Arctic investment competition heats up
11 January 2012
Sustained high oil prices and strategic fiscal terms and are creating viable upstream openings in the Arctic. Russia is leading the way, write Pedro van Meurs, Barry Rodgers and Jerry Kepes*
NEW FISCAL terms and high oil and gas prices are creating an environment for increasing exploration opportunities in Arctic areas. This is one conclusion of a new, extensive 310-page study*.
Government take for Arctic oil is illustrated in Figure 1. Regions that do not yet have regular oil production are attracting investment with government takes that are less than 50%. This includes Greenland; federal Canadian waters; the US (federal), and Canada’s North West Territories and Labrador offshore. Alaska, Norway and Russia have a higher government take – and Russia’s general terms still uneconomic: with $25 a barrel costs and an oil price of $80/b, resulting in a government take of more than 100%.
All countries have corporate income tax as an important component. But, otherwise, the structure of the government take is very different across the various jurisdictions.
The US federal offshore has royalties and Russia has...