Washington (Platts)--1Jun2007

US oil and gas royalties are some of the lowest in the world, a US
Government Accountability Office report said Friday.

     The report presented findings from five studies which compared US
royalties levied for oil and gas drilling on federal property with those
charged by other jurisdictions.

     It found that the US' "take" of oil and gas resources produced on its
land and in the Gulf of Mexico was generally lower than those of states and
foreign countries.

     Countries like Angola, Australia, and Egypt, and states like Wyoming,
Alaska and California all asked more for their resources, the studies found,
than did the US federal government.

     The studies were completed before the Minerals Management Service
increased its royalty rates from 12.5% to 16.67% earlier in 2007, so the
federal take is likely to grow somewhat as old leases expire and new ones are
added.

     These royalty hikes may dissuade some developers from investing, and
result in some loss of tax revenues, though the US Treasury would still come
out ahead, the report said.  

     Some $4.5 billion in new royalties are expected to result from the
increase, while $820 million will likely be lost in leases and taxes,
according to the report.

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