Circular 24/2020/TT-BCT classification and reporting on petroleum resources

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Circular No. 24/2020/TT-BCT dated September 18, 2020 of the Ministry of Industry and Trade providing regulations on classification and formulation of reports on petroleum resources and reserves
Issuing body: Ministry of Industry and TradeEffective date:
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Official number:24/2020/TT-BCTSigner:Dang Hoang An
Type:CircularExpiry date:Updating
Issuing date:18/09/2020Effect status:
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Fields:Industry , Natural Resources - Environment

SUMMARY

Guidance on calculating petroleum resources and reserves

On September 18, 2020, the Ministry of Industry and Trade issues the Circular No. 24/2020/TT-BCT providing regulations on classification and formulation of reports on petroleum resources and reserves.

Accordingly, petroleum resources and reserves are calculated as follows:

Firstly, regarding discovered petroleum resources: Petroleum initial in place and petroleum reserves are calculated by the executor for the respective levels (P1, P2, P3). Petroleum potential is also calculated by the executor for the respective levels (C1, C2, C3) with values of petroleum initial in place and corresponding potential recovery. Petroleum reserves of the field are updated in the outline development plan (ODP), field development plan (FDP) and the adjusted field development plan report, etc.

Next, the undiscovered petroleum resources are calculated or forecasted for the petroleum initial in place and the corresponding potential recovery (R1, R2), where the recovery coefficient is derived on the same principle on the basis of the price values of adjacent seams, field, areas, and basins.

Besides, time to update the report is 03 (three) years from the date of first commercial exploitation of oil and gas flow and then every 05 (five) years. In case of necessary, the executor shall update and submit the competent authority for consideration and approval.

This Circular takes effect on November 06, 2020.

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THE MINISTRY OF INDUSTRY AND TRADE
___________

No. 24/2020/TT-BCT

THE SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness

_______________________

Hanoi, September 18, 2020

 

 

CIRCULAR

Providing regulations on classification and formulation of reports on petroleum resources and reserves

___________

 

Pursuant to the Petroleum Law dated July 06, 1993; the Law Amending and Supplementing a Number of Articles of the Petroleum Law No. 19/2000/QH10 dated June 09, 2000, and the Law Amending and Supplementing a Number of Articles of the Petroleum Law No. 10/2008/QH12 dated June 03, 2008;

Pursuant to the Government’s Decree No. 98/2017/ND-CP dated August 18, 2017, defining the functions, tasks, powers and organizational structure of the Ministry of Industry and Trade;

Pursuant to the Government’s Decree No. 95/2015/ND-CP dated October 16, 2015, detailing a number of articles of the Petroleum Law;

Pursuant to the Government’s Decree No. 33/2013/ND-CP dated October 16, 2015, issuing the model oil and gas production sharing contract;

At the proposal of the Director of the Department of Oil, Gas and Coal,

The Minister of Industry and Trade hereby promulgates the Circular providing regulations on classification and formulation of reports on petroleum resources and reserves.

 

Chapter I

GENERAL PROVISIONS

 

Article 1. Scope of regulation

This Circular provides regulations on classification and formulation of reports on petroleum resources and reserves.

Article 2. Subjects of application

1. The executors or organizations or individuals (hereinafter collectively referred to as executors) shall make reports on petroleum resources and reserves when activities of prospecting, exploration and development of field and petroleum exploitation are conducted within the land territory, internal waters, islands and archipelagos, territorial waters, contiguous zones, exclusive economic zones and continental shelf under the sovereignty, sovereign rights and jurisdiction of Vietnam, determined according to Vietnamese law and treaties to which Vietnam is a contracting party.

2. State management agencies, organizations and individuals involved in the classification and formulation of reports on petroleum resources and reserves in petroleum-related activities.

Article 3. Interpretation of terms

In this Circular, the terms below are construed as follows:

1. Exploited petroleum (cumulative output) means the total amount of oil and gas exploited of an oil and gas seams or field updated to the time of making the report on petroleum resources and reserves (hereinafter referred to as the report), which is a recovered part of petroleum reserves.

