Petronas procedures and guidelines for planning and budgeting

PETRONAS Proceduresand Guidelines for Upstream

Activities (PPGUA 3.0)

© 2013 PETROLIAM NASIONAL BERHAD (PETRONAS)

All rights reserved. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by

any means (electronic, mechanical, photocopying, recording or otherwise) without the permission of the copyright owner.

PLANNING AND BUDGETVOLUME 4

VOLUME 4PLANNING AND BUDGET

2 PPGUA/3.0/042/2013

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Table of Contents

Executive SummaryContact InformationSection 1: Work Programme & Budget (WPB) and Related Processes 1.1 Work Programme & Budget (First and Annual Submission) 1.1.1 Objective 1.1.2 Approval for WPB 1.1.3 Submission Requirements 1.1.4 Submission and Format 1.2 Pre-Budget Expectation (PBE) 1.2.1 Objective 1.2.2 Submission Requirements 1.2.3 Submission of PBE Response 1.3 Additional Budget Request (ABR) 1.3.1 Objective 1.3.2 Submission Requirements 1.4 ABR Budget Tracking 1.4.1 Capital Expenditure (CAPEX) 1.4.2 Operating Expenditure (OPEX) 1.4.3 Submission and Format 1.5 Year End Carry Over (YECO) 1.5.1 Objective 1.5.2 Submission Requirements 1.5.3 Submission and Format 1.6 Appeal to WPB/ABR/YECO 1.6.1 Objective 1.6.2 Form of Appeal 1.6.3 Summary of Submission TimelineSection 2: Annual Review of Petroleum Resources (ARPR) 2.1 Objective 2.2 ARPR Final Submission 2.2.1 Submission Requirements 2.2.2 Submission and Format 2.2.3 Process Workflows 2.3 ARPR Pre-Submission Review 2.3.1 Submission Requirements 2.3.2 Submission and Format


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2627-28

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29-3030

30-313132

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34-3535

36-37373738

38-3939-40

404141

42-4344-4849-51

2.3.3 Process Workflows 2.4 Petroleum Resource Changes Review and ApprovalSection 3: Crude Oil Annual Production Target & Quarterly Performance

Review (QPR) 3.1 Objective 3.2 Submission Requirements 3.3 Annual Approved Production Target 3.4 Quarterly Performance Review 3.4.1 Submission and Format 3.5 Production VariationSection 4: Gas Production, Condensate & Quarterly Performance Review (QPR) 4.1 Objective 4.2 Submission Requirements 4.2.1 Non-Associated Gas (NAG) and Associated Gas (AG) 4.2.2 Condensate 4.3 Annual Approved Gas Supply Target 4.4 Quarterly Performance Review 4.4.1 Submission and Format 4.5 Production VariationSection 5: Enhanced Capacity Review (ECR) 5.1 Objective 5.2 Submission Requirements 5.3 Submission and Format 5.4 Process Workflows 5.5 Production Variation - ECR versus WPB SubmissionAbbreviationsAppendix 1Appendix 2


4 PPGUA/3.0/042/2013

Executive SummaryThe Planning and Budget volume is consistent with the Contract’s requirement for the submission of Work Programme & Budget (WPB). In addition, for overall planning purposes, it is fundamental that Contractor adheres to the following:

a) Work Programme & Budget (WPB) and related processesb) Annual Review of Petroleum Resources (ARPR) and related practicesc) Approved annual crude oil production level processd) Approved annual gas supply level process e) Enhanced Capacity Review (ECR) related proceduresf ) Requirements for data submission to PETRONAS

In relation to managing budget changes, Contractor shall comply with the Additional Budget Request (ABR) procedures in conducting the petroleum operation activities.

The submission of production level forecast on crude oil, non-associated gas,associated gas and condensate shall be:

a) based on the latest reservoir engineering study and an approved reservoir management policyb) consistent with safe operating conditions and a realistic development schedule

Consideration shall be given to the need for efficient and economic exploitation of hydrocarbon resources.

Contact InformationAll correspondence related to this volume shall be addressed to:

SUBJECT CONTACT

Work Programme &Budget and Related

Processes

Contractor shall address its official letter and submission to:General ManagerStrategic PlanningPetroleum Management Unit

All enquiries related to administrative matters shall be addressed to:Senior ManagerBusiness PlanningStrategic PlanningPetroleum Management Unit


PPGUA/3.0/042/2013 5

SUBJECT CONTACT

Annual Review ofPetroleum Resources

(ARPR)

Crude Oil Annual Production Target &

Quarterly Performance Review (QPR)

Enhanced Capacity Review

Contractor shall address its official letters and submission to:General ManagerStrategic PlanningPetroleum Management Unit

All enquiries related to administrative matters shall beaddressed to:Senior ManagerOil Resource PlanningStrategic PlanningPetroleum Management Unit

Gas Production,Condensate & Quarterly

Performance Review (QPR)

Contractor shall address its official letters and submission to:General ManagerStrategic PlanningPetroleum Management Unit


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Section 1: Work Programme & Budget (WPB) and Related Processes

1.1 Work Programme & Budget (First and Annual Submission) 1.1.1 Objective The Work Programme & Budget (WPB) is submitted annually by Contractor to PETRONAS. It outlines the Contractor’s proposed annual petroleum operations, namely exploration, development and production.

Each WPB shall provide details of the proposed petroleum operations, which shall include all relevant data, activities description, estimated costs and plan of upcoming year activity plus four (4) years forecast. The expenditure breakdown shall be submitted in the following order:

The WPB submission to PETRONAS for approval shall be based on the following:

1.1.2 Approval for WPB PETRONAS will notify Contractor of approval or rejection of the proposed WPB by 31st December of the same year in respect of each subsequent WPB (approval may be conditional). Petroleum operations can only be carried out by Contractor once the relevant WPB has been approved in writing by PETRONAS.

Below is the overview of the annual WPB related processes:

EXPENDITURE REQUIREMENT BREAKDOWN

Year 1 to Year 2 Quarterly

Year 3 to Year 5 Annually

CONDITION SUBMISSION REQUIREMENT

Upon signing of new Contract

Within ten (10) weeks after the execution date of the Contract or unless/otherwise specified in the Contract

Throughout Contract’s tenure

No later than 1st September each year for the subsequent year activity


PPGUA/3.0/042/2013 7

Figure 1: Timeline of Work Programme and Budget Related Processes

1.1.3 Submission Requirements WPB submission shall comprise of four (4) sets of documentations, updated as and when advised by PETRONAS. The documentations shall consist of:

JAN

PETRONAS issues WPB guidelines to Contractor

FEB MARCH APR MAY JUNE JULY AUG SEPT OCT NOV DEC

Annual WPB submission by 1st

September

PETRONAS issues decision by 31st

rebmeceD

Note : 1. 1st WPB shall be submitted ten (10) weeks after the execution date of the Contract 2. ABR submission shall be as and when necessary throughout the current budget year

PETRONAS issues PBE guidelines to

rotcartnoC

Contractor submits esnopser EBP

YECO submission by Contractor

on 18th February of the subsequent year

PETRONAS issues YECO guidelines

rotcartnoC ot

YECO approval letter will be issued by batches commencing May subject to PETRONAS’ decision.

