Petroleum industry

• Ghana has introduced some climate change policies and general environmental regulations but has yet to pass a Climate Change Act.
• Climate change law expert Kikelomo Kila sets out her findings in a recent paper on why Ghana must not follow the “command and control” regulatory approach.
• Under the first approach, Ghana mostly relies on the Environmental Protection Agency Act (1994) to regulate climate change matters.
• The problem with this approach is that climate change impacts are secondary to issues like land use and conservation.
• The country’s climate change regulator, the National Council on Climate Change, instituted programmes and policies for key emissions sectors.
• Read more:
  Climate change: 3 key goals Nigeria must focus on at COP28

  Your research paper recommends that Ghana follow an alternative approach to climate change regulation.

• The government introduced the Climate Change Act 2016 and the Climate Change (Amendment) Act 2023 which combine prescriptive and economic tools.

Kikelomo Kila receives funding from the UK Economic and Social Research Council (ESRC) and the Arts and Humanities Research Council (AHRC).

• Gulf Keystone, a leading independent operator and producer in the Kurdistan Region of Iraq, today provides an operational and corporate update.
• Jon Harris, Gulf Keystone’s Chief Executive Officer, said:
  “We remain focused on preserving liquidity by maximising local sales, maintaining strict cost control and proactively managing accounts payable.
• It is currently engaged in an independent non-executive director search process to ensure compliance.
• However, the pace of the process has been controlled to reflect the Company’s current focus on cost reduction and liquidity preservation.

• The "The Petroleum Industry in Nigeria 2023" report has been added to ResearchAndMarkets.com's offering.
• This report on the petroleum industry in Nigeria includes information on the state and size of the upstream, downstream and gas subsectors, infrastructure, economic contribution, reserves, production, consumption, wholesale, retail and distribution.
• The Dangote refinery, the continent's largest refinery, was commissioned in May 2023, and is expected to help reduce the country's reliance on fuel imports once it comes fully online.
• The Petroleum Industry Act, enacted in 2021, is expected to help deregulate the downstream sector and encourage more investment in oil production.

• On Sunday Chalmers flagged changes to the petroleum resource rent tax (PRRT) – a tax on the profits from oil and gas exports – that he says will mean the offshore LNG industry “pays more tax, sooner”.
• Bad resource tax design works against this because it means those resource profits are immune from tax.
• Read more:
  Australia already has a UK-style windfall profits tax on gas – but we'll give away tens of billions of dollars unless we fix it soon

Dusting off review recommendations

• The changes come in response to recommendations from two reviews: the Callaghan Petroleum Resource Rent Tax review released in 2017 by then-treasurer Scott Morrison; and a subsequent Treasury review released on Sunday.
• The Callaghan report recommended changes to the tax only be applied to new projects, to maintain the stability of the sector.
• Currently, an entity’s liability is levied at 40% of the taxable profit made from its interest in the project.
• His government accepted eight of the 11 recommendations from that review and eight recommendations from the Callaghan Review (recommendations accepted but not implemented by the previous government).

Modest, balanced or weak reform?

Labor’s proposed changes are too modest and are only expected to net the government about $2.4 billion over the next four years. The proposed tax scheme will cap deductions to limit the proportion of PRRT assessable income that can be offset by deductions to 90%. It will also mean that producers will start paying petroleum resource rent tax immediately rather than in 2030 as is the current expectation.

How have the reforms been received?

• She called on the government “to work constructively and cooperatively with the opposition”.
• The Greens want the government to eliminate the $284bn of accumulated credits that allow gas companies to reduce their tax liability.
• LNG exports are worth more than $90 billion per year, yet this step will yield only $600 million annually.
• Local liquified natural gas producer Santos and multinationals including Shell, Chevron, and ConocoPhillips may also be affected, media reports suggest.

Real change is desperately needed

• Significant change to the petroleum resource rent tax is desperately needed to address budget repair and blowouts.
• In the decade before the Gladstone LNG port opened, when Australia’s gas exports soared, company taxes and the resource tax paid by the industry were approximately 15% of revenue.
• In 2022, Australia exported a record 81.4 million metric tonnes of LNG, earning the industry $92.8 billion (when expected revenue was $44 billion).