Sonangol Awarded Qaiyarah Contract Area

Source: www.gulfoilandgas.com 12/14/2009, Location: Middle East

The Petroleum Contracts and Licensing Directorate of the Ministry of Oil is pleased to announce the results of bidding for the Qaiyarah Contract Area.

In total 1 bid was received, as follows: Operator: Sonangol (100%), RFB (US$/boe): 5.00 (12.50), PPT(bopd): 120,000.

The original Remuneration Fee Bid of US$ 12.50/boe was in excess of the Maximum Remuneration Fee (MRF) of US$ 5.00/boe set by the Ministry of Oil. Sonangol originally declined the opportunity to match the MRF. However, after further clarification as to requirements for the transfer of the heavy crude oil from this Contract Area, Sonangol advised that it will match the MRF.

After this acceptance, Sonangol is declared winner of the bid for the Qaiyarah Contract Area.

(i) Companies/Consortia bids comprise two variables:

a. Remuneration Fee (RFB), expressed in U.S. Dollars per barrel of oil equivalent (US$/boe) and worth up to 80 points. Points are calculated by dividing the lowest RFB bid by all competing companies/consortia by the RFB bid, and multiplying by 80; and

b. Plateau Production Target (PPT), expressed in barrels of crude oil per day (bopd) and worth up to 20 points. Points are calculating by dividing the PPT bid by the highest PPT bid by all competing companies/consortia and multiplying by 20.

(ii) The RFB is payable on each barrel of crude oil and each barrel of oil equivalent of LPG and natural gas recovered from a gas processing plant, and transferred to the Regional Oil Company.

(iii) The RFB is payable once this Contract Area achieves a production of 30,000 bopd.

(iv) Costs incurred in developing the Contract Area are also paid by the ROC.

(v) The Plateau Production Target (PPT) must be maintained for a specified period, which is 9 years in the case of the Qaiyarah Contract Area.

(vi) A signature bonus of US$ 100 million is also payable.


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