NO. PACKAGEDETAILS SHALL

INCLUDE BUT NOT LIMITED TO

FORMAT APPLIES TO

1 ExecutiveSummary

Contract generalbackground, activityoverview, basis andassumption applied in the proposed WPB

Microsoftapplications, e.g. Word,PowerPoint

Compulsory to all Contractors

2 Main Book (i) Activity and associated cost details

eWPB(online system)


Main Book (ii) Detail on activities and expenditures not available in eWPB format, for example, drilling, facilitiesmanagement, Health, Safety and Environment (HSE), Information, Communication and Technology (ICT), list of Pre-Budget Expectations (PBE) non-compliance, and other related information

Microsoftapplications, e.g. Word,PowerPoint, Excel

Compulsory to all Contractors (whereapplicable)


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1.1.4 Submission and Format WPB packages shall be submitted via hardcopy, softcopy and eWPB or as advised by PETRONAS in its annual WPB guidelines, as follows:

The diagram provides an overview of the WPB process workflows:

FORMAT OFSUBMISSION

NO. OF COPIES

Hardcopy Two (2) sets for each of the submission requirement items (where applicable)

Softcopy Two (2) CDs comprising all of the submission requirement items

Online (eWPB) eWPB is accessible by Contractor for data input in June. eWPB is closed on 1st September

NO. PACKAGEDETAILS SHALL

INCLUDE BUT NOT LIMITED TO

FORMAT APPLIES TO

3 Exploration Book

Exploration summarystrategies, generalframework, hydrocarbon plays and inventory ofprospects/leads and reserves

Microsoftapplications, e.g. Word,PowerPoint

Contractor with on-goingexploration activities

4 Manpower and Training Book

Manpower manning and cost summary, training forMalaysian staff

Microsoftapplications, e.g. Word and/or PowerPoint



PPGUA/3.0/042/2013 9

Figure 2: Work Programme & Budget Process Workflows

1.2 Pre-Budget Expectation (PBE)

1.2.1 Objective PBE is an annual submission, which commences prior to actual WPB submission. It outlines PETRONAS’ expectations of Contractor. It serves to assist Contractor in preparing the annual WPB consistent with PETRONAS’ business plans and objectives.

Clarification session may be held between PETRONAS and Contractor. This session provides the opportunity for preliminary discussions on the activities and proposed budget, with a view of optimising both parties’ expectations and objectives.

1.2.2 Submission Requirements PBE comprises of general and specific expectations in relation to petroleum operations. The PBE shall include the exploration, development and production (whichever is relevant to the Contractor) that PETRONAS expects to be carried out annually and includes the four (4) years forecast.

Contractor shall pursue its own initiatives to conduct petroleum operations in accordance with prudent and modern practices.

The expectations formulated shall be in accordance with the respective contractual obligations. It shall incorporate the following details but not limited to:

Contractor

Provides feedback(reason, justification,

resubmission if needed)

Issues WPB guidelines

No

Yes

Requires clarification?

Clarifies WPB guidelines (if any)

and prepares submission

Note: WPB submission is to be mutually reviewed and endorsed with relevant Partner(s) where applicable.

Submits WPB on 1st Sept orten (10) weeks after

execution date for newContract/Submits feedback

as and when required

Receives and reviews WPB

Finalises decision

Receives decision

Executes approved activity and budget

END

Accepts decision?

Yes

No Submits Appeal

Receives and reviews appeal

SP, PMU


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ACTIVITYEXAMPLE OF GENERAL

EXPECTATIONEXAMPLE OF SPECIFIC

EXPECTATION

Exploration Contractor to pursueexploration activity through geological and geophysics (G&G) studies, seismicacquisition and exploration drilling, as well as explore and test new play types.

Number of wells(wildcat/appraisal) to be drilled, volume of seismic acquisition and processing and type of studies.

Development Ensure project total cost and first hydrocarbon date in WPB submission are aligned with Field Development Plan (FDP), Final Investment Approval (FIA) or any latest approved revision byPETRONAS. Any deviation shall require PETRONAS’written approval.

Project related activities for example, facilitiesengineering and drilling activity.

Production Achieve targeted production by minimising unplanned downtime, undertake overall facilities management.

Specific activity for:• facilities management

(pipeline, topside,structures, well)

• production enhancement (subsurface operations)

• hydrocarbon measurement and accounting.

Health, Safety andEnvironment

Strengthen and enhance HSE performance and leadership towards achieving zeroincidents, institutionalise process safety in operations.

HSE KPIs target, HSEinitiatives and Contractor HSE management.

Drilling Achieve full compliance with drilling requirements, forexample, notification ofdrilling programme approval.

As stipulated in Volume 8: Drilling and Well Operations

Abandonment/Decommissioning

Latest decommissioning cost estimates, a detail plan (if applicable) and cess payment for any applicable facilities.

Cost estimates andabandonment/decommissioning


PPGUA/3.0/042/2013 11

1.2.3 Submission of PBE Response The response to PBE shall be in writing to the General Manager of Strategic Planning (SP), Petroleum Management Unit.

The following diagram illustrates the PBE process workflows:

Figure 3: Pre-Budget Expectation Process Workflows

1.3 Additional Budget Request (ABR) 1.3.1 Objective An ABR provides the opportunity to address budget changes. A request for additional expenditure can be made to fund a cost increase or unplanned work because of work scope increase, work acceleration and/or change in assumption that have financial impact. The ABR must relate to the CURRENT budget year. It shall be submitted as and when necessary throughout the particular year.

ABR is not required in the following instances:

a) payment for late charges that have been accrued and approved in the previous Year End Carry Over (YECO), not exceeding 10% of the approved actual expenditure. b) past years’ expenditure which was neither accrued nor approved in the previous YECO (Refer to the process in Figure 5).

Note: The Risk Service Contractor (RSC) shall observe its respective RSC Governance Procedure and Guideline for treatment of ABR.

1.3.2 Submission Requirements The following figure explains key submission requirements of the ABR:

Contractor

Submits PBE response

Issues PBE

No

Yes

*Clarifies PBE

Reviews response

Clarifies response

END


*Clarification session may be held upon request

Accepts PBE

response?

No

Yes

Receives PBE

SP, PMU


12 PPGUA/3.0/042/2013

Figure 4: The Key Submission Requirement of the Additional Budget Request

1.4 ABR Budget Tracking With the exception of allocated costs (for example, Information Technology (IT), manpower, training, general and administrative and shared logistic/ facilities costs), expenditures shall be monitored at Contractor’s level.

Other expenditure is monitored as per Contract level, as follows:

1.4.1 Capital Expenditure (CAPEX)

Timeline

Approval Guidelines

Requirement

Determining Factor Latest estimate – Latest approved = Variance >10% of respective ABR Budget Tracking

In accordance to standard ABR format

• Valid and agreed activities as per agreement reached with respective PMU Line Departments • Subject to PETRONAS’ Technical Approval eg. Well proposal, FDP, FIA, FIP and etc • Conformance to PPGUA guidelines • Reasonable expenditure

• Contractor to raise ABR prior to work execution • PETRONAS to respond within 60 days of ABR receipt

Technical Discussion Where applicable, Contractor to initiate technical as well as budget estimation discussion with respective PMU Line Departments prior to ABR submission

BUDGET CATEGORY SUB-BUDGET CATEGORYABR BUDGET GROUP

ELEMENTS

Exploration Seismic (acquisition, process, reprocess, etc.)

By individual programme

G&G Total expenditure

Specialised studies Total expenditure

Drilling (wildcat/appraisal) Individual well/prospect

Other allocated CAPEX Total expenditure


PPGUA/3.0/042/2013 13

BUDGET CATEGORY SUB-BUDGET CATEGORYABR BUDGET GROUP

ELEMENTS

Development Seismic (acquisition, process, reprocess, etc.)




