-
2013 PETROLIAM NASIONAL BERHAD (PETRONAS)
All rights reserved. No part of this document may be reproduced,
stored in a retrieval system or transmitted in any form or by
any means (electronic, mechanical, photocopying, recording or
otherwise) without the permission of the copyright owner.
PETROLEUM INVESTMENTVOLUME 2
PETRONAS Proceduresand Guidelines for Upstream
Activities (PPGUA 3.0)
-
VOLUME 2PETROLEUM INVESTMENT
2 PPGUA/3.0/042/2013
Table of Contents
Executive SummaryContact InformationDefinitions Section 1: Block
Acquisition 1.1 Introduction 1.2 Registering an Interest 1.3
Company Screening and Data Review 1.3.1 Establish Contact 1.3.2
Data Review 1.3.3 Expression of Interest (EOI) 1.4 Bidding and
Award 1.4.1 Bidding 1.4.1.1 Issuance of Invitation to Bid 1.4.1.2
Bid Package Submission 1.4.1.3 Bid Evaluation 1.4.2 Conditional
Award 1.4.3 FinalisationSection 2: Farm In/Farm Out Exercises and
Media Announcement 2.1 Farm In/Farm Out 2.1.1 Farm in/Farm Out
Process 2.2 Media Announcements 2.2.1 Procedures for Media
Announcement - Specific CategoriesAbbreviations
33455555
5-66777788899
9-10111112
-
VOLUME 2PETROLEUM INVESTMENT
PPGUA/3.0/042/2013 3
Executive SummaryAs custodian of Malaysias oil and gas resources
pursuant to the PetroleumDevelopment Act 1974, PETRONAS constantly
strives to advance Exploration and Production (E&P) activities
in the country. PETRONAS promotes exploration & exploitation of
petroleum investments, optimise Malaysias E&P assets and manage
all E&P activities in the country. Its aspiration is to provide
a conducive and progressive business environment in the Malaysian
oil and gas industry.
Petroleum Management Unit (PMU), acts for and on behalf of
PETRONAS, and responsible for the overall management of Malaysias
domestic oil and gas assets. Its main functions among others is to
manage the optimal exploitation of hydrocarbon resources and
enhance the prospectivity of domestic acreages in order to attract
investment in the Malaysian oil and gas industry as well as
protecting the national interest.
This volume shall contain two (2) main sections. Section 1
provides guidelines for block acquisition and Section 2 provides
guidelines for Farm In/Farm Out exercises and media
announcements.
PETRONAS reviews and approves the participation of investors in
the Malaysianpetroleum operations.
Contact InformationGeneral inquiries regarding content of this
volume shall be made to:
Senior General ManagerPetroleum Resource Exploration Petroleum
Management Unit
and/or
Senior General ManagerPetroleum Resource DevelopmentPetroleum
Management Unit
-
VOLUME 2PETROLEUM INVESTMENT
4 PPGUA/3.0/042/2013
Definitions
TERM DEFINITION
Bid Package A package that includes instructions and guidelines
forinterested investors to participate in the bidding process.
Conditional Award An award of a block or field with the
requirement forContractor to fulfill certain conditions prior to
final award.
Confidentiality Agreement Non-disclosure agreement executed by
Potential Investor(s) and PETRONAS to protect the confidentiality
of PETRONAS data.
Farm In/Farm Out Whenever a company acquires/assigns
participating interest from an existing Contractor in an existing
Contract.
InternationalUnitisation Agreement
An agreement entered into between two (or more) hostGovernments
in relation to the joint development andproduction of a straddling
field(s) across the nationalboundaries of each country.
Potential Investor(s) Company(ies) that is interested in
investing in Malaysias E&P activities including existing
Contractor(s) intending to acquire additional Malaysian
acreages.
Straddling Field(s) Petroleum field(s) that has geological
communication and shares the same field structure with another
petroleum field in another block.
