On October, 11 Canadian-Ukrainian Chamber of Commerce held a round-table discussion for the heads of producing companies devoted to Canadian technology and equipment for oil-and-gas and extractive industry. The event was attended by Canadian producers and the Embassy of Canada in Ukraine.
The event was attended by the representatives of Association of Ukrainian Gas-Producing Companies, heads of leading mining companies such as Poltava Petroleum Company, KUB-GAS, Ukrnaftogazservice and others, as well as the representatives of core higher educational establishments.
Canada's experience in the development of oil and gas market was especially interesting for the participants of the round-table discussion.
During the presentation, the participants from Canada spoke about new government’s initiative aimed to stimulate the development of the industry. Authorities of Alberta, main oil-and-gas producing province, introduced a stimulating 5%-rent for all new wells starting from 2017. Current tax regime will remain unchanged for existing projects until 2027. Tax incentives will be provided for all new investments, regardless of the field type (gas, oil, bitumen, etc.), which is a significant difference from the previous approach, when it applied only either to shale gas or deep wells with horizontal drilling, and benefit action was limited in time (up to five years).
It should be noted that, with reference to Canadian experience, Ukrainian gas producers have recently publicly expressed the need to introduce a single stimulating rent rate for extracted gas at the level of 12% for new investments starting from the following year.
In addition, as noted by the Canadian interlocutors, given the interests of the region, the Government of Alberta has also decided to introduce the third period of the deposit life cycle, so called "depletion." This step follows the payback time of deposits and takes place when productivity reaches its minimum. During the period of depletion rent level decreases again, which helps to maintain field functioning longer and save jobs.
Such thoughtful approach to the tax law allows Canada to keep world leadership in the enhancement of oil and gas production technologies. Encouragement of small businesses in oil and gas market enables companies to grow and attract billions of dollars of investment within short periods of time.
Utilization of the above approach to taxation in oil and gas sector of Ukraine would allow producing companies to recover from crisis and become a starting point to an increase in domestic production and energy independence of the country.
https://en.gas-oil.com.ua/stati/121-canadian-experience-5-rent-for-all-new-investment-into-the-oil-and-gas-sector.html