diÁrio da repÚblica decree 91-… · production plan. article 6 (review and updating of the...

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Tuesday, 10 April 2018 I Series No 46

DIÁRIO DA REPÚBLICA

OFFICIAL GAZETTE OF THE REPUBLIC OF ANGOLA

CONTENTS

President of the Republic

Presidential Decree 91/18: Establishes the rules and procedures for activities of well abandonment and dismantling of oil and gas installations in the national territory. — Repeals all legislation contrary to the provisions of this Statute.

PRESIDENT OF THE REPUBLIC

Presidential Decree 91/18 of 10 April

Whereas Law 10/04 of 12 November on Petroleum Activities establishes the safeguarding and protection of the environment, among other principles relating to economic and social policy for the Sector;

Taking into account that the activity of abandonment of wells and oil and gas installations, whether executed onshore or offshore, requires adjustments to the procedures across the Sector, and also the necessary compatibilisation of other activities relating to other natural resources exploited in those areas;

Furthermore, as it is imperative to establish standards and procedures which ensure with rigour, flexibility and objectivity the performance of the activity of abandonment of oil and gas wells and installations without economic and social constraints which are in conformity with the principles and fundamental standards enshrined in the said Law, for the purpose of guaranteeing environmental protection, among other things;

The President of the Republic decrees, in accordance with article 120(l) and article 125.3, both of the Constitution of the Republic of Angola, as follows:

CHAPTER I General Provisions

ARTICLE 1 (Object)

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This Statute establishes the rules and procedures for the activities of abandonment of wells and dismantling of oil and gas installations in the national territory.

ARTICLE 2 (Scope)

1. This Statute applies to the abandonment of wells and the dismantling of installations used in petroleum operations which are executed onshore and offshore, on the terms specified in Law 10/04 of 12 November, on Petroleum Activities.

2. This Statute does not apply to the dismantling of installations used for activities of crude oil refining, transport, logistics, distribution and marketing of petroleum products.

ARTICLE 3 (Definitions)

1. For the purposes of this Statute and unless otherwise expressly stated in the Law on Petroleum Activities, the words and expressions used herein shall have the following meanings, and definitions in the singular apply equally in the plural and vice versa:

a) "Well Abandonment", plugging for the cessation of activities in the well;

b) "Permanent Abandonment", permanent plugging for the cessation of activities in the well owing to mechanical or geological problems, or in connection with the work programme (end of the lifetime of the well, excessive gas production, economic limit or cessation of production);

c) "Temporary Abandonment", temporary plugging for the cessation of activities in the well owing to mechanical or geological problems, or in connection with the work programme (fulfilment of obligations in the exploitation period, reservoir studies and definition of the concept of development), taking account of the possibility of future development activities;

d) "Environment", set of physical, chemical and biological systems and their relationships and economic, social and cultural factors, with a direct or indirect effect on living beings and on the quality of life of human beings;

e) "Risk Analysis", assessment of potential dangers and the making of a quantitative or qualitative estimate of the risk related with an identified situation and a recognised threat;

f) "Drill Cuttings", pieces of the underground rock formation resulting from the drilling work;

g) "Abandonment Campaign", scheduled activity of well abandonment and/or dismantling of installations;

h) "Escrow Account", account used as a guarantee for financial obligations, subject to specific rules to be complied with fully by the parties;

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i) "Dismantling of installations", set of activities which comprises the suspension of operations and the permanent withdrawal and removal of installations, giving them appropriate final disposal and the environmental recovery of the areas in which these installations are situated;

j) "Companies Providing Services", any entity which engages in the supply of goods and services in the petroleum activity and which does not form part of the Entities under Contract;

k) "Entities under Contract", a national or foreign legal entity, which in the capacity of an investor enters into a contract with the National Concessionaire in the forms specified in article 14.3 of Law 10/04 of 12 November;

l) "Surface Structures", all production modules which are installed onshore or above sea level, including FPSOs, FSOs and export buoys;

