The Dominican Republic's (DR) Energy and Mines Ministry (MEM) in May 2018 issued an international call for bids from companies to provide consulting services for the Caribbean island nation as it works on the road to launch and promote its planned E&P bidding round in H2 2018. According to the documents, workscope for the three-year contract calls for block delineation, resource magnitude, development costs as well as cobbling together reference terms. The company would also work to promote the round. MEM's inquiry for the round kicked off on 9 May 2018. The inquiry period will last through 29 May. The deadline to submit sealed proposals is 20 June 2018. The sealed envelopes are scheduled to open on 30 July, while official award will be made in August. Previous to this procurement call, on 1 May, MEM officially initiated a 30-day public consultation period for the country's draft exploration and production (E&P) contract. The DR has been working towards a licensing round since 2015. As previously reported, officials from MEM have said they want the process aimed at relaunching the hydrocarbons E&P sector to be transparent and inclusive.Initial plans for the Dominican Republic licensing round include offering four blocks for exploration. These areas were to be offered under a production sharing contract (PSC). As reported, the first tracts to be offered will be onshore in the Enriquillo and Azua basins. The blocks are expected to be Azua (~13.4 sq km) and Enriquillo (~177 sq km). Meanwhile, Phase 2 focuses offshore in the Bay of Ocoa (~435 sq km) and the San Pedro de Macoris play (~7,922 sq km). It's not clear of the DR will try to make the round more attractive for established IOCs and NOCs by offering more attractive blocks.The significant terms of the draft model PSC dated 26 March 2018 are: ->Minimum operator credentials to oversee a contract are defined in Article 5. These are specified by situation (onshore, shallow water, deep water and ultra-deep water) and include, but are not limited to: minimum level of production in the range 1,500 - 10,000 boe/d and 10-15 years' experience. (Article 5.3) ->Initial exploration period of up to six years with two, two-year extensions possible. (Article 12) ->After three years, the contractor to relinquish 20% (25% is stated in words) of the original contract area. After four years, the contractor to relinquish 25% of the original contract area. After five years, the contractor to relinquish 30% of the original contract area. Extensions require a drilling commitment. (Article 13) ->An evaluation period of up to one year is possible to investigate a discovery. (Article 16) ->The production period to have a duration of 20 years which may be extended twice for five years each. (Article 21) ->Inclusion of a stabilisation clause. (Article 23) ->A Special Tax on Hydrocarbons (IEH) replaces income tax established in Law 11-92 of 16 May 1992. (Article 24.1) ->The contractor to receive a share of net hydrocarbon production after IEH. (Article 24.3) ->Contractor to recover its costs. (Article 24.4) ->Calculation of contractor remuneration: (Article 24.5) ->Gross income from sale of net oil production in a quarter = (Average weighted price of the product in the quarter x Net production in the quarter) + Other income. ->Contractor remuneration for the quarter = Recoverable cost + Amount of profit to distribute to the contractor in the quarter. ->IEH rate based on internal rate of return (IRR) calculation and adjusted by an additional amount bid by the contractor (X%). The IRR calculation is in four tranches (based on effective interest rate of Dominican Republic sovereign debt (Y%) and adjusted by 0% to 10% according to tranche) with rates of IEH between 40%+X% and 55%+X%. ->The maximum share of gross income available for cost recovery is 80%. (Article 25.2) ->Contractor exempt from import tariffs. (Article 27.1) ->Ultimate arbitration rests with the International Centre for Settlement of Investme
The Dominican Republic's (DR) Energy and Mines Ministry (MEM) in May 2018 issued an international call for bids from companies to provide consulting services for the Caribbean island nation as it works on the road to launch and promote its planned E&P bidding round in H2 2018. 