Thailand Petroleum E&P 21st Bidding Round Opens

ANNOUNCEMENT
MINISTRY OF ENERGY OF THAILAND

SUBJECT : INVITATION TO SUBMIT APPLICATION FOR THE RIGHT TO PETROLEUM EXPLORATION AND PRODUCION IN EXPLORATON BLOCKS ONSHORE AND OFFSHORE IN THE GULF OF THAILAND

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The Ministry of Energy of the Kingdom of Thailand wishes to invite interested parties to submit application(s) for the right to petroleum exploration and production in any of the 29 exploration blocks, located onshore and offshore in the Gulf of Thailand. Detailed descriptions of the areas or exploration blocks open for applications are shown in Map No. P.94/2014 as appeared in Attachment 1. The Geological Constant factors, the rates for special reductions, and the minimum expenditure obligation and physical work obligation for each exploration block are shown as in Attachment 2.

An interested company may apply for such right to explore and produce petroleum in accordance with the Petroleum Act B.E. 2514, and in line with the following rules, procedures, and conditions.

1. QUALIFICATIONS OF THE APPLICANTS

The applicant must possess all the qualifications as stipulated in Section 24 of the Petroleum Act B.E. 2514 (1971), as follows:

(1) must be a company or companies, and
(2) must command assets, machinery, equipment, tools and specialists to such an extent that the applicant shall be capable to explore for, produce, sell and dispose of petroleum.

If the applicant does not possess all the qualifications under (2) hereof, the applicant must have another company which the Government finds reliable and which possesses all the qualifications under (2) and has relationship in capital or management with the applicant, guarantee that such company shall make available, to the applicant, assets, machinery, equipment, tools and specialists to such an extent that the applicant shall be capable to explore for, produce, sell and dispose of petroleum.

2. PROCEDURES IN THE APPLICATION
The applicant, in applying for the right to explore and produce petroleum, shall take the following procedures:

2.1 Duration for the Submission of Application
The applicant must submit the application for the right to explore and produce petroleum together with the application fee and bid security under 2.2 and documents under 2.3, 2.4 and 2.5 either in the Thai or English language, to the Department of Mineral Fuels (the Department) by the 18th of February B.E. 2558 (2015), or a new date as may be specified by future public notice. The application is to be submitted at the office of the Department of Mineral Fuels, Ministry of Energy, 21st Floor, Energy Complex Building B, 555/2 Vibhavadi Rangsit Road, Bangkok 10900, Thailand, during office hours.

2.2 Application Fee and Bid Security for each Application
The applicant must submit the application for the right to explore and produce petroleum together with the application fee and bid security as follows:
2.2.1 An application fee of 10,000 Baht (Ten thousand Baht only) per block per application shall be made in cash only. The fee is nonrefundable.
2.2.2 Bid security in the amount of 3,000,000 Baht (Three million Baht only) per block per application, an instrument of which may be in either of the following forms:
(a) A cashier check issued by a bank with branches in Thailand payable to the Department of Mineral Fuels;
(b) A Thai Government bond, endorsed to the Department of Mineral Fuels;
(c) A Letter of Guarantee issued by a bank with branches in Thailand in favor of the Department of Mineral Fuels, with validity for at least 1 year.

Upon the announcement of the bid result, the bid security will be returned to the unsuccessful applicants upon written request, or to the successful bidders upon their signing of the agreement (s) awarding the right to petroleum exploration and production, as the case may be.
The applicants shall have a letter requesting the return of the bid security. The bid security will be returned within 15 working days from the date of receipt of the letter.

2.3 Document Required in the Application
An applicant must submit application form for the right to explore and produce petroleum in a format as per the DMF/P1 Form, as in Attachment 3, which is as prescribed in the Ministerial Regulation on Rules, Procedures and Methods in Concession Application B.E. 2555. The Applicant shall also furnish the following documentary evidence:

(1) Documentary evidence certifying the existence of the company, including, among others:
a. Certificate of Incorporation; (copy of the Certificate shall be certified within the recent three months)
b. Objectives of the company;
c. List of the major shareholders;
d. Document on registered capital.

(2) Evidence showing the power of attorney with ability to sign on behalf of the applicant’s company; for example, document on directors of the company who have the power to sign on behalf of the company, power of attorney, etc.

(3) Evidence showing that the applicant commands assets, machinery, equipment, tools and professional experts to such an extent that it shall be capable to explore for, produce, sell and dispose of petroleum, for example, annual report of the company, financial balance sheet or operational report for the recent three years.

