The royalty rate on onshore fields is down to 12.5% from 20%, while it remains steady at 10% for offshore fields. The move should spur greater investments in onshore fields, which are faster and cheaper to develop. Yet, the effective rate would drop for offshore fields as well, as the method of deducting expenses before royalty calculation has changed. Exploration and production (E&P) companies can now claim a deduction of 15-20% of realization, or up to $16 per barrel, assuming an oil price of $80 per barrel, against $3-6 per barrel earlier.