Drilling (appraisal) Individual well/prospect

Project (engineering/facilities)

Total expenditure/project

Project (drilling) Drilling campaign/project

Other allocated CAPEX Total expenditure

Production Maintenance Well workover By programme

Modification andmiscellaneous

Per individual project valued at RM 10 Million and above; andTracked at the group/consolidated level forprojects less than RM 10 Million

Support Services IT Total expenditure

Onshore support Total expenditure

Offshore support Total expenditure

HSE Total expenditure


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1.4.2 Operating Expenditure (OPEX)

1.4.3 Submission and Format a) Request for ABR shall be submitted in writing to the General Manager of Strategic Planning, Petroleum Management Unit. b) Request for approval of previous years’ unapproved expenditure shall be submitted in writing to the Senior General Manager of Petroleum Operations Management (POM), Petroleum Management Unit. c) Submissions shall comply with the ABR form and its requirements. Refer to Appendix 1 and Appendix 2.

The following diagram illustrates the ABR process workflows:

BUDGET CATEGORY SUB-BUDGET CATEGORYABR BUDGET TRACKING

ELEMENTS

Exploration Seismic (acquisition, process, reprocess, etc.)




Management andAdministration (M&A)

Total expenditure

Other Allocated OPEX Total expenditure

Development Seismic (acquisition, process, reprocess, etc.)




M&A Total expenditure

Other allocated OPEX Total expenditure

Production Operations Surface routine operations Total expenditure

Sub-surface operations Total expenditure

Logistics Total expenditure

Maintenance Total expenditure

Special studies Total expenditure

General overhead Total expenditure

Other allocated OPEX Total expenditure

Abandonment Individual line item

Others Individual line item


PPGUA/3.0/042/2013 15

Figure 5: Additional Budget Request Process Workflows

1.5 Year End Carry Over (YECO) 1.5.1 Objective YECO is an annual submission for actual expenditure versus the latest approved WPB. It incorporates expenditure changes requested via ABR and/or appeal request.

Note: “latest approved WPB” may include wherever applicable, approved WPB + submitted ABR + submitted appeal + approved carry over from previous year.

There are two (2) main components of YECO:

a) Year End - relates to the actual expenditure for the budget year incurred from 1st January to 31st December. b) Carry Over - relates to ongoing or incomplete approved activities and budget as at 31st December of the budget year. The spilled over activities shall be completed no later than by the end of Q1 of the subsequent budget year.

The expenditure shall be on an accrual or estimate basis whichever applicable and submitted on 18th February of the subsequent year.

Note: YECO is not applicable to RSC.

Contractor

Prepares & submits request to SGM, POM

Determines requirement for additional fund

No

Yes Prepares

submission of ABR

Submits to SP

Conveys the decision within 60 days upon notification subject to su cient

information/justification

Executes approved ABR activity

Reviews and deliberates appeal with relevant PMU Line

Department

Expenditure in current

year?

Updates audit account

Accept/Reject

Issues decision to Contractor

Decision by

VP, PM

END

Receives and reviews request (in consultation with relevant

PMU Line department )

SP, PMU

POM, PMU


16 PPGUA/3.0/042/2013

1.5.2 Submission Requirements Submission shall consist of YECO expenditure, as well as a comprehensive description and justification for variance incurred of plus or minus 10% from the approved budget. The submission package shall incorporate the following expenditure variance analyses, but not limited to:

Attention: Any unbudgeted cost and variance expenditure of more than 10% without ABR may not be eligible for cost recovery, with the exception of allocated expenditure.

1.5.3 Submission and Format The YECO submission package shall be submitted via hardcopy and softcopy (or as advised by PETRONAS in its annual YECO guidelines) as follows:

The following diagram illustrates the YECO process workflows:

NO.EXAMPLE OF ANALYSIS OF

EXPENDITUREFORMAT APPLIES TO

1 Year end and Carry over Microsoftapplications, e.g. Word, PowerPoint, Excel

Compulsory to all Contractor(where applicable)

2 Affiliated Service

3 IT

4 Manpower and training

5 PSC Training Commitment

6 General & Administration (G&A)

7 ABR and appeal of ABR

8 WPB appeal

9 Status of WPB conditional approval

FORMAT OF SUBMISSION NO. OF COPIES

Hardcopy Two (2) sets comprising of the entiresubmission requirement items (whereapplicable).

Softcopy Two (2) CDs comprising of the entiresubmission requirement items (whereapplicable).


PPGUA/3.0/042/2013 17

Figure 6: Year End Carry Over Process Workflows

1.6 Appeal to WPB/ABR/YECO

1.6.1 Objective This section explains the appeal request procedures for disapproved WPB, ABR and/or YECO.

1.6.2 Form of Appeal Contractor must submit appeal request in writing which includes the following:

a) a description of the disapproved activity and associated expenditure b) justification for the activity, which may include technical support, cost description and other evidences

The following diagram illustrates the appeal process workflows:

Contractor

Provides feedback (reason, justification, resubmission

if needed)

Issues YECO guidelines

No

No

Yes


Clarifies YECO guidelines (if any)


Note: YECO submission is to be mutually reviewed and endorsed with relevant Partner(s) where applicable.

Submits YECO on 18th Feb/

Submits feedback as and when

required

Receives and reviews YECO

Finalises decision

Receives decision

Updates expenditure

book END

Accepts decision?

Yes

No Submits Appeal

Receives and reviews appeal

SP, PMU


18 PPGUA/3.0/042/2013

Figure 7: Appeal Process Workflows

1.6.3 Summary of Submission Timeline

Contractor

CRAC

(Cost Recovery

Appeal Committee)

Prepares and submits request to CRAC

Determines appeal requirement

No

Yes

Prepares Appeal

Submits to SP

Receives and reviews request (in consultation with relevant

PMU Line department )

Conveys the decision subject to su cient information/justification

Executes approved activity

Expenditure captured by PSC Audit?

Updates audit account

Accept/Reject Issues decision to

Contractor

Decision by

VP, PM

END

Reviews and deliberates appeal with relevant PMU

Line Department

SP, PMU

NO. SUBMISSION SUBMISSION TIMELINE TO PETRONAS

1 YECO 18th February

2 PBEBy May The actual date will be communicated to Contractor

3 WPB 1st September

4 ABR As and when required during thatCURRENT budget year

5 Appeal of WPB/ABR/YECO As and when required


PPGUA/3.0/042/2013 19

Section 2: Annual Review of Petroleum Resources (ARPR) 2.1 Objective The Annual Review of Petroleum Resources (ARPR) is an annual exercise that reports the inventory level of Malaysia’s petroleum resources. It also ensures that reporting by Contractor adheres to PETRONAS’ Definitions and Guidelines for Classification of Petroleum Resources. PETRONAS established its first resources guideline in 1997. The latest revision was in October 2012 and it is aligned with the Society of Petroleum Engineers’ Petroleum Resources Management System (SPE PRMS). The resources guideline provides standardised and coherent definition, classification and reporting method for effective management of petroleum resources and business portfolios. It serves as a basis for PETRONAS’ resources portfolio management that outlines the terminology recommended for classification and estimation of quantities of petroleum (e.g. crude oil, natural gas, condensate and related substances) as at a specific date. Refer to the PETRONAS’ Definitions and Guidelines for Classification of Petroleum Resources. The following diagram gives an overview of the ARPR annual exercise: Figure 8: Overview of Annual Review of Petroleum Resources

Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan

ARPR exercise2

(Aug - Jan)

Preceding Year

AARRPPRR KKiicckk--oo AARRPPRR FFiinnaall SSuubbmmiissssiioonn

Note: 1 Petroleum resources changes review and approval are conducted with PMU Technical Department (Petroleum Resource Exploration (PREX), Petroleum Resource Development (PRD) and Petroleum Operations Management (POM)) through technical meetings e.g. FDP related, drilling results, new discoveries, Petroleum Arrangement and/or field award or relinquished, Gas Sales Agreement, etc. 2 Coordinated by ARPR secretariat

AARRPPRR PPrree--ssuubbmmiissssiioonn

RReevviieeww

CCoommmmuunniiccaattee FFiinnaall AARRPPRR

rreeqquuiirreemmeennttss

Petroleum resources changes review and approval1 (Nov - Oct)

