c)
i) Surface Rental
Surface rental is revenue charged by the government per square kilometer in respect of the acreage of block given to a contractor for petroleum operations. It is paid annually at each anniversary. The amount paid depends on the stage of production. It is lower at the exploration stage and increases at the development and production stages. The contractors pay these monies into the petroleum holding fund.

(2.5 marks)

ii) Carried Interest
Carried interest is the interest of the government that allows the state to have a share of the oil produced without making a contribution towards exploration and development costs. The state, however, contributes towards production costs in proportion to its share in the petroleum operations.

(2.5 marks)