Invitation to Bid for Suriname International Competitive Bid Round 2014/2015 Paramaribo, 1 August 2014 Table of Content Contents 1. Introduction ................................................................................................................... 4 2. Formal Bid Submission .................................................................................................. 5 3. Calendar of Events ......................................................................................................... 6 4. Highlights of the Model PSC 2014 ................................................................................. 7 4.1 General description ................................................................................................. 7 4.2 Management and Staatsolie Participation ................................................................ 7 4.3 Exploration ............................................................................................................. 7 4.4 Exchange controls ................................................................................................... 7 4.5 Applicable Law ...................................................................................................... 8 4.6 Description of the Blocks ........................................................................................ 8 5. Data Packages ................................................................................................................ 9 6. Bid-Qualification ......................................................................................................... 10 6.1 Information Relating to Technical Capacity .......................................................... 10 6.2 Information Relating to Financial Capacity ........................................................... 10 7. Non-Biddable Items ..................................................................................................... 11 7.1 Relinquishment ..................................................................................................... 11 7.2 Royalty and Income Tax Rate ............................................................................... 11 7.3 Cost Oil Ceiling .................................................................................................... 11 7.4 Carried interest...................................................................................................... 11 8. Biddable Items ............................................................................................................. 12 8.1 Exploration Period and Phases .............................................................................. 12 8.2 Profit Oil Share ..................................................................................................... 12 9. Evaluation of Bids & Negotiations ............................................................................... 14 10. Explanations of information and promotional seminars............................................. 15 10.1 Phone and Fax questions.......................................................................................... 15 10.2 Promotional seminars .............................................................................................. 15 10.3 Field visits ............................................................................................................... 15 11. Representations, warranties and reserved rights ........................................................ 16 12. Communications....................................................................................................... 17 13. Waiver...................................................................................................................... 18 Schedule 1 Location Map Blocks 58, 59and 60 ................................................................... 19 Schedule 2 Geographical Description of Blocks 58, 59and 60 ............................................. 20 Block 58.......................................................................................................................... 20 Block 59.......................................................................................................................... 21 Invitation to Bid Offshore Suriname 2014/2015- Page 2 of 25 Block 60.......................................................................................................................... 22 Schedule 3 Declaration to be made by a duly authorized representative of the company... 