Congo plans to introduce production sharing contracts (PSCs) under a new hydrocarbon law designed to attract foreign investment to the West African state after a series of exploration disappointments.
All future license awards will be PSCS, and companies with existing exploration and production programs in Congo can convert to PSCS, Wood Mackenzie Consultants Ltd., Edinburgh, reported.
Among the main aspects of the revised law:
- Oil production royalty is 15% at the wellhead, with transportation and processing costs reducing the effective rate to 12-14%. Gas production royalty is 5%.
- Cost of oil recovery is negotiable but limited to a maximum 70% of total production.
- Exploration costs and operating costs are recoverable, while development costs are depreciated on a 5 year straight-line basis.
- Profit oil split is negotiable.
- Corporate tax rate is 35%.
- Each development license is ring-fenced except for corporation tax.
Wood Mackenzie said Ste. Nationale Elf Aquitaine has negotiated new tax terms, which are similar to the new tax regulations, for its N'Kossa field development project. In addition, Agip SpA was said to have negotiated a parallel deal for Kitina.
The analyst said the new hydrocarbon code clears the way for three license awards. Marine Blocks XI and XII licenses are being negotiated by Occidental Petroleum Corp., Shell International Petroleum Co. Ltd. is seeking Marine IX acreage, while Elf is thought likely to be awarded the Marine X license.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
