LICENSE CONTRACT MODEL ROUND 1: THIRD INVITATION TO BID, ONSHORE FIELDS. Bidding Process CNH-R01-C03/2015

Transcription

1 LICENSE CONTRACT MODEL ROUND 1: THIRD INVITATION TO BID, ONSHORE FIELDS Bidding Process CNH-R01-C03/2015 May, 2015

2 Round 1 FIRST APPROACH 2

3 Round 1 NORTH REGION FIELDS 9 Contractual areas 9 Dry gas fields Original Oil in Place: 1,386 MMMcf Cumulative production: 411 MMMcf Surface area ranging from 3,954 to 33,359 acres (16 to 135 km 2 ) 3

4 Round 1 NORTH REGION SEISMIC AND INFRASTRUCTURE 9 Contractual areas 9 Dry gas fields Original Oil in Place: 1,386 MMMcf Cumulative production: 411 MMMcf Surface area ranging from 3,954 to 33,359 acres (16 to 135 km 2 ) 4

5 Round 1 CENTER REGION FIELDS 5 Contractual areas 5 oil and gas fields Original Oil in Place : 183 MMb and 64 MMMcf Cumulative production: 18 MMb and 14 MMMcf Surface area ranging from 1,730 to 5,683 acres (7 to 23 km 2 ) 5

6 Round 1 CENTER REGION SEISMIC AND INFRASTRUCTURE 5 Contractual areas 5 oil and gas fields Original Oil in Place : 183 MMb and 64 MMMcf Cumulative production: 18 MMb and 14 MMMcf Surface area ranging from 1,730 to 5,683 acres (7 to 23 km 2 ) 6

7 Round 1 SOUTH REGION FIELDS 12 Contractual areas 9 oil and gas fields and 3 gas and condensate fields Original Oil in Place: 1,624 MMb and 2,599 MMMcf Cumulative production: 270 MMb and 1,226 MMMcf Surface area ranging from 2,471 to 14,332 acres (10 to 58 km 2 ) 7

8 Round 1 SOUTH REGION SEISMIC AND INFRASTRUCTURE 12 Contractual areas 9 oil and gas fields and 3 gas and condensate fields Original Oil in Place: 1,624 MMb and 2,599 MMMcf Cumulative production: 270 MMb and 1,226 MMMcf Surface area ranging from 2,471 to 14,332 acres (10 to 58 km 2 ) 8

9 Round 1 CONTRACTUAL AREAS MAIN FEATURES Cumulative Original Oil in Place Production Density Surface area Surface area Region Name Type Oil Gas Oil Gas ( API) (km 2 ) (acres)* (MMb) (MMMcf) (MMb) (MMMcf) Anáhuac ,289.6 Benavides ,482.7 Calibrador ,978.4 Carretas ,091.2 North Duna Dry gas ,068.8 Mareógrafo ,363.7 Peña Blanca ,424.7 Ricos ,856.4 San Bernardo ,993.1 Barcodón ,718.2 Pontón ,915.8 Center Tecolutla Oil an gas ,779.2 La Laja ,520.5 Paso de Oro ,708.1 Tajón ,795.4 Cuichapa Poniente ,254.9 Moloacán ,441.0 Paraíso ,200.8 Topén Oil and gas ,251.8 South Mayacaste ,411.6 Malva ,238.6 Secadero ,421.6 Calicanto ,619.3 Mundo Nuevo ,844.8 Gas and Catedral ,332.1 condensate Fortuna Nacional ,436.3 MMb: Million barrels, MMMcf: billion cubic feet * Unit conversion provided by Sener. 9

10 License Contract KEY ELEMENTS Operations in these fields will be conducted under a license contract model. The State s compensation will be calculated on a gross income basis, before deducting costs. Awarded through public international bidding process and signed by the State through CNH. The Third Invitation aims to contribute towards the development of Mexican operators, both existing and recently created ones. Establishes obligations regarding industrial safety and environmental protection risk management and insurance. Subject to strict transparency rules. 10

11 License Contract STAGES Evaluation Development 2 additional periods 25 years 1 to 2 years Up to 24 years 5 years 5 years Local content requirement and yearly compliance program. Evaluation (up to 2 years): 22%. Extraction: Linear increment, from 27% in the first year to 38% in Minimum work commitment The drilling of at least 29 wells is expected in the next 12 months within the 26 contractual areas. 11

12 License Contract RESCISSION AND CONTROVERSY RESOLUTION Guarantees and insurance Corporate guarantees, compliance guarantees, and insurance. Rescission Administrative: linked to severe causes, as provided by Art. 20 of the Hydrocarbons Law. Cure period and procedures. Mexican Federal Courts. Contractual: linked to unjustified actions in terms of the Contract s terms and conditions. Conciliation or direct consultation, prior to the start of an arbitration process. International arbitration in The Hague, under the United Nations Commission on International Trade Law (UNCITRAL) rules under Mexican Law. 12

