Determination and Offering of Oil and Gas Work Areas

In order to increase and facilitate the supply, determination, and offer of oil and gas work areas the Minister of Energy and Mineral Resources has repealed and replaced Regulation No. 40 of 2006 with Regulation No. 35 of 2008. The previous regulatory framework was deemed to be ineffective and no longer suitable.

Basically, the Minister is responsible for stipulating policy with regards to supply, determination, and offer of oil and gas work areas. This is to be done with assistance of the Director General and taking into consideration any inputs from the Executive Agency for Upstream Oil and Gas Business Activities.

The Regulation deals with the supply of work areas. These areas can be, among others, areas that have never been offered previously or areas that are no longer subject to Joint Work Contract. Furthermore, the Regulation then addresses issues relating to the offering of these areas wither through auction or as a direct offer to a particular entity.

In addition the Regulation also sets out offer guarantees and implementation guarantees. The offer guarantee is 100% of the signing bonus. This must be surrendered at the same time as the offer documents. The implementation guarantee is 10% or USD 1 million or USD 1.5 million (whichever is the larger figure) depending on the type of work area being supplied.

The Regulation also sets out the evaluation criteria for the work areas to be offered. This covers such matters as technical, financial, and performance evaluations.

The Regulation has been in force since 12 November 2008.