Answer ... The duration of exploration and production rights depends on whether the SUC relates to a complex project.
Where a contract for the exploration and production of hydrocarbons through a complex project is concluded, the exploration period is 18 years, including:
- nine years for the initial exploration stage;
- six years for the appraisal stage; and
- three years for pilot operation stage.
Transition to each next stage requires the submission of an application by the subsoil user, together with certain documents specified by the Subsoil Code, before the expiry of the current stage. (Otherwise, the exploration term is limited to the duration of the current stage.) The MoE will consider the application within 20 business days. If there are no grounds for rejection (eg, late submission of the application or failure to submit all required documents), the MoE will sign the relevant amendment to the SUC on its extension for the duration of the subsequent stage within 10 business days.
The maximum duration of the exploration stage under a standard SUC is six years. If a reservoir is discovered, the SUC may be extended for appraisal works for up to three years. The exploration period may be extended by a further period of up to three years to conduct pilot operations on the reservoir (ie, the maximum exploration term is thus 12 years). The extension procedure is generally the same as that outlined above.
If, during the exploration, compliance with one of the criteria for complex projects is confirmed, the subsoil user may transition to the conditions for complex projects, including the right to extended terms of exploration (minus the factual term of exploration). The relevant application will be considered by the MoE within 20 business days.
Before the expiry of the exploration period under a standard SUC, the subsoil user must submit the relevant application and have either a production period or a preparation period fixed by relevant amendment; otherwise, the SUC becomes ineffective.
During the preparation period, which cannot exceed three years, the subsoil user may:
- prepare and obtain approval for the field development project;
- develop the field infrastructure; and
- produce hydrocarbons in a volume that does not exceed the volume of production during the test operations of the field.
If a complex project SUC holder fails to file an application before the expiry of the exploration period to transfer to the production stage executed, this will result in the premature termination of the SUC.
The maximum duration of the production period is:
- 45 years for huge fields (ie, where geological reserves of oil or gas exceed 100 million tons or 50 billion cubic metres, respectively); and
- 25 years for other fields.
An SUC for a huge field must contain one of five obligations set out in Article 119.7 of the Subsoil Code (eg, modernisation or reconstruction of existing extraction or processing facilities; implementation of another investment project). This obligation becomes effective for a complex project SUC holder only after 20 years from the date of on which hydrocarbon exports commence.
A complex project SUC may be converted into a standard production contract if exploration does not result in confirmation of compliance with any of the criteria for complex projects. Conversely, a standard SUC may be converted into a complex project SUC if the results of the exploration confirm such compliance.