The following five examples provide overviews of petroleum regimes in five countries. These are not to be considered definitive interpretations but as overviews designed to show the complexities of different systems.
(As an aside, this blog entry will be published July 2nd, 2011. This is my 35th wedding anniversary. I am a lucky guy.)
Outside of the recently discovered pre-salt play, Brazil operates a concession/royalty/tax system, the legislation for which was only passed in 1997. Prior to that the system reflected a monopoly held by the national oil company, Petrobras. While Petrobras remains Brazil’s NOC, apart from being endowed with a commanding acreage position from its legacy status, its rights are identical to all other companies. A portion of the company is owned by public shareholders. Within the pre-salt play area, which is subject to a PSC regime, Petrobras also enjoys special treatment.
Licenses are awarded on the basis of competitive auction to international oil companies. All unlicensed acreage is held by a newly created government agency, the Agência Nacional do Petróleo (ANP), which is separate from the Ministry of Mines. In its first round (in 1999), the ANP awarded licenses on the basis of an open auction, with bids weighted 85% to cash and 15% to commitments to spend exploration and development monies with Brazilian suppliers. The detail of award criteria has changed with subsequent rounds, but it still represents an open competitive bidding environment. Essentially, the cash bonuses offered by companies reflect an offer by the companies to pay away some of the fiscal rent that they can imagine themselves earning when risks and costs are taken into account.
The 1998 Petroleum Law established the basic principles under which licenses would be held and awarded, although the licenses themselves are held under a model Concession Agreement that was drawn up following adoption of the Petroleum Law. This agreement is fundamentally the same for all players (Petrobras and the licensees from the first round), save some clauses that reflect terms specific to the round/award process. Petrobras is free to bid in competition or in consortium with other oil companies for new licenses, but must pay its way at all stages of the exploration and exploitation process.
Under the 1998 Petroleum Law companies are required to pay a royalty, special petroleum tax known as “Special Participation”, rentals and bonus to acquire the license. A subsequent Presidential Decree established the calculation of Special Participation, which aims to be a form of rent tax, with a sliding scale taxation rate based on the productivity and profitability of individual fields. Royalty rates are set as a legal minimum and maximum of 5% and 10%, although the ANP has the right to vary these rates as it deems appropriate and necessary. Rentals are established according to a schedule, and the signature bonus is bid.
Within the Concession Agreement the rights and obligations of the oil companies are established, including minimum levels of expenditure during each license period. These commitments are established prior to bidding on a round. Contract duration is up to nine years for exploration in three phases, and a further 27 years for each development. Companies have the right to export or sell all their production domestically. Administration of the Concession Agreement and collection of royalty and special participation is undertaken by the ANP. Issues of general taxation and employment are the responsibility of other government departments.
 As of the time of writing there has been a deferral of licensing following discovery of the pre-salt play, although there have been suggestions that this will resume during 2011.