LONDON 18 June, 2012 — Oil and gas companies continue to provide significant state revenues around the world, according to the latest Ernst & Young Oil & Gas Tax Guide. The report also confirms that many governments are working on ways to make oil and gas tax regimes more attractive to investors.

Alexey Kondrashov, Oil & Gas Tax Leader at Ernst & Young says, “Over the past 18 months, many countries significantly changed their tax regimes, which impacted companies but also provided incentives for much-needed investors. Specifically, changes influenced industry taxes, such as royalties and petroleum taxes and affected the general taxes as well, such as income tax rates and other general fiscal terms”

New frontier countries in which hydrocarbon reserves have just been discovered such as African Nations, Cyprus and Israel are working towards designing their national legal and tax legislation for the oil and gas industry. This is as a result of both unconventional oil and unconventional gas attracting greater government attention which is focused on incentivizing development of such reserves.

Shale gas development continues to be a top priority, particularly in North America, China and in certain European countries. For example, Poland is working on its tax regime for shale gas; however development is still in its early stages.

Arctic countries compete for attracting investments into cost-intensive offshore and onshore projects and may revise their tax legislation. Russia which has the largest potential Arctic oil and gas reserves is already in process of elaborating a new attractive tax regime for Arctic offshore projects.

Kondrashov concludes that despite major economic woes, high oil and gas prices are focusing governments’ on maximizing efficient production of oil and gas to improve state budgets while securing a fair return for the extraction of nation’s natural resources.

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