Mongolian PSC terms for Block XX14 Aug 2019 14:13
I will put this here, as IF MATD do strike oil, some numpties will be along to tell you its worthless.
Actually, Mongolian oil is very valuable. The PSC terms are rather wonderful......the oil has very high value in real terms to the producing company.
Look at these PSC terms - keep this to repost later - compare these terms against some other countries terms, see how much the oil is worth in other places in real terms to the producing company, after tax and tax and tax is hit upon them.
Petroleum Sharing Contract (PSC)
Royalty: Block XX 5%
Low cost in comparison to other jurisdictions
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Corporate tax: 0%
Speaks for itself, designed to encourage foreign investment
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Cost recovery mechanism: Exploration, development and operations costs recoverable against oil production with annual cap of 40% of total gross revenue. The remainder is carried over. Transportation costs are recoverable
This really needs shouting about!! Costs of Exploration, Development, Operations and Transport can be recovered in the success case. The implication for this is that on any success, when coming to arrange finance, this puts the company in a very strong position. This is something quite special
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Contractor Profit oil split: Block XX 45% to 60%
This highlights just how aligned the Mongolian government is with the success case. Implications are to enable a significant cash flow from production.
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