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Your challenge

As oil and gas companies continue to extend their

reach around the world, transer pricing is one o most

signicant tax issues they ace. It is one o the areas

in which the corporate tax unction o a multinational

company can help support corporate business objectives

and undertake tax planning.

This is especially true or oil and gas companies. Pricing

the sale o tangible products between related companies

is generally a challenge when companies operate in

numerous jurisdictions and remote locations. Recentdevelopments in the United States and global regulatory

environment have created additional transer pricing

complexity in several other areas o the oil and gas supply

chain, including:

Services Regulations. The scope o cross-border services

provided between related oil and gas companies has

grown dramatically in recent years, and extends across

the whole energy supply chain. Whether it is back-oce

support services or specialized R&D, engineering, or

marketing, your companys methodology or pricing these

services, along with the documentation that supports

the approach, are critical to compliance with the transer

pricing regulations.

Intangible Property. As demand or oil and gas products

increases globally, oil and gas companies are continuing to

develop new technologies and techniques or exploration,

production, and distribution. Deciding where intellectual

property should reside and how licenses to that intellectual

property should be priced represent a challenge or transer

pricing compliance and planning.

Cost sharing. The increasing need to deploy new

energy technologies across the globe has led oil and gas

companies to employ cost sharing mechanisms to allow

their aliates access to critical equipment and techniques.

The IRS has intensied its scrutiny o cost sharing

arrangements and issued new regulations to require

buy-in payments that U.S. taxpayers receive rom oreign

participants to adequately refect the arms length valueo the contributed intangibles. It is a complex challenge

to comply with these new regulations, while balancing

business objectives.

Adding to these concerns is the growing sophistication o

tax authorities around the world. Many o the more than

60 countries that now have transer pricing statutes also

have transer-pricing-specic penalty regimes. The use

From the oil feld to the pump,transer pricing oers opportunityor energy sector tax planning.

As used in this document,

Deloitte means Deloitte

Financial Advisory Services

LLP, which provides nancial

services; and Deloitte

Consulting LLP, which

provides consulting services.These entities are separate

subsidiaries o Deloitte LLP.

Please see www.deloitte.

com/us/about or a detailed

description o the legal

structure o Deloitte LLP and

its subsidiaries. . Certain

services may not be available

to attest clients under the

rules and regulations o

public accounting.

Transer pricing services orthe energy sector

Deloitte Center for Energy Solutions

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o deemed prot regimes in many o the hydrocarbon-

producing countries adds to the pressure. Accordingly, the

risk o incurring double taxation between these countries

and the United States is increasing.

Our approach

Whether it is helping you develop an approach to transer

pricing or addressing discrete and highly technical issues

that can arise, Deloittes team o oil and gas transer

pricing specialists is well equipped to work with you.

We are ull-time transer pricing proessionals and have

access to proessionals in Deloitte Touche Tohmatsu (DTT)

member rms located, and with recognized experience, in

major markets worldwide.

Among our team members are energy economists with

years o experience working either in energy companies or

oreign energy-producing governments.

This experience is valuable, but only i it can be applied

with a deep understanding o your business. This is where

we excel. In addition to our recognized experience in the

oil and gas industry and its individual segments, we are

widely known or our collaborative and fexible approach.

We listen careully to understand the particulars o your

situation, quickly zero in on issues that are important to

your company, and help you explore options that can be

both eective and sustainable. Our services include:

Planning Support. We can help you assess the

tax impact o IP holding companies, cost sharing

arrangements, and commissionaire or contractmanuacturing relationships. We also perorm rigorous

unctional analyses to help you consider what unctions

add value and what opportunities exist or evaluating the

pricing o these unctions.

