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PSC Budgeting and Reporting
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Overall ObjectivesTo provide a high level overview of terms, concepts and implementation of Planning and Budgeting, as well as Cost/Revenue Reporting in Oil & Gas Production Sharing Contract (PSC)
Upon completion of this module, you should understand the basic of: Work Program and Budget PSC Budgeting PSC Reporting Authorization For Expenditures
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Exploration
Development
Upstream Resource Lifecycle
Each stage of cycle critical to long-term profitable growth Successful execution drives upstream performance Accountants role key throughout lifecycle
Production
Research
Gas Marketing
Identifyand Capture
Explore and Discover Deplete
Appraiseand Develop
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Resources Allocation
This chart is illustration only, it does not represent operations of any particular company
The Corporation has to invest its resources into assets that has high opportunity to
replace its O&G reserves, will give highest return, with reasonable risks.
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Petroleum Business Characteristics High Risk Business
Exploration Risk Development Risk Political Risk etc
Capital Intensive Need capital for exploration stage High capital for development stage
Long term capital return Long payout period especially for gas
Depend on Reserve Discovery Successful discovery enable long term business continuity
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Budget Build-up Considerations
Some key considerations in developing budget Country Risks: political climates, regulations, general
security environment, etc. Assets Characteristics: “green fields”, “brown fields”,
depleted assets Assets Lifecycle: Exploration, Development or
Production stage Type of Operations: Onshore Vs. Offshore operations Type of reserves: Oil Vs. Gas
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Budget Build-up Process
Asset A
(Development, Brown field, Offshore, Gas)
Asset B
(Production, Depleted, Onshore, Oil)
Asset C
(Exploration, Green field, Onshore, Gas)
You?Consolidate the budget at country level
Corporation
Political clim
ate RegulationsGeneral Security
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PSC Concepts at a GlanceLand lord Investor
PSC Agreement
Exploration – Development - Production Gross Revenue to be accounted for
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PSC Budgeting
Definition WP&B is a proposal of details annual work program and budget,
taking into account the operational condition, commitment, effectiveness and efficiency of the PSC Contractor within the contract area
The WP&B scope includes: Exploration activities (Seismic and Geological Survey, Drilling and G&G) Production activities and the exertion to keep production continuity
Plan Of Development POD Sidetrack drillings Production Operations and workover drilling EOR projects
Costs to perform the above program/activities
The scope may vary depends on the cycle of Contractor’s operations
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PSC Budgeting
PSC terms and requirements Section I (Scope and Definition)
BPMIGAS has the authority and controls over the PSC/JOB/KKS management of their operational activities and Contractors should account for the activities before BPMIGAS
Section IV (Work Program and Expenditures)
Three months prior to the commencement of the calendar year, Contractor should have prepared and submit the Original WP&B for BPMIGAS approval in order to carry on the activities as stipulated in the work program
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PSC Budgeting
WP&B Cycle Original WP&B - 90 days prior to the beginning of
calendar year Revised WP&B - 6 months prior to the end of calendar
year
Approval process Technical Meeting – may required to submit a
Replacement WP&B Management Meeting – to agreed on the annual
program and budget that will be documented by a formal approval letter
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PSC Budgeting
BS 1 - Financial Status Report BS 2 - Key Operating Statistics BS 3 - Expenses/Expenditures
Summary BS 4 - Exploration/Development
Summary BS 5 - Exploration Drilling
Expenditures BS 6 - Development Drilling
Espenditures BS 7 - Miscellaneous Capital
Expenditures BS 8 - Production Expenses
Summary
BS 9 - Production Facilities Capital Expenfitures
BS 10 - Miscellaneous Capital Expenditures
BS 11 - Administration Expenses Summary
BS 12 - Administration Capital Expenditures
BS 13- Capital Assets Place In Service
BS 14 – Depreciation old/new BS 15 - Detailed Program
Support Listing BS 16 - Production Lifting
Foracasts BS 17 - Budget Year
Expenditures
Budget Schedule (Ref. Financial Budget and Reporting Procedures Manual)
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Budget Preparation
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Budget Preparation
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Budget Preparation
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Budget Preparation
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Budget Preparation
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Budget Preparation
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Budget Preparation
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Budget Preparation