The evolution of the Onshore Petroleum Rules in Pakistan reflects significant regulatory developments aimed at enhancing petroleum exploration and production. This comparative analysis focuses on the key differences and improvements between the Pakistan Onshore Petroleum Rules of 2009, 2013, and the amended 2013 rules as of January 2020.
The Onshore Petroleum Rules Pakistan are essential for regulating petroleum exploration and production within the country. Understanding the definitions of commercial discovery definition and commercial production petroleum is crucial for stakeholders in the industry. These definitions outline the conditions under which a petroleum find can be considered viable for development and continuous production.
The Directorate General Petroleum Concessions (DGPC) plays a pivotal role in administering and regulating petroleum activities. The petroleum rights application process involves several steps, including submitting detailed applications that comply with regulatory standards. There are different types of petroleum rights Pakistan, including reconnaissance permits, exploration licences, and development and production leases.
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The exploration licence duration typically spans up to five years, with provisions for renewal under specific conditions. The petroleum licence renewal process requires applicants to demonstrate compliance with the initial terms and conditions. Additionally, licensees must adhere to the petroleum area relinquishment schedule, which mandates the return of a portion of the licensed area after each exploration phase.
Development and production lease conditions are stringent, ensuring that leaseholders comply with safety and environmental standards. The petroleum royalty calculation is based on the wellhead value of the produced petroleum, and it is essential for ensuring fair revenue distribution between the Federal and Provincial Governments.
Environmental protection is a critical aspect of petroleum operations. The rules mandate strict environmental protection in petroleum operations to mitigate adverse impacts. The petroleum rights assignment approval process requires prior consent from the DGPC, ensuring that the assignees meet the necessary financial and technical criteria.
Surrendering petroleum rights is a structured process that involves fulfilling all obligations and providing notice to the DGPC. Leaseholders are also required to meet social welfare obligations petroleum to contribute to the well-being of local communities. Joint venture petroleum rights are common, and partners must appoint an operator approved by the DGPC to manage operations.
Petroleum reporting requirements include regular submission of detailed reports on exploration, development, and production activities. Non-compliance can lead to non-compliance penalties petroleum, including fines and lease revocation. The field development plan approval process involves submitting comprehensive plans that detail the development and production strategies.
Extended well testing EWT approval is necessary for conducting tests to evaluate well performance. Similarly, early commercial production ECP petroleum allows for the early extraction of petroleum before the full development of the field. The gas discovery retention period can be extended under certain conditions to accommodate market and infrastructure developments.
The petroleum wellhead value calculation is crucial for determining royalties, which are impacted by petroleum transportation costs. Safety is paramount, and leaseholders must implement rigorous safety measures in petroleum operations to prevent accidents and ensure the welfare of workers.
In cases where work obligations are not met, liquidated damages petroleum may be imposed. The dispute resolution petroleum rights mechanism ensures that conflicts between stakeholders and the DGPC are resolved efficiently. Seismic and drilling services approval is required before commencing exploration activities to ensure compliance with technical standards.
An abandonment plan petroleum lease must be submitted before decommissioning activities, detailing how the environment will be restored. Accurate petroleum records maintenance is mandatory for compliance and operational transparency.
Federal and provincial royalty sharing is a key aspect of revenue distribution, ensuring that both levels of government benefit from petroleum production. A petroleum reconnaissance permit conditions include conducting surveys and submitting detailed reports to the DGPC.
Appraisal renewal petroleum licence is necessary for extending exploration activities if initial findings are promising. Pending lease approval, lease extension pending approval allows for continued operations. Non-compliance rental payments petroleum can result in significant penalties, emphasizing the importance of timely payments.
Determining the fair market price petroleum royalty is critical for calculating accurate royalties. Compliance with environmental compliance petroleum lease conditions is strictly monitored by the DGPC. The petroleum exploration licence renewal process requires adherence to all regulatory and operational standards.
Maintaining accurate records petroleum operations is vital for transparency and accountability. The DGPC’s role in monitoring petroleum production activities ensures that all activities comply with the established regulations and standards.
Pakistan Onshore Petroleum Rules, 2009
The 2009 rules were foundational, setting the regulatory framework for petroleum exploration and production in onshore areas. Key features included:
- Permit and Licensing: Clear guidelines for obtaining exploration licences and permits, with detailed application processes.
- Production Sharing: Mechanisms for production sharing between the government and petroleum companies, ensuring fair distribution of resources.
- Environmental Safeguards: Provisions for environmental protection and safe operations, including measures to prevent pollution and manage drilling waste.
Pakistan Onshore Petroleum Rules, 2013
The 2013 rules introduced significant updates to modernize and streamline the regulatory environment. Major changes included:
- Enhanced Definitions: More comprehensive definitions of terms such as “commercial discovery” and “petroleum right,” providing greater clarity and precision.
- Improved Licensing Process: Simplification and acceleration of the licensing process to encourage investment and reduce bureaucratic delays.
- New Zones for Exploration: Introduction of specific zones for exploration with tailored incentives, reflecting geological prospectivity and risk levels.
- Data Management: Enhanced requirements for data submission and management, including detailed reporting on geological and geophysical data, production records, and well testing results.
Pakistan Onshore Petroleum Rules, 2013 (Amended January 2020)
The 2020 amendments brought further refinements and addressed gaps in the 2013 rules. Key amendments included:
- Extended Well Testing (EWT): New provisions allowing for extended well testing during the appraisal phase, subject to compliance with royalty, tax, and rental obligations. This aimed to facilitate better assessment of reservoir potential before full-scale production.