2. Petroleum initial in place or hydrocarbon initial in place means the quantity of petroleum that exists originally in naturally occurring reservoirs, whether or not discovered by a drilling well, calculated or forecasted for specific entity.

3. Economic - technical conditions mean economic - technical criteria argued for application at the time of preparing the report.

4. Petroleum recovery coefficient means the ratio between the amount of oil and gas that can be exploited to the amount of petroleum initial in place of the field or seam in certain economic - technical conditions.

5. Group not eligible for commercial development (hereinafter referred to as the undeveloped group) means a discovered petroleum resource that has been assessed as not satisfying economic - technical conditions for development, which may include oil and gas fields in the stationary or stretched state due to changes in economic - technical factors.

6. Group eligible for commercial development (hereinafter referred to as the developed group) means a discovered petroleum resource that has been assessed as satisfying economic - technical conditions for development, including fields that have been and are being exploited; fields that are under development activities; the oil and gas discoveries are justified as satisfying economic - technical conditions to prepare for field development from the executor’s point of view.

7. Petroleum resource means the total quantity of petroleum initial in place that exists in naturally occurring reservoirs.

8. Undiscovered petroleum resource means the total quantity of petroleum initial in place that exists in naturally occurring reservoirs but has not been discovered by drilling wells.

9. Discovered petroleum resource means the total quantity of petroleum initial in place existing in naturally occurring reservoirs that has been discovered by drilling wells.

10. Product layer means a collection of product reservoirs and seams in a stratigraphic unit of geological structure.

11. Play means a group of petroleum prospect objects within certain geological and geographical limits, having the same conditions and characteristics of oil production, storage, and barrier.

12. Petroleum product reservoir or seam means a geological body containing natural oil and gas located in an oil and gas field, separated from other product reservoirs and seams by barrier elements.

13. Flow test means the process of surveying the wells to collect the parameters of the reservoir such as flow rate of oil, gas, water, pressure, temperature and other necessary parameters.

14. Seam test means a hydrodynamic study conducted in order to fully determine the hydrodynamic parameters and evaluate the exploitability of a part or the whole of the reservoir.

15. Potentially recoverable means the expected amount of petroleum that can be recovered from the petroleum initial in place of undeveloped discoveries or undiscovered ones.

16. Petroleum reserves means the amount of oil and gas that is expected to be commercially recoverable from the field’s petroleum initial in place with economic - technical conditions at a given time.

 

Chapter II

CLASSIFICATION OF PETROLEUM RESOURCES AND RESERVES

 

Article 4. Grounds for classification

1. Classification of petroleum resources and reserves is carried out on the basis of a combination of assessment of reliability in geological and geophysical information, technical and technological feasibility and economic efficiency at the time of preparing the report.

2. The classification of petroleum resources and reserves must comply with Article 5 and Appendix IA attached to this Circular.

Article 5. Classification of petroleum resources and reserves

Petroleum resources are divided into two groups, including discovered petroleum resources (by drilling well) and undiscovered petroleum resources.

1. Discovered petroleum resources: Depending on the technical and technological feasibility and economic efficiency from the point of view of the executor at the time of preparing the report, discovered petroleum resources are divided into developed group and undeveloped group.

a) Developed groups: Petroleum resources and reserves of the developed group are classified into proved (P1), probable (P2), and possible (P3).

(a1) P1: P1 expresses to the highest degree of confidence in the classification of petroleum resources and reserves. Level 1 must satisfy the following conditions:

- The petroleum reservoir is determined with a high degree of confidence according to geological, geophysical documents, drilling, seam test, and exploitation.

- Petroleum permeability, storage and saturation characteristics of petroleum reservoir are confirmed by geophysical documents on drilling well and (or) core samples.

- Test results of seams and fluid samples allow to determine the capacity for commercial oil and gas flows from the executor’s point of view from at least one drilling well.

(a2) P2: P2 expresses to a lower level of confidence than P1 in the classification of petroleum resources and reserves. P2 has is determined to potentially exist in reservoirs on the basis of geological and geophysical data but has not been proved by seam test results and/or fluid samples.

