Exemption from surcharge during cost-recovery period

(1) Subject to the provisions of this section, a Class B Contractor will be exempt from the payment of surcharge under this Part in respect of an oil field from the date of declaration of commerciality to allow for the recovery of the initial capital investment (i.e., approved exploration costs that apply to that field and costs in accordance with the approved development plans for the field). (2) For the purpose of sub-section (1) of this section, the maximum exemption period will be three years from the date of declaration of commerciality of the field for onshore fields, and five years from such declaration for offshore fields, Provided that if the initial capital investment is recovered before the expiry of the maximum exemption period specified above, as verified by the Inspector of Petroleum, the exemption period will immediately cease and the Contractor will become liable for the payment of the surcharge under this Part. (3) Sub-sections (1) and (2) of this section will also apply to a Class A Contractor in respect of any new oil field upon declaration of commerciality.