◊ Conversion on licence expiry and renewal : the licence becomes subject to the 60 % relinquishment requirement .
• For marginal fields : ◊
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Producing marginal fields convert to a PML within 18 months of the PIA but retain their original royalty rates .
OML holders of fields that are “ marginal ” ( as assessed prior to the PIA ) must , within 3 years of the PIA , present field development plans , farm out the discovery , or relinquish the field .
Separation of upstream , midstream and downstream activities :
• Separate companies should be used for upstream , midstream and downstream operations ( and no stamp duty or CGT will be charged on the segregation of current multiple-stream companies ). Strategic projects that sell products domestically can be consolidated . Midstream and downstream activities require particular licences issued by the applicable Authority .
• Transition : Current OML holders engaged in midstream / downstream activities must obtain the new necessary licence within 18 months of the PIA .
Assignment approval process :
• Assignments of licence interests , or changes in control in a licence holder , continue to require Ministerial approval but this now requires a Commission recommendation .
• The PIA sets a timetable for the approval process : 60 days for the Commission to review an assignment application and to not unreasonably withhold consent ; 60 days from the Commission ’ s recommendation for the Minster to consider and not unreasonably withhold consent . This may help to address the long delays that upstream M & A has faced in obtaining Ministerial consent .
• The PIA does not amend or revoke the DPR 2021 Guidelines and procedure for obtaining Ministerial consent , which presumably continue to apply .
Gas development :
• Domestic supply obligations : Separate regulations will establish the extent of the domestic gas supply obligations . If the terms of the domestic gas supply contract does not establish a penalty for failure to deliver gas under a domestic supply obligation , then the PIA sets a penalty of $ 3.50 per mBTU for such nondelivery .
• New regulatory framework : Expanded provisions for gas supply and transportation that build on existing regulations , including in regard to the gas transportation network operator , gas network code , gas aggregator , access to pipeline infrastructure , and gas pricing .
Decommissioning and abandonment :
• Lease holders require prior Commission approval before they can decommission or abandon and must first provide their programme of activities and estimated costs . Field development plans must include decommissioning and abandonment plans . For existing fields in production with no abandonment plan , the lease holder must prepare and submit a plan for approval by the Commission .
• Lease holders must establish and fund a decommissioning and abandonment fund with a financial institution by way of an escrow arrangement with the Commission . Funding obligations are to be specified in the abandonment plan ( based on the reasonable estimate of the total costs ( as approved by the Commission ) divided by the estimated life of the relevant facilities ).
• Abandonment funding contributions are eligible for cost recovery and are tax deductible .
• It appears that former lease holders will not be responsible for decommissioning or abandonment if the transfer to a new company involves the assumption of these obligations that is approved by the Commission .
• The Commission can instruct lease holders to undertake decommissioning and abandonment , when required under good international industry practice .
• These requirements apply to existing and unconverted OMLs . bracewell . com