Merak Fiscal Model Library

A world-class collection of standardized fiscal models

Bahrain PSC (1998)

Fiscal Term Description
R-Factor Type Cost Recovery and Production Sharing Contract plus an Income Tax. The PSC
Fiscal Regime Type granted Chevron in February 1998 is being used by Bahrain as a model for new bids for offshore
areas.
Governing Legislation General laws of the country. (No specific petroleum acts).
State Participation None.
Signature Bonus Negotiable and not cost recoverable. (Chevron paid a one million Dollar bonus)
An annual registration fee is payable by all companies. Such fees vary according to the business
Rental and Fees activity and the form of the company.
Production Bonus None
Royalty None
• At "R Factor" of less than one (1.00), cost recovery is out of 50% of Crude Oil Net Production or
Non-Associated Gas.
• When the “R” factor is greater than one (1.00), Cost Recovery Petroleum is 40% percent.

Cost Recovery Petroleum • Excess cost recovery oil available for profit oil split.
• Capital Costs recoverable at 25% per year.
• Exploration Costs earn Interest of LIBOR plus 1%.
• Unrecovered costs are carried forward.
Profit Crude Oil and Non-Associated Gas Sharing

NOC’s % Contractor’s Share %

R Factor <1 65 35
1 <R Factor <1.5 70 30
1.5 <R Factor <1.75 75 25
1.75<R Factor <2 80 20
Profit Oil R Factor >2 85 15
• "R Factor" of 1.00 or less gives 35%. When the "R Factor" (ratio of receipts to expenditures) is
over 2, production split drops to 15% for contractor. The R Factor lookup is direct rather than
incremental.
• "R Factor" is the ratio of receipts to expenditures. Receipts are the aggregate value of Cost
Recovery Petroleum and contractor share of Excess Cost Recovery Petroleum and contractor
share of Profit Crude Oil.
• The cumulative expenditures are the aggregate amount of expenditure previously incurred.
• The tax rate is 46%. The country has no Income Tax except on petroleum-related activities.
Income Tax
• Depreciation assumed to be 10 year straight line.

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 Bahrain PSC (1998)

Fiscal Term Description

There are no taxes or withholding taxes on dividends, interest, fees, or other remittances.
Withholding Taxes Companies are allowed to transfer accumulated profits and capital without restrictions.
Associated Gas Associated gas not used on site free to state. Model assumes all gas input to be non-associated.

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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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