Alaya Legal presents its Sixth Issue of the Oil & Gas E-Zine. The contents are presented to provide a comprehensive legal and industry update covering global market developments, regulatory changes and contractual concepts in the oil and gas sector.
Reference Material
- Categories of proven oil and natural gas reserves across the globe.
- Overview of Upstream, Midstream and Downstream sectors in the Oil & Natural Gas Industry.
REGULATORY & JUDICIAL DEVELOPMENT – INDIA
Centre Notifies GCV-Based Gas Price of USD 5.05/MMBtu
October 29, 2014
The Ministry of Petroleum and Natural Gas notified a revised domestic gas price of USD 5.05 per MMBtu based on Gross Calorific Value (GCV).
The revised price replaced the earlier rate of USD 4.20 per MMBtu and remained effective from November 1, 2014 to March 31, 2015.
Policy Framework for Early Monetization of Hydrocarbon Discoveries
November 10, 2014
The Government introduced a policy framework providing extensions, relaxations and clarifications under the Production Sharing Contract (PSC) regime to facilitate early monetization of hydrocarbon discoveries.
- Extension of declaration of commerciality timelines.
- Extension of field development plan submission periods.
- Adjustment of minimum work programme obligations.
- Swapping of 2D and 3D seismic commitments.
- Entry into subsequent exploration phases after settlement of unfinished work obligations.
- Condonation of procedural delays.
- Additional appraisal drilling opportunities.
- Evaluation of additional reservoirs during appraisal programmes.
FEATURE
Annual Contract Quantity (ACQ) – Adjustments
The Annual Contract Quantity (ACQ) represents the maximum quantity of gas that a seller must tender for delivery under a Gas Sales Agreement during a contract year. The Adjusted Annual Contract Quantity (AACQ) is determined after applying various additions and deductions.
Key Additions to ACQ
- Make-Up Gas
- Recovery of take-or-pay entitlements from previous years
- Contractual mechanisms for future gas recovery
- Price adjustment and settlement provisions
Undertake Gas
Undertake Gas arises when a buyer takes delivery of less gas than the quantity delivered by the seller against the buyer’s nomination.
- Undertake gas tolerance limits.
- Seller remedies and buyer liabilities.
- Force majeure exclusions.
- Commissioning period exceptions.
- Off-specification gas exclusions.
Key Deductions from ACQ
- Carry Forward Gas
- Shortfall Gas
- Overtake Gas
Carry Forward Gas allows excess gas taken in one year to reduce future take-or-pay obligations, while Shortfall Gas and Overtake Gas provisions establish contractual remedies and liabilities for supply or nomination imbalances.
The Annual Contract Quantity framework forms the commercial foundation of long-term Gas Sales Agreements and must carefully address Make-Up Gas, Carry Forward Gas, Undertake Gas, Shortfall Gas and Overtake Gas adjustments.
MARKET DEVELOPMENTS – GLOBAL
Chevron Confirms First Oil Production from Tubular Bells
November 17, 2014
Chevron announced commencement of production from the Tubular Bells deepwater project in the Gulf of Mexico, with expected output of approximately 50,000 barrels of oil equivalent per day.
ONGC Approves Major Western Offshore Investments
November 14, 2014
ONGC approved investments exceeding ₹10,600 crore for redevelopment of Mumbai High South and integrated development of Mukta, Bassein and Panna formations.
GAIL Participates in TAPI Pipeline Company
November 13, 2014
GAIL joined national gas companies from Turkmenistan, Afghanistan and Pakistan in establishing TAPI Pipeline Company Limited to build, own and operate the 1,800-kilometre TAPI pipeline.
Rajahmundry Resumes Gas Supplies to GAIL
November 12, 2014
Gas supplies were restored from key ONGC installations following operational disruptions caused by a pipeline incident earlier in the year.
Schlumberger Releases Offshore Mozambique Seismic Data
November 10, 2014
Schlumberger announced availability of extensive offshore Mozambique seismic data, including over 110,000 km of seismic information supporting exploration activities.
GAIL and SOCAR Sign Strategic Cooperation Agreement
November 3, 2014
GAIL and Azerbaijan’s SOCAR entered into an MoU covering LNG opportunities, upstream assets, LNG sourcing, shipping and petrochemical investments.
ONGC and PVEP Sign Exploration Cooperation Agreements
October 28, 2014
ONGC and ONGC Videsh signed agreements with PetroVietnam Exploration Production Corporation for cooperation in Indian and Vietnamese exploration blocks.
Chevron Approves Stampede Deepwater Development
October 28, 2014
Chevron approved development of the Stampede Project in the Gulf of Mexico, a deepwater project with estimated capital expenditure of approximately USD 6 billion.
Chevron Begins Production from Bibiyana Expansion Project
October 27, 2014
Chevron commenced production from the Bibiyana Expansion Project in Bangladesh, increasing gas production capacity to approximately 1.4 billion cubic feet per day.
ONGC Videsh and PEMEX Execute Cooperation Agreement
September 27, 2014
ONGC Videsh and PEMEX signed an agreement to collaborate on upstream hydrocarbon opportunities in Mexico.
ONGC Videsh Expands Cooperation with PetroVietnam
September 16, 2014
A Letter of Intent was signed to explore participation in additional offshore Vietnam exploration blocks.
GAIL Supplies Alternate Gas to Gujarat Industries
September 14, 2014
GAIL arranged alternative gas supplies to industrial consumers affected by diversion of APM gas to domestic PNG and transport CNG sectors.
ONGC Videsh Signs MoU with YPF Argentina
September 3, 2014
ONGC Videsh and YPF agreed to cooperate on upstream hydrocarbon opportunities in Argentina, India and third-country markets.
ONGC Videsh Signs Myanmar Production Sharing Contracts
August 11, 2014
ONGC Videsh executed production sharing contracts for onshore exploration blocks B-2 and EP-3 in Myanmar.
NEXT ISSUE
April 2015
IN-HOUSE CONTRIBUTORS
- Sakshi Bawa – Oil & Gas Team (Downstream Sector)
- Neha – Oil & Gas Team (Downstream Sector)
SOURCES
- Norwegian Petroleum Directorate
- U.S. Energy Information Administration
- The International Energy Agency
- Organisation of the Petroleum Exporting Countries
- The Oil and Gas Journal
- Official Websites of Various Oil & Gas Companies
DISCLAIMER
The information in this private circulation is not legal advice and should not be treated as such.
The information is sourced from public domain materials and is intended solely for private and non-commercial purposes.
No representation is made regarding the accuracy, completeness or reliability of the information provided.
This disclaimer shall be governed by and construed in accordance with the laws of India, and any disputes shall be subject to the exclusive jurisdiction of the courts of India.
Doc ID: 2O&G14
