Royalty

(1) The Minister shall require a contractor to pay to the Government a royalty, in cash or in kind, at the option of the Government, upon the value or volume, as the case may be, of crude oil produced and saved in the contract area after deducting the amount of crude oil used and consumed in the conduct of petroleum operations. (2) The Minister may require a contractor to pay to the Government a royalty based on the gross value or volume, as the case may be, of natural gas produced, saved and sold from the contract area after deducting the amount of natural gas used and consumed in the conduct of petroleum operations. (3) The royalty rate, and method of determination and payment shall be prescribed in each contract. (4) The owner of any private land beneath which a petroleum reservoir is located shall receive from the Government five per centum of the royalty payable in respect of any petroleum won there from, where the petroleum rights in respect of such land would but for the passing of the Petroleum (Production) Act, 1937, Cap. 184, R. E. 1980-1990, and this Act, be vested in him. 27 (5) Where a petroleum reservoir extends beyond the boundaries of any public or private land, production from such reservoir shall, for the purposes of subsection (4) of this section, be allocated to the lands concerned in the manner prescribed and payments under subsection (4) of the section, shall be made in accordance with such allocation.