Key enablers in a production sharing contract operatorship transfer exercise

Abstract

Production Sharing Contract (PSC) is one of the petroleum agreements mode that are being utilized in many parts of the world in enabling exploration, development and production of the petroleum resources at the respective locations. It was first introduced in Indonesia in 1966, and followed by Malaysia, Vietnam, Thailand, and Brunei. One of interesting aspects of PSC management is the operatorship transferhandling when a PSC is nearing its expiry. When the time come, the current PSC contractor as operator has the option to relinquish it to the host authority to be handed over to other operator, farm it out to the other PSC contractor to reduce the risk exposure or continue operating under a new PSC terms. The most challenging will be to relinquish the operatorship to another operator whereby several complexities will need to be adequately addressed to ensure benefit preservation to the host authority, incoming operator and outgoing operator. Therefore there is a need to adhere to key factors or enablers to administer the operatorship transfer exercise if it occurs in the near future. The key enablers would be able to address the operatorship transfer exercise effectively with the objective to alleviate complications to the host authority, outgoing operator and incoming operator. With the emphasized in the PETRONAS Procedure & Guideline for Upstream Activities together with three case studies, this paper proposed several key enablers to be considered for a PSC successful operatorship transfer which is human resources, data management, asset reliability and integrity management, supply chain management and good relationship between parties. With identified key factors, it is hoped that any PSC operatorship transfer will be able to be managed smoothly and will ensure benefits to all parties concerned.