Comparative Analysis Of Optimal Oil Production Strategy Using Royalty & Tax And Production Sharing Petroleum Fiscal Models

After recent discoveries of large oil reserves in pre-salt areas of Brazil, the government has proposed a change in the current fiscal regime from Royalty & Tax, also adopted in countries like Norway, United Kingdom and United States, to Production Sharing Contracts, the regime already adopted in countries like Egypt, Indonesia, and Vietnam. The government wishes to implement the production sharing system to earn higher revenues, believing that this is the best policy to improve State gains to be transferred to society. In this new environment and focusing on the oil production strategy selection process, it is required to know if: 1) the production strategies are the same or different for both models 2) the same technical-economic indicators are suitable to be used to select the optimal production strategy in both systems. Nowadays, there is no clear convergence of points of view to answer these issues, although some debates among professionals and government are taking place. The aim of this paper is to present a comparative analysis of the optimum exploitation strategy for both fiscal models, regarding number of injection and production wells and, their allocation in the reservoir. This objective is accomplished following a production-strategy optimization that combines manual and automatic procedures to maximize the NPV accounting for the assumption of a known behavior of oil prices. Sensitive analyses of government take to oil price and cost recovery limits are carried out. The results show that the choice of the optimal-production strategy to maximize NPV depends on the fiscal regime. In addition, the government take is reduced with the increase of oil prices, being more critical in R&T systems. The government take is less sensitive to oil prices under PSC, so that this system is more interesting from the government viewpoint. Copyright 2012, Society of Petroleum Engineers.2857864Eni Ieoc,Baker Hughes,Dana Gas,Kuwait Foreign Petroleum Exploration Company K.S.C. (KUFPEC)Adamns, E.W., Grotzinger, J.P., Watters, W.A., Schroder, S., McCormick, D.S., Al-Siyabi, H.A., Digital Characterization of Thrombolite-Stromatolite Reef Distribution in a Carbonate Ramp System (Terminal Proterozoic, Nama Group, Namibia) (2005) AAPG Bulletin, 89 (10), pp. 1293-1318www.anp.gov.br, acessed in December 2011Bindemann, K., (1999) Production-Sharing Agreements: An Economic Analysis, , Oxford Institute for Energy Studies, WPM 25Mezzomo, C.C., Field Development Projects Optimization Integrated to Risk Analysis (2006) SPE Annual Technical Conference and Exhibition, San Antonio, Texas, USA, , Paper SPE 106525 presented at theMian, M.M., Project Economics and Decision Analysis (2002) Determinist Analysis, 1. , PenWell BooksKhelil, C., Fiscal Systems for Oil, 1995. , http://rru.worldbank.org/documents/publicpolicyjoumal/046khelil.pdf, Source: acessed in December 2011www.planalto.gov.br, acessed in December 2011www.camara.gov.br, acessed in December 2011Johnston, D., (2003) International Exploration Economics, Risk and Contract Analysis, , PenWell BooksPetrobras, , http://www.petrobras.com.br/minisite/presal/pt/perguntas-respostas/, accessed in January 2012Ravagnani, A.T.F.S.G., Mazo, E.O.M., Schiozer, D.J.A., Case Study of the Structure of the Process for Production Strategy Selection (2011) International Journal of Modeling and Simulation for the Petroleum Industry, 4-5, pp. 9-15Van Meurs, P., (1993) World Fiscal Systems for Oil, , New York: Barrows In