23 Schedule 4 Summary Bid Form........................................................................................ 24 A. Minimum Work Program phase 1 ......................................................................... 24 B. Staatsolie Share of Profit oil .................................................................................. 24 Schedule 5 Awarded Points for Evaluation of the Bids Received ..................................... 25 Invitation to Bid Offshore Suriname 2014/2015- Page 3 of 25 1. Introduction Staatsolie Maatschappij Suriname (Staatsolie) is offering blocks 58, 59 and 60 for the purpose of Hydrocarbons Exploration and Development. A map indicating the location of the Bidding Blocks is attached to this document as Schedule 1. We are looking for international oil companies (IOC’s) that are ready and willing to commit capital and expertise to a rapid Exploration and Development effort. The bidding process will take place in two stages, a bid-qualification stage and a bidding stage. Interested IOC’s are asked to submit a formal request to bid-qualify. As more fully described in this document, this request should include specific information relating to the company’s financial, technical and management capacity. Staatsolie has several data packages available which includes seismic data and well information. To submit a bid for block 58 leasing the Offshore Data Package 2012 is mandatory. To submit a bid for blocks 59 and or block 60 leasing the Offshore Data Package 2009 is mandatory. Companies may submit their bid ultimately on 30 January 2015 at 13.00 Suriname time. Companies may also create consortia among themselves. It is estimated that the bid evaluation will take a period of one month. Any IOC that qualifies to bid may submit a bid in the English language for a maximum of two block(s) in which they are interested. The bid must include competitive offers with regard to (i) the Minimum Work Obligation of phase one of the Exploration Period and (ii) Profit Sharing. Staatsolie based on the evaluation of the bids received will award the blocks and will enter into a Production Sharing Contract (PSC) after the negotiation stage. The fundamental ideas embodied in Staatsolie’s 2014 model PSC will not be modified as a result of these negotiations. Negotiations will have to result in a PSC within a period of 4 months after awarding the blocks. Invitation to Bid Offshore Suriname 2014/2015- Page 4 of 25 2. Formal Bid Submission Any IOC wishing to participate in the Suriname International Competitive Bid Round 2014/2015 (Suriname 2015 Bid Round), must submit its formal bid so as to be received by Staatsolie, no later than Friday January 30th 13.00 hours, Suriname time. The bid, in duplicate, must be sent by international courier or may be delivered by hand to Staatsolie Maatschappij Suriname N.V. Attn. Marny Daal-Vogelland Dr. Ir. H.S. Adhinstraat 21 Paramaribo Suriname Two copies of the bid shall be contained in one sealed envelope, which shall be marked “Suriname 2015 Bid Round”. This envelope shall also include a covering letter identifying the name of the sender, the IOC(s) that he/she represents and notification of the block(s) for which the bid is intended. Acknowledgement of each bid, indicating time and date of receipt, will be made by Staatsolie by faxed copy of the covering letter submitted by the IOC. The actual bid contained in the inner sealed envelope will be opened on Friday, January 30tht at 14.00h local time by a notary public. Separate bids in separate envelopes are required for each block. This Bid Document replaces all previous communications from Staatsolie. All interested IOC’s must follow the procedures established in this document. Any other representations made by employees or officers of Staatsolie or any of its affiliates regarding the terms of this Bid Document will not be binding on Staatsolie or any of its affiliates. This document is issued solely for the assistance and guidance of potential bidders. Invitation to Bid Offshore Suriname 2014/2015- Page 5 of 25 3. Calendar of Events Although Staatsolie will endeavor to maintain the time table given herein the schedule could be subject to change. Bid Document issued to industry 5 August 2014 IOC’s to qualify to submit a bid 1 September - 30 December 2014 Model PSC available for IOC’s that are 1 September 2014 quantified to bid Presentations at Latin Upstream, Rio de 2 September 2014 Janeiro Presentations at AAPG , Istanbul 17 September 2014 Presentations at Calgary