Year of Reporting

Final submission


20 PPGUA/3.0/042/2013

2.2 ARPR Final Submission Contractor shall submit the ARPR report to PETRONAS by 15th January of each year. The final submission shall include petroleum resources report, tabular data, map and relevant information as specified in the ARPR requirements, for the preceding year. The ARPR data must represent the condition as at 1st January. It shall include estimates of the petroleum resources and production volume from 1st

January to 31st December of the preceding year. Contractor must obtain PETRONAS’ approval for all petroleum resource changes by or prior to 31st October of each year for inclusion in the ARPR as at 1st January. 2.2.1 Submission Requirements Contractor shall submit the ARPR report and any subsequent revisions in a standard reporting format. The report shall detail petroleum resources inventory at project and reservoir level for each range of uncertainty. Contractor shall report petroleum resources estimates and reflect volume until end of field life. Contractor shall also report reserves estimates with volume up to the end of the Contract life. Contractor shall adhere to ARPR reporting requirements issued annually by the ARPR Secretariat. The reporting requirements include a minimum of the following: Management Reports and Technical Reports:

A. Executive Summary:

REQUIREMENTS

• Summary on Contract, field and type of petroleum resources• Exploration, development and production activities • Plan and recommendation for contingent resources• Resources key performance indicator • Location map with coordinate and sub-block – fields, prospects and leads

Note: The Executive Summary shall be in writing.


PPGUA/3.0/042/2013 21

B. Tabulation:

1. DISCOVERED RESOURCES

Crude Oil • field status• Petroleum Initially in Place (PIIP) under reserves (low/best/high)• PIIP under contingent resources (CR) (low/best/high)• total PIIP (low/best/high)• ultimate recovery (low/best/high)• estimated ultimate recovery (low/best/ high)• production• cumulative production• reserves developed (1P/2P/3P)• reserves undeveloped (1P/2P/3P)• total reserves (1P/2P/3P)• contingent resources (CR) (1C/2C/3C)• project maturity• 2P reserves developed and undeveloped at Contract life• justification for resources revision compared to previous reporting

Condensate• field status• ultimate recovery (low/best/high)• estimated ultimate recovery (low/ best/high)• production• cumulative production• reserves developed (1P/2P/3P)• reserves undeveloped (1P/2P/3P)• total reserves (1P/2P/3P)• CR (1C/2C/3C)• project maturity• 2P reserves developed and undeveloped at Contract life• justification for resources revision as compared to previous reporting


22 PPGUA/3.0/042/2013

1. DISCOVERED RESOURCES

Associated Gas:• field status• PIIP under reserves by gas cap and solution gas (low/best/high)• PIIP under CR by gas cap and solution gas (low/best/high)• total PIIP by gas cap and solution gas (low/best/high)• ultimate recovery by gas cap and solution gas (low/best/high)• estimated ultimate recovery by gas cap and solution gas (low/best/high)• production from reserves• production from CR• injection from reserves• injection from CR• cumulative production from reserves• cumulative production from CR• cumulative injection from reserves• cumulative injection from CR• reserves developed (1P/2P/3P)• reserves undeveloped (1P/2P/3P)• total reserves (1P/2P/3P)• CR by gas cap and solution gas (1C/2C/3C)• project maturity• 2P reserves developed and undeveloped at Contract life• justification for resources revision as compared to previous reporting• production by solution gas and gas cap gas from reserves and CR• reserves developed by gas cap and solution gas (1P/2P/3P)• reserves undeveloped by gas cap and solution gas (1P/2P/3P)• total reserves by gas cap and solution gas (1P/2P/3P)

Non-Associated Gas (NAG) • field status• PIIP under reserves (low/best/high)• PIIP under CR (low/best/high)• total PIIP (low/best/high)• ultimate recovery (low/best/high)• estimated ultimate recovery (low/best/ high)• production from reserves• production from CR• cumulative production from reserves• cumulative production from CR• reserves developed (1P/2P/3P)• reserves undeveloped (1P/2P/3P)• total reserves (1P/2P/3P)• CR (1C/2C/3C)• project maturity• 2P reserves developed and undeveloped at Contract life• justification for resources revision as compared to previous reporting

2. PRODUCTION PROFILE

Contractor shall generate a production profile until the end of field life according to project level for 2P reserves developed and undeveloped. Contractor shall submit the productionprofile in a similar format used for WPB submission.


PPGUA/3.0/042/2013 23

3. UNDISCOVERED RESOURCES

Crude Oil, Associated Gas and Non-Associated Gas:• prospect• lead• objective• PIIP• recovery factor• un-risked prospective resources (PR)• Probability of Success (POS)• risked PR• prospect and leads detailed technical report

4. RESERVOIR PARAMETERS FOR RESERVES, CR AND PR

5. PLAN FOR CR; DETAILING PROJECT WITH SCOPE AND CR ESTIMATES

6. KEY DATA FOR EACH OIL AND GAS FIELD (DISCOVERED FIELD)

• field status• sub-block information• discovery date• name, type and number of exploration wells drilled• number of platform/jacket installed • number of development wells drilled • information on specific gravity, non-hydrocarbon gas, average water depth • distance to shore and nearest facilities• name of nearest facilities • first commercial production date • sub-block expiry date • Contract date• field expiry date

7. INFORMATION ON RELINQUISHED CONTRACT AND ITS SUB-BLOCK/FIELD IN YEAR OF REPORTING

C. Other data or information:

1. AS STATED IN THE CONTRACT, THE REPORT SHALL ALSO INCLUDE THE FOLLOWING:

• The location, size, extend, structural and stratigraphic cross-sections of the petroleum reservoirs• Maps of scale 1:12,500 or 1:25,000 (at minimum) whichever is applicable, at each reservoir level, for the following: - structure depth map at top of reservoir quality rocks - reservoir faces to reflect the porosity and permeability distribution vertically or laterally


24 PPGUA/3.0/042/2013

2. IN THE EVENT THAT NON-HYDROCARBON GASES ARE PRESENT:

• Contractor shall report the AG and NAG IIP at actual condition and reserves, CR and PR at both actual condition and at the point of sale

2.2.2 Submission and Format Contractor to submit ARPR packages via hardcopy, softcopy and eARPR (online) or as advised by PETRONAS in its annual ARPR reporting guideline, as follows:

2.2.3 Process Workflows The following diagram illustrates the ARPR final submission review process: Figure 9: Annual Review of Petroleum Resources Final Submission Process

FORMAT OF SUBMISSION NO. OF COPIES

Hardcopy Two (2) sets of management and technicalreports and eARPR package

Softcopy Two (2) CDs of management and technical reports and eARPR package

Online (eARPR) Not ApplicableNote: eARPR will be accessible to Contractor for data input by October and closed on the ARPR submission date.

