Several streams of revenues result from petroleum activities. The first stream is a result of the multi-client data sales which is periodically disclosed on the LPA website. Once a commercial discovery is made and production starts, the government collects its share which is composed of the royalty, the state’s share of profit petroleum and taxes paid by Right Holders. Click here to view the Lebanese petroleum fiscal system diagram.
As the owner of petroleum resources, the State is entitled to receive a royalty that is a percentage of the petroleum extracted from the reservoirs. It is a 4% fixed rate on produced gas and a sliding scale on produced oil varying from 5% to 12%.
Profit petroleum is the remaining produced petroleum after deducting the royalty and the cost petroleum. It is split between the State and the Consortium according to the commercial proposal.
The petroleum tax law specifies the corporate income tax that oil and gas companies have to pay. Additionally, these companies have also to settle all other taxes as per the Lebanese legal system.
It is important to monitor costs in order to avoid unnecessary expenses so to prevent corruption and inefficiencies, to maximize the income for the country and to recover the full value of the prospective resources, while taking into consideration quality and safety standards. The Lebanese Petroleum Administration (LPA) monitors costs for cost recovery purposes, day to day operations and audits right holders’ accounting and financial procedures to make sure they are consistent with the provisions of the Exploration and Production Agreement. The Ministry of Finance monitors costs for tax collection purposes.