Production Licences

Licence type/summary of terms

Competitive round production licences

Open-door production licences

How to apply

Issued only as the result of invited, competitive bidding during well-defined licensing rounds
Applications will not be accepted outside licensing rounds except in the case of acreage that has been relinquished.
The opening of any further licence round competitions will be announced in the Falkland Islands and London Gazettes and will be advertised in the trade press.

Bids for open-door production licences can be made at any time for any number of whole blocks (12' longitude by 10' latitude) up to a total of 30 contiguous blocks in any one licence. The applicant is free to determine the size and shape of the area bid for. There is no limit to the number of licences (each of up to 30 blocks) that can be applied for at any time.
Bids will be opened at midday Stanley time on the last working day of each month. Decisions regarding applications will be made as soon as possible. In addition to a completed application form, companies will need to provide full details of their fiscal and technical records and their environmental and health and safety policies.

Work programmes

The entire Phase 1 work commitments for all existing production licences issued in 1996 have been completed, or alternative (completed) programmes sanctioned by the Government.

A work programme will be acceptable only if it contains one or more of the following elements:

1. acquisition of geochemical 'sniffer' - type survey
2. acquisition of aeromagnetic survey
3. acquisition of set of sea-bed cores testing the stratigraphy of the feather edges of presently unexplored basins or sub-basins
4. acquisition and processing of 2D and 3D seismic data
5. the drilling of one or more exploration wells.

Desk studies and the acquisition of presently available datasets, whether proprietary or non-exclusive, will not be regarded as acceptable work commitments, and production licences will not be issued for such work.
Successful applicants for open-door production licences would be expected to comprehensively acquaint themselves with any existing datasets available for the licence area.

Exploration Phase 1

The first exploration phase was for five years. However, this initial exploration period was extended in 2000, to provide additional years during the first phase.
There is a 50% relinquishment of acreage at the end of the first phase. However, as well as the 50% retained automatically, an additional 10% can be retained for each of the first three exploration wells drilled within the first phase. Relinquishment obligations may be subject to negotiation.

Phase 1 of the open-door licences is for 3, 5, 6 or 8 years, depending on the work programme commitment as outlined below:
a) acquisition of 2D seismic data appropriate to the size of the licence area, plus associated exploration activity - 3 years;
b) acquisition of 2D seismic data appropriate to the size of the licence area, plus associated exploration activity, plus acquisition of 3D seismic data of appropriate size to the size of the licence - 5 years;
c) acquisition of 2D seismic data appropriate to the size of the licence area, plus associated exploration activity, plus drilling at least one well - 6 years;
d) acquisition of 2D seismic data appropriate to the size of the licence area, plus associated exploration activity, plus acquisition of 3D seismic data of appropriate size to the size of the licence, plus drilling at least one well - 8 years.

Exploration Phase 2

Phase 2 is seven years.
It allows for completion of the work programme specified in the original licence application. Additionally, entry to the second phase includes a commitment to drill during the seven years.
There is a 50% relinquishment of remaining acreage at the end of the second phase.

Phase 2 is for five years.
There is an automatic 50% relinquishment of the licensed area before Phase 2 can be entered.
Entry to Phase 2 is on a drill or drop basis and will therefore require a commitment to drill one or more exploration wells.
All the area must be surrendered at the end of Phase 2, unless a discovery has been made and plans are in place to appraise or develop it.

Exploration Phase 3

Phase 3 is ten years.
It allows for further exploration and appraisal drilling. Entry to the third exploration phase requires a renewed drilling commitment on the exploration acreage, and is therefore also on a drill or drop basis.

This does not apply to open-door licences.

Discovery area

This does not apply to competitive round licences.

If a discovery is made at any time during either Phase 1 or Phase 2, a 'Notification of Discovery' should be made to the Governor.
The geological structure, or the aerial extent of the stratigraphic play containing the discovery will then be set aside as a 'Discovery Area', and will not count as part of the exploration or relinquishment schedule for the remainder of Phases 1 or 2 as appropriate.
A 'Discovery Area' can be held for five years from the date of spudding of the discovery well, to allow time for appraisal drilling and/or the submission, for the Govenor's approval, of a development plan.
However, either appraisal drilling or the submission of a development plan must commence within three years of the date of a discovery, or the licensee's interests in the 'Discovery Area' will be forfeited.

Exploitation phase

This phase is for 35 years, or longer if needed to complete production.
Development approval for a projected field can be sought at any time.
If a development plan is submitted and approved before entry to the third exploration phase, the relinquishment of exploration acreage will be 50% of the total acreage that was carried into the second phase, regardless of the existence of a planned development area. However, where any such policy would result in difficulties, for example where one or more potential fields have been identified for development at some future date and a 50% relinquishment would prejudice the development of those fields, the Falkland Islands Government will be sympathetic to any request for amendment of the regulations concerning relinquishment.

This phase is for 35 years, or longer if needed to complete production.
Approval of a field development plan will expire if production has not commenced within five years of approval being granted, and the licensee's interests in the discovery area will be forfeited.

Acreage rentals

Variable according to phase of licence

Variable according to phase of licence