Mid October Closing of bid submission process 30 January 2015at 13.00h. Suriname time Opening of bids 30 January at 14.00h Suriname time Meeting of Bid Evaluation Committee 1 February – 28 February 2015 Notification to winners 15 March 2015 PSC negotiations & signing 2nd quarter 2015 Invitation to Bid Offshore Suriname 2014/2015- Page 6 of 25 4. Highlights of the Model PSC 2014 The following is a summary description of the general terms and conditions that will govern the Exploration and Development of hydrocarbons in the three blocks allotted in Suriname 2015 Bid Round. This summary is qualified in its entirety by the terms of the 2014 Model PSC in English which will be available to the IOC’s that are qualified to submit a bid (the signed Dutch version of the PSC will prevail). Staatsolie will enter into an agreement with IOC’s solely on the basis of a PSC. 4.1 General description Suriname 2015 Bid Round, calls for participation in the Exploration of blocks 58, 59, and 60 by IOC’s either alone or in consortia, followed by the Appraisal and Development of any commercial discoveries. 4.2 Management and Staatsolie Participation The management and supervision of petroleum activities in each block will be carried out by the IOC. The Operations Committee, which shall comprise of an equal number of members nominated by Contractor and Staatsolie, will be responsible to approve certain stages of the petroleum operations as further defined in the PSC. If Staatsolie elects to participate in development and production operations, that participation will not exceed 20%. Staatsolie will then participate as a paying partner in all development and production expenditures. 4.3 Exploration The Contractor will bear all exploration risk and expense through the Exploration Period that will have a duration of maximum 7 years. During this time the Contractor must undertake the agreed Minimum Work Program. At the end of each phase of the Exploration Period, Contractor will have the opportunity to withdraw from the Contract Area without further commitments. Each block is subdivided into a number of sub-blocks, each of 5’ x 5’ or approximately 85 square kilometers. When entering a next exploration phase, IOC’s will be required to relinquish a percentage of the original block. Relinquished areas shall conform to the subblocks. 4.4 Exchange controls Funds committed by IOC’s and proceeds of borrowings or sales of crude oil or gas may be maintained by the IOC’s in foreign currencies in bank accounts outside Suriname. Invitation to Bid Offshore Suriname 2014/2015- Page 7 of 25 4.5 Applicable Law The PSC between the IOC and Staatsolie will be governed by the laws of Suriname. Any disputes which may arise during the performance of the agreement between Staatsolie and the IOC may be resolved by International Arbitration. Resource to sole expert determination of certain technical matters will be allowed under the agreement between Contractor and Staatsolie. 4.6 Description of the Blocks A geographical description of the blocks 58, 59, and 60 is set out in Schedule 2. Invitation to Bid Offshore Suriname 2014/2015- Page 8 of 25 5. Data Packages Details on the content of data package s are available on www.staatsolie.com/pio. IOCs can obtain data package by sending an application to: Ms. Marny Daal-Vogelland Manager Petroleum Contracts Staatsolie Maatschappij Suriname N.V. Dr. Ir. H.S. Adhinstraat 21 Paramaribo Suriname Fax: +597 530093 Email: [email protected] The IOC needs to sign a Confidentiality Agreement and transfer payment of the relevant license fee before the data will be couriered to the IOC. The data included in the package remains the property of Staatsolie. The resale of the package to third parties or their publication without the written permission of Staatsolie is strictly forbidden. Payment will not be reimbursed under any circumstances. Invitation to Bid Offshore Suriname 2014/2015- Page 9 of 25 6. Bid-Qualification All applicants wishing to be considered for the acreage offering must be bid-qualified in their own right. The bid qualification closes on 30 December 2014 at 13.00h Suriname time. The process of bid-qualification is the evaluation by Staatsolie of the technical, financial and management capabilities of each company or group of companies expressing interest in the blocks on offer. Companies wishing to bid-qualify must submit, as a minimum the documentation and information described below in 6.1, 6.2 and 6.3: 6.1 Information Relating to Technical Capacity Areas in the world where current exploration and production activities are conducted, current production and investment (exploration and production) levels. 