- Early Commercial Production (ECP): Introduction of Early Commercial Production approvals, allowing companies to commence production before the formal grant of a lease, thus speeding up the transition from discovery to production.
- Retention Periods: Clear guidelines on retention periods for significant gas discoveries, especially in zones lacking infrastructure, with provisions for extensions based on market development and pipeline availability.
- Environmental and Safety Standards: Reinforcement of environmental protection and safety standards, including the prevention of harmful working methods and pollution control measures.
- Arbitration and Dispute Resolution: Detailed arbitration clauses to resolve disputes under Pakistani law, ensuring a clear framework for addressing legal conflicts.
- Force Majeure: Explicit provisions for force majeure, extending the duration of petroleum rights during unforeseen events such as natural disasters, thereby providing legal certainty for operators.
Critical Commentary
The 2020 amendments to the Pakistan Onshore Petroleum Rules, 2013, reflect a progressive approach to regulatory improvements, aligning with international best practices. The introduction of EWT and ECP provisions significantly enhances operational flexibility, allowing companies to optimize their appraisal and production strategies. These changes are expected to attract greater investment by reducing delays and uncertainties in transitioning from discovery to production.
The enhanced focus on environmental and safety standards underscores the government’s commitment to sustainable development and responsible resource management. By setting stringent requirements for pollution control and operational safety, the rules aim to mitigate the environmental impact of petroleum activities.
However, while the amendments offer numerous benefits, the success of these regulations will depend on effective implementation and enforcement. Ensuring compliance with the new standards and addressing any operational challenges will be crucial for realizing the full potential of these regulatory improvements.
Q & A on the Pakistan Onshore Petroleum Rules (2013)
1. What is the purpose of the Onshore Petroleum (Exploration and Production) Rules, 2013?
The Onshore Petroleum (Exploration and Production) Rules, 2013 are established to regulate the exploration and production of petroleum in onshore areas of Pakistan, excluding coal bed methane. These rules set out the procedures and requirements for obtaining permits, licences, and leases, and ensure that petroleum operations are conducted efficiently and safely, adhering to good international oilfield practices.
2. How are the terms “commercial discovery” and “commercial production” defined in the rules?
A “commercial discovery” is defined as a discovery of petroleum which, in the opinion of the petroleum rights holder, justifies its development due to its quality, quantity, and other factors, ensuring continuous commercial production for a reasonable period. “Commercial production” refers to the production of petroleum from a commercial discovery that ensures at least the recovery of all expenditure directly attributable to such discovery within a reasonable time and the earning of a reasonable profit.
3. Who is responsible for the administration and regulation of these rules?
The Directorate General Petroleum Concessions (DGPC) or any officer or authority appointed by the Federal Government is responsible for the administration and regulation of these rules. The DGPC oversees the execution of duties imposed by these rules and any other functions entrusted by the Federal or Provincial Government.
4. What are the requirements for applying for a petroleum right?
Any company may apply for a petroleum right by submitting a written application in the form set out in the First Schedule, addressed to the DGPC. The application must include a fee, five copies of a map delineating the boundaries of the area applied for, and any additional information requested by the DGPC. The application must be made separately for each non-contiguous area.
5. What are the different types of petroleum rights that can be granted under these rules?
The rules provide for three types of petroleum rights: a reconnaissance permit, an exploration licence, and a development and production lease. Each right grants specific privileges and imposes corresponding obligations on the holder.
6. What is the duration of an exploration licence, and how can it be renewed?
The initial term of an exploration licence is up to five years, divided into two phases: phase-I (three years) and phase-II (two years). The licence can be renewed for up to two additional one-year periods if the licence holder has complied with the committed work programme and discharged all other obligations. Extensions for ongoing drilling activities and post-well studies can also be granted.
7. What are the relinquishment requirements for an exploration licence?
A holder of an exploration licence must comply with the following relinquishment schedule: 30% of the original licence area at the end of phase-I, 20% of the remaining area at the end of phase-II, and 10% of the remaining area on or before the start of the second renewal.
8. What conditions must be met for the DGPC to grant a development and production lease?
A development and production lease is granted when the DGPC is satisfied that the terms and conditions of the exploration licence, including the work programme, have been duly observed and performed, and that a commercial discovery has been made. The lease application must be accompanied by a field development plan.
9. How is the value of petroleum determined for royalty purposes?
The value of petroleum produced and saved is determined at the delivery point using the actual selling price. If sold to the national market, the price is determined in accordance with the relevant sale and purchase agreement. In other cases, the price is the greater of the selling price, the fair market price through arm’s length sales, or the price applicable to sales made to the national market, less allowed transportation costs.
10. What is the royalty rate for petroleum, and how is it administered?
The royalty rate for petroleum is twelve and a half per cent of the wellhead value unless a higher rate is specified in the petroleum concession agreement. Royalty payments are made monthly to the Federal Government, which then disburses the royalty to the provinces. The royalty can be paid in cash or kind, and the payment must be made within forty-five days of the end of the production month.
11. What are the obligations of a petroleum rights holder regarding environmental protection?
Petroleum rights holders must adopt safety measures to deal with emergencies and protect the environment. They are required to submit plans for environmental protection, including measures to prevent adverse impacts, as part of their field development plans.
12. How are disputes between petroleum rights holders and the government resolved?
Disputes between petroleum rights holders and the government are resolved in accordance with the terms of the petroleum concession agreement and the applicable laws of Pakistan. The DGPC may also provide guidance and issue directives to resolve disputes.