m) "Subsea Structures", all submerged equipment which remains on the seabed, such as lines, manifolds, Christmas trees, production separators and other equipment;

n) "Environmental Impact", any change in the environment, particularly with effects on the air, land, water, biodiversity and on the health of persons and animals resulting from the petroleum activities;

o) "Installations", all structures or equipment installed for the purpose of the execution of petroleum operations;

p) "Lines", pipes for the conveyance of liquid and gaseous fluids; q) "NORM", naturally occurring radioactive material; r) "Operator", the entity which executes petroleum operations in a

particular petroleum concession; s) "Final Budget", the estimated amount after updates, which must be

sufficient to cover all the expenses inherent in the schedules of activities of the final abandonment plan;

t) "Involved Agencies", all entities with direct participation in the process of approval of the abandonment and dismantling plan, and also in waste treatment and storage;

u) "Petroleum", crude oil, natural gas and all other hydrocarbon substances which may be found and extracted or otherwise obtained and collected from the area of a petroleum concession;

v) "Abandonment Plan", a document containing the description of methodology for the abandonment of wells and dismantling of petroleum installations, including the costs associated with the execution of these activities;

w) "Pollution", dissemination in the environment of solid matter, fluids and gases, and also the emission of noise, in such a way and in quantities such as to adversely affect it, resulting from the petroleum activities;

x) "Reserves", quantities of petroleum deduced from previously known and estimated accumulations as being recoverable from a particular date, applied in development projects under specific technical and economic conditions;

y) "Casing", pipes installed in wells, the purpose of which is to isolate permeable intervals impregnated with fluids;

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z) "ROV", remotely operated vehicle; aa) "Plugging", operation of the installation of cement and mechanical

barriers in wells, for the purpose of isolating permeable intervals containing fluids under pressure;

bb) "Topside", upper part of the offshore installation and it includes personnel accommodation, production processing units, anchorage and stability systems, and energy generation and gas compression modules.

2. Terms whose definitions are not stated in these Regulations must be adapted to current national legislation and internationally recognised standards on the matter.

ARTICLE 4 (General principles)

This Statute is based on the following basic principles, among other principles enshrined in the Constitution of the Republic and in Law 10/04 of 12 November, on Petroleum Activities:

a) ensuring the end of the petroleum operations in accordance with the legally defined standards and procedures, to guarantee the integrity of the abandoned wells and dismantled installations, seeking environmental protection, taking future generations into consideration;

b) reinstatement of the environment and landscape recovery for the purpose of restoring the characteristics existing prior to the performance of the petroleum operations in a particular area;

c) guaranteeing safety to the local community for sailing, fishing, circulation and other uses, in the areas previously subjected to the petroleum operations;

d) ensuring and holding the Entities under Contract liable for the funding of the amount necessary for the activities of well abandonment and dismantling of the oil and gas installations in accordance with this Statute;

e) encouraging the development and use of new technologies for well abandonment and the dismantling of petroleum installations in Angola, bearing in mind environmental preservation, the reduction of costs and conformity with the accepted rules and practices of the Petroleum Industry;

f) ensuring the adequate removal, reuse, recycling and disposal of materials and equipment resulting from the dismantling of the installations;

g) ensuring the correct handling, treatment, transport and final disposal of all the waste produced, including NORM and drill cuttings.

CHAPTER II Abandonment Plan

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ARTICLE 5 (Provisional abandonment plan)

1. The Entities under Contract must submit to the National Concessionaire a provisional abandonment plan, including the environmental impact study.

2. The provisional abandonment plan must state the forecast of the funds necessary for its implementation, including a breakdown of the calculation of the cost of abandonment of the wells and dismantling of the installations, in accordance with Annex 3 to this Statute, of which it forms an integral part, with specific adjustments for each abandonment project.

3. The provisional abandonment plan must be drafted in accordance with the standard model described in Annex 2 to this Statute, of which it forms an integral part.

