Merak Fiscal Model Library

A world-class collection of standardized fiscal models

Peru License Prod (2003)

Fiscal Term Description
Fiscal Regime Type License Contract (Royalty/Tax Contract).
Governing Legislation 1993 Organic Hydrocarbon Law, 1994 License Contract Model and Decree 017- 2003-EM
State Participation None
Signature Bonus Negotiable
Normally calculate as proportion of Production Rates:
Production Rate (MBBL/d) Training Fee (M$)
Until Production Start Negotiable
Training Fee
0 – 30 Negotiable
30 – 50 Negotiable
> 50 Negotiable
The Contractor, at Declaration of Commerciality, may irrevocably choose a Royalty Rate for oil
and condensate based on the liquid production rate OR a Royalty Rate that is calculated from the
R-factor. This model is set to do the Production Based Royalty calculations. There is a separate
model from the R-Factor model.

Examples are shown in the following table:

Production Rate (MBBL/d) Royalty (%)
0–5 5
Royalty 5 – 100 5 - 20
> 100 20

The latest decree does not mention gas so we assumed that the gas royalty rate is also based on
production. BOE Production is used.

The royalty based on production is direct and linear.

Royalty rate is calculated Semi-Annually.

DMO None
• Tax Rate: 5%
• Losses can be carried forward for 4 years.
Labor Participation Tax
• Intangible Costs are expensed from the production start.
• Tangible Costs are depreciated 5-year straight line.

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 Peru License Prod (2003)

Fiscal Term Description

• Tax Rate: 30%
Income Tax • Same deductions and losses carried forward as Labor Participation Tax
• Labor Participation Tax is deductible
Withholding Tax 4.1%; but need to set repatriation rate in case in order for it to apply.
Ring Fencing Around the contract for Royalty.
Periodicity The model is set to Semi-Annual in order to properly calculate the royalty.

Schlumberger Information Solutions

Merak Fiscal Model Library is licensed and supported by Schlumberger Information Solutions (SIS). SIS is an operating unit of Schlumberger that
provides consulting, software, information management and IT infrastructure services to support the core operational processes of the oil and gas
industry. SIS enables oil and gas companies to drive their business performance and realize the potential of the digital oilfield. SIS is on the Internet at
www.sis.slb.com 04-IS-171

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