC and Gross Split and then to be compared to conventional waterflooding (WF) project’s economy. There are four cases on Field X that are simulated using a commercial simulator for 5 years. The cases are evaluated under PSC and Gross Split to calculate the project’s economy. The economic indicators that will be evaluated are the Net Present Value (NPV) and sensitivity analysis is also conducted to observe the change of NPV. The parameters for sensitivity analysis are Capital Expenditure (CAPEX), Operating Expenditure (OPEX), Oil Production, and Oil Price. It is found that LSWI implementation using Gross Split is more profitable than PSC. The parameters that affects NPV the most in all PSC cases are the oil production and oil price. On the other hand, in Gross Split cases, the oil production is the parameter that affects NPV the most, followed by oil price. The novelty of this study is in the comparison of project’s economy between WF and LSWI using two different fiscal regimes to see whether Gross Split is more profitable than PSC on EOR implementation, specifically the LSWI at Field X.