Operational activities in Oman are governed by Petroleum Agreements signed with the Government of the Sultanate of Oman. The physical and fiscal structure of these agreements is that of production sharing with local tax being credited in the Sultanate’s production share.

In both blocks, the Sultanate’s share is allocated to the Ministry of Oil and Gas (“MOG”). The production sharing mechanism entitles the Ministry of Oil & Gas to a proportion of the production however, and in practice, Petrogas E&P LLC’s operating subsidiaries lift all production and reimburse MOG in cash for their production entitlement.

The primary term of the Petroleum Agreements for Block-5 is 20 years ending in 2018, with an option to extend for a further 10 years. Such an extension has already been granted for Block-7 whose term now extends to May 2015. A second 10 year extension is under consideration.