-
VOLUME 2PETROLEUM INVESTMENT
PPGUA/3.0/042/2013 5
Section 1: Block Acquisition
1.1 Introduction Potential Investors with a genuine interest in
acquiring exploration blocks within Malaysia are required to convey
their interest formally to PETRONAS. All companies will be screened
by PETRONAS to ensure that certain criteria for Malaysian
investment are met. If the company is eligible to explore in
Malaysia, a data review session will be arranged followed by a
bidding exercise. All block acquisition processes are handled by
PMU on behalf of PETRONAS.
1.2 Registering an Interest The Block Promotion unit from the
Basin Assessment and Promotion (BAP) in Petroleum Resource
Exploration (PREX), PMU is responsible among others to market and
promote Malaysian exploration opportunities. Its aim is to attract
and sustain foreign investments in domestic E&P. Since its
establishment in 2004, the Block Promotion unit has moved from
conventional to aggressive promotion by embarking on various
marketing strategies to attract Potential Investors to undertake
exploration activities in Malaysia.
A Potential Investor must formally express its interest to
participate in Malaysian domestic exploration opportunities with
the Petroleum Resource Exploration Department. The procedures are
explained below.
1.3 Company Screening and Data Review 1.3.1 Establish Contact
Potential Investor must submit its companys profile, together with
latest audited financial statement, to PETRONAS for screening
purposes. Successfully screened investors are eligible to
participate in the review of Malaysian exploration opportunities.
1.3.2 Data Review PETRONAS will send an invitation to all
successfully screened investors, together with a technical summary
of the focus blocks. Potential Investor shall express its interest
to participate in the data review to PETRONAS. A data review
session will be scheduled. Potential Investor must execute
Confidentiality Agreement (CA) prior to any data review session.
Only information on the offered block(s) is available for review.
PETRONAS will not permit data review in any other block. Removal
and copy of data (in any format) from the data review room without
prior written consent from PETRONAS, is strictly prohibited.
-
VOLUME 2PETROLEUM INVESTMENT
6 PPGUA/3.0/042/2013
Potential Investor may request additional data review visits in
respect of the offered block, subject to room availability.
Potential Investor shall submit a technical evaluation report of
the reviewed block(s). This must be completed within two (2) months
after the first data review session.
Figure 1: Data Review and Block Award Process
1.3.3 Expression of Interest (EOI) Once the Potential Investor
has completed the data review of the offered block(s), PETRONAS
will request the Potential Investor to submit an EOI on the
reviewed block(s). Potential Investor must express in writing its
interest to participate in the bidding process if it wishes to be
considered.
EstablishContact
Courtesyvisit andreview ofcurrentopportunities
DataReview
ConditionalAward
ContractSigning
NegotiationBidding
. Companies establish contact with PMU and assessed for
interest
. Data is available for review upon request and companies are
requested to sign confidentiality agreement
. Shortlisted companies are invited for a closed tender for
selected blocks
. Contract negotation and award to successful company
. Companies submit report on findings and interest within three
(3) month
-
VOLUME 2PETROLEUM INVESTMENT
PPGUA/3.0/042/2013 7
1.4 Bidding and Award 1.4.1 Bidding 1.4.1.1 Issuance of
Invitation to Bid (ITB) After the submission of the EOI to
PETRONAS, Potential Investor will receive an ITB, together with a
CA from PETRONAS at the beginning of the bidding exercise. The CA
at this stage is to govern the confidentiality of the data and
information related to the bid activity and is separate and
different from the earlier CA signed for the data review. Potential
Investor shall respond to the ITB before the given deadline if it
wishes to participate in the bidding.
1.4.1.2 Bid Package Submission PETRONAS will provide written
instructions and guidelines on the bidding process. The guidelines
consist of the following documents:
a) An ITB; b) CA (executed); c) Attachment 1A: Tender
information including rules for submission of proposal; d)
Attachment 1B: Instructions to bidders with regards to conflict of
interests; e) Attachment 2: Draft Contract; f ) Attachment 3:
Location map; g) Attachment 4: Location map and coordinates of
block; and h) Appendix A: A template for the bid.
Potential Investor needs to submit its bid within a month upon
receiving the bid package in accordance with the template.
Potential Investor must also provide:
a) company profile; b) geological and geophysical evaluation of
the block; c) proposed exploration strategy for the block; d)
proposed minimum exploration work for the block; and e) financial
commitment to undertake the exploration activities for the
block.
