License Recognition
- Granted by decision of Ministry in charge of Energy, upon the conclusion of a reconnaissance Contract (specifying terms: validity period, area, etc.)
- Once the reconnaissance works are performed, the parties may decide to begin exploration works. In this case, a petroleum agreement sets out the respective rights and obligations of the parties.
Exploration permit
- Following the signature of the petroleum agreement between ONHYM and the petroleum company, a joint permit application is filled;
- An Association Contract (a joint operating agreement) is signed concurrently with the Petroleum Agreement, to organize relationships between the parties;
- The Minister in charge of Energy “MEM” grants exploration permits through a ministerial order within 60 days of the application filling date.
- The Petroleum Agreement is approved by joint order of the MEM and Minister in charge of finance (MF);
Concession operation
- In case a hydrocarbon discovery is made that unveils commercially exploitable quantities, the holders of the exploration permit are entitled to request an exploitation concession relating to the deposit so discovered, provided that all contractual and technical obligations are performed
- The concession is awarded by Decree of Prime Minister following approval of the request by the MEM
Entry requirements
- Pursuant to the Hydrocarbon Code, any petroleum company may conduct reconnaissance, exploration and exploitation activities in Morocco. Such petroleum company must evidence its technical and financial capabilities to carry out the exploration works agreed with ONHYM and undertake to fulfil a minimum work program with a corresponding financial commitment;
- Moroccan legislation and regulations apply equally to both local and foreign companies.
Legislation
With its very attractive and favorable regulatory terms, Morocco is one of the top destinations for investor in term of risk/reward ratio. Morocco has also undertaken constitutional reforms and legislative amendments that lead to its business attractiveness.
ONHYM plays the central role of a one-stop shop for oil companies interested in exploring Morocco’s hydrocarbon potential, and improves awareness of the legislation and regulation governing the upstream sector as follows:
UPSTREAM SECTOR
The Hydrocarbon Code
composed of :
• Law n°21-90 relating to the exploration and exploitation of hydrocarbon deposits, enacted by Dahir n°1-91-118 dated April 1, 1992, as amended by law n°27-99 enacted by Dahir n°1-99-340 dated February 15, 2000 .
• Decree n°2-93-786 dated November 3, 1993 implementing the Hydrocarbon Law, as amended by Decree n°2-99-210 dated March 16, 2000.
GENERAL TAX CODE
TREATIES
As part of the effort to encourage investment, Morocco signed and ratified the international instruments enabling implementation of arbitral awards, i.e. the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the 1965 International Convention on settlement of Investment Disputes between States and nationals of other States and the agreement with the European Union establishing a dispute settlement mechanism entered into in 2011.
Morocco grants the right to IOCs to recourse to arbitration for dispute settlement.
As for taxation, Morocco has signed 76 treaties on the avoidance of double taxation with countries and regional and international communities.
INCENTIVES
IOCs willing to operate in Morocco benefit from a very advantageous business environment granting multiple incentives:
• Government interest share of a maximum of 25 %.
• A total exemption from corporate income tax on production for a consecutive ten-year period as from the start of the regular production.
• A total perpetual exemption from all duties and taxes on the importation of equipment, materials and consumables, and a total perpetual exemption from VAT and all other taxes, except withholding tax.
• Exemption from the tax on income from shares, capital rights and similar revenues on the profits and dividends of the companies holding a producing concession and shareholders of these companies.
• Free transfer of the profits and dividends outside Morocco without limitation for foreign entities.
