Exploration Lease is granted to the license holder, if oil has been discovered in commercial quantities. The lease maximum period is 50 years (30+20). The royalty paid for oil and gas is 12.5%. The state can ask that the royalty be paid in kind, namely in the form of natural gas rather than money. The request for a lease comes after the official declaration that a drilling has lead to a commercial discovery.

This is the stage after the license period after the Petroleum Commissioner has acknowledged that a commercial discovery has been made. A development lease is granted for 30 years that can be extended by an additional 20 years, during which time the leaseholder is obliged to develop the field with all due diligence as a prudent operator and if he fails to do so and to start within the time allotted in his lease (usually 6 months after the lease has been awarded then it can be revoked). A lease confers upon the leasee the exclusive right to explore for and produce petroleum in the lease area and requires that the leasee produce petroleum in commercial quantities (or pursue test or development drilling). he leasee is entitled to transport and market the petroleum produced, subject to the right of the Government to call upon him to supply local needs first, at market price.