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Section 37
Petroleum expenses
: (1) The following expenses incurred by the contractor during the petroleum work according to this contract shall be considered as petroleum expenses:
(a) Capital Exploration Expenses: All expenses incurred in petroleum operations prior to notification of discovery of petroleum under this Agreement and all expenses incurred after notification of discovery of petroleum in any part of the Contract Area in case the petroleum found is not of commercial grade.
(b) Current Operating Expenses The following expenses incurred after the day of commercial production cost all non-capital expenses:
(1) Expenditures for labor, goods and services directly used in day-to-day petroleum operations, including exploration, development, production, refining, transportation, storage, handling and delivery and maintenance of petroleum and similar activities,
(2) General and office administration, service and overhead operations, expenses including technical and related services, materials, transportation, rent payment and professional staff related expenses and other similar expenses incurred directly in petroleum work within and outside Nepal,
(3) Insurance expenses, fees and all expenses incurred in recovery of all losses, claims, indemnities and judgments related to petroleum operations,
(4) Damages caused by updating the goods,
(5) Expenses incurred for education and training under section 48.
(c) Capital Expenditure: Generally: All expenditure incurred on goods having a commercial life or value of more than one year (excluding capital exploration expenditure) including the following expenditure:-
(1) All expenses related to exploration and prospecting work done in the contract area and all expenses incurred in drilling, testing and completing development wells and constructing permanent facilities for the production, refining, storage and transportation of petroleum.
(2) Fees paid by the contractor to His Majesty's Government for seismic or other information and reports (3) All activities performed by the Contractor in connection with petroleum operations pursuant to this Agreement after the day of commercial production aOther Capital Expenditures.
(2) Apart from the gains from foreign exchange, the amount raised from the removal or sale of equipment and goods from customs duty, from the sale of information, from the sale of rights under this agreement, from insurance and other similar sources of income shall be deducted from petroleum expenses.
(a) Capital Exploration Expenses: All expenses incurred in petroleum operations prior to notification of discovery of petroleum under this Agreement and all expenses incurred after notification of discovery of petroleum in any part of the Contract Area in case the petroleum found is not of commercial grade.
(b) Current Operating Expenses The following expenses incurred after the day of commercial production cost all non-capital expenses:
(1) Expenditures for labor, goods and services directly used in day-to-day petroleum operations, including exploration, development, production, refining, transportation, storage, handling and delivery and maintenance of petroleum and similar activities,
(2) General and office administration, service and overhead operations, expenses including technical and related services, materials, transportation, rent payment and professional staff related expenses and other similar expenses incurred directly in petroleum work within and outside Nepal,
(3) Insurance expenses, fees and all expenses incurred in recovery of all losses, claims, indemnities and judgments related to petroleum operations,
(4) Damages caused by updating the goods,
(5) Expenses incurred for education and training under section 48.
(c) Capital Expenditure: Generally: All expenditure incurred on goods having a commercial life or value of more than one year (excluding capital exploration expenditure) including the following expenditure:-
(1) All expenses related to exploration and prospecting work done in the contract area and all expenses incurred in drilling, testing and completing development wells and constructing permanent facilities for the production, refining, storage and transportation of petroleum.
(2) Fees paid by the contractor to His Majesty's Government for seismic or other information and reports (3) All activities performed by the Contractor in connection with petroleum operations pursuant to this Agreement after the day of commercial production aOther Capital Expenditures.
(2) Apart from the gains from foreign exchange, the amount raised from the removal or sale of equipment and goods from customs duty, from the sale of information, from the sale of rights under this agreement, from insurance and other similar sources of income shall be deducted from petroleum expenses.