Monitoring and Supervision Procedures for Exploration and Development Activities - Final Under Strengthening of Hydrocarbon Unit in the Energy and Mineral Resources Division (Phase-II) ADB Grant 0019: GTDP For HYDROCARBON UNIT Energy and Mineral Resources Division Government of the People’s Republic of Bangladesh May 6, 2011 Monitoring and Supervision Procedures for Exploration and Development Activities - Revised Under Strengthening of Hydrocarbon Unit in the Energy and Mineral Resources Division (Phase-II) ADB Grant 0019: GTDP For HYDROCARBON UNIT Energy and Mineral Resources Division Government of the People’s Republic of Bangladesh May 6, 2011 Submitted by: Dr. Mark Cronshaw, Team Leader TABLE OF CONTENTS PAGE 1 EXECUTIVE SUMMARY ..................................................................................................... 1 2 INTRODUCTION ................................................................................................................... 3 2.1 PURPOSE ........................................................................................................................ 3 2.2 AUTHORITY ................................................................................................................... 3 3 HYDROCARBON ACTIVITY IN BANGLADESH ............................................................. 5 3.1 AGENCIES WITH HYDROCARBON RESPONSIBILITIES ....................................... 5 3.1.1 Energy and Mineral Resources Division ............................................................... 5 3.1.2 Petrobangla ............................................................................................................ 6 3.1.3 HCU ....................................................................................................................... 8 3.2 EXPLORATION AND PRODUCTION ACTIVITY .................................................... 10 3.2.1 Historical Evolution of Petroleum Agreements in Bangladesh ........................... 10 3.2.2 First Round PSCs ................................................................................................ 13 3.2.3 PSCs Based on the 1997 Model PSC .................................................................. 16 3.2.4 BAPEX/Niko Resources Joint Venture ............................................................... 16 3.2.5 Offshore Bidding Based on the Model PSC 2008 ............................................... 19 3.2.6 Future Bidding ..................................................................................................... 20 4 CURRENT MONITORING AND SUPERVISION METHODS ......................................... 21 4.1 MONITORING AND SUPERVISION OF EXISTING PSCS...................................... 21 4.2 PSC MONITORING SYSTEMS AT PETROBANGLA .............................................. 24 4.3 PETROBANGLA’S PSC MONITORING EXPERIENCE ........................................... 28 4.4 HYDROCARBON UNIT’S PSC MONITORING EXPERIENCE............................... 33 4.5 MONITORING AND SUPERVISION OF THE BAPEX/NIKO RESOURCES JOINT VENTURE ..................................................................................................................... 35 5 SURVEY OF BEST PRACTICES IN MONITORING AND SUPERVISION ................... 39 5.1 INTRODUCTION .......................................................................................................... 39 5.2 QATAR .......................................................................................................................... 43 5.2.1 General Monitoring, Supervisory and Audit Scheme ......................................... 43 5.2.2 Duration ............................................................................................................... 44 5.2.3 Exploration and Work Program .......................................................................... 44 5.2.4 Relinquishment .................................................................................................... 45 5.2.5 Evaluation and Registration Requirements ......................................................... 46 5.2.6 Recoverable Costs ............................................................................................... 46 5.2.7 Fiscal Structure .................................................................................................... 48 5.2.8 Measurement ....................................................................................................... 48 5.2.9 Taxes, Duties, Levies .......................................................................................... 48 5.2.10 Domestic Supply ................................................................................................. 49 5.2.11 Associated/Non-Associated Gas ......................................................................... 49 5.2.12 Safety and Environment ...................................................................................... 50 5.2.13 Reporting Requirements ...................................................................................... 51 5/6/2011 i Gustavson Associates5/6 5.2.14 Title and Equipment Control; Procurement ........................................................ 51 5.2.15 Training and Technology Transfer ...................................................................... 51 5.2.16 Assignment .......................................................................................................... 51 5.2.17 Termination ......................................................................................................... 52 5.3 OMAN ............................................................................................................................ 52 5.3.1 General Monitoring, Supervisory and Audit Scheme ......................................... 52 5.3.2 Duration ............................................................................................................... 53 5.3.3 Exploration and Work Program; Production Control .......................................... 53 5.3.4 Relinquishment .................................................................................................... 55 5.3.5 Evaluation and Registration Requirements ......................................................... 55 5.3.6 Recoverable Costs ............................................................................................... 55 5.3.7 Fiscal Structure .................................................................................................... 57 5.3.8 Measurement ....................................................................................................... 58 5.3.9 Taxes, Duties, Levies .......................................................................................... 58 5.3.10 Domestic Supply ................................................................................................. 59 5.3.11 Associated/Non-Associated Gas ......................................................................... 59 5.3.12 Safety and Environment ...................................................................................... 60 5.3.13 Accounting .......................................................................................................... 61 5.3.14 Title and Equipment Control; Procurement ........................................................ 62 5.3.15 Training and Technology Transfer ...................................................................... 62 5.3.16 Assignment .......................................................................................................... 63 5.3.17 Termination ......................................................................................................... 63 5.4 PAKISTAN .................................................................................................................... 64 5.5 NORWAY ...................................................................................................................... 67 5.6 SUGGESTED BEST PRACTICE STANDARDS FOR BANGLADESH ................... 70 5.6.1 General Monitoring, Supervisory and Audit Scheme ......................................... 70 5.6.2 Duration ............................................................................................................... 71 5.6.3 Exploration and Work Program .......................................................................... 71 5.6.4 Relinquishment .................................................................................................... 71 5.6.5 Evaluation of Bidding Round Procedure ............................................................. 72 5.6.6 Recoverable Costs ............................................................................................... 72 5.6.7 Fiscal Structure .................................................................................................... 72 5.6.8 Measurement ....................................................................................................... 73 5.6.9 Taxes, Duties, Levies .......................................................................................... 73 5.6.10 Right of First Refusal for Gas Purchases ............................................................ 73 5.6.11 Associated/Non-Associated Gas ......................................................................... 74 5.6.12 Safety and Environment ...................................................................................... 74 5.6.13 Accounting .........................................................................................................