13 For detailed information please visit: 13

14 ECONOMIC AND FISCAL TERMS Bidding Process CNH-R01-C03/2015 May, 2015

15 Fiscal Terms INTRODUCTION The License Contract Model will be used for the Third Invitation to bid: Production Sharing Contract License Contract Compensations are calculated based on net profits. Compensations are calculated based on gross income. Considers cost recovery. Doesn t consider cost recovery. Adjustment mechanism based on profitability. Adjustment mechanism based on production volume and the price of hydrocarbons in the market. 15

16 Fiscal Terms INTRODUCTION Elements established by the Law Income tax 30% Contractual fee during the exploration phase Exploration and Extraction Activities Tax Basic Royalty Ring-fencing First 60 months: 1,150 MXN/km 2 Thereafter: 2,750 MXN/km 2 1,500 MXN/km 2 during exploration 6,000 MXN/km 2 during extraction Price sensitive formula for each hydrocarbon E&P Industry for Corporate Income Tax purposes Elements defined in the Contract Adjustment mechanism Defined formula Element to be defined in the public tender Additional royalty Defined by the winning bidder 16

17 Fiscal Elements AWARDING MECHANISM Sealed Envelope First Price Auction Clear, transparent, and simple awarding mechanism. Most common awarding mechanism worldwide: o Angola, Brazil, Canada, USA, Indonesia, Nigeria, Peru, Venezuela, amongst others. Awarding Mechanism Bidders will present a sealed envelope for each of the contractual areas, specifying their offer or abstention. The envelopes will be turned in at the beginning of the session. Proposals cannot be modified once delivered. The winner will be announced during the session. The formal awarding process concludes a couple of days later. 17

18 Fiscal Terms AWARD VARIABLES Bidding Variables The bidding variables are: Percentage points of additional royalty. Additional investment related to the minimum investment commitment defined for each area. The award process follows objective criteria, based on a predetermined formula. The winner will be the bidder that presents the best Economic Proposal Weighted Value (V). This value is calculated as follows: V = 0.90 * additional royalty factor * additional investment factor Tie Breaking Mechanism 1. Cash payment, and 2. Polling method. Reserve Price A minimum reserve value will be established for the variables, prior to the the date in which the proposals are presented. 18

19 Adjustment factor Production royalty % License Contracts FISCAL REGIME ADJUSTMENT MECHANISM Adjustment Mechanism The Contract includes the Adjustment Mechanism formula. This mechanism increases the total royalty to be paid by the contractor as production rises through a continuous formula that prevents distortions. How it works Applied differently according to the production kind: Oil and condensates Natural Gas (associated and non-associated) Calculated based on the daily production moving average. A maximum percentage is established in the contract. U1 U2 Daily production average 19

20 License Contract FISCAL REGIME OTHER CONSIDERATIONS Accounting Procedures and Costs and Investments Registration Even though costs are not used to determine the compensations, in accordance with transparency regulations, the Contractors must register all the costs, expenditures and investments through the Mexican Petroleum Fund. The registry will operate in a simple manner and for information purposes, in accordance with guidelines issued by the Secretariat of Finance. Interaction with the Mexican Petroleum Fund The rules, dates, and periods to turn in the relevant information and payments to the Fund are predefined. Information is registered through an electronic system, and is signed electronically. The Fiscal Authority (SAT) can perform verifications and audits for corporate income tax purposes. 20

21 For detailed information please visit: 21

22 THIRD CALL FOR BIDS OF ROUND 1 ONSHORE FIELDS May,

23 INTRODUCTION Today, CNH presented the call for bids and bidding terms for Round 1 s third tender for exploration and production blocks. This call for bids comprises 26 onshore license contracts. 23

24 OPERATOR REQUIREMENTS Technical Capabilities Eligibility is achieved through staff s credentials, not companies credentials. 1. Companies must prove that their key staff in charge of operations has at least 10 years of managerial experience in exploration and extraction projects. 2. Companies or proposed personnel must have implemented and operated industrial safety and environmental protection systems such OHSAS (security) e ISO (environment) in the last 5 years. 24

25 OPERATOR REQUIREMENTS Financial Capabilities 1. Companies must demonstrate a net worth of at least: a. 5 millon dollars for each and every contractual area they intend to present a proposal for, which may be all or a subset of the following: Anáhuac, Benavides, Calibrador, Calicanto, Carretas, Catedral, Duna, Fortuna Nacional, La Laja, Malva, Mareógrafo, Mayacaste, Mundo Nuevo, Paraíso, Paso de Oro, Peña Blanca, Pontón, Ricos, San Bernardo, Secadero, Tecolutla and Topén. or b. 200 million dollars for each and every contractual area they intend to present a proposal for, which may be all or a subset of the following: Barcodón, Cuichapa-Poniente, Moloacán and Tajón. 25

