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Bibliographical References

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  2. Alfred Kjemperud (2007): Petroleum contracts: fiscal régime – Taxation, The bridge Group AS

Anne-Charlotte ARMYNOT DU CHATELET, Alban LIEGEARD (2016):

Global oil and gas markets and security of supply, in Panorama
énergies-climat N°11 5p

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  3. Bruno Carton (2000): Oil in Africa, violence against peoples. Research Group for an Alternative Economic Strategy. 246 p

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  23. NNPC (2022): Annual Report

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TABLE OF CONTENTS

FOREWORD 9

[GENERAL INTRODUCTION 12](#general-introduction)

PART I: GENERAL INFORMATION ON THE OIL INDUSTRY AND THE CHALLENGES OF RESEARCH AND EXPLOITATION IN WEST AFRICA 15

1- VALUE CHAIN OF THE HYDROCARBON SECTOR 16

1.1- The segment Amont (upstream) 17

1.1.1-Features 17

[1.1.2- State of play in West Africa 18](#state-of-play-in-west-africa)

[1.1.3- Main challenges 22](#main-challenges)

1.2- The Midstream segment 22

1.2.1- Characteristics 22

[1.2.2- State of play in West Africa 24](#state-of-play-in-west-africa-1)

[1.2.3- Main challenges 24](#main-challenges-1)

1.3- The Downstream segment (downstream) 25

1.3.1- Characteristics 25

[1.3.2- State of play in West Africa 26](#state-of-play-in-west-africa-2)

[1.3.3- Main Challenges 27](#main-challenges-2)

1.4- Weaknesses in the West African oil industry value chain 27

[1.4.1- At the ECOWAS level 29](#at-the-ecowas-level)

[1.4.2- At the level of the APPO 29](#at-the-level-of-the-appo)

1.5- Possible solutions for an oil industry serving the region 30

[2- DIFFERENT PHASES OF UPSTREAM OIL AND THE ROLES OF STATES 32](#different-phases-of-upstream-oil-and-the-roles-of-states)

2.1- Pre-licensing phase 33

2.1.1- Definition of the concept 33

2.1.2- Strategy for awarding petroleum licences or authorizations 34

2.1.3- Financing of pre-licensing phase investments 36

2.1.4- Importance of the pre-licensing phase and responsibilities of the State 36

2.2- Exploration phase 37

2.2.1- Exploration methods and strategies 37

[2.2.2- Techniques for evaluating a prospect 40](#techniques-for-evaluating-a-prospect)

2.2.3- Financing of exploration activities 46

2.2.4- Responsibilities of States in the exploration phase 47

2.3- Development Phase 49

2.3.1- Definition and strategies 49

[2.3.2- Reservoir Evaluation Methodology 50](#reservoir-evaluation-methodology)

[2.3.3- Financing of development activities 52](#financing-of-development-activities)

[2.3.4- Roles and responsibilities of States in the development phase and Relevance of a PDO 52](#roles-and-responsibilities-of-states-in-the-development-phase-and-relevance-of-a-pdo)

2.4- Phase de Production 55

2.4.1- Definition and characteristics 55

[2.4.2- Recovery methods and strategies 57](#recovery-methods-and-strategies)

[2.4.3- Financing of production operations 58](#financing-of-production-operations)

[2.4.4- Responsibilities of the Host States in the production phase 58](#responsibilities-of-the-host-states-in-the-production-phase)

2.5- Abandon 61

2.5.1- Definition of the concept 61

[2.5.2- Financing of decommissioning/abandonment work 61](#financing-of-decommissioningabandonment-work)

[2.5.3- Responsibilities of States in the phase of abandonment 62](#responsibilities-of-states-in-the-phase-of-abandonment)

2.6- Summary of expenses and revenues during the life cycle of an oil project 62

[PART TWO: OIL CONTRACTS AND OIL TAXATION IN WEST AFRICA 64](#part-two-oil-contracts-and-oil-taxation-in-west-africa)

3- TAX REGIMES IN THE PETROLEUM SECTOR 65

[3.1- Tax system or system: Conceptual foundations 68](#tax-system-or-system-conceptual-foundations)

[3.2- The concession system 69](#the-concession-system)