6.2 Information Relating to Financial Capacity A. Audited consolidated financial statements for the applicant company with notes of the last three (3) years, including: i) Balance Sheet ii) Income Statement iii) Cash Flow Statement iv) Nature of capitalization B. Any additional information supporting the financial capacity of the applicant that the IOC wishes Staatsolie to take into account. 6.3 Legal and Administrative Requirements A. The name, title, address, telephone and fax number of the person who shall be the single point contact in the applicant company to whom all correspondence should be sent. B. A copy of the Articles of Incorporation and By-Laws of the applicant company The decision whether to bid-qualify an applicant will be made by Staatsolie in its sole judgment and discretion. However, Staatsolie may reject any application without giving reasons for so doing. Qualified companies will be free to form consortia. The only restrictions that will apply are: i) ii) Each consortium must name the Operator that has an interest of at least a 30% and The minimum interest that may be held by an applicant in a consortium is 10%. Invitation to Bid Offshore Suriname 2014/2015- Page 10 of 25 IOCs wishing to bid qualify can submit their application using the contact details of section 12. Staatsolie will notify the IOC or group of IOC’s of its status as bid-qualified. 7. Non-Biddable Items 7.1 Relinquishment At the end of each phase of the Exploration Period, contractor must relinquish a certain percentage of the awarded block. Block name Moment of relinquishment Block 58 At the end of exploration phase At the end of exploration phase At the end of exploration phase Block 59 Block 60 7.2 mandatory Percentage of relinquishment mandatory each 25% of initial contract area. each 25% of initial contract area each 25% of initial contract area Royalty and Income Tax Rate A Royalty Rate of 6.25% of gross production is applicable offshore. The rate of Income Tax is 36% and will be applicable for the duration of the PSC. 7.3 Cost Oil Ceiling Per calendar year a maximum of 80% (block 58) and 75% ( blocks 59 and 60) of the gross production minus royalty, shall be used for recovery of Exploration, Development and Production costs. 7.4 Carried interest Staatsolie can elect to participate in Development and Production operations for a maximum of 20%. Staatsolie will then participate as a paying partner in all Development and Production expenditures. The Contractor shall carry Staatsolie during the Exploration Period. Invitation to Bid Offshore Suriname 2014/2015- Page 11 of 25 8. Biddable Items Each qualified IOC or consortia may bid on a maximum of two (2) Blocks. In case IOC’s already participate in offshore Suriname blocks, Staatsolie may take into account its own view of the tendering company’s technical and financial capabilities of participating in more than one block in offshore Suriname. Every bid shall be accompanied by the following: 1. a signed declaration indicating that the model Production Sharing Contract 2015 has been examined and the terms agreed, to be presented in the form attached hereto as Schedule 3; 2. a summary of the proposals in respect of (i) the Minimum Work Program in Phase 1 of the Exploration Period and (ii) Profit Oil Sharing referred to in clause 8.2 presented in the prescribed manner as indicated in the Summary Bid Form attached hereto as Schedule 4; 3. legal identity of the bidder(s); 8.1 Exploration Period and Phases IOCs are asked to bid the Minimum Work Program of phase 1 of the Exploration Period. IOCs must bid to acquire, process and interpret at least the minimum seismic as follows: For Block 58 Phase Years 1 3 2 2 3 3 Minimum Requirement 1,000 km2 3D seismic Spud 1 Well Spud 1 Well For Blocks 59 & 60 Phase Years 1 3 2 2 3 2 Minimum Requirement At least 3,000km 2D or 1000 km2 3D seismic Spud 1 Well Spud 1 Well 8.2 Profit Oil Share IOC’s are asked to bid on top of the required level of Staatsolie’s Profit Oil share while X is a multiple of 1%: Block 58 R- Factor Slices Staatsolie Share (%) 0-1 20 + X 1 - 1.25 20 + X 1.25 - 1.50 25 + X 1.50 - 1.75 30 + X 1.75 - 2 40 + X 2-3 50 + X >3 70 + X Invitation to Bid Offshore Suriname 2014/2015- Page 12 of 25 Blocks 59 and 60 R- Factor Slices 0-1 1-1.25 1.25- 1.50 1.50-1.75 1.75-2 2-3 >3 Staatsolie Share (%) 15+ X 20+ X 25+ X 45+ X 60+ X 70+ X 75+ X Where the R-factor is calculated for a Commercial