Contracts & Guidelines | Malaysia Petroleum Management (MPM)

Investors wishing to participate in exploration and production activities must apply and receive license from PETRONAS. The licenses take the form of a Petroleum Arrangement (PA) contract between PETRONAS and the investors (to be referred as PA Contractors), where one of the parties is designated as the operator. The vast majority of PA contracts applicable today is in the form the Production Sharing Contract (PSC). The PSC continues to evolve since its introduction in 1976 to replace the concession-based system. The PSC fiscal terms today are tailored to match the opportunities offered, providing optimum sharing of the profit oil and profit gas between PETRONAS and investors.

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Petroleum Arrangement Contract

The Petroleum Arrangement Contract is a contractual agreement entered into between PETRONAS and PA Contractors that outlines the rights and responsibilities of each party. There are various forms of Petroleum Arrangement Contract offered to PA Contractors which is the Production Sharing Contract (PSC) and Risk Service Contract applying different types of fiscal terms such as Revenue-over-Cost PSC, Deepwater PSC, Late Life Assets PSC, Small Field Assets PSC and Enhanced Profitability PSC.

The Petroleum Arrangement (PA) Contract is the main document for governing the activities in Malaysia’s Upstream oil and gas sector. It sets out the terms, conditions, rights and responsibilities of the parties involved. A typical PA Contract specifies, among others:

Duration & Scope of Contract
Contract Area
Work Programme & Budget
Management & Operations
Division of Gross Production & Cost Recovery
Accounts & Audits
Procurement of equipment, facilities, goods, material, supplies and services
Governing Law & Dispute Resolution
Taxes
Abandonment

Governing Standards for Malaysia Petroleum Operations (Governing Standards)

Governing Standards aims to empower PA Contractors through simplified requirements with more flexibility, enabling value optimisation without compromising safety and governance.

The document sets out PETRONAS’ governing standards and minimum requirements which are applicable to the conduct of petroleum operations and activities by all PA Contractors under the Petroleum Arrangement (PA) Contract.

The Purpose of Governing Standards

Serves as a one-stop document reference for governing Malaysia Oil and Gas activities, covering obligations on the PA Contractors to conduct its Petroleum Operations as stipulated in the PA Contracts, in accordance with each aspect of the life of field, including those required throughout the phases.

Regulate the industry in a transparent manner by providing clarity to the provisions provided in the PA Contracts and inculcate operational discipline across upstream activities.

Enable the PA Contractors to operate towards value optimisation, using its best-in-class performance, without compromising safety and good governance for the entire life of an asset from exploration and abandonment.