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SABAH
M eru
PENINSULAR MALAYSIA
Segam at
LNG PLANTS
SARAWAK
OIL AND GAS FIELDS* FIELD DISCOVERED PRODUCING OIL 134 47 GAS 178 14
102
Malaysia / Thailand Joint Development Area
104
106
VE A I TN M
108
200m
110
112
114
116
118
P LA A A WN
120 9
( P I LI P I N S H P E)
Pulau Bugsuk Pulau Balabac
20 0m
PM3
Commercial Arrangement Area
7
PM301
Pulau Langkawi
ND4
PM302 PM311
ND5
H
SB303
ND2
A
ND3
C
K
G
SB302
Sulu Sea
PM303
SB330 SB301
PM312
F F
L
E
PM320
5
PM321
Pulau Pinang
PM309
PM307 PM305
B
B SK301 SK3 SK302
Pulau Natuna
M
J
SABAH
SB332
SB331
Pulau Tawitawi
SK312 SK308
Pulau Labuan
EI
Pulau Sebatik
Pulau Pulau Sibutu Timbun Mata
5
SB306
SK SK 30 309 9
PENINSULAR MALAYSIA
SK 307 SK310
SK306
SK311
U BR N
PM308
Kepulauan Anambas
ND6
ND7
SK303
Pulau Subi Besar
SK5 SK305
Pulau Tioman
Pulau Djemadja
3
SK331
SK304
SARAWAK
S M TR UA A
0
S N A OE I GP R
1 98 100 102
200 Km
K LI M N N A A TA
Celebes Sea
104
106
108
GOVERNMENT
PDA
PETRONAS
Conve rte d Conce ssion Syste m to Production Sharing Contracts (PSC). Oblig ate s Partne rs to provide all financing and insulate PETRONAS from risks. Provide s a more e quitable partne rship. Stipulate s contractual pe riod, manag e me nt of ope rations, re cove ry of costs, division of profit, obligations of partie s. Plans and se cure s long te rm de ve lopme nt of Nation's pe trole um re source base . Promote s sustainable e xploration, de ve lopme nt and production of re source s for the maximum be ne fit to the nation. Manage s pe rformance of PSC Partne rs. Brings in fore ign inve stme nt and te chnolog y.
PSC
CONTRACTORS
1985 PSC To attract other oil companies besides ESSO and SHELL
1976 PSC
Convert existing Concession into PSCs CONCESSION AGREEMENT Oil companies and State government
50
1 9 7 6 P S C 1 9 8 5 P S C
D E E P W A T E R & R /C P S C
42 43 41 44
46
40
37 33
30
27
30
30
31 29 29
31 27
21
20
11
10
5 4 4 4 5 5 6 6 6 6 4
1976
1980
1984
1988
1992
1996
2000
Contractor
Government
76 PSC
Government Cash Flow
Gross Revenue Less Cost Cost Oil Ceiling 20% Profit Oil Split Contr : PET 30% :70%
85 PSC
Government Cash Flow
Gross Revenue Less Cost Cost Oil Ceiling 50% Oil, 60% Gas Profit Oil Split Contr : PET Sliding
Contr PETH 50 60 70 First 10 kbd Next 10 kbd Ecxess 20 kbd 50 40 30
Gross Revenue Less Cost Cost Oil Ceiling Depend on R/C Profit Oil Split Contr : PET Depend on R/C
Contractors' Cumulative Cost Oil +Profit Oil From The Effective Date Contractors' Cumulative Petroleum Costs From The Effective Date
2.50
2.00
1.50
1.00
0.50
Cumulative Costs
0.00
8 10 12 14 16 18 20 22 24 26 28
8 10 12 14 16 18 20 22 24 26 28
Year
Year
R/C = 1; Represents PAYOUT (undiscounted), but true Payout (considering time value of money, tax payment, etc.) occurs when R/C is around 1.4
Outline
R/C TABLE
Contractors R/C Ratio
COST OIL
Cost Oil Ceiling
PROFIT OIL
Unused Cost Oil PET : Cont Profit Oil PET : Cont
0.0 < R/C <= 1.0 1.0 < R/C <= 1.4 1.4 < R/C <= 2.0 2.0 < R/C <= 2.5 2.5 < R/C <= 3.0 R/C > 3.0
N.A.
20 : 80 30 : 70 40 : 60 50 : 50 60 : 40
20 : 80 30 : 70 40 : 60 50 : 50 60 : 40 70:30
FISCAL IMPROVEMENT
Fiscal terms are tied to rate/volume level, NOT related to PROFITABILITY Fixed Cost Oil/Gas is NOT sensitive to investment level especially in the early of the project life Fiscal terms applied to Contract Area (rather than field basis) Higher profit split benefits accrue to First field. Subsequent development does not enjoy higher profit split. NO fiscal incentives to save costs Any Unused Cost Oil/Gas becomes profit and share in a bigger proportion to PETRONAS NO fiscal incentives for re-investment Additional investment will not enjoy the same benefit as in earlier investment
100
PSC Partner
10.1
14.0
16.4
12.7
80
15.8
PETRONAS
28.7
13.3
12.5
60
42.3
42.2
30.1
40
GOVERNMENT
38.1
20
COST
23.1
44.7
28.0
28.0
0
1976 PSC
Note : The 1976, 1985 and R/C PSCs are based on 40 million bbls crude oil reserve volume. The Deepwater PSC assumes a large oil discovery in excess of 1 billion bbls.
1985 PSC
R/C
DEEPWATER
Low
High 2. Higher Contractor's share of Profit Oil/Gas is given when Contractor's Profitability is low and decreases as Contractor's Profitability increases. CONTRACTOR'S SHARE OF PROFIT OIL/GAS High
Low
High
Oil Price
20
Cost
100 mmbbl
100 mmbbl
18
40 mmbbl
16
40 mmbbl
14
12
10
Salient Features: Under the new R/C fiscal terms, Cost Reduction provides as much impact on Contractors' IRR as that caused by oil price increase Cost Reduction is fully within our control, unlike oil price. Therefore, Contractors will be enticed to reduce cost rather than to hope for oil price to improve. This leads to larger share in revenue for all parties involved.
-30%
-20%
-10%
Base Case
10%
20%
30%
Decrease
Percent Variation
Increase
REVENUE
ANNUAL
COSTS
1st round investment 2nd round investment
CUMULATIVE
Cumulative Revenue
Cumulative Costs
2.0 1.5
RC INDEX
YEAR
R/C IS SELF-ADJUSTING
Costs, Reserves & Oil Price are estimated based on current conditions and current Technology when a Contract is negotiated and agreed. Estimates likely to change, New technologies may evolve over time.
CONTRACTOR'S R/C INDEX
R/C INDEX PROFILE IF OIL PRICE TURNS OUT TO BE 25% HIGHER
0.0 2 4 6 8 10 12 14 16 18 20
0.0 0 2 4 6 8 10 12 14 16 18 20
10
12
14
16
18
20
11
13
15
17
19
ROYALTY ( 10% )
Below 50 MMbbls 50 : 50
COST RECOVERY up to 50%
Above 50 MMbbls 30 : 70
Below 10 kbbl/d 50 : 50
Next 10 kbbl/d 40 : 60
Above 20 kbbl/d 30 : 70 12 % 12 %
20 %
16 %
28 % 20 % 24 %
28 %