13. What are the penalties for non-compliance with the work programme or other obligations?
If a petroleum rights holder fails to fulfil their work programme or other obligations, they must pay liquidated damages corresponding to the minimum expenditure of the undischarged work obligations. The DGPC may also cancel the lease, withhold performance guarantees, or take other actions, including blacklisting the holder.
14. What is the process for transferring a petroleum right or working interest?
A petroleum right or any working interest therein cannot be assigned without the prior written approval of the DGPC. The application for approval must include a fee and particulars of the proposed assignee. The DGPC assesses the assignee’s financial, technical, and business experience before granting approval.
15. How can a petroleum rights holder surrender their right?
A petroleum rights holder wishing to surrender their right must give the DGPC one month’s notice and fulfil all obligations under the petroleum right, including payment of liquidated damages. If there are multiple holders, all must agree to the surrender. Upon surrender, the holder ceases to have rights and obligations related to the surrendered area.
16. What is the role of the DGPC in the exploration and production of petroleum?
The DGPC administers and regulates petroleum exploration and production, ensuring compliance with the rules and the execution of duties imposed on petroleum rights holders. The DGPC grants permits, licences, and leases, monitors operations, and enforces obligations and standards.
17. What are the requirements for submitting a field development plan?
A field development plan must include information on the nature and characterization of reserves, development and production proposals, production and storage facilities, transportation alternatives, production profiles, safety measures, environmental protection, organizational setup, contingency and abandonment plans, and a time schedule of activities. The plan requires DGPC approval.
18. What is the process for obtaining an extended well testing (EWT) approval?
To obtain EWT approval, a licence holder must submit a request to the DGPC with detailed technical justification, proposed duration, and a plan for the disposal of natural gas. The DGPC grants approval if the holder complies with royalty, tax, rental, and other obligations as applicable under a lease.
19. What is “early commercial production” (ECP) and how is it regulated?
ECP is the production of petroleum after declaring commerciality and before granting a lease. The DGPC may grant approval for ECP if the production is accounted for in terms of royalty and other obligations applicable to a lease. The facilities for early production must comply with good international oilfield practices.
20. How are royalties on petroleum production shared between the Federal and Provincial Governments?
Royalties on petroleum production are paid to the Federal Government, which then disburses the appropriate share to the Provincial Governments. The provinces have the option to receive their share in cash or kind, with transportation arrangements made by the holder of the petroleum right at the allowed transportation cost.
21. What conditions apply to the use of petroleum for operational purposes by the lease holder?
A lease holder is permitted to use petroleum produced from the lease area for drilling, production, maintenance, and processing operations free of cost, royalty, and excise duty. However, they are not entitled to include notional costs of this petroleum as business expenses for income tax purposes.
22. What obligations must be met for the renewal of a development and production lease?
For a development and production lease to be renewed, the lease holder must apply at least one year before the expiry of the lease term, providing a revised development plan. The lease area must have been producing on a regular commercial basis, and the lease holder must have complied with the initial lease terms and conditions.
23. How can a petroleum rights holder appeal a decision made by the DGPC?
If a petroleum rights holder is aggrieved by a decision made by the DGPC, they can appeal to the Federal Government. The appeal must be submitted within thirty days of the decision, and the Federal Government will make a final determination on the matter.
24. What are the requirements for a petroleum rights holder to construct transportation facilities?
A petroleum rights holder intending to construct transportation facilities must submit an application to the relevant regulator, detailing the proposed organization, implementation plans, and design of the transportation system. The DGPC may impose conditions to ensure a rational transportation system and may require joint ownership of facilities or grant access to third parties.
25. How is the “wellhead value” of petroleum defined in the rules?
The “wellhead value” is the value of petroleum determined at the delivery point, based on the actual selling price. If the petroleum is sold to the national market, it is determined in accordance with the relevant sale and purchase agreement. For other sales, it is the greater of the selling price, the fair market price through arm’s length sales, or the price applicable to sales to the national market, less allowed transportation costs.
26. What steps must be taken if petroleum is avoidably lost or wasted?
If petroleum is avoidably lost or wasted, the holder of a lease must pay royalty on the lost or wasted petroleum as directed by the DGPC. The DGPC will determine if the loss was avoidable and the amount of royalty due.
27. How is the map of licensing zones used in the context of the Onshore Petroleum Rules?
The map of licensing zones, attached as Annexure I to the rules, is used to define the geographical areas for which permits, licences, and leases can be granted. It helps in organizing and managing petroleum exploration and production activities within specified boundaries.
28. What are the responsibilities of a lease holder regarding social welfare obligations?
A lease holder is required to fulfil social welfare obligations as part of their commitments under the lease. This includes contributing to the development and well-being of local communities affected by their operations, in accordance with the terms specified in the lease and any additional requirements imposed by the DGPC.
29. Can a petroleum right be granted over areas already covered by another licence or lease?
No, a petroleum right cannot be granted over areas already covered by an existing licence or lease unless specified by the DGPC. The rules ensure that there is no overlap of rights, preventing conflicts and ensuring clarity in the management of petroleum resources.
30. What actions can the DGPC take if a petroleum rights holder defaults on their obligations?
If a petroleum rights holder defaults on their obligations, the DGPC can take various actions, including revoking the lease, withholding performance guarantees, and blacklisting the holder. The DGPC may also impose fines and require the payment of liquidated damages corresponding to the undischarged work obligations.
