Following award by PETRONAS, investors shall enter into a Petroleum Arrangement (PA) with PETRONAS in the form of a contract – typically the Production Sharing Contract (PSC).
There could be multiple investors in a PA contract where one of them shall be designated as the Operator. The Operator shall be responsible in leading and ensuring successful execution of petroleum operations in the pertinent acreages, as well as fulfillment of work and financial commitments as stipulated under the PA contract. The agreement that the investors entered into among themselves for the petroleum operations is called the joint operating agreement.
The scope of operations may span across phases in the life of assets from exploration to abandonment. Apart from complying with Malaysian laws and regulations, the Operators shall, among others, be responsible in meeting PETRONAS’ governance requirements and expectations. This include production targets, performance reviews, project management and execution, financial accounting and annual audits, data and information confidentiality, reporting and documentation, local content and local capability development, and technology and industry collaboration. Standard requirements are stipulated under the PSC as well as PETRONAS Procedures and Guidelines for Upstream Activities (PPGUA).
The periods for exploration, development and production in each PA contract are defined, and the Operator is time-bound to deliver the requirements of the PA contract. Upon relinquishment or expiry of PA contracts, the acreages are returned to PETRONAS (MPM). Exploration acreages which have not been converted into a development area at the end of the exploration period is also deemed as relinquished.
The Operator shall also consider at all stages of petroleum assets’ life cycle to prepare for decommissioning at the end of economic life. The Operator shall execute decommissioning of any disused installations in accordance with applicable laws and regulations, contractual obligations, and PETRONAS’ requirements in a safe and cost-effective manner with the aim of restoring the contract area into a stable environmental condition.