We pay taxes in full compliance with the intent of the law and do not engage in aggressive tax minimisation strategies. This socially responsible approach is consistent with the Oil Search Code of Conduct’s focus on ethics, integrity and our Company values.
We maintain a transparent and constructive dialogue with governments and tax authorities regarding our tax approach and disclosures. This supports our efforts to enhance tax system effectiveness, such as through direct engagement on tax reform and the commitments associated with being an Extractive Industries Transparency Initiative Supporting Company.
The Oil Search Group includes seven subsidiaries incorporated in the British Virgin Islands, six of which are incorporated to hold exploration interests in the Middle East. Any income from these investments is subject to tax in accordance with the tax laws of the jurisdiction where the exploration licences are located. This structure provides stability and flexibility in relation to potential future divestment or equity raising in relation to each jurisdiction and has minimal effect on our tax obligations in all relevant jurisdictions. The seventh subsidiary is an in-house finance company in the British Virgin Islands with no material profits.
The Oil Search Group also maintains a former exploration subsidiary in the Cayman Islands. This subsidiary is a dormant legacy company. These holding companies have provided no tax benefits to the group, nor were they established with that purpose.
After incurring substantial exploration costs that are non-deductible for tax in any jurisdiction, Oil Search is in the process of withdrawing from exploration activities in the Middle East.
We have a formal tax agreement in place with the PNG Government for the PNG LNG Project, which provides our Company with a stable environment and long-term certainty for authorities and our shareholders. The PNG Government confirmed its commitment to fiscal stability for PNG LNG in 2017 with amendments to the Income Tax Act 1958.