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Royalties

As owner of the resource, the government determines how much of the oil it gets from the wells in its jurisdiction. This royalty is expressed as a percentage of total production. The financier gets the rest.

Royalties do not depend on operating, amortization, or cleanup expenses. They are also independent of taxes and the financier's profitability situation.

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The financier decides when to suspend or abandon the well. The government does not earn any royalties in either case.

 
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