In accordance with Article 8 of Law 1437 of 2011, and in order to promote exploratory investment in the country, as well as to seek the incorporation of new reserves, the National Hydrocarbons Agency ("ANH") published for comments the text of the draft Agreement "Establishing Criteria for The Extension, Granting of Deadlines and Mutual Termination of Hydrocarbons Evaluation, Exploration and Production Contracts" (the "Agreement.")
The Agreement establishes criteria for:
1. extension by mutual agreement for additional exploratory activities;
2. granting of term extensions for the fulfilment of contractual obligations related to the fulfilment of exploratory activities;
3. the requests for termination by mutual agreement of Contracts for the technical evaluation, exploration and production of hydrocarbons and hydrocarbon exploration and/or exploitation agreements, signed by the ANH.
In this regard, the Agreement acknowledges the requests for extensions by mutual agreement for the execution, as an additional activity in the contract, of the drilling of A2 or A3 exploratory wells in previously identified prospects, and under the following assumptions:
A. The associated investment must be consistent with the unit price table related to the relevant contract, or to that provided for in Article 33 of Agreement No. 002 of 2017, in cases where the contract does not have this reference.
B. Extensions shall be granted for a single time and for the minimum period required for the performance of the proposed activity, which may not exceed 18 months and exceptionally 24 months, where it is shown that it is not possible to carry the activity out within a shorter period.
C. No extensions shall be granted in the following cases: (i) contracts whose obligations of an exploratory nature are suspended; (ii) contracts with outstanding activities to be implemented at the current stage; (iii) contracts in respect of which a declaration of non-compliance procedure has been initiated for any reason; or (iv) where there is another contractual provision expressly permitting the extension of the current phase or period or permitting the start of the subsequent exploratory program.
D. If, at the expiration of the extension, the activity or investment has not been effectively and satisfactorily executed, the contractor must pay to the ANH the amount of the investment associated with the exploration activity not executed within 90 calendar days following the end of the corresponding period.
E. In formalizing the extension amendment, the contractor shall provide the guarantees for compliance with the new exploratory obligations, labor obligations and non-contractual civil liability, as appropriate, through the instrument, validity and amount corresponding to one hundred percent (100%) of the proposed investment.
F. In addition, the value of the activities or investments proposed during the extension will impact the Community Benefit Programs.
G. The request for extension must be submitted at least three months before the expiry of the respective phase of the exploratory period, subsequent exploratory program or evaluation program. The ANH will also have three months to issue a decision. Lacking a decision once the deadline has expired shall be deemed to be negative silence.
H. The request for extension shall not suspend the terms for the performance of the obligations of the contract.
On the other hand, extensions of terms for the fulfilment of obligations shall be subject to the following conditions:
A. The extension for the delivery of periodic reports may be up to 30 calendar days, subject to acceptance by the contractor of the penalty regime.
B. The extension for the submission of discovery notices and evaluation programs may be up to a period of three months, which shall be deducted from the period of the evaluation period.
C. The requests for extension must be submitted at least one month before the expiry of the respective phase of the exploratory period, subsequent exploratory program or evaluation program. The ANH shall also have one month to give to issue a decision. Lacking a decision once the deadline has expired shall be deemed to be negative silence.
Finally, with regard to requests for termination of contracts by mutual agreement, the ANH, in addition to verifying compliance with the rules and requirements set out in the regulations and/or contracts, shall take into account the alternative that offers the State greater benefit than it would have in the event of not terminating the Contract and, if the impossibility of execution of the subject matter of the Contract is verified, the of the ANH may terminate it.
Comments to the draft Agreement shall be sent in the Excel format provided for this purpose to the email email@example.com until 5:00 p.m. Monday, October 19, 2020.