In the case where the assets, machinery, equipment, tools or experts commanded by the applicant are inadequate or incomplete, the applicant may furnish evidence that another company, which the Government finds to be reliable, guarantees to make available to the applicant assets, machinery, equipment, tools or experts to such an extent that the applicant shall become capable to explore for, produce, sell and dispose of petroleum. The applicant must furnish evidence showing the guarantee in making available to the applicant assets, machinery, equipment, tools or experts and evidence showing the relationship in capital or in management between the guarantor company and the applicant, as well as the evidence required under item (1), (2), and (3) hereof of the guarantor company.

In the case that the applicant and/or the guarantor company is a company established under foreign laws, the evidence required under item (1), (2) and (3), must also be accompanied by a verification issued by the office in Thailand of the Embassy, legation or consular office of the country of its establishment, or issued by notary public or, if there is no notary public in the country where the applicant company and/or the guarantor company was established, issued by a person having the same powers and duties as the notary public.

2.4 Exploration Program: Expenditure and Physical Work Obligations
(1) An outline of petroleum exploration program indicating methods and time schedule of the operations together with estimated expenditures of each work, and detailed geological study, in a format as appeared in Attachment 4, to support the proposed petroleum exploration program of the applied exploration blocks. Field development plan is specifically required for application(s) on offshore blocks No. G3/57, G5/57 and G6/57.

In this regard, the Department of Mineral Fuels has prepared sets of data or report on geology, geophysics and the wells drilled in areas past works had been performed in the vicinity of each block. The applicant may purchase any of these sets of data for further study and evaluation for preparation of the petroleum exploration program and detailed geological study and work obligation for the applied blocks.

(2) The amount of expenditure obligations and physical work obligations for petroleum exploration of each exploration block shall be filled in the Form for Petroleum Exploration Obligation Proposal as shown in Attachment 5, and in conformity with the prescriptions of the Ministerial Regulation on Rules, Procedures and Conditions in Concession Application B.E. 2555. The proposed expenditure and physical work obligation (for the first three years) must be not less than those minimum requirements as specified for each block in Attachment 2.

(3) A Letter of Intent to place with the Department of Mineral Fuels a performance bond i.e. the Thai Government bond and/or a bank guarantee, with a validity period corresponding with that of the First Obligation Period, in the amount of not less than the minimum expenditure obligation of the First Obligation Period (for the first three years) from a bank with branches in Thailand, will be required from the successful bidder.

2.5 Special Advantages
The applicant shall propose special payments/advantages in addition to the payment of royalty and income tax and special remuneratory benefit as required under the laws, throughout the petroleum exploration and production period. The applicant may also propose special advantages such as supporting fund for organizational efficiency development and public participation, supporting fund for petroleum development in Thailand, etc. In this connection, the following special payments/advantages must be proposed, as a minimum, for each exploration block applied:

(1) Scholarships and community development payments in the operating areas of each exploration block, which shall not be less than 1,000,000 Baht (One million Baht only) per year throughout the exploration period, and, in the case the petroleum production area is granted, not be less than 2,000,000 Baht (Two million Baht only) per year per block throughout the production period. Before proceeding with the scholarships and community development in any year, program and budget on such payment must be submitted to the Department of Mineral Fuels for prior approval annually.

(2) Signature Bonus upon awarding the concession of each exploration block in the amount of not less than 10,000,000 Baht (Ten million Baht only); exclusive of blocks No. G3/57, G5/57 and G6/57 which shall not be less than 100,000,000 Baht (One hundred million Baht only) per block; and exclusive of blocks L6/57 and L23/57 which shall not be less than 2,000,000 Baht (Two million Baht only) per block.

(3) Production Bonus in the amounts of not less than 400,000,000 Baht (Four hundred million Baht only) for each onshore exploration block, and of not less than 200,000,000 Baht (Two hundred million Baht only) for each offshore exploration block, each time the volume of accumulated petroleum sold or disposed of has reached 10, 20 and 30 million barrels of oil equivalent (BOE), respectively. (For the purpose of determining the volume of petroleum, it shall be deemed that quantity of heating value of natural gas in an amount of ten million BTU is equivalent to one barrel of crude oil).

(4) The applicant must propose in its special advantages to have, after a production area has been first correctly defined in the concession block, a Thai juristic person (established under the laws of Thailand with Thai nationals holding more than 50% interest in it), with the approval of the Petroleum Committee, to acquire an undivided participating interest of not less than 5% of the right in such block. Such juristic person shall reimburse the applicant the expenditures incurred from the block prior to the date of its participation according to its participating interest share and bear its participating interest share of all the expenditure incurred in the block from the date of its participation.