31. What is the process for the DGPC to invite competitive bids for petroleum rights?
The DGPC can invite competitive bids for petroleum rights by publishing a notice in national or foreign publications. Interested companies submit bids in response to the invitation, and the DGPC evaluates the bids based on the criteria specified in the bidding documents.
32. How are production bonuses handled under the rules?
Production bonuses are payable upon the commencement of commercial production subsequent to the grant of a lease. If early commercial production (ECP) is approved, the production taken during this period is accounted for the purpose of paying production bonuses and other obligations.
33. What measures must be taken for the protection of the environment during petroleum operations?
Petroleum rights holders must adopt safety measures and implement plans for the protection of the environment during field development and production operations. This includes measures to prevent adverse impacts, deal with emergencies, and comply with environmental protection standards.
34. What is required in the application for a development and production lease?
The application for a development and production lease must include a detailed field development plan, describing the nature and characterization of reserves, development proposals, production and storage facilities, transportation alternatives, production profiles, safety measures, environmental protection plans, and other relevant information.
35. How can a lease holder extend the term of a lease for drilling an exploration well?
The term of a lease can be extended by the DGPC if an exploration well is in progress. The extension period will be approved on a case-by-case basis and considered part of the initial term or renewal. Further extensions for post-well studies may also be granted.
36. What is the procedure for relinquishing part of a licence area?
A holder of a licence must comply with the relinquishment schedule specified in the rules: 30% at the end of phase-I, 20% at the end of phase-II, and 10% on or before the start of the second renewal. Requests for retention of relinquished areas must be supported by a commitment to undertake additional work units.
37. What happens if a licence holder fails to fulfil their work programme?
If a licence holder fails to fulfil their work programme, they must pay liquidated damages or request the transfer of undischarged work obligations to another area. Failure to comply may result in the cancellation of the lease, withholding of performance guarantees, and other penalties.
38. How are joint ventures handled under the Onshore Petroleum Rules?
Joint ventures are allowed under the rules, and multiple companies can hold a petroleum right jointly. They must appoint an operator from among them with the DGPC’s approval and are jointly and severally liable for obligations and liabilities resulting from their activities.
39. What documentation is required when applying for a petroleum right?
The application for a petroleum right must include a written application in the form set out in the First Schedule, a fee, five copies of a map delineating the area, and any additional information requested by the DGPC. The application must be entered into the register maintained by the DGPC.
40. What is the process for extending the period of a licence or lease?
The period of a licence or lease can be extended by the DGPC if the licence holder has complied with the work programme and discharged all obligations. Extensions for drilling an exploration well in progress and post-well studies can also be granted on a case-by-case basis.
41. What criteria are used to evaluate the financial and technical capabilities of applicants for petroleum rights?
The DGPC evaluates the financial, technical, and business experience of applicants based on the information provided in the application. This includes assessing the applicant’s financial stability, technical expertise, and managerial capabilities to ensure they can fulfil their obligations under the petroleum right.
42. What is the role of the Provincial Governments in the administration of petroleum rights?
Provincial Governments play a role in the administration of petroleum rights within their jurisdictions. The DGPC consults with Provincial Governments on matters related to the granting of petroleum rights, and royalties are shared with the provinces based on their share of the produced hydrocarbons.
43. What conditions apply to the assignment of a petroleum right or working interest?
A petroleum right or any working interest therein cannot be assigned without the prior written approval of the DGPC. The application for approval must include a fee and particulars of the proposed assignee, who must meet the same financial, technical, and business experience criteria as the original applicant.
44. What happens if a petroleum rights holder wishes to surrender their right?
If a petroleum rights holder wishes to surrender their right, they must give the DGPC one month’s notice and fulfil all obligations under the petroleum right, including payment of liquidated damages. If there are multiple holders, all must agree to the surrender. Upon surrender, the holder ceases to have rights and obligations related to the surrendered area.
45. What are the responsibilities of a lease holder regarding social welfare obligations?
A lease holder must fulfil social welfare obligations as part of their commitments under the lease. This includes contributing to the development and well-being of local communities affected by their operations, in accordance with the terms specified in the lease and any additional requirements imposed by the DGPC.
46. Can a petroleum right be granted over areas already covered by another licence or lease?
No, a petroleum right cannot be granted over areas already covered by an existing licence or lease unless specified by the DGPC. The rules ensure that there is no overlap of rights, preventing conflicts and ensuring clarity in the management of petroleum resources.
47. What actions can the DGPC take if a petroleum rights holder defaults on their obligations?
If a petroleum rights holder defaults on their obligations, the DGPC can take various actions, including revoking the lease, withholding performance guarantees, and blacklisting the holder. The DGPC may also impose fines and require the payment of liquidated damages corresponding to the undischarged work obligations.
48. What is the process for the DGPC to invite competitive bids for petroleum rights?
The DGPC can invite competitive bids for petroleum rights by publishing a notice in national or foreign publications. Interested companies submit bids in response to the invitation, and the DGPC evaluates the bids based on the criteria specified in the bidding documents.
49. How are production bonuses handled under the rules?
Production bonuses are payable upon the commencement of commercial production subsequent to the grant of a lease. If early commercial production (ECP) is approved, the production taken during this period is accounted for the purpose of paying production bonuses and other obligations.
50. What measures must be taken for the protection of the environment during petroleum operations?
Petroleum rights holders must adopt safety measures and implement plans for the protection of the environment during field development and production operations. This includes measures to prevent adverse impacts, deal with emergencies, and comply with environmental protection standards.