Contractor

Reflects changes from Pre-

Submission in Final ARPR and submits to

PETRONAS by 15th January


Yes

Finalisesdecision and

obtains approval

from Management

No Finalises

ARPR Report

Receives ARPR final number and follows the same process as for the following year’s exercise

Provides ARPR opening balance for following

year’s exercise

Conducts discussion with Contractor

END

Receives and reviews ARPR submission

Provides feedback (reason, justification,


SP, PMU


PPGUA/3.0/042/2013 25

2.3 ARPR Pre-Submission Review The ARPR Pre-Submission Review is a session for PETRONAS to review Contractor’s proposal on the estimates and reclassification of petroleum resources in its Contract. PETRONAS will conduct the review session towards the end of the year prior to ARPR final submission. The review session provides an avenue for PETRONAS to clarify and ensure Contractor’s adherence to PETRONAS’ Definitions and Guidelines for Classification of Petroleum Resources in ARPR reporting and necessary technical approval on petroleum resource changes obtained PETRONAS’ approval. PETRONAS and Contractor will record any discrepancy or issue that arises during the review session and agree on the action item. Contractor shall follow up and close the action item prior to the dateline given by PETRONAS and incorporate the outcome in the final ARPR submission. PETRONAS will chair all of ARPR Pre-Submission Review sessions with Contractor. 2.3.1 Submission Requirements Contractor shall submit the ARPR Pre-Submission Review pack and any subsequent revisions in a standard reporting format. The review pack shall detail petroleum resources at field level for discovered resources and at prospects/leads level for undiscovered resources. Contractor must ensure and show that the proposed petroleum resource changes have obtained PETRONAS’ technical approval. Contractor shall report petroleum resources estimates and reflect volume until end of field life. Contractor shall adhere to ARPR reporting requirements issued annually by the ARPR Secretariat. The reporting requirements include a minimum of the following: For crude oil, NAG, AG and condensate: a) executive summary b) reclassification of resources changes c) discovered resources changes by field level for each resource type: • PIIP (best estimate/P50) • reserves (2P) • CR (2C) • recovery factor • cumulative production • production


26 PPGUA/3.0/042/2013

• resource revision • justification for resources changes (to specify PETRONAS’ approval) d) undiscovered resources changes by prospect and lead for each resource type: • PIIP (best estimate/P50) • un-risked PR (2U) • Probability of Success (POS) • risked PR (2U) • risked volume revision • justification for resources changes (to specify PETRONAS’ approval) e) information on gas production and utilisation f ) information on exploration, development and production activities g) information on field relinquishment h) detail information and data on reserves and production 2.3.2 Submission and Format Contractor to submit the ARPR Pre-Submission Review package via hardcopy and softcopy or as advised by PETRONAS in its annual ARPR reporting guideline. 2.3.3 Process Workflows The following diagram illustrates the ARPR pre-submission review process: Figure 10: Annual Review of Petroleum Resources Pre-Submission Process

Contractor

Reflects changes and resubmits

pre-submission pack

Issuance of reporting

requirements & guidelines

Clarifies reporting requirements & guideline (if any)


Submits Pre-Submission material

in November as advised by PETRONAS

Receives and reviews Pre-Submission


Provides feedback (reason, justification,


Yes

Accepts submission

No Pre-submission

Review in Dec

Presentation at Pre-

Submission Review

Technical approval cut-o 31st Oct

Captures Action Items,

MOM sign o

Closes action item (to discuss with PETRONAS if

required)

Follow up

Receives re-submission

END

SP, PMU


PPGUA/3.0/042/2013 27

2.4 Petroleum Resource Changes Review and Approval Contractor shall review and obtain the necessary technical approval on the petroleum resource changes via appropriate engagement with the relevant PMU Technical Department e.g. PREX, PRD or POM. The engagement shall be via established committees, e.g. Technical Review Committee (TRC), Field Reservoir Management Review (FRMR), Post Drilling Review (PDR), Exploration Resources Review Committee (ERRC) or any other appropriate technical committee or team as recommended by PETRONAS. Contractor must obtain PETRONAS’ approval on the proposed petroleum resources changes by or prior to 31st October of each year. The following diagram illustrates the Petroleum Resources Maturation Workflows:


28 PPGUA/3.0/042/2013

Figure 11: Petroleum Resources Maturation Workflows

Un

dis

co

vere

d

Re

sou

rce

s D

isc

ove

red

R

eso

urc

es

Prospective Resources

Contingent Resources

Prospects Leads

6 New

discovery

5 Resources

require further

evaluation

Play

3 Resources

require separate project

sanction

1 Resources

with completed

*MR#4 subject to Host Govt. approval

2 Resources with MR#1 with Host

Govt.

4 Gas

Resources with no firm commitment

to supply

7 Gas

Resources flared/ vented

8 Resources

not viable for development

Development on Hold

Development Not Viable

Development Pending

Reserves with approval obtained, pending final planning/contract

Reserves producing and selling to market

Reserves with approval obtained, development underway

Sold & Delivered

Historical Production

Exploration Sub-block: PREXDevelopment/Production

Sub-block: PRD

*Criteria to mature CR to Reserves for Natural Gas : i) Signed GSA, ii) Without GSA but firm intent to supply with specific volume and market are stated in Petroleum Arrangement or Head of Agreement (HOA)

Reserves

On Production

Approved for Development

Justified for Development

POMM/PRD

PRD/POM


PPGUA/3.0/042/2013 29

Section 3: Crude Oil Annual Production Target & Quarterly Performance Review (QPR)

3.1 Objective In the submission of annual ECR and WPB, Contractor shall submit the remaining life cycle of crude oil production potential and availability forecasts for each petroleum field. The potential and availability production shall be based on: a) the latest reservoir engineering study and approved Reservoir Management Policy (refer to Volume 7, Section 1: Well and Reservoir Management) b) well test requirements (refer to Volume 7, Section 2: Well Test and Surveillance), c) established facilities reliability and integrity management (refer to Volume 7, Section 3: Facilities Reliability and Integrity Management) consistent with safe operating conditions (refer to Volume 3, Section 1: Health, Safety and Environment) d) a realistic development schedule, for example, FDP or Area Development Plan (refer to Volume 6: Field Development) Contractor shall submit the production potential and availability forecasts in accordance with the submission requirements for both ECR and WPB submissions (refer to Section 5: Enhanced Capacity Review and Section 1: Work Programme & Budget (WPB) and Related Processes in this volume). PETRONAS shall decide on the approved production rate of crude oil in each petroleum field as provided for in the Contract. 3.2 Submission Requirements Contractor shall submit the ECR, WPB inclusive of any subsequent revisions as per PETRONAS’ guidelines issued by SP, PMU (refer to Section 5: Enhanced Capacity Review and Section 1: Work Programme & Budget (WPB) and Related Processes in this volume). The report shall provide the following: a) performance outlook (for preceding year) on monthly basis b) immediate year on monthly basis c) succeeding four (4) years on quarterly basis d) remaining years until end of field life on annual basis The report details shall include but not limited to the following:


30 PPGUA/3.0/042/2013

a) technical potential b) technical potential at facilities design c) production availability d) planned downtime e) unplanned downtime f ) first oil date g) project oil type h) initiative type

3.3 Annual Approved Production Target PETRONAS shall advise Contractor on its Contract’s annual approved production level in writing by 31st December of the preceding year, in respect of each subsequent ECR and WPB. The Contract’s annual approved production target is derived from WPB submission for each petroleum field and subject to national requirements (if any). Contractor must execute activities as approved in the WPB. Contractor or PETRONAS may request further clarification, no later than 1st

November of each year, in the following circumstances: a) Contractor - to clarify any annual production target revision which differs from the WPB submission figure (Contractor shall provide comprehensive clarification to PETRONAS) b) PETRONAS - to clarify the basis of the stretched production target should it differ from the WPB submission figure The total production of each year will be monitored based on PETRONAS’ annual approved production target. 3.4 Quarterly Performance Review PETRONAS shall conduct a quarterly performance review with Contractor to track and monitor the production performance prior to commencement of the next quarter. In the second month of each quarter (or when advised by PETRONAS), Contractor is required to submit the following information in a standard reporting format as issued by PETRONAS: a) a breakdown of the expected production potential and availability by project and initiative type, such as base production, infill/sidetracking, new development projects, work-over, well services and debottlenecking for each month of the year b) an update of the year’s major planned shutdowns and its barrel deferred for each month of the year


PPGUA/3.0/042/2013 31

c) for each quarterly review, Contractor shall also submit the outlook for the next six (6) quarters’ production level which serves as input to PETRONAS’ 18-month rolling forecast performance review Table below illustrates the extent of submission by quarter:

All projects must be categorised according to “Initiative Type” as defined by PETRONAS in its Annual ECR/WPB Reporting Guideline. Contractor shall submit information which shall not be limited to the following: a) basis/assumption used to derive the crude production forecast b) reasons for variance of actual versus production approved level c) unplanned shutdown and its barrel impact d) issues related to production gap and provide catch up plan in cases where the Year End Projection (YEP) is lower than annual approved production target e) opportunities and threats impact to YEP Contractor shall submit the presentation materials to PMU’s meeting secretariat no later than five (5) working days prior to the session.

