By WAYNE MA and STEVEN YANG
BEIJING -- Foreign joint ventures involved in oil and gas
production in China will now be charged a compensation fee
calculated on production value rather than volume, the Ministry
of Land and Resources said.
The fee will extend to unconventional oil and gas resources
such as coal-bed methane gas, the ministry said Tuesday, adding
that it will be retroactive from November 2011 and valid
through March 2020.
The announcement is a consolidation of two long-standing
policies that used different formulas to charge domestic and
foreign joint ventures involved in the extraction of crude oil,
gas and coal.
China first levied a fee on foreign joint ventures based on
production volume in 1990. However, it suspended the fee in
The government began charging domestic companies a fee based
on production value in 1994. Under that formula, local
governments and autonomous regions kept between 50% and 60% of
the proceeds and the central government took the rest.
Going ahead, foreign joint ventures will also use the
domestic formula, although with some modifications.
Local governments and autonomous regions can also apply on
behalf of companies for an exemption.
The announcement follows the national rollout last year of a
new resource tax, which was also calculated on value rather
than volume of domestic oil and gas
The adjustments coincided with a decline in China's special
oil income levy and merely represented a shift in tax revenue
from the central government to local provinces and autonomous
Dow Jones Newswires