51. What is the role of the DGPC in the development and production of petroleum?
The DGPC oversees the development and production of petroleum, ensuring compliance with the approved field development plan and good international oilfield practices. It grants necessary approvals, monitors operations, and enforces obligations to safeguard efficient and responsible petroleum production.
52. How can a holder of a licence apply for a development and production lease?
A holder of a licence can apply for a development and production lease by submitting a notice of commercial discovery to the DGPC along with a comprehensive field development plan. The application must demonstrate that the terms and conditions of the licence have been met and that commercial production is viable.
53. What are the conditions for early commercial production (ECP) approval?
ECP approval conditions include submitting a request to the DGPC, including a disposal plan for petroleum during the ECP period. Facilities for early production must comply with good international oilfield practices, and production during ECP is accounted for royalty and other obligations as applicable to a lease.
54. How does the DGPC handle the valuation of petroleum for royalty purposes?
The DGPC determines the value of petroleum at the delivery point based on the actual selling price, which includes the price determined by sale and purchase agreements for the national market or the greater of the selling price, fair market price through arm’s length sales, or the national market price, less allowed transportation costs.
55. What is the procedure for submitting and publishing competitive bids?
The DGPC publishes notices for competitive bidding in national or foreign publications, inviting interested companies to submit bids. Bidding documents must include instructions, bid forms, lease deed forms, and technical documents. Bids are evaluated based on criteria such as signature bonuses and technical capabilities.
56. How are royalties on natural gas shared between the Federal and Provincial Governments?
Royalties on natural gas are paid to the Federal Government, which disburses the appropriate share to the Provincial Governments. Provinces can choose to receive their share in cash or kind. For royalty in kind, the lease holder arranges transportation downstream of the field gate at the allowed transportation cost.
57. What is the role of the operator in joint ventures for petroleum rights?
In joint ventures, the operator, appointed with DGPC approval, manages day-to-day operations and ensures compliance with obligations and regulations. The operator represents the joint venture in dealings with the DGPC and other authorities and is responsible for fulfilling work programmes and obligations.
58. What are the reporting requirements for petroleum rights holders?
Petroleum rights holders must submit periodic reports to the DGPC, including details of exploration, development, and production activities. Reports must cover technical data, progress updates, financial expenditures, and compliance with work programmes and environmental protection measures.
59. What happens if a petroleum rights holder fails to meet social welfare obligations?
Failure to meet social welfare obligations can result in penalties, including withholding of performance guarantees and potential revocation of the lease. The DGPC may also impose fines and require the holder to fulfill their social welfare commitments as stipulated in the lease agreement.
60. How are environmental protection measures enforced during petroleum operations?
The DGPC enforces environmental protection measures through regular inspections, requiring petroleum rights holders to adopt safety protocols and submit environmental impact assessments. Non-compliance can result in fines, suspension of operations, or revocation of the lease.
61. What is the process for amending a field development plan?
To amend a field development plan, the lease holder must submit a revised plan to the DGPC, detailing the proposed changes and their justifications. The DGPC reviews the amendments and grants approval if the modifications comply with regulatory standards and do not adversely impact production or environmental protection.
62. How can a lease holder extend the term of a lease for continued commercial production?
A lease holder can extend the term by applying for renewal at least one year before the expiry of the current lease term, providing evidence of ongoing commercial production and a revised development plan. The DGPC may grant an extension if the lease area continues to produce on a regular commercial basis.
63. What are the penalties for avoidable loss or waste of petroleum?
Penalties for avoidable loss or waste of petroleum include the payment of royalty on the lost or wasted petroleum, as determined by the DGPC. Additionally, the DGPC may impose fines and take other actions, such as revocation of the lease or blacklisting the holder.
64. What are the requirements for the construction and operation of transportation facilities by petroleum rights holders?
Petroleum rights holders must submit an application to the relevant regulator for constructing and operating transportation facilities, including pipelines. The application must detail the proposed organization, implementation plans, and design. The DGPC may impose conditions to ensure a rational transportation system.
65. How does the DGPC handle the distribution of royalties among joint venture partners?
In joint ventures, the designated operator typically remits royalties on behalf of all partners unless the DGPC approves otherwise. Royalties are distributed based on the partners’ respective working interests, and the operator ensures compliance with payment schedules and documentation requirements.
66. What is the role of the DGPC in approving seismic and drilling services for exploration activities?
The DGPC reviews and approves plans for seismic and drilling services, ensuring they meet regulatory standards and technical requirements. Approval is based on the availability of services, the proposed work programme, and compliance with environmental and safety protocols.
67. How are liquidated damages calculated for undischarged work obligations?
Liquidated damages for undischarged work obligations are calculated based on the minimum expenditure required for the unfulfilled work programme. The DGPC determines the amount due, and the petroleum rights holder must pay the damages within thirty days of surrender, expiry, or revocation of the licence.
68. What measures must be taken for the safety and security of petroleum operations?
Petroleum rights holders must implement safety and security measures, including emergency response plans, safety protocols, and regular safety audits. The DGPC enforces compliance through inspections and may impose penalties for violations or non-compliance.
69. How is the wellhead value of petroleum determined for royalty purposes?
The wellhead value of petroleum is determined based on the actual selling price at the delivery point, as per sale and purchase agreements, or the greater of the selling price, fair market price through arm’s length sales, or the national market price, less allowed transportation costs.