We can also help evaluate the transer pricing impact o

assumption o risks and analyze risk transer arrangements,

contingent payment mechanisms, and R&D cost sharing,

which may help you eectively align the unctional, risk,

and economic prole o each entity and product with your

organizations transer pricing practices

Documentation. Many oreign jurisdictions have similar,

yet distinct, requirements or documentation and reporting.Thus, it is critical or oil and gas companies to have a

consistent multicountry approach to documentation,

but one in which the nuances o each jurisdiction can be

addressed quickly and cost efciently. Our team includes

economists and tax specialists who are amiliar with the

documentation rules and practices in specifc jurisdictions.

We can help you develop the analyses and documentation

to support your pricing methodologies.

Tax Controversies and Competent Authority.

Controversies are increasingly likely, given the growing

emphasis countries around the world are placing

on transer pricing. Transer pricing examinations

are expensive and disruptive, but so we have highly

experienced proessionals ready to assist you with

audit deense and dispute resolution, including ormer

competent authorities rom several countries who can help

you navigate that critical process.

Advance Pricing Agreements. In many jurisdictions, it is

advantageous to consider an Advance Pricing Agreement

(APA) as a mechanism or avoiding disputes and managing

cash fow. We are leaders in helping to negotiate APAs

with tax authorities around the world.

The Deloitte difference

The Deloitte Transer Pricing team brings a breadth oexperience to help oil and gas businesses deal with the

complexities o cross-border activity. We are recognized as

having one o the worlds leading transer pricing services

organizations, integrating both the international tax and

economic aspects o transer pricing. The ability to team

cross unctionally with oil and gas specialists rom the

Deloitte & Touche LLP audit practice, valuation specialists

rom Deloitte Financial Advisory Services LLP, and actuaries

and technology integration specialists rom Deloitte

Consulting LLP has distinguished our oil and gas industry-

ocused services. In serving our clients, we draw upon:

Aglobaltransferpricingpracticeservingmorethanhal o the Fortune 100 and Fortune Global 100. We

have access to transer pricing specialists, including

economists and tax proessionals, in DTT member rms

and their aliates in more than 80 countries.

TheDTTmemberrms,collectively,havebeenranked

Number One in Euromoneys list o Worlds Leading

Transer Pricing Advisers in 2002, 2004, 2006, and

2008. In act, the 2008 Guide recognized the DTT

member rms as having the greatest number o leading

transer pricing advisers, with 81 eatured advisers.

Highlyexperiencedtransferpricingspecialistsincluding

ormer government ocials and examiners. Our

proessionals understand both stated documentationrequirements and the types o issues that authorities are

likely to ocus on in their examinations.

Oilandgasindustryspecialistsinspeciclocations

across the United States, as well as dedicated DTT

member rms proessionals around the world, including

Germany, Japan, and the United Kingdom.

Provenapproachestodevelopingtransferpricing

strategies, methodologies, and documentation.

Accesstothespecializedandrecognizedresourcesof

the Deloitte U.S. Firms, and the member rms o DTT

and their aliates.

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About the Deloitte Center for Energy Solutions

The Deloitte Center or Energy Solutions provides a orum or innovation, thought leadership, groundbreaking research, and industry collaboration to

solve the most complex energy challenges.

Through the Center, Deloittes Energy & Resources Group leads the debate on critical topics on the minds o executivesrom legislative and regulatorypolicy, to operational eciency, to sustainable and protable growth. We provide complete solutions through a global network o specialists and

thought leaders.

WithlocationsinHoustonandWashington,D.C.,theDeloitteCenterforEnergySolutionsoffersinteractionthroughseminars,roundtablesandother

orms o engagement, where established and growing companies can come together to learn, discuss and debate. www.deloitte.com/energysolutions

This publication contains general inormation only and Deloitte is not, by means o this publication, rendering accounting, business, nancial,

investment, legal, tax, or other proessional advice or services. This publication is not a substitute or such proessional advice or services, nor should

it be used as a basis or any decision or action that may aect your business. Beore making any decision or taking any action that may aect your

business, you should consult a qualied proessional advisor.

Deloitte, its aliates, and related entities shall not be responsible or any loss sustained by any person who relies on this publication.