Republic of Congo Upstream Fiscal and Regulatory Report ─ New Licensing Round Set to Close in June 2019

The fiscal and regulatory framework in the Republic of Congo underwent significant upheaval in 2016 with the passage of the new hydrocarbons code and the opening of the first licensing round. After this overhaul, the government’s focus remains on promoting new investment. The Licensing Round Phase II 2018/2019, which opened in September 2018, offers 18 blocks in the Cuvette and Coastal Basins. Additionally, the government is increasing its focus on gas development, following on from the incentives introduced in the hydrocarbons code, and it has recently announced that it is preparing a gas code.

“Republic of Congo Upstream Fiscal and Regulatory Report ─ New Licensing Round Set to Close in June 2019”, presents the essential information relating to the terms which govern investment into Republic of Congo’s upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Republic of Congo’s upstream oil and gas investment climate.

Scope

Overview of current fiscal terms governing upstream oil and gas operations in Republic of Congo

Assessment of the current fiscal regime’s state take and attractiveness to investors

Charts illustrating the regime structure, and legal and institutional frameworks

Detail on legal framework and governing bodies administering the industry

Levels of upfront payments and taxation applicable to oil and gas production

Information on application of fiscal and regulatory terms to specific licenses

Outlook on future of fiscal and regulatory terms in Republic of Congo

Reasons to buy

Understand the complex regulations and contractual requirements applicable to Republic of Congo’s upstream oil and gas sector

Evaluate factors determining profit levels in the industry

Identify potential regulatory issues facing investors in the country’s upstream sector

Utilize considered insight on future trends to inform decision-making

Table of Contents

1. Table of Contents

1. Table of Contents 1

1.1. List of Tables 3

1.2. List of Figures 3

2. Regime Overview 4

3. State ...

1. Table of Contents

1. Table of Contents 1

1.1. List of Tables 3

1.2. List of Figures 3

2. Regime Overview 4

3. State Take Assessment 7

4. Key Fiscal Terms 8

4.1. Royalties, Bonuses, and Fees 8

4.1.1. Bonuses 8

4.1.2. Provision for Diversified Investments (PID) 8

4.1.3. Royalty 8

4.1.4. Rental Fees 9

4.1.5. Social Projects 9

4.2. Cost Recovery 9

4.2.1. Cost Recovery Limit 9

4.2.2. Recoverable Costs 10

4.2.3. Excess Cost Recovery 11

4.3. Profit Sharing 11

4.4. Direct Taxation 12

4.4.1. Corporate Income Tax 12

4.4.2. Deductions and Depreciation 13

4.4.3. Withholding Tax 13

4.4.4. Capital Gains (after the introduction of Hydrocarbons Code of 2016) 13

4.5. Indirect Taxation 13

4.5.1. Value Added Tax 13

4.5.2. Customs Duties 13

4.6. Environmental Risk Prevention Fund 14

4.7. Pollution Tax 14

4.8. Abandonment Costs 14

4.9. State and Local Participation 15

5. Regulation and Licensing 16

5.1. Legal Framework 16

5.1.1. Governing Law 16

5.1.2. Contract Type 17

5.1.3. Title to Hydrocarbons 17

5.1.4. Title to Movable and Immovable Goods 17

5.1.5. Transfer of Assets 17

5.2. Institutional Framework 18

5.2.1. Licensing Authority 18

5.2.2. Regulatory Agency 18

5.2.3. National Oil Company 19

5.2.4. Licensee’s Corporate Structure in the Republic of Congo 19

5.2.5. Management Committee 19

5.3. Licensing Process 19

5.3.1. Licensing Rounds 19

5.3.2. Bidding 20

5.4. License Terms 21

5.4.1. Duration and Relinquishments 21

5.4.2. Domestic Market Obligation 21

5.4.2.1. Work Obligations 21

5.5. Local Content 22

6. Outlook 23

7. Appendix 25

7.1. Fiscal Terms for Pre-2016 Contracts 25

7.1.1. Cost Oil Terms 25

7.1.2. Profit Oil and Super Profit Oil Terms 30

7.2. References 34

7.3. Contact Us 36

7.4. Disclaimer 36

List of Tables

1.1. List of Tables

Table 1: Republic of Congo, Regime Overview 4

Table 2: Republic of Congo, Special Royalty Rates for Contracts Signed Before the ...

1.1. List of Tables

Table 1: Republic of Congo, Regime Overview 4

Table 2: Republic of Congo, Special Royalty Rates for Contracts Signed Before the Hydrocarbons Code of 2016 9

Table 3: Republic of Congo, Bid Cost Oil Provisions, Licensing Round Phase II 2018/2019 10

Table 4: Republic of Congo, Profit Oil and Super Profit Oil Framework, Licensing Round Phase II 2018/2019 12

Table 5: Republic of Congo, Bid Weighting, Licensing Round Phase II 2018/2019 20

Table 6: Republic of Congo, Cost Recovery Limit, Excess Cost Oil Limit, and Guaranteed Cost Oil, Pre-2016 Contracts 25

Table 7: Republic of Congo, Profit Oil and Super Profit Oil Terms, Pre-2016 Contracts 30

Table 8: References 34

List of Figures

1.2. List of Figures

Figure 1: Republic of Congo, Regime Flow Chart ─ Production Sharing Agreement 6

Figure 2: Republic of Congo, Indicative NPV10/boe, IRR ...

1.2. List of Figures

Figure 1: Republic of Congo, Regime Flow Chart ─ Production Sharing Agreement 6

Figure 2: Republic of Congo, Indicative NPV10/boe, IRR and State Take Comparison, Regional 7

Figure 3: Republic of Congo, Legal Framework 16

Figure 4: Republic of Congo, Institutional Framework 18

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