70. What is the process for declaring a commercial discovery of petroleum?
Upon completing appraisal and evaluation work, including extended well testing (EWT), the licence holder submits a notice of commercial discovery to the DGPC with a detailed report. The DGPC reviews the submission, and upon approval, the holder can apply for a development and production lease.
71. What are the obligations of a lease holder regarding the production and storage of petroleum?
Lease holders must adhere to the approved field development plan, ensuring efficient and safe production and storage of petroleum. They must maintain production facilities, implement safety measures, and comply with environmental regulations. Regular reporting to the DGPC on production activities is also required.
72. How are exploration and production licences granted for non-contiguous areas?
For non-contiguous areas, separate applications must be submitted for each area. The DGPC assesses each application independently and grants licences based on the applicant’s compliance with regulatory requirements and the feasibility of exploration and production activities in the proposed areas.
73. What is the process for obtaining an appraisal renewal for a petroleum licence?
To obtain an appraisal renewal, the licence holder must submit an application to the DGPC, including a detailed appraisal programme. The renewal, not exceeding one year, applies to the estimated discovery area and may be extended further based on reservoir uncertainty and proposed investment.
74. What are the penalties for failing to meet rental payment obligations under a lease?
Failure to meet rental payment obligations can result in fines, suspension of operations, or revocation of the lease. The DGPC enforces compliance by withholding performance guarantees and taking legal action to recover unpaid amounts.
75. How can a petroleum rights holder appeal against a DGPC decision?
A petroleum rights holder can appeal a DGPC decision by submitting an appeal to the Federal Government within thirty days. The Federal Government reviews the appeal and makes a final determination, which may uphold, modify, or overturn the DGPC’s decision.
76. What are the requirements for submitting a development plan for a petroleum lease?
A development plan must include information on reserves, development proposals, production facilities, transportation alternatives, production profiles, safety measures, environmental protection plans, organizational setup, contingency and abandonment plans, and a timeline of activities. The DGPC reviews and approves the plan.
77. How are disputes between joint venture partners resolved under the Onshore Petroleum Rules?
Disputes between joint venture partners are resolved according to the terms of their joint operating agreement and applicable laws. The DGPC may also provide guidance and issue directives to facilitate dispute resolution, ensuring compliance with regulatory standards.
78. What is the procedure for extending the period of a petroleum lease beyond twenty-five years?
To extend the period of a petroleum lease beyond twenty-five years, the lease holder must apply for renewal, providing evidence of ongoing commercial production and a revised development plan. The DGPC may grant extensions if the lease area continues to produce on a regular commercial basis.
79. How are royalties on petroleum production calculated and paid?
Royalties on petroleum production are calculated based on the wellhead value, with a standard rate of twelve and a half percent unless a higher rate is specified in the petroleum concession agreement. Royalties are paid monthly to the Federal Government, which disburses the appropriate share to the Provincial Governments.
80. What is the role of the DGPC in approving field development plans?
The DGPC reviews and approves field development plans, ensuring they meet regulatory standards and technical requirements. Approval is based on the proposed development and production activities, safety and environmental measures, and compliance with good international oilfield practices.
81. How are production facilities and transportation alternatives evaluated in a development plan?
Production facilities and transportation alternatives are evaluated based on their feasibility, safety, environmental impact, and efficiency. The development plan must include details on the number, size, and capacity of production facilities, transportation routes, and equipment required. The DGPC reviews these aspects to ensure compliance with regulatory standards.
82. What happens if a lease holder fails to comply with environmental protection measures?
Non-compliance with environmental protection measures can result in fines, suspension of operations, or revocation of the lease. The DGPC enforces compliance through regular inspections and may impose penalties for violations or non-compliance.
83. What are the conditions for granting a retention period for significant gas discoveries?
A retention period of up to five years may be granted for significant gas discoveries in specified zones if the discovery may be declared commercial once adequate gas pipeline transportation facilities are installed and gas markets are developed. Extensions may be considered for discoveries of low BTU gas without readily available outlets.
84. How are the costs for transportation of royalty petroleum handled?
The lease holder is responsible for arranging transportation of royalty petroleum downstream of the field gate at the allowed transportation cost. This cost is deducted from the wellhead value when calculating the royalty payable to the Federal Government and the Provincial Governments.
85. What are the reporting requirements for petroleum rights holders regarding safety measures?
Petroleum rights holders must regularly report to the DGPC on safety measures implemented, including emergency response plans, safety audits, and compliance with safety protocols. Reports must detail any incidents, corrective actions taken, and ongoing safety initiatives.
86. How is the fair market price of petroleum determined for royalty purposes?
The fair market price of petroleum is determined based on arm’s length sales, considering the price received through such sales, less allowed transportation costs. If the petroleum is sold to the national market, the price is determined by sale and purchase agreements, ensuring it reflects market conditions.
87. What is the process for the DGPC to approve an extended well testing (EWT) plan?
The licence holder must submit an EWT plan to the DGPC, including technical justification, proposed duration, and a disposal plan for natural gas. The DGPC reviews the plan and grants approval if the holder complies with royalty, tax, rental, and other obligations applicable under a lease.
88. How are exploration licences renewed under the Onshore Petroleum Rules?
Exploration licences can be renewed for up to two additional one-year periods if the licence holder has complied with the committed work programme and discharged all obligations. The licence holder must apply for renewal at least three months before the expiry of the initial term.
