: (1) The Government of Nepal shall retain at least 12.5 percent of all petroleum produced from the contract area as royalty in accordance with Section 13 of the Act.
(2) After the government of Nepal has kept the royalty from the petroleum produced in the contract area and the petroleum expenses have been paid to the contractor, the remaining petroleum will be distributed between the government of Nepal and the contractor according to the provisions of the petroleum agreement.
(3) For the purposes of this rule, petroleum produced from the contract area means petroleum produced from each place within the contract area after deducting the petroleum used as follows:
(a) petroleum used in analysis, testing or petroleum operations,
(b) natural gas provided or flared to other contractors free of cost for the protection of petroleum assets with the prior approval of the department,
(c) Natural gas used by the Government of Nepal at its own risk.