All service contractors may avail of the incentives or privileges under the following laws and issuances governing petroleum exploration: Presidential Decree (PD) No. 87 or the Oil Exploration and Development Act of 1972 provides the legal basis for the exploration and development of indigenous petroleum resources in the country by authorizing the grant of service contracts entered into through public bidding or through negotiations.

• Service fee of up to 40% of net production
• Cost reimbursement of up to 70% gross production with carry-forward of unrecovered costs
• FPIA grants of up to 7.5% of the gross proceeds for service contract with minimum Filipino company
  participation of 15%
• Exemption from all taxes except income tax
• Income tax obligation paid out of government's share
• Exemption from all taxes and duties for importation of materials and equipment for petroleum operations
• Easy repatriation of investments and profits
• Free market determination of crude oil prices, i.e., prices realized in a transaction between
  independent persons dealing at arms-length
• Special income tax of 8% of gross Philippine income for subcontractors
• Special income tax of 15% of Philippine income for foreign employees of service contractors and subcontractors

Office of the Energy Affairs Circular No. 87-12-003 The sliding scale allowance from 1.5 percent to 7.5 percent of the gross proceeds granted to the contractor when the aggregate participation in the contract by one or more Filipino Citizens and/or companies is at least 15.0 percent in respect to a Deepwater Contract.

DOE Circular No. 94-01-01 The allowance of 7.5 percent of the gross proceeds granted to the contractor when the aggregate participation in the contract by one or more Filipino citizens and/or companies is at least 15.0 percent in respect to the drilling of a well by the contractor in water depths beyond 200 meters, whether inside or outside a deepwater area.