(a3) P3: P3 expresses to a lower level of confidence than P2 in the classification of petroleum resources and reserves. P3 is determined when the amount of oil and gas can exist in the reservoirs based on geological and geophysical data but is not reliable enough to be classified as P2.

b) Undeveloped groups: Petroleum resources of the undeveloped group (potential) are classified into proved (C1), probable (C2), and possible (C3). Technical criteria used to classify C1, C2 and C3 are same as those of P1, P2 and P3.

2. Undiscovered petroleum resources include estimated undiscovered petroleum resources (R1) and theoretical undiscovered petroleum resources (R2).

a) Estimated undiscovered petroleum resources (R1) is the estimated amount of oil and gas at a given time for potential objects that have been mapped but the existence of oil and gas has not been determined by drilling results or seams in the product layer of the fields being exploited with geological conditions considered favorable for oil and gas accumulation but not yet drilled;

b) Theoretical undiscovered petroleum resource (R2) is the estimated amount of oil and gas at a given time for petroleum accumulations that are expected to theoretically exist in a prospective set with favorable geological conditions for petroleum accumulation but not yet mapped.

Article 6. Boundaries of classification of petroleum resources and reserves

1. Boundaries of classification of petroleum resources and reserves are determined for each petroleum reservoir according to the principle of extrapolation in accordance with specific geological conditions specified in Appendix II attached to this Circular.

2. The determination of the classification and distribution boundaries of petroleum reservoirs is identified on the basis of specific documents and bases. Where similar methods are applied, the executor must have the originated data and explain the possibility of using such data for the field or reservoir to be calculated in order to confirm the correctness of the selection of methods and calculation parameters.

 

Chapter III

ASSESSMENT OF PETROLEUM RESOURCES AND RESERVES

 

Article 7. Methods for assessment of petroleum resources and reserves

1. Petroleum reservoirs and seams shall be subject to petroleum resource and reserve assessment.

2. Petroleum resources and reserves are calculated by volumetric method (usually, according to 3D geological simulation models, reserve density, or similar), field hydrodynamics (material balance and exploitation simulation) and other methods depending on the available documents. In which:

a) The applicable methods include: Normal volume for all cases; 3D geological simulation models for developed and developing fields; material balance for fields that are exploited;

b) Other methods depending on specific conditions, but when applied, arguments are required.

3. Results obtained by such methods must be analyzed and compared.

4. Regarding the case of updating petroleum resources and reserves, calculated results must be compared with previous results and reasons for changes must be analyzed.

5. Petroleum resources and reserves and their components must be calculated separately for each type of product for each reservoir, seam, and type of reservoir rock and the ability to include the objects that have their reserves calculated into exploitation must be assessed.

6. Parameters for calculation of petroleum resources and reserves must follow a unified system of units. The figures of petroleum resources and reserves must be presented in the International System of Units in accordance with the Law on Measurement and refer to international petroleum industry practices.

Article 8. Calculation of petroleum resources and reserves

Based on the classification specified in Article 5 of this Circular, petroleum resources and reserves shall be calculated as follows:

1. Discovered petroleum resources

a) Petroleum initial in place and petroleum reserves are calculated by the executor for the respective levels (P1, P2, P3). Methods for calculation of petroleum initial in place and petroleum reserves are prescribed in Appendix II attached to this Circular;

b) Petroleum potential is also calculated by the executor for the respective levels (C1, C2, C3) with values of petroleum initial in place and corresponding potential recovery;

c) Petroleum reserves of the field are updated in the outline development plan (ODP), field development plan (FDP) and the adjusted field development plan report;

d) Petroleum reserves of the field are updated during the recovery work in the production decline phase of the field life with secondary and tertiary exploitation options such as: Infill, full exploitation of additional seams and applying other measures to improve oil recovery coefficient (EOR).

2. The undiscovered petroleum resources are calculated or forecasted for the petroleum initial in place and the corresponding potential recovery (R1, R2), where the recovery coefficient is derived on the same principle on the basis of the price values of adjacent seams, field, areas, and basins.

