March 2, 2021
ANH establece criterios para prórrogas y terminaciones conciliadas

On February 5, 2021, the National Hydrocarbons Agency ("ANH") issued Agreement 01 of 2021, "Whereby criteria are established for the extension, granting of terms, and termination by common consent of Contracts and Agreements for the Evaluation, Exploration, Exploitation, and Production of Hydrocarbons" (the "Agreement"), to establish the criteria to be followed by the ANH for (i) the requests for an extension by common consent; (ii) the performance of additional exploratory activities to those foreseen in the exploration period/ subsequent exploratory program/ evaluation program, as applicable; (iii) the granting of extensions for the compliance of other contractual obligations; and (iv) the analysis of the termination requests of Hydrocarbons Evaluation, Exploration, Exploitation, and Production Contracts, and Agreements, according to their modality, and duly entered into with the ANH.

The Agreement consists of 12 articles, through which, among others, the following is established:

1.    Extension requests. Extensions by common consent must have the prior, express, and written authorization of the ANH, who will evaluate the requests following these criteria: 
a)    Extension shall proceed when (i) they seek to execute additional activities of the contract (drilling of A2 or A3 exploratory wells in already identified prospects); (ii) for the evaluation programs that include drilling of A1 exploratory wells. 
b)    The term shall not exceed 18 months or exceptionally 24 months.
c)    They may not be granted: (i) in contracts in which the term subject to the extension request is suspended; (ii) the contracts have pending activities in the current phase or, the activities have not been executed under the respective schedule; (iii) the ANH has sanctioned the contractors, and at the date of the request such sanctions have not been paid; and (iv) there is another contractual provision that expressly allows the extension of the phase.

The extension requests must be submitted no less than three months before the expiration of the respective phase of the Exploration Period / Subsequent Exploration Program / Evaluation Program, as the case may be. The ANH will have three months to determine the technical and legal feasibility of the extension request and adopt the corresponding decision. Upon expiration of this term without a pronouncement from the ANH, the request will be understood as denied. 

It is worth noting that the extension request will not suspend the terms of performance of the obligations of the respective contract.

Once the ANH has approved the extension, an amendment agreement must be signed. Such amendment must establish, among others, the obligation of the contractor to provide the guarantees that cover the compliance of the new exploratory or appraisal obligations, by means of a standby letter of credit for an amount corresponding to 100% of the proposed investment, as well as the respective policies of labor obligations and civil tort liability. Said guarantees must be delivered to the ANH within eight calendar days after the additional agreement's execution formalizes the extension.

2.    Areas return Requests. The return must be formalized through the execution of a minute, after the verification by the ANH, based on the information submitted in the request, that the area under exploration does not comprise exploration prospects.

3.    Requests for contract termination by common consent. The termination of contracts by common consent must have the prior, express, and written authorization of the ANH, who will verify, for each particular case, compliance with the respective regulations and/or contracts to determine its feasibility. Also, the ANH will take into account the alternative that offers to the State a more significant benefit than that the nation would have in the case the contract is not terminated; and, if the impossibility of performing the contract is verified, the administration of the ANH may proceed to terminate the contract.

The authorization must be formalized through a termination minutes of the contracts.

It is worth mentioning that the requests for extension and termination by common consent approved before the effective date of the Agreement will be reviewed by the ANH and formalized through the execution of the amendment or termination act, as the case may be.

The Agreement is available at the following link: 
 
https://www.anh.gov.co/normatividad-es 

 

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