3.4.1 Submission and Format a) The submission package shall include hardcopies and softcopies of all the above data and information. b) The format shall be Microsoft applications (e.g. PowerPoint, Word, Excel) or as per PETRONAS’ electronic system.

QUARTER REQUIREMENTS

Q1 Year 1 The performance outlook of Year 1 on a monthly basis plus three (3) quarters of the subsequent year

Q2 Year 1 The performance outlook of Year 1 on a monthly basis plus four (4) quarters of the subsequent year

Q3 Year 1 The performance outlook of Year 1 on a monthly basis plus five (5) quarters of the subsequent years

Q4 Year 1 The performance outlook of Year 1 on a monthly basis plus six (6) quarters of the subsequent years

Example: Q4 2012 Quarterly Review• The performance of 2012 on monthly basis, plus four (4) quarters in 2013 and first two (2) quarters in 2014 on quarterly basis


32 PPGUA/3.0/042/2013

3.5 Production Variation Contractor must take all measures to comply with the annual approved production level with minimal production fluctuation. However, to cater for unexpected operational requirements, Contractor must endeavour to make-up the deferred production (for example, through production enhancement initiatives). Therefore, the possible catch up plans must be in place and presented during the quarterly performance review. Contractor must obtain approval from PETRONAS on the proposed production catch-up plan if fields fall under the National Depletion Policy (NDP). The NDP states that for any major fields with a total Oil Initially in Place (OIIP) equal to or more than 400 MMstb, the production will be limited to a ceiling of 3% of OIIP in any one (1) year.


PPGUA/3.0/042/2013 33

Section 4: Gas Production, Condensate & Quarterly Performance Review (QPR)

4.1 Objective In the submission of annual ECR and WPB, Contractor shall submit the remaining life cycle of gas production and utilisation forecast (for example sales, reinjection, fuel, flaring/venting, and so on) based on supply capacity (availability). The submission must include the condensate forecast for each NAG field. In the same ECR and WPB submission, Contractor shall submit the remaining life cycle of AG production availability including Plant Liquid Return (PLR)/liquid dropout forecast for each petroleum field. This forecast shall be consistent and in accordance with the considerations stipulated in Section 3: Crude Oil Annual Production Target and Quarterly Performance Review (QPR) in this volume. The production availability shall be based on: a) the latest reservoir engineering study and approved Reservoir Management Policy (refer to Volume 7, Section 1: Well and Reservoir Management) b) well test requirements (refer to Volume 7, Section 2: Well Test and Surveillance) c) established facilities reliability and integrity management (refer to Volume 7, Section 3: Facilities Reliability and Integrity Management) consistent with safe operating conditions (refer to Volume 3, Section 1: Health, Safety and Environment) d) a realistic development schedule, such as, FDP or Area Development Plan/Overall Area Development Area (refer to Volume 6: Field Development) e) PETRONAS shall decide on the approved gas supply target in each petroleum field as provided for in prevailing agreements (e.g. Contract, Gas Supply Agreement (GSA), etc.). Contractor shall not produce NAG other than for the purpose of gas sales and gas related operational requirements, without prior approval of PETRONAS unless it has been stated otherwise in the prevailing agreements (e.g. Contract, GSA, etc.).


34 PPGUA/3.0/042/2013

4.2 Submission Requirements 4.2.1 Non-Associated Gas (NAG) and Associated Gas (AG) Contractor shall submit the ECR, WPB and any subsequent revisions in a standard reporting format as per PETRONAS’ format issued by SP, PMU (refer to Section 5: Enhanced Capacity Review and Section 1: Work Programme & Budget and Related Processes in this volume). The report shall consist of: a) performance outlook (for the preceding year) on a monthly basis b) first year on a monthly basis c) succeeding four (4) years on a quarterly basis d) remaining years until end of field life on an annual basis The report details shall include but not limited to the following: a) field capacity b) field availability c) gas sales/gas export- Full Well Stream (FWS) d) gas sales availability e) planned downtime f ) unplanned downtime g) first gas date h) project gas type i ) initiative type j ) reinjection for Enhanced Oil Recovery (EOR) project k) reinjection l ) fuel m) gas-lift n) flaring/venting at platform o) flaring/venting at terminal p) Gas Heating Value (GHV) (by field)

4.2.2 Condensate Contractor shall include gasoline and/or Plant Liquid Return (PLR). Contractor shall submit the ECR, WPB and any subsequent revisions in a standard reporting format but not limited to the following as per PETRONAS’ format issued by SP, PMU (refer to Section 5: Enhanced Capacity Review and Section 1: Work Programme & Budget (WPB) and Related Processes in this volume).


PPGUA/3.0/042/2013 35

The report shall consist of: a) performance outlook (for preceding year) on a monthly basis b) the first year on a monthly basis c) the succeeding four (4) years on a quarterly basis d) remaining years until end of field life on an annual basis

The report details shall include but not limited to the following: a) condensate b) gasoline/PLR/liquid drop-out (if applicable) c) Condensate Gas Ratio (CGR)

4.3 Annual Approved Gas Supply Target PETRONAS shall advise Contractor on its approved gas supply target in writing by 31st December of the preceding year in respect of each subsequent ECR and WPB. The PETRONAS’ annual approved gas supply target will be determined based on WPB submitted figures. The approval will be aligned with the Contractor’s delivery commitment and obligations as stipulated in the GSA. Contractor shall adhere to this target and execute activities as approved in the WPB. Contractor and PETRONAS may request further clarification no later than 1st November of each year in the following circumstances: a) Contractor - to clarify any annual gas supply target revision that differs from the WPB submission figure (Contractor to provide official, comprehensive clarification to PETRONAS) b) PETRONAS - to clarify the basis of the stretched gas supply target if it differs from the WPB submission figure Therefore, the total gas supply of each year will be monitored based on the PETRONAS’ annual approved gas supply target.


36 PPGUA/3.0/042/2013

4.4 Quarterly Performance Review PETRONAS shall conduct a quarterly performance review with Contractor to track and monitor the production performance prior to commencement of that quarter. In the second month of each quarter (or as and when advised by PETRONAS), Contractor is required to submit the following information in a standard reporting format as issued by PETRONAS: a) breakdown of expected gas production capacity, availability and gas sales by project and initiative type (for example, base production, infill/ sidetracking, workover, well services and debottlenecking) for each month of the year b) monthly gas production, utilisation and flaring/venting (where applicable) for each month of the year c) the average monthly condensate production for each month of the year (where applicable) d) an update of the year’s major planned shutdowns for each month of the year e) for each quarter review, an outlook for the next six (6) quarters’ gas supply level (this will provide input into PETRONAS’ 18-month rolling forecast performance review) Table below illustrates the extent of submission by quarter:

All projects must be categorised according to “Initiative Type” as defined by PETRONAS in its annual ECR/WPB Reporting Guideline.