4. For new development areas, the provisional abandonment plan will be considered to be approved upon the approval of the general development and production plan.

ARTICLE 6 (Review and updating of the provisional abandonment plan)

1. For fields in production and future concessions, the provisional abandonment plan must be reviewed and updated every 3 (three) years and submitted to the National Concessionaire 90 (ninety) days prior to the beginning of the following calendar year.

2. If there is any matter which falls within the competence of other government agencies, the National Concessionaire must submit the provisional abandonment plan to the Supervisory Body for appropriate joint appraisal with the other agencies of the State.

3. Updates of the provisional abandonment plan submitted to the National Concessionaire must be in accordance with Annex 2 and contain an estimate of costs in accordance with Annex 3.

4. If there is any change in the project which causes a significant impact on the technical, financial and strategic aspects, it must be exceptionally reviewed and updated outside the established frequency, always based on the economic limit or cessation of production.

5. The National Concessionaire must review the provisional abandonment plan within 150 (one hundred and fifty) days from the initial date of submission by the Entities under Contract.

6. If the National Concessionaire recommends an amendment to the provisional abandonment plan, the Entities under Contract must submit the said amended plan to the National Concessionaire within a maximum time of 45 (forty-five) days.

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7. Once the amended provisional abandonment plan is received, the National Concessionaire must approve the plan within 90 (ninety) days.

8. In accordance with item 5 of this article, a provisional abandonment plan will be considered to be approved if no pronouncement is made by the National Concessionaire within the fixed time limit.

9. For the purposes of the provisions of the previous items, the National Concessionaire and the Operator must make available, from the Escrow Account, the necessary funds for the completion of the approved dismantling and abandonment of the installations, as required by Annex 5 to this Statute, which forms an integral part hereof.

ARTICLE 7 (Final abandonment plan)

1. The final abandonment plan must be the result of the successive reviews and updates of the provisional abandonment plan throughout the lifetime of the project.

2. Up to 24 (twenty-four) months before the economic limit or cessation of production, the Entities under Contract must submit the final abandonment plan to the National Concessionaire.

3. As defined in the previous point, the National Concessionaire and its associates, the Supervisory Body, and also other Involved Agencies must perform the following activities:

a) agree and finalise the terms of the final abandonment plan between the National Concessionaire and its associates within the first 4 (four) months;

b) engage and establish contacts between the National Concessionaire and the Involved Agencies within the 8 (eight) months following;

c) the National Concessionaire and its associates must submit to the Supervisory Body the final abandonment plan for final approval within the 12 (twelve) months following;

d) as soon as the final abandonment plan is submitted for approval by the Supervisory Body, the time limit for approval must comply with the provisions of article 27 of Decree 1/09, of 27 January, on Petroleum Operations.

4. The final abandonment plan must be drafted in accordance with the standard model (Annex 2) and must contain a description of the following items, among others:

a) any other relevant aspects for the choice of the abandonment option;

b) results of specific studies of fauna, hydrocarbons and heavy metals resulting from the activities of operation, according to comparative studies and/or any other studies which may be determined by the involved government agencies, according to the applicable law;

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c) equipment for emergency interventions in the case of incidents or accidents.

5. The final abandonment plan must be submitted as provided in figure 2.1 contained in Annex 1 to this Statute, of which it forms an integral part, and it must be the result of successive reviews and updates of the provisional abandonment plan throughout the concession period.

CHAPTER III Well Abandonment

ARTICLE 8 (Well abandonment)

1. Well abandonment must be performed in accordance with Annex 1.

2. Well abandonment must be permanent in both in the exploration and production period.

3. In accordance with the previous item, provided that it is duly justified by the Entities under Contract, temporary abandonments may be authorised for the purpose of conversion to productive wells, injection wells or for any other reason.

4. The abandonment of a well must guarantee the isolation of geological formations by means of cement plugs or appropriate alternatives, to prevent the leakage and migration of fluids.

