Global Petroleum Survey 2013

This report presents the results of the Fraser Institute’s 7th annual survey of petroleum industry executives and managers regarding barriers to investment in oil and gas exploration and production facilities in various jurisdictions around the globe. Those barriers include high tax rates, costly regulatory obligations, uncertainty over environmental regulations and the interpretation and administration of regulations governing the “upstream” petroleum industry, and concerns over political stability and security of personnel and equipment. A total of 864 respondents participated in the survey, providing sufficient data to evaluate 157 jurisdictions.

A Policy Perception Index captures investors’ perceptions on conditions affecting investment decisions and provides a comprehensive assessment of each jurisdiction. On this index, the 10 least attractive jurisdictions for investment (worst first) are Venezuela, Ecuador, Iran, Bolivia, Russia—Offshore Arctic, Uzbekistan, Russia—Eastern Siberia, South Sudan, Iraq, and Russia—Other (i.e., all of Russia except for Offshore Arctic, Offshore Sakhalin, and Eastern Siberia). This index does not factor in a jurisdiction’s known petroleum reserves.

The jurisdictions with the best Policy Perception Index scores (scores that suggest obstacles to investment are lower than in all other jurisdictions), are all located in Canada, the United States, and Europe. According to this year’s survey, the 10 most attractive jurisdictions for investment worldwide are Oklahoma, Mississippi, Saskatchewan, Texas, Arkansas, Kansas, Alabama, North Dakota, Manitoba, and Netherlands—North Sea.

A new section has been added to this year’s report to examine how jurisdictions compare on the Policy Perception Index when their proved oil and gas reserves are considered. Jurisdictions with proved reserves have been split into three tiers based on their holdings of the worlds’ proved oil and gas reserves: Tier One each hold at least 1 percent; Tier Two hold between 0.1 and 1 percent; and Tier Three hold up to 0.1 percent. Twenty-seven of the jurisdictions assessed hold at least 1 percent each of the worlds’ proved oil and gas reserves, ranging from India’s 13.9 billion barrels of oil equivalent (Bboe) to Iran’s 369.6 Bboe. Together, the jurisdictions in this Tier One group account for 92 percent of global reserves. The nine Tier One jurisdictions that stand out as the least attractive for investment on the basis of their Policy Perception Index scores (Venezuela, Iran, the four Russian regions, Iraq, Libya, and Kazakhstan) account for more than half of the world’s proved oil and reserves. The seven large-reserve holders that rank highest on this measure are Texas, Qatar, Alberta, United Arab Emirates, Norway—North Sea, Australia—Offshore, and Kuwait.

Barriers to investment have increased in a number of jurisdictions over the past year, particularly in New Mexico, Michigan, Colorado, Cyprus, Hungary, Guyana, France, Romania, California, Bulgaria, New York, Guatemala, Quebec, and Kyrgyzstan. However, 14 jurisdictions improved their relative attractiveness for investment. Most improved were Chile, Jordan, Mali, and Pakistan.

As in previous surveys, investors indicate that they continue to turn away from jurisdictions with onerous fiscal regimes, political instability, and land claim disputes. Similarly, investors prefer to avoid jurisdictions with costly, time-consuming uncertain regulations. Other factors being equal, competitive tax and regulatory regimes can attract investment and thus generate substantial economic benefits.