Uruguay Upstream Fiscal and Regulatory Report – 3rd Offshore Licensing Round set to close in April 2018

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Uruguay’s previous two offshore licensing rounds, held in 2009 and 2012, have not yet resulted in any commercial discovery in its frontier basins. Seventeen blocks in shallow to ultra-deep waters will be offered in the third round in April 2018, which will be licensed under production sharing agreements. To promote further frontier exploration activities, Uruguay offers favourable fiscal and regulatory terms, not requiring royalties, signature production bonus payments or surface rental fees. Compared to the second round, the very deepest blocks can now be explored up to 11 years with an increased cost recovery limit.

“Uruguay Upstream Fiscal and Regulatory Report – 3rd Offshore Licensing Round set to close in April 2018”, presents the essential information relating to the terms which govern investment into Uruguay’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 Uruguay’s upstream oil and gas investment climate.

Scope

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

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 Uruguay

Reasons to Buy

Understand the complex regulations and contractual requirements applicable to Uruguay’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 2

1.2. List of Figures 3

2. Regime Overview 4

3. State Take Assessment 6

4. Key Fiscal Terms 7

4.1. Royalties, Bonuses and Fees 7

4.2. Cost Recovery 7

4.2.1. Limit on Recovery 7

4.2.2. Recoverable Costs 8

4.3. Profit Sharing 8

4.4. Direct Taxation 9

4.4.1. Petroleum Income Tax 9

4.4.2. Deductions and Depreciation 14

4.4.3. Withholding Tax 14

4.5. Indirect Taxation 14

4.5.1. Value Added Tax 14

4.5.2. Customs Duties 14

4.6. State Participation 14

4.7. Fiscal Stabilization 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

5.2. Institutional Framework 18

5.2.1. Licensing Authority 18

5.2.2. Regulatory Agency 19

5.2.3. National Oil Company (NOC) 19

5.3. Licensing Process 19

5.3.1. Licensing Rounds 19

5.3.2. Prequalification 20

5.3.3. Bidding 21

5.4. License Terms 24

5.4.1. Duration and Relinquishments 24

5.4.2. Work Obligation 24

5.4.3. Local Content 24

6. Outlook 25

7. Appendix 27

7.1. Contact Us 27

7.2. Disclaimer 27

Table

1.1. List of Tables

Table 1: Uruguay Regime Overview 4

Table 2: Uruguay, Cost recovery limits in (%), third offshore round offering 17 blocks. 7

Table 3: Uruguay, Cost Recovery limits of the first Offshore Round (%) 8

Table 4: Uruguay, Profit Sharing – R-Factor, Onshore PSA, 2nd and 3rd Round Offshore PSAs 9

Table 5: Uruguay Profit Sharing in (%), First Offshore Round (2009). 9

Table 6: Uruguay, Profit Sharing in (%), First Offshore Round (2009) 10

Table 7: Uruguay, Employment generation criteria for bids (%), 2015 11

Table 8: Uruguay, Weight criteria for bids (%), 2015 12

Table 9: Montevideo investment credit qualification points, 2015 12

Table 10: Uruguay Industrial sector investment credit qualification points, 2015 13

Table 11: Uruguay Round III, Pre-qualification terms 20

Table 12: Uruguay, 3rd offshore licensing round, Value Working Units of the Exploratory Program 21

Table 13: Uruguay, Second & Third Offshore Licensing Round Uruguay, Weight of Criteria for Bids (%) 22

Table 14: Uruguay, 3rd onshore licensing round, value working units for exploratory program 23

Table 15: Uruguay, weight of criteria for bids, onshore bidding. 23

Figures

1.2. List of Figures

Figure 1: Uruguay Regime Flow Chart 5

Figure 2: Uruguay, Indicative NPV10/boe, IRR and State Take Comparison, Regional. 6

Figure 3: Uruguay, Legal Framework 16

Figure 4: Uruguay, Institutional Framework 18

Frequently asked questions

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