Indonesia’s fourth generation also introduced first tranche petroleum, which split the first 20% of production equally between IOC and state before cost recovery. This has been viewed by many industry analysts as an effective royalty, as the state is guaranteed a return prior to any cost recovery. The remaining 80% of production was available for cost recovery (no limit).

Although on the surface this appeared to be a less restrictive cost recovery structure, it was an exact cost recovery limit as seen previously. Marginal fields now had a slightly more attractive profit split (for the IOC) of 75/25 rather than the standardized 80/20 under second generation PSAs (this was revised to 65/35 in 1994 as a result of declining oil prices). The Angolan PSAs signed in the mid- to late 1990s were some of the most demanding, as rising oil prices were met with sliding production volume profit oil splits and price caps, where the state took nearly 100% of oil above $20/bbl prices.

Regardless of oil prices and rising production costs, all states now reserve the right to take equity positions in many development projects—state participation— allowing them to become equity partners after exploration and development efforts and investments have been made. Fiscal regimes in eff ect today cover a very wide range of markets and rates. using analysis from Daniel Johnston, provides an overview of countries, agreements, and their estimated takes.


From this spatial array, it is clear that the sharing agreements average the highest government takes, the royalty/tax regimes the lowest, and the PSA/PSCs the middle ground.