Subject to the implementation of the provisions of Section 14(2) of the petroleum code, the State shall, in a production sharing contract, either directly or through a duly mandated public body, hire the services or a holder to exclusively carry exploration on its behalf, within a specified area and carry out exploitation, in the event of discovery of a commercially exploitable hydrocarbon field.
The holder shall be responsible for financing such petroleum operations.
Depending on their nature, petroleum operations under a production-sharing contract shall be the subject of an exclusive exploration authorization, or an exclusive exploitation authorization covering the exploitation of a commercially exploitable hydrocarbon field.
Under a production-sharing contract, hydrocarbon production shall be shared between the State and the holder, in accordance with the terms of such contract.
The holder shall therefore receive a share of production as reimbursement for its costs and as compensation in kind according to the following terms and conditions:
(a) As specified in the petroleum contract. a share of total hydrocarbon production shall be allocated for the reimbursement of petroleum costs actually incurred by the holder under the petroleum operations contract. Such share. Commonly referred to as “cost oil” or “cost recovery production”, may not exceed the percentage of production specified in the production sharing contract which defines the recoverable petroleum costs, special amortization terms for such costs, as well as the terms and conditions for their recovery through deduction from production;
(b) After deduction of the share pursuant to (a) above, commonly referred to as “profit oil” or “production for compensation”, the remainder of the total hydrocarbon production shall be shared between the State and the holder, in accordance with the terms set forth in the petroleum contract.