5.625
%
Neutral
26
mm boe
40
%
Our key issues for the country surround the integrity of the government and the concern that the rule of law is not universally applied. While the country has made considerable strides in regularising the application of hydrocarbon law, there is a concern that its application is still politically motivated.
May 20, 2021
Former Soviet Union
mm bbl
bcf
Between Turkey and Russia, with a sliver of land north of the Caucasus extending into Europe.
PSC/PSA
Early agreements in Georgia were Joint Ventures under royalty/tax fiscal terms, but all contracts are now Production Sharing Contracts (PSCs). Existing PSC terms and conditions, in particular, profit splits, vary from contract to contract depending on when and how they were negotiated. Under the terms of the PSC, costs are recovered and profits allocated on a conventional fixed production sharing basis. In recent contracts, the only Government take is through the profit split calculation, as taxes are generally paid by the Georgian Oil and Gas Corporation (“GOGC”) through its share of profit oil.
The Georgian government’s “Georgia 2020” economic strategy, initially published in 2014, outlines economic policy priorities. It stresses the government’s commitment to business-friendly policies, such as low taxes, but also pledges to invest in human capital and to strive for inclusive growth across the country. The strategy also emphasizes Georgia’s geographic potential as a trade and logistics hub along the New Silk Road linking Asia and Europe via the Caucasus. Overall, business and investment conditions are sound. However, some companies have expressed an increasing lack of confidence in the judicial sector’s ability to adjudicate commercial cases independently or in a timely, competent manner, with some business dispute cases languishing in the court system for years.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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