Petroleum rules published

Exploration, production contracts for 30 years

A decree regulating all aspects of offshore petroleum operations was published in the Official Gazette on May 9. The decree comprises 165 articles related to surveying, exploration, and production activities, including standards for the construction of facilities and safety regulations.

The decree stated the rules for obtaining a license to conduct petroleum surveys, which include listing all vessels and equipment that will be used and indicating the time needed for execution. Filing fees for a survey license application were set at $20,000.

The decree also specified rules for obtaining exploration and production rights (licensing round). Filing fees to apply exploration and production rights were set at $50,000. After concluding the preliminary exploration phase, winning consortiums are required to pay $350 per square kilometer for the first year, and $400 per square kilometer for each of the following years.

Before starting drilling operations, each consortium should obtain a license to drill wells from the Ministry of Energy and Water (MoEW). Consortiums should then apply for a production license eight weeks before starting the actual production activities.

The Petroleum Administration has proposed a fixed royalty fee of four percent on gas and a sliding fee of between five and 12 percent on oil, depending on the production size. These rates will be negotiable with qualified consortiums and are subject to amendments requested by the Cabinet.

The decree specified the guidelines for exploration and production agreements that will be signed with each of the participating consortiums. Each contract serves for a maximum period of 30 years.