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 Infopetro -> Laws & Regulation


Provisional Regulations on Royalty for Sino-Foreign Cooperative Exploitation of Land Oil Resources

  08/03/2004


(Issued by the Ministry of Finance on January 15, 1990)

Article 1. The regulation are formulated to give an impetus to the development of the national economy, enhance international economic and technological cooperation and encourage the exploitation of land oil resources in China.

Article 2. Chinese and foreign enterprises engaged in the cooperative exploitation of oil resources on the land within the territory of the People's Republic of China shall pay fees for using mining areas (oil royalties) in accordance with the regulations.

Article 3. The fees for using mining areas are computed and imposed separately in accordance with the total output of crude oil or natural gas in each oil or gas field in a calendar year. The fees for using mining areas are charged at the following rates:

1. Crude Oil

No fee is charged for the first 50,000 tons of the annual crude oil output,

1% is charged for the range of the annual output of over 50,000--100,000 tons,

2% for the range of the annual output of over 100,000 to 150,000 tons,

3% for the range of the annual output of over 150,000 to 200,000 tons,

4% for the range of the annual output over 200,000 to 300,000 tons,

6% for the range of the annual output of over 300,000 to 500,000 tons,

8% for the range of the annual output of over 500,000 to 750,000 tons,

10% for the range of the annual output of over 750,000 to one million tons,

12.5% for the range of the annual output over one million tons.

2. Natural Gas

No fee is charged for the first 100 million NCM (normal cubic meter) of the annual output,

1% for the range of the annual output of over 100 million to 200 million NCM,

2% for the range of the annual output of over 200 million to 300 million NCM,

3% for the range of the annual output of over 300 million to 400 million NCM,

4% for the range of the annual output of over 400 million to 600 million NCM,

6% for the range of the annual output of over 600 million to one billion NCM,

8% for the range of the annual output of over one billion to 1.5 billion NCM,

10% for the range of the annual output of over 1.5 to 2 billion NCM,

12.5% for the range of the annual output over 2 billion NCM.

Article 4. The fees for using mining areas producing crude oil or natural gas are paid in kind.

Article 5. The fees for using mining areas producing crude oil or natural gas are charged and controlled by tax departments.

The fees for using mining areas for Sino-foreign cooperative exploitation of oil and gas field are withhold by the operators of the oil and gas fields and handed over to China National Oil Development Corporation for payment on a commission basis.

Article 6. The fees for using mining areas are calculated yearly and paid in advance in separate period or by installments. Their settlements are made after the end of the year, Time limit for the advance payments and settlements are fixed by the tax departments.

Article 7. The oil and gas field operators shall report the quarterly output and send other relevant materials to the tax departments ten days after the end of the quarter.

Article 8. The consignee who withhold and hand over the fees for using mining areas on a commission basis must pay the fees before the due day. For delay payment, the tax departments shall impose an additional overdue fine computed at a daily rate of one thousandth the fees for using the mines starting from the day after the amount is due.

Article 9. The tax departments may impose with discretion a fine of less than Rmb 5,000 on the oil or gas field operator who fails to report on time the actual oil or gas output and send other relevant on time the actual oil or gas output and send other relevant materials required by the tax department in violation of Article 7. For any concealment of output, the tax departments may impose with discretion a fine not more than five times the fees for using mining areas apart from pursuing the original fees the operator is bound to pay.

Article 10. The meaning of the following terminologies in the regulations is defined as follows:

1. Crude oil: Solid and liquid hydrocarbon in a natural state, including any liquid hydrocarbon extracted from natural gas except CH4.

2. Natural gas: Non-associated and associated natural gas in a natural state.

Non-associated natural gas: All gaseous hydrocarbon extracted from gas reserve including wet gas, dry gas and residual gas after the extraction of liquid hydrocarbon from wet gas.

Associated natural gas: All gaseous hydrocarbon extracted together with crude oil from gas reserve, including residual gas after the extraction of gaseous hydrocarbon from it.

3. The total crude oil output in a calendar year: The total amount of crude oil produced in each oil or gas field in a contracted mining area in a calendar year with deduction of oil used in operation and loss.

4. The total gas output in a calendar year: The total amount of natural gas produced in each oil or gas field in a contracted mining area in a calendar year with deduction of gas used in oil operation and loss.

Article 11. The power to interpret the regulations is vested in the State Administration of Taxation.

Article 12. The regulations go into effect on January 1, 1990.


Important Notice:
This document is an unofficial translated version in English. In case of discrepancy, the original version in Chinese shall prevail.



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