89. What are the requirements for submitting an abandonment plan for a petroleum lease?
An abandonment plan must include details on decommissioning production facilities, restoring the environment, managing residual petroleum, and ensuring safety. The plan must be submitted to the DGPC as part of the field development plan and requires DGPC approval before implementation.
90. How are joint venture partners held accountable for obligations under a petroleum right?
Joint venture partners are jointly and severally liable for obligations and liabilities resulting from their activities under the petroleum right. They must appoint an operator with DGPC approval to manage operations and ensure compliance with regulatory standards and obligations.
91. What is the role of the DGPC in monitoring petroleum production activities?
The DGPC monitors petroleum production activities to ensure compliance with regulatory standards, approved development plans, and good international oilfield practices. Regular inspections, reporting requirements, and enforcement actions help maintain oversight of production operations.
92. How can a lease holder apply for an extension pending the grant of a lease?
If a lease holder has applied for a lease before the expiry of the licence, the licence period can be extended until the lease is granted or refused. The extension ensures continuity of operations while the DGPC processes the lease application.
93. What are the requirements for maintaining accurate records of petroleum operations?
Petroleum rights holders must maintain accurate records of all activities, including accounts, books, returns, statements, reports, charts, tables, diagrams, surveys, maps, agreements, and financial information. Records must be kept in writing or electronic form and submitted to the DGPC as required.
94. How are royalties on petroleum production shared between Federal and Provincial Governments?
Royalties on petroleum production are paid to the Federal Government, which then disburses the appropriate share to the Provincial Governments. Provinces can choose to receive their share in cash or kind, with transportation arrangements made by the lease holder at the allowed transportation cost.
95. What are the conditions for granting a petroleum reconnaissance permit?
A reconnaissance permit is granted for non-exclusive rights to perform reconnaissance surveys over designated areas. The permit holder must comply with terms and conditions specified by the DGPC, including submitting maps, plans, data, and reports of the survey, and paying rent for the permit area.
96. What are the requirements for a petroleum rights holder to comply with social welfare obligations?
A petroleum rights holder must fulfil social welfare obligations by contributing to the development and well-being of local communities affected by their operations. This includes funding social projects, providing training and employment opportunities, and improving local infrastructure, as specified in the lease agreement.
97. How are disputes between the DGPC and petroleum rights holders resolved?
Disputes between the DGPC and petroleum rights holders are resolved according to the terms of the petroleum concession agreement and applicable laws. The Federal Government may also review appeals and make final determinations to resolve disputes.
98. What are the requirements for submitting a revised development plan for a petroleum lease?
A revised development plan must include updated information on reserves, development proposals, production facilities, transportation alternatives, production profiles, safety measures, environmental protection plans, and a timeline of activities. The revised plan requires DGPC approval before implementation.
99. How does the DGPC handle the approval of seismic and drilling services?
The DGPC reviews and approves plans for seismic and drilling services, ensuring they meet regulatory standards and technical requirements. Approval is based on the availability of services, the proposed work programme, and compliance with environmental and safety protocols.
100. What are the penalties for non-compliance with rental payment obligations under a lease?
Penalties for non-compliance with rental payment obligations include fines, suspension of operations, and potential revocation of the lease. The DGPC enforces compliance by withholding performance guarantees and taking legal action to recover unpaid amounts.
101. How are liquidated damages calculated for undischarged work obligations?
Liquidated damages are calculated based on the minimum expenditure required for the unfulfilled work programme. The petroleum rights holder must pay the damages within thirty days of surrender, expiry, or revocation of the licence, as determined by the DGPC.
102. What are the responsibilities of a petroleum rights holder regarding environmental protection?
Petroleum rights holders must adopt safety measures and implement plans for environmental protection, including measures to prevent adverse impacts, deal with emergencies, and comply with environmental protection standards. The DGPC enforces compliance through regular inspections and penalties for violations.
103. How can a petroleum rights holder appeal a DGPC decision?
A petroleum rights holder can appeal a DGPC decision by submitting an appeal to the Federal Government within thirty days. The Federal Government reviews the appeal and makes a final determination, which may uphold, modify, or overturn the DGPC’s decision.
104. What is the role of the DGPC in approving field development plans?
The DGPC reviews and approves field development plans, ensuring they meet regulatory standards and technical requirements. Approval is based on the proposed development and production activities, safety and environmental measures, and compliance with good international oilfield practices.
105. How are production facilities and transportation alternatives evaluated in a development plan?
Production facilities and transportation alternatives are evaluated based on their feasibility, safety, environmental impact, and efficiency. The development plan must include details on the number, size, and capacity of production facilities, transportation routes, and equipment required. The DGPC reviews these aspects to ensure compliance with regulatory standards.
106. What happens if a lease holder fails to comply with environmental protection measures?
Non-compliance with environmental protection measures can result in fines, suspension of operations, or revocation of the lease. The DGPC enforces compliance through regular inspections and may impose penalties for violations or non-compliance.
107. What are the conditions for granting a retention period for significant gas discoveries?
A retention period of up to five years may be granted for significant gas discoveries in specified zones if the discovery may be declared commercial once adequate gas pipeline transportation facilities are installed and gas markets are developed. Extensions may be considered for discoveries of low BTU gas without readily available outlets.
108. How are the costs for transportation of royalty petroleum handled?
The lease holder is responsible for arranging transportation of royalty petroleum downstream of the field gate at the allowed transportation cost. This cost is deducted from the wellhead value when calculating the royalty payable to the Federal Government and the Provincial Governments.
