By an OGJ correspondent
LIMA, May 30 -- Peru's President Alejandro Toledo has approved new legislation to boost sluggish oil exploration and production through a reduction in royalties to a minimum 5%. Royalties were previously limited to 13.8%, except for exploration in deep waters on the continental shelf in 200-400 m of water.
Under the new rules, published Thursday in El Peruano, the official Peruvian gazette, contractors already exploring certain blocks also can benefit.
Companies now have two options:
-- Selecting a royalty starting at 5% and producing as much as a registered 5,000 b/d of oil. Royalties in these cases will gradually increase up to a maximum of 20%, according to the volume of production.
-- Selecting a fixed royalty of 5% using an R factor of 1.15 until the contractor recovers its costs. The royalty will then vary between 0-20%, according to revenue and costs incurred by the company during the previous year.
State oil concern Perupetro said that the new system will step up negotiations for E&D contracts and will make small finds more feasible.
Meanwhile, Perupetro plans to attend an event in Calgary during June 9-11 to promote its new system, later to be followed by events in Houston and certain European cites.