-
VOLUME 2PETROLEUM INVESTMENT
8 PPGUA/3.0/042/2013
1.4.1.3 Bid Evaluation All bid submissions will be evaluated by
the Bid Evaluation Committee (BEC) which is a committee formed by
PETRONAS. The BEC will evaluate the bid based on technical and
financial criteria.
Clarification Meeting Upon recommendation from the BEC, the
Business Development Team under PREX, PMU will conduct a
clarification meeting with the shortlisted bidder. The shortlisted
bidder is required to explain its bid proposal, focusing on the
minimum work, financial commitment, and exploration strategy
aspects of its bid. During the clarification meeting, PETRONAS may
require the shortlisted bidder to revise its proposal to serve the
best interests of both parties.
1.4.2 Conditional Award After the clarification meeting with the
shortlisted bidder and the receipt of the revised proposal if any,
PETRONAS will decide to give conditional award to the successful
bidder.
1.4.3 Finalisation PMU together with the successful bidder will
finalise all terms and conditions of the Contract for
execution.
-
VOLUME 2PETROLEUM INVESTMENT
PPGUA/3.0/042/2013 9
Section 2: Farm In/Farm Out Exercises and Media Announcement
2.1 Farm In/Farm Out 2.1.1 Farm In/Farm Out Process A company
may farm in or an existing Contractor may farm out its
participating interest or equity in a Contract subject to the final
approval of PETRONAS. Depending on the phase of petroleum
operations of a Contract in which the farm in/farm out exercise
occurs, the following departments within PMU are responsible to
review such exercise:
The written application shall be submitted directly to PMU which
includes:
a) Letter of Intent (LOI); b) Proposed farm in candidate(s)
profile; and c) Proposed CA; d) Data package if applicable
A farm in/farm out exercise can only be executed upon PETRONAS
approval. Figure 2 demonstrates the process farm in/farm out
exercise.
PHASE DEPARTMENTS WITHIN PMU
Exploration Petroleum Resource Exploration (PREX)
Development Petroleum Resource Development (PRD)
Production Petroleum Operations Management (POM)
-
VOLUME 2PETROLEUM INVESTMENT
10 PPGUA/3.0/042/2013
Figure 2: Farm In/Farm Out Process Flow
START
END
Contractor sends LOI, draft CA, Data Packageand list of
candidates to PETRONAS
Amendment
NO
YES
NO
YES
PETRONASapproval on the release of the reviewed CA
Contractor to submit to PETRONASthe signed CA with all the
candidates
Bidding Process
Submit Farm Out application andevaluation report to PETRONAS
PETRONAS approval on Farm Out
Contractor to notify the approved candidatesand issue a Side
Letter to JOA parties
PETRONAS issues Side Letter to Contract
Contractor to submit the acknowledged Side Letterto Contract and
copy of Side Letter issued to JOA to PETRONAS
-
VOLUME 2PETROLEUM INVESTMENT
PPGUA/3.0/042/2013 11
2.2 Media Announcements Any media announcements relating to
PETRONAS and petroleum operations of the Contract shall require
PETRONAS prior approval.
All media enquiries, especially on sensitive issues and PETRONAS
policies, shall be directed to PETRONAS for appropriate
responses.
2.2.1 Procedures for Media Announcement - Specific Categories
Media announcements of certain categories shall be directed to the
respective Head of Departments in PMU:
CATEGORY RESPONSIBLE HEAD OF DEPARTMENT
Exploration Senior General Manager, PREX
Development Senior General Manager, PRD
-
VOLUME 2PETROLEUM INVESTMENT
12 PPGUA/3.0/042/2013
TERM IN FULL
BAP Basin Assessment and Promotion
BEC Bid Evaluation Committee
CA Confidentiality Agreement
E&P Exploration and Production
EOI Expressions of Interest
ITB Invitation to Bid
JOA Joint Operating Agreement
LOI Letter of Intent
PMU Petroleum Management Unit
POM Petroleum Operations Management
PRD Petroleum Resource Development
PREX Petroleum Resource Exploration
Abbreviations