26 CONSORTIUM REQUIREMENTS Financial Capabilities Consortia must demonstrate that the operator has a net worth of at least : a. 3 million dollars for each and every contractual area they intend to present a proposal for, which may be all or a subset of the following: Anáhuac, Benavides, Calibrador, Calicanto, Carretas, Catedral, Duna, Fortuna Nacional, La Laja, Malva, Mareógrafo, Mayacaste, Mundo Nuevo, Paraíso, Paso de Oro, Peña Blanca, Pontón, Ricos, San Bernardo, Secadero, Tecolutla and Topén. or a. 120 million dollars for each and every contractual area they intend to present a proposal for, which may be all or a subset of the following: Barcodón, Cuichapa-Poniente, Moloacán and Tajón. 26

27 ASSOCIATION CRITERIA Companies may participate individually, in consortia or joint ventures, provided they adhere to the following: 1. The Operator must hold at least a one-third working interest. 2. No Company may be part of more than one consortium. 3. Large scale companies criterion: Companies with average production greater than 1.6mmboe may not associate amongst themselves. 27

28 TRANSPARENCY Clarifications and bidding terms revisions o All procedures are conducted in written form through the website o Interested parties and bidders shall refrain from contacting CNH in any other way in order to obtain information or influence the process. Prove lawful origin of financial resources o As part of the prequalification process a financial background check will be assessed to gauge the lawful origin of the projects funds. To this end, CNH will rely on the Financial Intelligence Unit of the SHCP. o To receive any comment from the general public. Receiving & Opening Bids Event o Live online broadcasting of the ceremony. o A public notary will attest to the act. 28

29 MILESTONES OF THE THIRD CALL TO BID Request to access the Data room From May 12, 2015 through August 14, Access the Data Room. Starts June 1, 2015 Reception of prequalification documents From September 14, 2015 through October 2, 2015 Publication of the final bidding terms (Contract included) November 2, 2015 Receiving and opening of proposals and winner announcement December 15,

30 INDUSTRY RESPONSE TO THE FIRST CALL FOR BIDS 14 EXPLORATION BLOCKS Companies that had access to the data room / started their prequalification process Announcement Date: December11, 2014 Proposal Reception: July15, 2015 Atlantic Japan Petroleum BG Group México Korea National C. BHP Billiton BP CASA Exploration Chevron Citla Energy Cobalt Energía de México Compañía Española de Petróleo, S.A. (CEPSA) LUKOIL Maersk OLIE OG GAS A/S Marathon offshore Mitsubishi Corporation Murphy Worldwide NBL México Inc. Nexen CNOOC Oil, Gas & Energy B. CPC Corporation, Taiwan ONGC Videsh L. Diavaz Ecopetrol Pacific Rubiales PEMEX E&P Hidrocarburos y Servicios PETROBAL ENI International Exploration & Production PCL Petrobras Petronas Carigali ExxonMobil Plains Acquisition C. Gaffney, Cline & A Galp Energía E&P BV GEOSEIS, Inc Grupo R Hess Corporation Hunt Overseas Inpex Japan Oil, Gas and Metal Pluspetrol Premier Oil plc Reliance Industries Ltd. Shell Sierra Oil & Gas Sinopec Statoil Total Number of participants per country Companies that showed interest: Participants that innitiated their prequalification process: * Last updated May 9,

31 INDUSTRY RESPONSE TO THE SECOND CALL FOR BIDS. 9 SHALLOW WATER FIELDS IN 5 CONTRACTS Companies that had access to the data room / started their prequalification process Atlantic BG Group BP CASA Exploración CHEVRON CNOOC Compañía Española de Petróleo, S.A (CEPSA) DEA DEUTSCHE ERDOEL AG Diavaz offshore E&P Hidrocarburos y Servicios Ecopetrol ENI INTERNATIONAL Exploration & Production PCL Galp Energía E&P BV Hunt Overseas LUKOIL NBL México INC. PEMEX Perforadora México Petronas Carigali Premier Oil Sánchez Oil & Gas Corporation Sapurakencana Shell Sierra Oil & Gas Sinopec Total Announcement Date: February 27, 2015 Proposal Reception: September 30, 2015 Number of participants per country Companies that showed interest: Participants that innitiated their prequalification process: * Last updated May 9, 2015

32 FOR DETAILED INFORMATION PLEASE VISIT: 32