2 sedimentary basins showing hydrocarbon accumulation
 

Strategic reforms

• Development and adoption of cost-sharing Production Contract since 1996
• Creation in Nov. 2005 of a national Company: SMH
• Membership in the Extractive Industries Transparency Initiative (EITI), since September 2005 (participatory approach: State, civil society, private sector)
• Establishment of National Hydrocarbon Revenue Fund (FNRH) - Transparency of the Treasury
• Investment development opportunities in the sector. Led to an important commitment from mining investors
• Improvement of the regulation and fiscal framework and creation of general investment condition incentives

Major reforms - 2

Regulation reform

• Hydrocarbon Code (ongoing adoption) : Defines (i) the legal and fiscal framework related to the exploration, exploitation, transport, storage, works and installations of hydrocarbons;(ii) the institutional and regulation framework of all these activities; (iii) rights and obligations of stakeholders
• Reconnaissance: 12 months maximum. Includes all reconnaissance operations except higher bore hole at 300 m.
• Exploration: 9 years maximum. Divided into 3 phases set by the Exploration-Production Contract (CEP). 25% reduction of the area at
• each phase. The whole area should be covered at the 9 years
• Exploitation: 25 years (Oil) and 30 years (Gas) Divided into 3 phases set by CPP. Limited cost oil (60% of the annual production for oil and 65% for gas)
• Contractor's Obligations : Must submit (i) Program and annual Budget for research activities; (ii) Evaluation Program and Budget in case of discovery; (iii) mobilization of technical, financial and equipment resources for CEP

Major reforms - 3

Fiscal system and customs

• Taxes on industrial and commercial revenue (CGI in Mauritania): fixed rate for the contract duration. Other taxes : Value added tax (TVA) and ITS (at the most 35% for expatriate staff)
• Exemption of all other tax: IMF, on real estate capital revenue, on turnover capital, apprenticeship tax, patent, registration and fiscal dues, or any other tax, due, obligation or contribution as long it is related to oil operations.
• Simplified fiscal regime (RFS) for foreign companies subcontracting services for contractors
• Customs Incentives
• Regulation of changes and conditions in protection of very attractive investments

Investments Evolution

About 30 foreign companies are working in oil exploration and exploitation since 2001

Key Constraints

--Deficit in specialized skills and know-how

--Supplementary efforts can be made to simplify legal and fiscal frameworks

Anticipated short and medium term reforms

• Consolidation of efforts already made to promote and develop investment opportunities in the oil sector
• Promotion of exploration of free areas (10 out of 23) in the coastal basin and the Taoudenni basin (24)
• Development of a national strategy of management of oil activities
• Complementing and consolidation of regulation framework and custom and fiscal regimes
• Establishment of monitoring and independent audit committees
• Promotion of international best practice and experiences in the field.