5. The removal of equipment from wells must be preceded by diagnoses to assess the technical conditions.

6. Well abandonment must be differentiated according to the architecture and path of the well and the characteristics of the reservoirs.

7. A risk assessment must be carried out in relation to all wells which must be permanently abandoned as a consequence of radioactive sources which may have been left in the well.

8. It is the responsibility of the Entities under Contract to have regard to all aspects to prevent incidents or accidents, during or after the performance of the temporary or permanent abandonment.

9. If an incident or accident occurs during or after temporary or permanent abandonment and it is determined that this was due to negligence or malicious intent of the Entities under Contract, the responsibilities and costs associated to re-establish the permanent abandonment of wells will be attributed to these.

10. In the event of substitution of the Entities under Contract, the new Entity under Contract shall be responsible for the abandonment in accordance with the previous items.

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CHAPTER IV Dismantling of Installations

ARTICLE 9 (Dismantling of installations)

1. The dismantling of oil and gas installations may be total or partial, and the factors determining the dismantling option are stated in Annex 1.

2. In accordance with Annex 1, provided that they are duly justified by the Entities under Contract and authorised by the Supervisory Body, partial and/or early dismantling of installations may be carried out.

3. At the time of the presentation of the dismantling option by the Entities under Contract to the National Concessionaire, it must consider the following determining factors:

a) available technology; b) risk assessment; c) environmental impact study; d) control and audits; e) strategic aspects.

4. The Entities under Contract must include in the abandonment plan the schedule of the activities and costs relating to the collection, cleaning and appropriate treatment of equipment, and the transport and disposal of structures at sites in the national territory to be indicated by the National Concessionaire during the review and update of the provisional abandonment plan.

5. It is the responsibility of the Entities under Contract to have regard to all aspects to prevent incidents or accidents during or after the performance of the dismantling of installations.

6. The creation of artificial reefs on the seabed requires approval from the involved government agencies.

7. The National Concessionaire, upon request by the Entities under Contract, must submit the request for approval by the Supervisory Body, which must ensure that the aforesaid approval is obtained.

8. In the event of substitution of the Entities under Contract, the new Entity shall be responsible for the dismantling of installations in accordance with the previous items.

CHAPTER V Handover of Installations and Wells

ARTICLE 10 (Handover of installations and wells)

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1. The process of handover will be agreed between the Operator and the National Concessionaire, and this must include the activities of inspection and audit, up to 18 (eighteen) months from the end date of the Development Area.

2. The Entities under Contract must hand over the installations and wells in a good state of preservation in accordance with the provisions of the contracts with the National Concessionaire.

3. When the handover has been completed, the National Concessionaire must issue, within 30 (thirty) days, a certificate of exoneration from liability in accordance with Annex 4 to this Statute, of which it forms an integral part.

ARTICLE 11 (Naturally Occurring Radioactive Material — NORM)

1. The injection of NORM in the national territory is prohibited.

2. All handling of NORM must comply with the provisions of the applicable legislation.

ARTICLE 12 (Environmental and social impact study)

The Entities under Contract must comply with the technical requirements relating to environmental impact assessment specified in Annex 1 to this Statute, of which it forms an integral part, in accordance with article 27.1(c) of Decree 1/09 of 27 January, on Petroleum Operations, and also other applicable legislation.

CHAPTER VI Inspection and Audit

ARTICLE 13 (Inspection and general audit)

1. Prior to the execution of the activities of well abandonment and dismantling of installations specified in the abandonment plan, the Supervisory Body and other involved government agencies may carry out inspection visits or request that a specialist organisation carry out an audit of the installations on their behalf.

2. In the course of the activities of well abandonment and dismantling of installations specified in the abandonment plan, the Supervisory Agency and other involved government agencies must carry out inspection visits or request that a specialist organisation carry out the monitoring of the execution of the activities on their behalf.

