Do oil companies get the rights to oil drilling or do those rights go to the countries that have the oil?



  1. 0 Votes

    Ultimately the rights to the oil belong to the country where the oil is. This is why so many wars are started over oil rights. However, the oil companies can try to come in and give compensation to the government or the people for the rights to drill in that country.

  2. 0 Votes

    In some countries, such as Mexico and Saudi Arabia, only the national oil company has any rights to explore for and produce oil. Companies like Exxon buy oil from those companies to import to the US. In others, such as Nigeria or Angola, independent companies pay up to hundreds of millions of dollars for the right to explore particular areas, then, if they actually find any oil, they pay a royalty (a kind of tax) on the oil they produce to the country. In Nigeria there is an across the board royalty of 50% on all production, then up to 12% more depending on where the oil is. So if a company like Shell spends $40 per barrel to find and produce a field, at $75 a barrel that leaves $35. 50% of that, or $17.50 goes to Nigeria, leaving $17.50. In the 12% zone, another $2.10 goes to Nigeria, leaving $15.40. That is what Shell makes at the well head on each barrel it produces (and that is given a conservative $40 a barrel finding and production cost; that could be rather more). That is before any costs of shipping the oil anywhere.

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