Overview of PSCs Baker McKenzie IBP.Final.pdf

The psc form in china establishes a considerable

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the government. The PSC form in China establishes a considerable amount of governmental supervision of PSC matters:
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46 Regulatory Oversight By The Host Government China Clause 8.2 (p. 17 ): each company comprising Contractor must register with government agency (MOFCOM) Clause 11.6 (p. 25) : government approves Overall Development Plan Clause 14.2.1 (p. 33) : carries out quality analysis of production Clause 14.3.1 (p. 32) : calibrates petroleum measuring devices Clause 14.6.1 (p. 34) : may approve sale of production to Chinese Users Clause 21.2 (p. 44) : receive PSC confidential information
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47 Regulatory Oversight By The Host Government Equatorial Guinea In contrast with other PSC forms, the PSC in Equatorial Guinea establishes extensive government control and regulation of PSC matters:
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48 Regulatory Oversight By The Host Government Equatorial Guinea Clause 1.2.1 (p. 7) : Ministry of Mines, Industry and Energy is responsible for supervising Petroleum Operations Clause 4.1 (p. 12) : Ministry must approve the Annual Work Program and Budget Clause 5.2.1 (p. 16) : Ministry must approve an Appraisal Work Program relating to discovery of hydrocarbons Clause 5.5.1 (p. 18) : Ministry must approve a Development and Production Plan for any commercial Discovery
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49 Regulatory Oversight By The Host Government Equatorial Guinea Clause 6.2 (p. 22) : Ministry must approve the JOA; Clause 6.8.1 (p. 24) : Ministry may inspect Petroleum Operations; Clause 10.2.1 (p. 40) : Ministry and Contractor must agree on Market Price of Crude Oil; Clause 1.3.3 of Annex C Accounting Procedure (p. 82) : Contractor must submit extensive production information to the Ministry
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50 Key Provisions in PSCs Minimum Work Obligation Local Content Bonus & Taxes Cost Recovery Relinquishment Commercial Discovery Term Stabilization Management and Control
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51 Minimum Work Obligation Contains: Detailed description of minimum work to be performed by IOC Estimate of cost in each phase of exploration The most negotiated provision in the PSC The Minimum Work Obligation is finalized before any work begins
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52 Key Provisions in PSCs Minimum Work Obligation Local Content Bonus & Taxes Cost Recovery Relinquishment Commercial Discovery Term Stabilization Management and Control
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53 Relinquishment IOC is required to progressively reduce the size of the Contract Area at stated intervals during the exploration period Relinquishment percentages vary greatly by region
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54 Exploration Phase – multiple exploration periods EXPLORATION PHASE I EXPLORATION PHASE II EXPLORATION PHASE III RELINQUISHMENT OF CONTRACT AREA 100% of contract area less discovery areas 25% of contract area not being discovery areas 50% of contract area not being discovery areas 100 % of contract area not being discovery areas 100% of contract area less discovery areas Relinquishment: India PSC Model
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55 Key Provisions in PSCs Minimum Work Obligation Local Content Bonus & Taxes Cost Recovery Relinquishment Commercial Discovery Term Stabilization Management and Control
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56 Commercial Discovery What is a Commercial Discovery?
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  • Winter '14
  • Bijay K Behra
  • contractor, Petroleum industry

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