Field as: R= (cumulative gross revenue - cumulative royalty - cumulative tax) (cumulative recoverable petroleum expenditures) “cumulative gross revenue” means the total value of all Gross Production from the Effective Date to end of the respective Calendar Quarter, with Gross Production being valued at the Market Price; “cumulative royalty” means 6.25% of the cumulative gross revenue; “cumulative income tax” means the total of all income taxes calculated as the tax rate multiplied by total Profit Oil from both Contractor and Staatsolie related to this Commercial Field, from the Effective Date to the end of the respective Calendar Quarter; and “cumulative petroleum expenditures” means the sum of all recoverable Petroleum Expenditures related to the Commercial Field from the Effective Date to the end of the respective Calendar Quarter. Invitation to Bid Offshore Suriname 2014/2015- Page 13 of 25 9. Evaluation of Bids & Negotiations A Staatsolie is seeking an early well commitment but all tenders will be evaluated on their technical merits. Each work program offered must include an estimate for the seismic acquisition and drilling operations. B A bid proposal shall be evaluated on the basis of the Point System to be used for Evaluating Bids set out in Schedule 5. C The submitted bids will be evaluated by Staatsolie according to the following weighted criteria. a. The minimum Exploration Work Program for phase 1 (60%) b. Staatsolie Profit Oil Share (40%) C. Where several bidders for a particular block are awarded the same number of points, each such bidder shall be required to bid a signature cash bonus for the purpose of determining the preferred bidder for that block. D. Successful bids shall be announced by 15March 2015. E. IOC’s awarded a block will be invited to sign with Staatsolie a PSC and negotiation for each block will proceed on an exclusive basis with the IOC or consortia of companies. Invitation to Bid Offshore Suriname 2014/2015- Page 14 of 25 10. Explanations of information and promotional seminars 10.1 Phone and Fax questions Staatsolie will be pleased to assist companies who have questions regarding the process via the contact details listed in Section 12. While minor queries will be dealt with by phone, any substantive issues will be handled in writing. 10.2 Promotional seminars Staatsolie will be conducting promotional seminars as given in the Calendar of Events. 10.3 Field visits Bid-qualified companies may visit Staatsolie. Neither Staatsolie nor any of its affiliates will be responsible for any loss or damage whatsoever, including personal injuries that might occur during any of the visits. Invitation to Bid Offshore Suriname 2014/2015- Page 15 of 25 11. Representations, warranties and reserved rights While the information made available in this document and the information which may subsequently be made available, whether as a supplement to this Bid Document, in answers to questions from prospective bidders, or in the data packages is believed to be fairly presented, neither Staatsolie nor any of its affiliates, their employees or agents makes any representation or warranty, either express or implied, as to the correctness of such information nor will they accept any claim for damages if such information proves to be incorrect. Staatsolie reserves the right, in its sole discretion, prior to the submission of bids, without any explanation, to: i) ii) iii) withdraw, add to, or substitute all or any of the blocks offered; waive any condition to the bid-qualification of any company; and revise the schedules, procedures and conditions pertaining to the Suriname 2015 Bid Round. Staatsolie also reserves the right, at any time, in its sole discretion, to declare any bid or the entire Suriname 2015 Bid Round void or to disqualify any bid-qualified company without giving any reason. IOC’s submitting bids shall accept that in no event may a claim be filed against the Government of the Republic of Suriname, Staatsolie or any of its affiliates or any of their agents or employees as a result of any such decision. Invitation to Bid Offshore Suriname 2014/2015- Page 16 of 25 12. Communications All communications must be sent to the name, address and fax numbers given below. Marny Daal-Vogelland Manager Petroleum Contracts Staatsolie Maatschappij Suriname N.V. Dr. Ir. H.S. Adhinstraat # 21 ParamariboSuriname Phone: + 597 439781 Fax: + 597 530093 Email:[email protected] Invitation to Bid Offshore Suriname 2014/2015- Page 17 of 25 13. Waiver In submitting a bid under the terms