Kenya Upstream Fiscal and Regulatory Guide
September 2019
27
About the Report
About the Report
Kenya Upstream Fiscal and Regulatory Guide
Summary
Kenya offers production sharing agreements for upstream petroleum operations. In 2019, the government introduced new legislation governing the sector, which includes the introduction of a profitability-based profit sharing mechanism and also shifts the tax liability on to licensees for new contracts signed. Previously the state paid licensee's tax obligations through its share of profit oil. Further amendments to the framework including changes to the Income Tax Act are planned in the short term and following this, a licensing round is planned 2021.
Kenya Upstream Fiscal and Regulatory Guide, presents the essential information relating to the terms which govern investment into Kenya'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 Kenya's upstream oil and gas investment climate.
Scope
- Overview of current fiscal terms governing upstream oil and gas operations in Kenya
- 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 Kenya
Reasons to buy
- Understand the complex regulations and contractual requirements applicable to Kenya'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
Products
Table of Contents
Table of Contents
Table of Contents
1.1. List of Tables
1.2. List of Figures
2. Executive Summary
2.1. Regime Overview - Production Sharing Agreement
2.2. Timeline
2.3. State Take Assessment
3. Key Terms - Production Sharing Agreements
3.1. Bonuses and Fees
3.1.1. Signature Bonus
3.1.2. Surface Fees
3.1.3. Training Fee
3.2. Cost Recovery
3.2.1. Limit on Recovery
3.2.2. Uplift
3.2.3. Recoverable Costs
3.2.4. Non-Recoverable Costs
3.3. Profit Sharing
3.3.1. 2019 Model
3.3.2. Pre-2019 Contracts
3.4. Windfall Tax (2008-2018 Contracts)
3.5. Abandonment Fund
3.6. Direct Taxation
3.6.1. Corporate Income Tax
3.6.2. Deductions and Depreciation
3.6.3. Capital Gains Tax
3.6.4. Withholding Tax
3.7. Indirect Taxation
3.7.1. Value Added Tax
3.7.2. Customs Duties
3.8. State Participation
3.9. Marginal and Sub-Commercial Discoveries
3.10. Natural Gas Discoveries
3.11. License Terms
3.11.1. Duration and Relinquishments
3.11.2. Work Obligation
3.12. Domestic Market Obligation
4. Regulation and Licensing
4.1. Legal Framework
4.1.1. Governing Law
4.1.2. Contract Type
4.1.3. Title to Hydrocarbons
4.2. Institutional Framework
4.2.1. Licensing Authority
4.2.2. Regulatory Agency
4.2.3. National Oil Company
4.3. Licensing Process
4.3.1. Licensing Rounds
4.3.2. Bidding
4.4. Local Content
5. Appendix
5.1. References
5.2. Contact Us
5.3. Disclaimer
List of Figure
List of Figures
Figure 1: Regime Flow Chart - Production Sharing Agreements
Figure 2: Kenya, Indicative NPV10/boe, IRR and State Take Comparison, and Price and Cost Sensitivity Analysis
Figure 3: Kenya, Legal Framework
Figure 4: Kenya, Institutional Framework
List of Table
List of Tables
Table 1: Regime Overview
Table 2: Kenya, Key Events since 2000
Table 3: Kenya, PSA, Signature Bonus Payments From Selected PSAs (USD )
Table 4: Kenya, PSA, Surface Fees From Selected PSAs (USD /km)
Table 5: Kenya, PSA, Annual Training Fees From Selected PSAs (USD )
Table 6: Kenya, PSA, R-Factor Profit Petroleum Split, 2019
Table 7: Kenya, PSA, Incremental Profit Sharing Split, Blocks 11A and L16, 2012
Table 8: Kenya, PSA, Incremental Profit Sharing Split, Blocks L27 and L28, 2012
Table 9: Kenya, PSA, Incremental Profit Sharing Split, Block 2B, 2008
Table 10: Kenya, PSA, Incremental Profit Sharing Split, Block 1, 2007
Table 11: Kenya, PSA, Government Participation From Selected PSAs (%)
Table 12: Kenya, PSA, License Duration Examples (Years)
Table 13: Kenya, PSA, Work and Minimum Expenditure Obligations From Selected Contracts
Table 14: References
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