109. What are the reporting requirements for petroleum rights holders regarding safety measures?
Petroleum rights holders must regularly report to the DGPC on safety measures implemented, including emergency response plans, safety audits, and compliance with safety protocols. Reports must detail any incidents, corrective actions taken, and ongoing safety initiatives.
110. How is the fair market price of petroleum determined for royalty purposes?
The fair market price of petroleum is determined based on arm’s length sales, considering the price received through such sales, less allowed transportation costs. If the petroleum is sold to the national market, the price is determined by sale and purchase agreements, ensuring it reflects market conditions.
111. What is the process for the DGPC to approve an extended well testing (EWT) plan?
The licence holder must submit an EWT plan to the DGPC, including technical justification, proposed duration, and a disposal plan for natural gas. The DGPC reviews the plan and grants approval if the holder complies with royalty, tax, rental, and other obligations applicable under a lease.
112. How are exploration licences renewed under the Onshore Petroleum Rules?
Exploration licences can be renewed for up to two additional one-year periods if the licence holder has complied with the committed work programme and discharged all obligations. The licence holder must apply for renewal at least three months before the expiry of the initial term.
113. What are the requirements for submitting an abandonment plan for a petroleum lease?
An abandonment plan must include details on decommissioning production facilities, restoring the environment, managing residual petroleum, and ensuring safety. The plan must be submitted to the DGPC as part of the field development plan and requires DGPC approval before implementation.
114. How are joint venture partners held accountable for obligations under a petroleum right?
Joint venture partners are jointly and severally liable for obligations and liabilities resulting from their activities under the petroleum right. They must appoint an operator with DGPC approval to manage operations and ensure compliance with regulatory standards and obligations.
115. What is the role of the DGPC in monitoring petroleum production activities?
The DGPC monitors petroleum production activities to ensure compliance with regulatory standards, approved development plans, and good international oilfield practices. Regular inspections, reporting requirements, and enforcement actions help maintain oversight of production operations.
116. How can a lease holder apply for an extension pending the grant of a lease?
If a lease holder has applied for a lease before the expiry of the licence, the licence period can be extended until the lease is granted or refused. The extension ensures continuity of operations while the DGPC processes the lease application.
117. What are the requirements for maintaining accurate records of petroleum operations?
Petroleum rights holders must maintain accurate records of all activities, including accounts, books, returns, statements, reports, charts, tables, diagrams, surveys, maps, agreements, and financial information. Records must be kept in writing or electronic form and submitted to the DGPC as required.
118. How are royalties on petroleum production shared between Federal and Provincial Governments?
Royalties on petroleum production are paid to the Federal Government, which then disburses the appropriate share to the Provincial Governments. Provinces can choose to receive their share in cash or kind, with transportation arrangements made by the lease holder at the allowed transportation cost.
119. What are the conditions for granting a petroleum reconnaissance permit?
A reconnaissance permit is granted for non-exclusive rights to perform reconnaissance surveys over designated areas. The permit holder must comply with terms and conditions specified by the DGPC, including submitting maps, plans, data, and reports of the survey, and paying rent for the permit area.
120. What are the requirements for a petroleum rights holder to comply with social welfare obligations?
A petroleum rights holder must fulfil social welfare obligations by contributing to the development and well-being of local communities affected by their operations. This includes funding social projects, providing training and employment opportunities, and improving local infrastructure, as specified in the lease agreement.
121. How are disputes between the DGPC and petroleum rights holders resolved?
Disputes between the DGPC and petroleum rights holders are resolved according to the terms of the petroleum concession agreement and applicable laws. The Federal Government may also review appeals and make final determinations to resolve disputes.
122. What are the requirements for submitting a revised development plan for a petroleum lease?
A revised development plan must include updated information on reserves, development proposals, production facilities, transportation alternatives, production profiles, safety measures, environmental protection plans, and a timeline of activities. The revised plan requires DGPC approval before implementation.
123. How does the DGPC handle the approval of seismic and drilling services?
The DGPC reviews and approves plans for seismic and drilling services, ensuring they meet regulatory standards and technical requirements. Approval is based on the availability of services, the proposed work programme, and compliance with environmental and safety protocols.
124. What are the penalties for non-compliance with rental payment obligations under a lease?
Penalties for non-compliance with rental payment obligations include fines, suspension of operations, and potential revocation of the lease. The DGPC enforces compliance by withholding performance guarantees and taking legal action to recover unpaid amounts.
125. How are liquidated damages calculated for undischarged work obligations?
Liquidated damages are calculated based on the minimum expenditure required for the unfulfilled work programme. The petroleum rights holder must pay the damages within thirty days of surrender, expiry, or revocation of the licence, as determined by the DGPC.
126. What are the responsibilities of a petroleum rights holder regarding environmental protection?
Petroleum rights holders must adopt safety measures and implement plans for environmental protection, including measures to prevent adverse impacts, deal with emergencies, and comply with environmental protection standards. The DGPC enforces compliance through regular inspections and penalties for violations.
127. How can a petroleum rights holder appeal a DGPC decision?
A petroleum rights holder can appeal a DGPC decision by submitting an appeal to the Federal Government within thirty days. The Federal Government reviews the appeal and makes a final determination, which may uphold, modify, or overturn the DGPC’s decision.
128. What is the role of the DGPC in approving field development plans?
The DGPC reviews and approves field development plans, ensuring they meet regulatory standards and technical requirements. Approval is based on the proposed development and production activities, safety and environmental measures, and compliance with good international oilfield practices.