3.3- The contractual system: 69

3.3.1- The Production Sharing Contract (PPC) 69

3.3.2- Service Contracts 71

3.4- Structure of Oil Tax Systems in West Africa 72

3.5- Contractual frameworks in West Africa 72

4- COMPARATIVE STUDY OF TAX REGIMES IN SELECTED WEST AFRICAN COUNTRIES: 74

[4.1- Design principles of the flow diagram associated with the oil contract 75](#design-principles-of-the-flow-diagram-associated-with-the-oil-contract)

4.1.1- Petroleum Code 75

4.1.2- Tax regime 75

4.2. Key tax elements applied in selected West African countries 76

[4.2.1- Redevance ad valorem (royalty) 76](#redevance-ad-valorem-royalty)

[4.2.2 - Recoverable Petroleum Costs 77](#recoverable-petroleum-costs)

[4.2.3- Oil Profit 79](#oil-profit)

[4.2.4- Profit/corporate tax 83](#profitcorporate-tax)

[4.2.5-State participation 83](#state-participation)

4.3- In-depth analysis of tax regimes by country 85

4.3.1- Nigeria 85

[4.3.2- Ghana 85](#ghana)

[4.3.3- Senegal 86](#senegal)

[4.3.4- Côte d’Ivoire 86](#côte-divoire)

[4.3.5 - Benin and Niger 86](#benin-and-niger)

[4.3.6- Other West African countries 86](#other-west-african-countries)

4.4- State/Contractor income associated with the tax system in selected West African countries 89

4.5- Analysis and interpretations 97

4.5-1. On the net income of States/contractors and attractiveness to foreign investment 97

4.5-2. On the overall State/Contracting Party cash flows 99

[4.6- Some suggestions for maximizing the oil revenues of the States 100](#some-suggestions-for-maximizing-the-oil-revenues-of-the-states)

[4.6.1 - Recoverable Petroleum Costs 100](#recoverable-petroleum-costs-1)

[4.6.2- State participation 101](#state-participation-1)

4.7- Partial conclusion 101

[PART THREE: POLITICAL STABILITY, GOVERNANCE AND CORRUPTION IN THE OIL SECTOR 103](#part-three-political-stability-governance-and-corruption-in-the-oil-sector)

[5- KEY SOCIO-POLITICAL DETERMINANTS OF OIL SECTOR PERFORMANCE 104](#key-socio-political-determinants-of-oil-sector-performance)

[5.1-Political stability and its impact on the oil sector 106](#political-stability-and-its-impact-on-the-oil-sector)

[5.2- Governance Structures in the Petroleum Sector 107](#governance-structures-in-the-petroleum-sector)

[5.3- Corruption in the oil sector 108](#corruption-in-the-oil-sector)

[5.4- Interrelationship between stability, governance and corruption 109](#interrelationship-between-stability-governance-and-corruption)

[5.5- Stakeholder Risk Mitigation Strategies 109](#stakeholder-risk-mitigation-strategies)

[5.5.1- Roles of operators 109](#roles-of-operators)

[5.5.2 - Responsibilities of States 110](#responsibilities-of-states)

[5.5.3- Roles of international institutions 110](#roles-of-international-institutions)

[5.6-Future trends and emerging risks 110](#future-trends-and-emerging-risks)

[6- WEST AFRICA: IN-DEPTH COUNTRY ANALYSIS 112](#west-africa-in-depth-country-analysis)

[6.1- Nigeria 113](#nigeria)

[6.2- Ghana 114](#ghana-1)

[6.3- Senegal 115](#senegal-1)

[6.4- Côte d’Ivoire 116](#côte-divoire-1)

[6.5- Benin 117](#benin)

[6.6- Niger 118](#niger)

[6.7- Other West African countries 118](#other-west-african-countries-1)

6.7.1- Mauritania 118

6.7.2- Sierra Leone 119

6.7.3- Libéria 119

6.7.4- Guinea and Guinea-Bissau 120

6.7.5- The Gambia 120

[6.8- Regional synthesis 121](#regional-synthesis)

[GENERAL CONCLUSION 122](#general-conclusion)

[GLOSSARY 125](#glossary)

[BIBLIOGRAPHICAL REFERENCES 136](#bibliographical-references)