(5) The applicant shall give priority to make use of services on transport vehicles, construction and others relating to petroleum activities from contractors, or to materials and tools available in Thailand.
The proposed Exploration Program and Expenditure and Physical Work Obligations, and the Letter of Intent on the performance bond under item 2.4 together with the proposed Special Advantages under item 2.5 shall be submitted in a sealed envelope, marking clearly “Expenditure and Physical Work Obligation for the petroleum exploration, the Letter of Intent on the performance bond, and Special Advantages”, which shall be a different envelop from the application and other evidences.

3. RULES IN CONSIDERATION OF THE APPLICATION

3.1 Only applications that have been submitted in accordance with the procedures prescribed in this Announcement will be deemed complete and considered.
3.2 The Department will first consider the applicant’s qualifications and credential i.e., reputation, experience and financial strength.
3.3 Each applicant will be informed of the initial status of evaluation of their applications and qualification within 60 working days from the 18th of February B.E. 2558 (2015).
3.4 Qualified applicants with proposed expenditure and physical work obligation (the first three years) for each exploration block and special advantages of not less than those specified herein will pass to step 3.5 and 3.6 in identifying prospective applicants.
3.5 In selecting the applicants to be awarded the rights to explore and produce petroleum in a particular block, each application will be graded and compared. The criteria for grading are:
(1) Petroleum exploration program and the amount of 80 points
expenditure obligations and physical work obligations
(2) Special advantages/payments 20 points
3.6 The consideration of the petroleum exploration program will be based on the conformity of the amount of proposed physical work with the geological reasons of the exploration block and the amount of proposed expenditure. The applicants may be invited to appear before the Department to provide clarifications and additional justification for their applications.

4. RESERVE OF RIGHTS AND OTHERS

4.1 The Government reserves its right to reject the applications which the applicant :

4.1.1 submitted after the date specified in 2.1,
4.1.2 failed to pay the application fee or furnish the bid security under 2.2
4.1.3 failed to furnish all the evidence required under 2.3, 2.4 and 2.5
The applicants shall not in any conditions be entitled to any claims.

4.2 The Government reserves its right to cancel this Announcement or to award the right to explore or produce petroleum under this Announcement to any applicant. The applicant shall not be entitled to claim for any conditions other than those specified under this Announcement.

4.3 The application shall be deemed a part of the agreement and the security will be returned without any interest.

4.4 When the awarding of the right in petroleum exploration and production is announced, and the competent officer has informed the successful applicant by written notice, at the address given by the applicant, of the date, time and place for affixing its signature to the agreement, the successful bidder must place with the Department of Mineral Fuels a performance bond in the amount not less than the proposed minimum expenditure obligation of the First Obligation Period (the first three years) as specified in its Letter of Intent under 2.4 (3) at least 10 working days prior to the signing date.

If the successful applicant fails to submit the performance bond and fails to appear and affix its signature within the designated time without justifiable ground, it shall be deemed that the successful applicant no longer wishes to be awarded the rights to explore or produce petroleum, fully aware that its bid security will be forfeited, and the said applicant shall not be entitled to claim for damage or for any rights from the Government.

4.5 Exploration Obligation of the First Obligation Period (first three years) is mandatory under the governing law. If the company awarded with the rights to explore or produce petroleum fails to fulfill the expenditure or physical works obligation prior to the end of the First Obligation Period or in the case of the whole relinquishment of the block prior to the end of the First Obligation Period, such company is obligated to pay the unspent residue of the First Obligation Period to the State. Failure of the company to do so, the State has the rights to confiscate the performance bond of the company on such exploration block.

If the company awarded with the rights to explore or produce petroleum has fulfilled all the obligation of the First Obligation Period (the first three years), the performance bond will be returned to company within 15 days from the date the Department of Mineral Fuels confirms such fulfillment and the company has a letter requesting for such return. The company can also request for the reduction of value of the performance bond, to correspond with the obligation fulfilled in each year.

4.6 The company awarded with the right to explore or produce petroleum must perform in strict compliance with the petroleum laws and other relevant laws, especially on issues related to safety and environmental protection.

4.7 The Department of Mineral Fuels has the rights to call any applicant for clarification or request additional document, without incurring any advantages or disadvantages to the other applicants.

For further information, please contact the Director, Petroleum Concession Management Bureau, Department of Mineral Fuels, 555/2 Energy Complex Building B, 21st Floor, Viphavadi-Rangsit Road, Chatuchak District, Bangkok 10900, THAILAND, tel. (662) 794-3471, (662) 794-3486 or fax. (662) 794-3470 during office hours, or visit our website at www.dmf.go.th.

21 October 2014

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This English translation was prepared by officers of the Ministry of Energy. Although care was taken to render the translation as reliable as possible, it does not carry any legal authority. Only the original text in Thai has legal force.