A percentage of interest in the value of production from a field that is paid to the mineral rights owner (such as to the host government, landowner, mineral owner). The payment of royalties is in most cases entirely dependent upon the sale or use of the gas by the lessee.

In Israel the royalties are set at 12.5% to be paid to the state. Royalties as a matter of fact for natural gas such as for the Mari-B field totalled only 11.21% because the price is taken at the well-head and so one deducts the cost of the infrastructure to shore and the terminal

Royalties differ from taxes which are paid from the revenue, in that royalties are paid from the total value of production. A few agreements provide for the royalty to be taken only in kind by the royalty owner