 

Chapter IV

FORMULATION, APPROVAL, REGISTRATION AND UPDATING OF REPORTS ON PETROLEUM RESOURCES AND RESERVES

 

Article 9. Requirements for the formulation and updating of reports

1. For the developed group, the executor shall prepare and update the report to submit to the Vietnam Oil and Gas Group for approval, submit it to the Ministry of Industry and Trade and the Appraisal Council to appraise the report and submit it to the Prime Minister for consideration and approval. Contents of approval include the quantity of petroleum initial in place at level 2P (including P1 and P2) with 50% probability and recognize corresponding petroleum reserves as a basis for elaborating and updating the field development plan.

2. For the undeveloped group and undiscovered petroleum resource, the Vietnam Oil and Gas Group shall consider, recognize, assess and report annually to the Ministry of Industry and Trade to serve the management of resources and formulation of the strategy and plan on prospecting, exploration and assessment in future.

3. Details of the approval and recognition of petroleum resources and reserves are prescribed in Appendix IB attached to this Circular.

Article 10. Contents of a report

1. The executor must submit a full report and summary report.

2. Contents of a full report are prescribed in Appendix III attached to this Circular.

Article 11. Procedures for submission, appraisal and approval of reports

Procedures for submission, appraisal and approval of reports shall comply with Article 64 of the Government’s Decree No. 95/2015/ND-CP dated October 16, 2015, detailing and guiding a number of articles of the Petroleum Law.

Article 12. Registering and updating petroleum resources and reserves

1. For reports of fields approved by the Prime Minister, the Vietnam Oil and Gas Group shall monitor, synthesize the petroleum resources and reserves, update and register on an annual basis.

2. The executor shall update and correct the following information:

a) Petroleum resources and reserves during the process of additional exploration, assessment and exploitation;

b) Petroleum reserves in the process of preparing the outline development plan (ODP), field development plan (FDP) and the adjusted field development plan report.

3. Time to update the report is 03 (three) years from the date of first commercial exploitation of oil and gas flow and then every 05 (five) years. In case of necessary, the executor shall update and submit the competent authority for consideration and approval.

4. In the update report, if the total amount of petroleum initial in place at 2P level of the field changes less than 15% (fifteen percent) compared with the most recent approval, the Vietnam Oil and Gas Group shall record and report to the Ministry of Industry and Trade and the Prime Minister. If the total amount of petroleum initial in place at 2P level of the field changes more than 15% (fifteen percent) compared with the most recent approval, the executor shall submit and request for re-approving the report according to Article 10 of this Circular.

5. For discovered petroleum resources in the undeveloped group and undiscovered petroleum resources, the Vietnam Oil and Gas Group shall make statistics, update and record to serve the management and orientation for the exploration in future.

 

Chapter V

IMPLEMENTATION PROVISIONS

 

Article 13. Special cases

During the performance of petroleum-related activities, if the application of classification and formulation of reports is different from provisions provided in this Circular, the executor shall provide grounds, dossiers and documents for the Vietnam Oil and Gas Group to submit the Ministry of Industry and Trade and Appraisal Council for consideration and decision-making within the competence.

Article 14. Transitional provisions

1. For reports approved before the effective date of this Circular, the executor and the State management agency shall continue complying with the approved reports.

2. Reports submitted the competent agency before the effective date of this Circular are not required to re-submit, and shall be appraised according to provisions promulgated before the effective date of this Circular.

Article 15. Effect and organization of implementation

1. This Circular takes effect on November 06, 2020. The Decision No. 38/2005/QD-BCN dated December 06, 2005 of the Minister of Industry, promulgating the Regulation on classification of petroleum resources and reserves and formulation of reports on petroleum reserves shall cease to be effective from the effective date of Circular.

2. In case the legal documents mentioned in this Circular are amended, supplemented or replaced, the newly ones shall prevail.

3. Any difficulties arising in the course of implementation of this Circular should be reported to the Ministry of Industry and Trade for consideration and settlement under competence./.

 

 

FOR THE MINISTER
THE DEPUTY MINISTER


 


Dang Hoang An


* All Appendices are not translated herein.

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