of conditions given in this official bid document any IOC or member of a consortium submitting a bid accepts the said terms and conditions and waives any recourse to appeal or litigation in any jurisdiction except as provided herein. This document replaces all previous communications from Staatsolie or any of its affiliates on the Suriname 2015 Bid Round. Invitation to Bid Offshore Suriname 2014/2015- Page 18 of 25 Schedule 1 Location Map Blocks 58, 59and 60 Invitation to Bid Offshore Suriname 2014/2015- Page 19 of 25 Schedule 2 Geographical Description of Blocks 58, 59and 60 The boundary of blocks on offer is defined by the geographical co-ordinates in terms of the WGS 84 geodetic datum, WGS 84 spheroid. Geographic Coordinate System of the coordinates Region Datum Spheroid Semi-Major Axis Semi Minor Axis First Eccentricity Squared Inverse Flattening South America, Suriname World Geodetic System 1984 (WGS 84) World Geodetic System 1984 a=6378137.000 m b=6356752.314 m e²=0.006694379 1/f=298.2572236 The boundary follows lines of equal latitude or longitude. Block 58 Block 58 comprising approximately 5,844 km² is situated offshore Suriname and is bounded by the lines joining the points listed hereunder. Block 58 # 1 2 3 4 5 6 Estimated Area Acres sq km 1444272.08 5844.762 Block 58 Lat Lon 7°00'00'' N 56°34'09'' W 7°25'00'' N 56°21'26.5'' W 7°39'57.9'' N 56°14'59.6'' W 7°55'00'' N 56°12'00'' W 7°55'00'' N 55°50'00'' W 7°00'00'' N 55°50'00'' N Invitation to Bid Offshore Suriname 2014/2015- Page 20 of 25 Block 59 Block 59 comprising approximately 9,800 km² is situated offshore Suriname and is bounded by the lines joining the points listed hereunder. Block 59 # 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Estimated Area Acres sq km 2421760.46 9800.517 Block 59 Lat Lon 6° 15.00' N 56° 59.17' W 6° 16.19' N 56° 58.63' W 6° 19.17' N 56° 57.01' W 6° 28.01' N 56° 51.70' W 6° 32.12' N 56° 49.22' W 6° 35.13' N 56° 46.92' W 6° 43.99' N 56° 42.34' W 6° 45.00' N 56° 41.82' W 6°45'00'' N 56°41'44'' W 7°00'00'' N 56°34'09'' W 7°00'00'' N 56°25'00'' W 6°45'00'' N 56°25'00'' W 6°45'00'' N 55°20'00'' W 6°15'00'' N 55°20'00'' W WGS 1984 Invitation to Bid Offshore Suriname 2014/2015- Page 21 of 25 Block 60 Block 60 comprising approximately 10,105 km² is situated offshore Suriname and is bounded by the lines joining the points listed hereunder. Block 60 Estimated Area Acres sq km 2497076.89 10105.31 Block 60 # 1 2 3 4 5 6 7 8 Lat Lon 6°15'00'' N 55°20'00'' W 6°45'00'' N 55°20'00'' W 6°45'00'' N 53°35'00'' W 6°40'00'' N 53°35'00'' W 6°40'00'' N 53°40'00'' W 6°25'00'' N 53°40'00'' W 6°25'00'' N 53°45'00'' W 6°15'00'' N 53°45'00'' W WGS 1984 Invitation to Bid Offshore Suriname 2014/2015- Page 22 of 25 Schedule 3 Declaration to be made by a duly authorized representative of the company Company Name Address (Company name) declares that is has reviewed the provisions of the model Production Sharing Contract (PSC) 2015 for blocks 58, 59and 60 and all its annexes having analyzed all its terms and condition for submission of a bid in response to this bid document “Suriname International Competitive Bid Round 2015”. (Company name) agrees that said model will be the basis of the PSC that will eventually be signed and that changes in the model PSC will be limited to (i) avoid any ambiguity or (ii) increase clarity. (print or stamp name here) Invitation to Bid Offshore Suriname 2014/2015- Page 23 of 25 Schedule 4 Summary Bid Form Block:_______________________ A. Minimum Work Program phase 1 Phase 1 Minimum Work Program Work Geophysical SEISMIC: Non biddable minimum Additional Seismic Total acquisition 2D seismic 3D Seismic DRILLING: Wells ____ Note: Spudding of at least one exploration well in the second phase and one exploration well in the third phase is a requirement of the exploration period if entered into. B. Staatsolie Share of Profit oil R- Factor Slices 0-1 1-1.25 1.25- 1.50 1.50-1.75 1.75-2 2-3 >3 Staatsolie Share (%) Invitation to Bid Offshore Suriname 2014/2015- Page 24 of 25 Schedule 5 Awarded Points for Evaluation of the Bids Received Block 58 Item 2D seismic 3D seismic Well Staatsolie profit share by increments of 1% for all slices Points 0.2 points per km 2 points per km2 20,000 9,000 points per increment Block 59 & 60 Item 2D seismic 3D seismic Well Staatsolie profit share by increments of 1% for all slices Points 0.2 points per km 2 points per km2 10,000 6,000 points per increment Invitation to Bid Offshore Suriname 2014/2015- Page 25 of 25
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