QUARTER REQUIREMENTS

Q1 Year 1 The performance outlook of Year 1 on a monthly basis plus three (3) quarters of the subsequent year

Q2 Year 1 The performance outlook of Year 1 on a monthly basis plus four (4) quarters of the subsequent year

Q3 Year 1 The performance outlook of Year 1 on a monthly basis plus five (5) quarters of the subsequent years

Q4 Year 1 The performance outlook of Year 1 on a monthly basis plus six (6) quarters of the subsequent years

Example: Q4 2012 Quarterly Review • The performance of 2012 on a monthly basis, plus four (4) quarters in 2013 and the first two (2) quarters in 2014 on a quarterly basis


PPGUA/3.0/042/2013 37

Contractor shall provide a minimum of the following information:

a) basis/assumption used to derive the gas production capacity forecast b) reasons for variance of actual and forecast versus WPB and/or GSA gas supply capacity forecast c) unplanned shutdown and its volume impact d) issues and catch up plan in cases where the YEP is lower than annual approved gas supply target e) opportunities and threats impact on YEP Contractor shall submit the presentation materials to the PMU’s meeting secretariat no later than five (5) working days prior to the session. 4.4.1 Submission and Format a) The submission package shall be hardcopies and softcopies comprising all of the above data and information. b) The format shall be in Microsoft applications (e.g. PowerPoint, Word and/or Excel) or as per PETRONAS’ electronic system. 4.5 Production Variation Contractor must take all possible measures to comply with the annual approved target gas supply capacity forecast with minimal production fluctuation. However, to cater for the unexpected operational requirements, Contractor must mitigate the shortfall, for example, through production enhancement initiatives. Therefore, all the possible production catch up plans must be in place and presented during the quarterly performance review.


38 PPGUA/3.0/042/2013

Section 5: Enhanced Capacity Review

5.1 Objective Enhanced Capacity Review (ECR) is an annual exercise established for Contractor to provide long term oil production, gas supply and condensate production, reflecting the outcome of Contractor’s response on Pre-Budget Expectation (PBE). It serves as a forecast for Contractor’s WPB. This session will provide an opportunity for Contractor to discuss the immediate year’s forecast and submit the long term forecast prior to the official WPB submission to PETRONAS. The long term forecast provided through ECR will serve as a baseline for PETRONAS to effectively manage and plan the national oil production, gas supply and condensate production target prior to annual WPB submission by Contractor. The ECR discussion objectives are to: a) forecast the immediate year’s plus four (4) years’ oil production, gas supply (production and feed gas) and condensate production b) discuss the gap or surplus for the immediate year’s forecast against the previous year’s WPB submission c) identify the immediate year’s opportunities and threats analysis d) discuss the mitigation plan (activity-based) to address the gap (if any) for the immediate year’s forecast for inclusion in the immediate year WPB submission e) consider the immediate year’s downtime assumption for planned and unplanned downtime f ) discuss the immediate year’s production enhancement, work-over, debottleneck and development projects and provide planned first oil and/or first gas date, annual rate and project progress g) consider the immediate year’s flaring forecast and proposal on the flaring limit h) provide long term forecast for oil production, gas supply (production and feed gas) and condensate production until end of field life The following diagram provides an overview of the ECR annual exercise:


PPGUA/3.0/042/2013 39

Figure 12: Overview of Enhanced Capacity Review Annual Exercise

5.2 Submission Requirements PETRONAS will schedule the ECR sessions with the respective Contractor in conjunction with the Quarter 4 performance review organised by Petroleum Operations Management (POM), PMU (normally conducted in July of each year). By July of each year, Contractor shall provide the final ECR submission detailing the long term oil production, gas supply (production and feed gas) and condensate forecast to PETRONAS. The ECR document shall also detail the proposed activities for the immediate year. PETRONAS shall communicate its ECR expectation annually, prior to actual deliberation. Contractor shall ensure that the forecast is aligned and consistent with PBE and WPB proposal, where possible. Contractor shall submit the information detailed below in Microsoft Power Point: a) five (5) years’ oil and gas production availability, feedgas supply and condensate production forecast, as follows: • monthly forecast for immediate year • yearly forecast for the next four (4) years b) immediate year’s gap/surplus analysis - ECR versus previous WPB c) immediate year’s opportunities and threats analysis d) immediate year’s mitigation plan to address gap (if any) e) immediate year’s planned downtime and unplanned downtime assumptions f ) immediate year’s production enhancement, workover plan, debottleneck and development projects’ first oil and gas target, annual production rate and project progress

Apr May June July Aug Sept Oct Nov Dec Jan Feb

National Target Setting exercise PBE exercise

QQuuaarrtteerrllyy PPeerrffoorrmmaannccee

RReevviieeww

EECCRR aanndd QQuuaarrtteerrllyy

PPeerrffoorrmmaannccee RReevviieeww

WWPPBB QQuuaarrtteerrllyy PPeerrffoorrmmaannccee

RReevviieeww

IIssssuuaannccee ooff CCoonnttrraaccttoorr ‘s AApppprroovveedd

PPrroodduuccttiioonn LLeevveell

QQuuaarrtteerrllyy PPeerrffoorrmmaannccee

RReevviieeww

Note: Pre-Budget Expectations (PBE), Work Programme & Budget (WPB) and Enhanced Capacity Review (ECR)

EEnnggaaggeemmeenntt sseessssiioonn oonn

ttaarrggeett sseettttiinngg ((iiff rreeqquuiirreedd))

ECR exercise


40 PPGUA/3.0/042/2013

g) the immediate year’s flaring limit Contractor shall submit the information detailed below in Microsoft Excel: a) long term oil and gas production availability, feedgas sales and condensate production forecast • monthly forecast for immediate year • quarterly forecast for the next four (4) years • yearly forecast for long term (beyond the fifth year) b) Contract, field and project • base • build-up from previous (development, production enhancement, workover) • new (development, production enhancement, workover) All projects must be categorised according to “Initiative Type” as defined by PETRONAS in its annual ECR Reporting Guideline.

5.3 Submission and Format a) The submission package shall include hardcopies and softcopies comprising of the above items (or as advised by PETRONAS in the annual ECR reporting guideline). b) The format shall be in Microsoft applications (i.e. PowerPoint and Excel) or as per PETRONAS’ electronic system.

Contractor shall submit the ECR presentation material to SP and/or quarterly performance review meeting secretariat no later than five (5) working days prior to the session. The final ECR submission (in both Microsoft PowerPoint and Microsoft Excel) must be submitted to PETRONAS by July of each year.

REQUIREMENT REMARKS

Hardcopies (Power Point) For ECR discussion

Softcopies (Power Point and Excel)

For ECR discussion and final submission.The submission shall be addressed to the ECR focal person via email or any other platform as advised by PETRONAS


PPGUA/3.0/042/2013 41

5.4 Process Workflows The following diagram illustrates the ECR process workflows: Figure 13: Enhanced Capacity Review Processes

5.5 Production Variation - ECR versus WPB Submission This ECR submission shall be treated similar to the WPB submission and Contractor must ensure the data integrity is not compromised. However, PETRONAS acknowledges that production variation may differ between the ECR and the WPB submissions. In these instances, Contractor shall notify PETRONAS on the variation in writing as part of the WPB submission, detailing the variance justification for PETRONAS’ records.

