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In particular foreign private oil companies have a long history of not paying adequate royalties to the countries they operate in (which is the reason they get
by hughprime 17y ago
In particular foreign private oil companies have a long history of not paying adequate royalties to the countries they operate in (which is the reason they get nationalized after popular revolts). Even the US govt sued Exxon in Alabama for systematically underpaying royalties (they lost, but whatever).
What do you think is a "fair" amount of royalties to pay?
In my opinion, whoever owns the land should get 100% of whatever income they can derive from it. If Shell wants to buy some land, they should own whatever oil they can suck up from under it.
- psranga 17y agoCredit card companies charge 1-2% of revenues. VC and hedge funds also charge management fees in that ballpark. I would say 1-2% of profits after deducting all operating and capital expenses is a good royalty figure. In most countries, all mineral rights lie with the govt (I agree with this principle, btw). In the US, most mineral rights belong to the lucky owner of the land. AFAIK in the Exxon case, the state of Alabama owned the land whose mineral had been leased to Exxon. It was proved that Exxon was systematically underpaying the state for agreed-upon royalties.