5.625
%
Neutral
30
mm boe
40
%
Our key issues concern 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.
April 22, 2024
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 are 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.
Georgia continues to follow the “Georgia 2020” economic strategy, stressing a commitment to business-friendly policies, such as low taxes and investment in human capital. Nevertheless, Georgia’s reliance on imports for manufactured goods and many foodstuffs drove inflation to 11.9% annually in 2022, which is expected to fall below the 3% target by the close of 1Q'24. In May 2023 data released by the Georgian National Statistics Office indicated that the country is recording historic lows in both unemployment (18% in Q1 of 2023) and the share of the population living under the poverty line (15.5% annually in 2022). 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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