Three African countries including Ghana have been cited as ahead of the UK in attracting more investments in the oil and gas sector.
Ghana joined the world’s league of oil producing countries when commercial production of oil began in the Jubilee oil fields on December 15, 2010.
A report by the Guardian of the UK cites the Global Head of Oil and Gas at Lloyds Banking Group, Andrew Moorfield as saying repeatedly that the British government tapering with the UK tax system is severely restricting the amount of money that can be attracted from the energy sector.
Moorfield said Britain has become a riskier place for oil and gas companies to invest than developing countries like Egypt.
The publication quotes him as saying that Ghana – a new emerging oil producing country – has worked closely with the Norwegian oil ministry to develop a stable tax regime that ensures an acceptable allocation of profit between the state and foreign investors.
Ghana has now developed a tax regime based around petroleum sharing contracts with 35% corporate tax and a 3%-10% royalty depending on the underlying commodity being extracted. This is agreed on a contract-by-contract basis, giving greater tax stability and transparency over the life of the project for investors, he says, according to the report.
He says, Gabon, also uses a predictable service contract-based regime that has not changed since 1983, and Egypt, he says maintains a predictable petroleum-sharing contract regime combined with 40-55% corporate tax, which has remained unchanged since 2005.
“In the UK, many of our customers are seriously concerned about supplementary charges which were invisible at the outset of their projects … In the longer term, the UK must create an environment of tax certainty to continue to compete on the global stage,” the report quoted Moorfield as saying.
British oil producer, Tullow Oil is one of the major stakeholders in Ghana’s nascent oil sector.