Contractor

Issuance of reporting

requirements & guidelines

Clarifies reporting requirements & guideline (if any)


Submits submission material to PETRONAS

Receives and reviews

submission

Provides feedback (reason,

justification, resubmission if

needed)

Yes

Accepts submission

No

ECR sitting

Presentation at ECR sitting

Captures Action Items,

MOM sign o

Closes action item (to discuss

with PETRONAS if

required)

Reflects changes

and submits

ECR packages by 31st July

Follow up

Receives ECR submission

END


Provides feedback (reason,

justification, resubmission if

needed)

Yes


No Sends out

Notification of

Acceptance

SP, PMU


42 PPGUA/3.0/042/2013

TERM IN FULL

ABR Additional Budget Request

AG Associated Gas

ARPR Annual Review of Petroleum Resources

CAPEX Capital Expenditure

CD Compact Disc

CGR Condensate Gas Ratio

CR Contingent Resources

CRAC Cost Recovery Appeal Committee

eARPR electronic ARPR

ECR Enhanced Capacity Review

EOR Enhanced Oil Recovery

ERRC Exploration Resources Review Committee

eWPB electronic WPB (online system)

FDP Field Development Plan

FIA Final Investment Approval

FIP Facilities Improvement Plan

FRMR Field and Reservoir Management Review

FWS Full Well Stream

G&A General & Administration

G&G Geological and Geophysical

GHV Gas Heating Value

GM General Manager

GOR Gas Oil Ratio

GSA Gas Sales Agreement

HOA Head of Agreement

HSE Health, Safety and Environment

ICT Information, Communication and Technology

IIP Initially in Place

IT Information Technology

KPI Key Performance Index

M&A Management and Administration

Abbreviations


PPGUA/3.0/042/2013 43

TERM IN FULL

MMstb Million stock tank barrels

MR Milestone Review

NAG Non-Associated Gas

NDP National Depletion Policy

OIIP Oil Initially in Place

OPEX Operating Expenditure

PBE Pre-Budget Expectation

PDR Post Drilling Review

PIIP Petroleum Initially in Place

PLR Plant Liquid Return

PMU Petroleum Management Unit

POM Petroleum Operations Management

POS Probability of Success

PR Prospective Resources

PRD Petroleum Resource Development

PREX Petroleum Resource Exploration

PRMS Petroleum Resources Management System

Q1 Quarter One (1)

Q2 Quarter Two (2)

Q3 Quarter Three (3)

Q4 Quarter Four (4)

QPR Quarterly Performance Review

RM Ringgit Malaysia

RSC Risk Service Contract

SGM Senior General Manager

SP Strategic Planning

SPE Society of Petroleum Engineers

TRC Technical Review Committee

VOWD Value of Work Done

VP, PM Vice President, Petroleum Management

WPB Work Programme & Budget

YECO Year End Carry Over

YEP Year End Projection


44 PPGUA/3.0/042/2013

Appendix 1

ABR Format for Development Project and Infill Drilling

Description of Application:

Title

Contract

Background & ABR Scope of work:

Justification for the ABR and why the activity is not budgeted by detailed line item (e.g.: Due to re-phasing/unplanned/acceleration/cost overrun/additional scope of work):


PPGUA/3.0/042/2013 45

Detailed Justification: (Figures in RM’000)

Detail Design

Amount Justification Attachment

Refer Attachment.

Procurement


Refer Attachment.

Fabrication


Refer Attachment.

Transportation and Installation


Refer Attachment.

Hook-Up and Commissioning


Refer Attachment.

Project Management and Other Services (Insurance etc)


Refer Attachment.

Drilling


Refer Attachment.

Technical proposal and/or discussion in relation to the ABR (if any). Please provide the details of the meeting i.e. date, members and key points agreed.


46 PPGUA/3.0/042/2013

Status of proposal/approval (If any, such as technical proposal, well proposal, FDP, FDPAddendum, FIA, etc. Please attach the proposal/approval)

Proposal/Approval Final Submission Date Status Attachment

Technical proposal/ well proposal/FDP/ FDP Addendum/FIA

ABR:

*Note: Refer Table 1

Quarterly budget phasing for ABR:

Budget Category Code*

Item RM’000

Latest Estimate Latest ApprovedAdditional Budget/ (Budget Available)

ABR

Prepared by: Endorsed by: Partner’s approval:

Signature

NameDesignationDate

Item

RM’000

Q1 Q2 Q3 Q4 Total


PPGUA/3.0/042/2013 47

Table 1

CAPEX Code

Exploration

Seismic A1.1

Drilling (Wildcat/Appraisal)

A1.2

G&G A1.3

Specialised Studies

A1.4

Other Allocated CAPEX

A1.5

Development

Seismic A2.1

G&G A2.2

Specialised Studies

A2.3

Project - Engineering/Facility

A2.4

Project- Drilling

A2.5

Drilling(Appraisal)

A2.6


A2.7

Production Maintenance

Well Workover A3.1

Modification & Miscellaneous

A3.2

Support Services

Information Technology

A4.2

Onshore Support A4.3

OffshoreSupport

A4.4

Health, Safety & Environment

A4.5

OPEX Code

Exploration

Seismic B1.1

G&G B1.2

Specialised Studies

B1.3

M&A B1.4

Other Allocated OPEX

B1.5

Development

Seismic B2.1

G&G B2.2

Specialised Studies

B2.3

M&A B2.4


B2.5

ProductionOperations

SurfaceRoutineOperation

B3.1

Sub-surface Operation

B3.2

Logistics B3.3

Maintenance B3.4

Special Studies B3.5

GeneralOverhead

B3.6

Others B3.7

Abandonment B4


48 PPGUA/3.0/042/2013

Attachment:Breakdown of the Budget:

Description

Actual as

of 31st

Dec

Year X

Year X + 1

Variance VOWD Project

LE RemarksApproved

WPBABR

Total

Exp

Approved

FIA/FDP

FACILITIES

Design

Engineering

Procurement

Fabrication

Transportation

& Installation

Hook-Up &

Commissioning

Project

Management

& Other

Services

Sub-Total

Facilities

DRILLING

Drilling

Completion

Formation

Evaluation

Rig

Operations

Logistics

Management &

Supervision

Other Services

Sub-Total

Drilling

TOTAL


PPGUA/3.0/042/2013 49

Appendix 2

ABR Format for Other than Development Project and Infill Drilling

Description of Application:

Title

Contract

Background & ABR Scope of work:

Justification for the ABR and why the activity is not budgeted by detailed line item (e.g.: Due to re-phasing/unplanned/acceleration/cost overrun/additional scope of work):

Technical proposal and/or discussion in relation to the ABR (if any). Please provide the details of the meeting i.e. date, members and key points agreed.

Status of proposal/approval (If any, such as technical proposal, well proposal, FDP, FDPAddendum, FIA, etc. Please attach the proposal/approval)


50 PPGUA/3.0/042/2013

ABR:

*Note: Refer Table 1

Quarterly budget phasing for ABR:

Budget Category Code*

Item RM’000

Latest Estimate Latest ApprovedAdditional Budget/ (Budget Available)

ABR

Prepared by: Endorsed by: Partner’s approval:

Signature

NameDesignation Date

Item

RM’000

Q1 Q2 Q3 Q4 Total


PPGUA/3.0/042/2013 51

Table 1

CAPEX Code

Exploration

Seismic A1.1

Drilling (Wildcat/Appraisal)

A1.2

G&G A1.3

Specialised Studies

A1.4


A1.5

Development

Seismic A2.1

G&G A2.2

Specialised Studies

A2.3

Project - Engineering/Facility

A2.4

Project- Drilling

A2.5

Drilling(Appraisal)

A2.6


A2.7

Production Maintenance

Well Workover A3.1

Modification & Miscellaneous

A3.2

Support Services

Information Technology

A4.2

Onshore Support A4.3

OffshoreSupport

A4.4

Health, Safety & Environment

A4.5

OPEX Code

Exploration

Seismic B1.1

G&G B1.2

Specialised Studies

B1.3

M&A B1.4


B1.5

Development

Seismic B2.1

G&G B2.2

Specialised Studies

B2.3

M&A B2.4


B2.5

ProductionOperations

SurfaceRoutineOperation

B3.1

Sub-surface Operation

B3.2

Logistics B3.3

Maintenance B3.4

Special Studies B3.5

GeneralOverhead

B3.6

Others B3.7

Abandonment B4

Petronas procedures and guidelines for planning and budgeting

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