The Model Production Sharing Agreement for Deepwater Areas was published on January 26, 2024, under the Petroleum Management Program (PMP) of the Ministry of Natural Resources.
The Program aims to achieve the Ministry’s overall mission of developing, implementing, and overseeing policies for the responsible exploration, development, and utilization of natural resources whilst ensuring the protection and conservation of the environment and advancement of the low-carbon economy.
This recent Agreement template will be used to form deals between potential oil exploration companies and the Ministry.
It will constitute an agreement made under Section 12 of the Petroleum Act, consistent with and subject to the Act and the Regulations and any other Applicable Law, and is a Production Sharing Agreement, the objective of which is to articulate the rights and obligations of the parties and the economic interest relative to the grant and holding of a Petroleum Exploration Licence and, if applicable, Petroleum Production Licence.
Upon making the Agreement, the Contractor commits to fulfilling its obligations and exercising rights under the Agreement efficiently and expertly. This includes conducting Petroleum Operations in line with international industry standards, prioritizing health, safety, security, and environmental conservation.
The Contractor must use modern technology to maximize oil and gas recovery, maintain operational assets, and minimize environmental impact, particularly reducing greenhouse gas emissions.
The Minister or designated entity can audit accounting records, and the Contractor must handle emergencies, and contamination, and inform the government of resource discoveries. Compliance with safety and environmental standards extends to subcontractors.
The Agreement protects the State from any damages caused by its operations and ensures timely payments and entitlements to the State.
Additionally, the Contractor is to prepare an annual budget pursuant to Article 17 of the Agreement, which will be referred to as the Budget Statement. The Budget Statement will distinguish between Exploration Costs, Development Costs, and Operating Costs.