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Begin New Search Topic Revenue Management Author Thomas Lassourd

1. Lessons for Generating Government Revenue for New and Prospective Liquefied Natural Gas Producers

Author:
Thomas Lassourd, Amir Shafaie, and Thomas Scurfield
Publication Date:
12-2019
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
The market for liquefied natural gas (LNG) is changing fast, with increasing demand, new sources of supply, and a growing spot market. Over the last decade (2008 to 2018), LNG prices in the three main markets of North America, Western Europe and East Asia have diverged significantly at times, creating arbitrage opportunities for sellers. This briefing presents two case studies of developing countries that have faced challenges in securing public revenue from their natural gas industries. Trinidad and Tobago and Peru offer two examples of developing countries that faced challenges in maximizing government revenue from LNG sales during that time. Although LNG markets are evolving, these examples offer lessons for new and prospective LNG producers, especially in sub-Saharan Africa. A key area (and the focus of this briefing) is the valuation of LNG sales and the corresponding impact on government revenues. Governments should pay close attention to LNG project structure and the long-term LNG sale and purchase agreements between LNG producers and offtakers, especially when they are related companies. Governments should push for these agreements to maximize the price flowing back to the LNG plant and the upstream producer and should favor project structures that facilitate this. In particular, the practice of diverting LNG cargos to more lucrative export markets than the ones initially designated in offtake agreements should be regulated and monitored by governments to balance the financial incentives to LNG sellers with the interests of LNG-exporting countries. This will become increasingly important as the market becomes more liquid and sellers have more options.
Topic:
Government, Gas, Tax Systems, Commodities, and Revenue Management
Political Geography:
South America, Caribbean, Peru, and Trinidad and Tobago

2. Tanzania and Statoil: What Does the Leaked Agreement Mean for Citizens?

Author:
David Manley and Thomas Lassourd
Publication Date:
08-2014
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
The leak in July 2014 of an important addendum to a production sharing agreement (PSA) between Norwegian national oil company Statoil and the government of Tanzania has ignited a debate on whether Tanzania “got a good deal” from granting these extraction rights for a block now expected to produce large amounts of commercial natural gas. The debate demonstrates a public appetite for explanations from the government on the country’s management of its nascent oil and gas industry. Potentially at stake are billions of dollars of potential revenues that could boost socio-economic development in Tanzania if it becomes possible to extract these gas resources. An NRGI financial analysis suggests that the deal is not out of line with international standards for a country that had no proven offshore reserves of natural gas at the time when the original contract was signed. Thus claims that the addendum is on its face grossly unfair to Tanzania appear to be premature. The outgoing managing director of Tanzania’s national oil company TPDC gave an estimate of the government’s take of 61 percent, a figure that our own model determined to be plausible under a reasonable set of assumptions. There are some caveats to this result which we explain in the body of the main briefing.
Topic:
Corruption, Natural Resources, Tax Systems, Accountability, and Revenue Management
Political Geography:
Africa, Tanzania, and Sub-Saharan Africa