Hydrocarbon Vision 2030 (ஹைட்ரோகார்பன் தொலைநோக்கு ஆவணம் 2030)

A management committee with representatives from both the operator and the service company
needs to be formulated to provide governance to the project. These contracts work best when
companies form alliances for a long period of time, e.g., 15-20 years. Further, the base production
profile of oil and gas for a particular block is mutually agreed upon by the service company and the
operator/owner.
The following figure provides illustration of base production profile vis-à-vis production profile with
PEC. The operator has to pay a fixed (USD per barrel) fee for production above the base profile, which
has been shown in shaded grey in the figure below.
Figure 22: Base profile and incremental profile
All costs incurred, except for surface facility cost, for production above the base profile needs to be
borne by the service company. Operator/owner will be responsible for the investments, required to
maintain production up to the base profile. Service companies will receive a fixed fee, in USD per
barrel, for each barrel of oil equivalent of oil and gas produced above the base production profile.
This structure provides an incentive to the service companies to produce more since its revenue
stream is linked to incremental production.
Stages for signing of PEC
In the flow chart below we have shown the step-wise procedure, right from initiation of formulation of
the contract to the signing of the contract between the operator and selected service company after
the bidding process for entering into PEC.
Figure 23: Stages for signing of PEC
Formulation of
draft PEC
contract by NOC
Bidding on the fixed
$/bbI fee to be carried
out for selection of
Service Company
A contractual
agreement to be signed
for a fixed $/bbI fee for
production above base
profile
NOCs to identify blocks
to be offered on PEC
model
Base production profile
is to be jointly agreed
/Biddable (Depending
upon Options)
Monitoring of the field
and new production by
management
committee (operator &
service provider)
Service companies to
be invited for studying
the block
characteristics
A data room to be
setup, where both
operator and service
companies carry out a
study on the block
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