Seems the China National Offshore Oil Company reported earnings today their time (now yesterday). One interesting little item says a lot about the way businesses (remember how US business loves China) are treated in China.
CNOOC will pay a total of $936 million to the government in windfall taxes on oil sales. (That is for 2007 only - pretax profit was just over $7 billion - my parenthetical).
The tax, which kicks in at $40 per barrel, is calculated each month and paid each quarter.
The National Development and Reform Commission, China's economic planning agency, said last month it expects more than $7 billion in oil windfall profit tax to be paid to the government this year.
snip
The tax applies not only to China's state oil companies but also to foreign oil firms..
Officials have used the tax revenue to subsidize low-income groups and industries hurt by rising oil prices, such as transportation and farming.
Dow Jones News Wire
This leads to a couple observations:
This tax has not scared off the majors:
Recently, offshore oil exploration in China has been the greater focus of the oil majors. CNOOC has initiated several Production Sharing Contracts (PSCs) with international oil companies for exploration and development in the Bohai Bay region. ConocoPhillips holds the largest acreage in the area, with total discovered reserves estimated at 732 million barrels. ConocoPhillips has a 49 percent stake in the Bozhong 11/05 block and has produced 30,000 bbl/d of crude oil from its Peng Lai 19-3 field since 2002, which it expects will eventually produce 140,000 bbl/d. Other companies involved in oil exploration and production activities in the Bohai Bay region are Kerr-McGee, Apache, Chevron, and Royal Dutch Shell. Some independent analysts estimate that the Bohai Bay area holds more than 1.5 billion barrels of recoverable oil reserves.
CNOOC holds a 51 percent stake in the CACT Operators Group, which includes Eni and Chevron that produces 110,000 bbl/d from five offshore fields in the South China Sea. Several other oil exploration and production projects are underway in the South China Sea and Pearl River Delta area. Husky Energy, Devon Energy, and Kerr-McGee established a joint venture with CNOOC in December 2005 for deepwater oil and gas exploration in the South China Sea. CNOOC officials have announced that deepwater exploration is a major priority for the offshore oil company. CNOOC is also involved in exploration activities in the East China Sea, although territorial disputes with its neighbors have so far limited large-scale development of fields in the region.
Encyclopedia of Earth: Energy in China
So, let's see - major US oil companies happy to play in a country with a windfall profit tax. I'm sure that's the story we get in the US, right?
Second; what is China doing?
Taking profits from the oil companies from increasing energy prices to insulate their own economy. Just like the Bush administration's policies, right?
Just one more instance of showing the rationale for lower taxes is really because we can, not because we have to.