3. At the end of the activities of well abandonment and dismantling of installations, the Supervisory Agency and other involved government agencies must carry out an inspection to ensure that these have been performed in accordance with the approved plan.

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4. In accordance with the previous item, the said entities may also request a specialist entity to perform the inspection on their behalf.

5. At the end of the activities of well abandonment and dismantling of installations, the Entities under Contract must perform the monitoring of the area to be reinstated, which must take place in accordance with the provisions of Annex 1.

6. The National Concessionaire and the Entities under Contract must present to the Supervisory Agency a monitoring report on the area, following the completion of monitoring.

7. After the monitoring period, the National Concessionaire and the Supervisory Agency must confirm the satisfactory completion of the abandonment plan and certify that all the involved government agencies have reviewed and approved the completion of the said plan.

8. The Supervisory Agency must issue a certificate of completion of the work and the National Concessionaire must issue a certificate of exoneration from liability, in accordance with Annex 4, and both certificates must be issued within a period not exceeding 60 (sixty) days.

9. In accordance with the previous item, exceptionally and whenever duly justified, the parties involved reserve the right to extend the work of completion and respective award of the certificate of completion of work to the Entities under Contract, by a period not exceeding 60 (sixty) days, after the end of the monitoring period.

CHAPTER VII Provisioning, Methodology and Estimate of Costs

ARTICLE 14 (Abandonment funds)

1. The Entities under Contract must provide the necessary funds for the execution of the activity of well abandonment and dismantling of installations, with an estimate of costs relating to the schedule of activities stated in the updated abandonment plan approved by the National Concessionaire.

2. The funds provided in accordance with the respective contracts must be deposited by the Entities under Contract in an Escrow Account, in accordance with the provisions of Annex 5 to this Statute, of which it forms an integral part.

3. The total abandonment fund for each Development Area or Concession Area must be provided by the Entities under Contract up to the economic limit or cessation of production.

4. In the case of substitution of the Entities the Contract before the end of the contract with the National Concessionaire, the new Entities under Contract shall be responsible for funding the abandonment costs, in accordance with the applicable mechanisms under their contracts with the National Concessionaire.

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5. In the case where the funds constituted are insufficient for the abandonment activity, the Entities under Contract must provide the necessary funds for the execution of the abandonment work, on the basis of their participatory interests, provided that these are recoverable, and the National Concessionaire shall be exempt from any liability in relation to the necessary funding.

6. In accordance with the previous item, if the costs cannot be recovered, the National Concessionaire and the Entities under Contract must agree on the method for the recovery or deduction of the said costs, as provided in the contract entered into with the National Concessionaire.

7. In the case of surplus abandonment funds, any remaining balance in the Escrow Account, plus any funds deposited in accordance with article 17 of this Statute, must be sent to the National Concessionaire, following deduction of all the tax charges provided by law.

8. The provision of abandonment funds in contracts with the National Concessionaire existing prior to the date of entry into force of this Statute must be performed in accordance with the said contracts.

9. The provision of abandonment funds for new Development Areas or new Concession Areas, in existing concessions, must commence in the interval between the commencement of commercial production up to 50% of the declared recoverable reserves, in accordance with the terms to be agreed between the National Concessionaire and the Entities under Contract.

10. In accordance with the previous item, if the National Concessionaire and the Entities under Contract cannot reach an agreement on the reserves for the determination of the commencement of the provision of abandonment funds, the method to be adopted must be the certification of reserves by an independent entity chosen by the National Concessionaire within the period for approval of Provisional Abandonment Plan.

11. In the case of contracts with the National Concessionaire entered into after the date of entry into force of this Statute, the provision of abandonment funds must commence at the beginning of commercial production.

12. If the National Concessionaire and the Entities under Contract decide to invest the funds provided, all the interest, capital gains or returns on the said investment must be recorded in the accounts as part of the provision of abandonment and deposited in the respective Escrow Account.

13. The escrow agent must comply, at all times, with the minimum credit rating requirements defined in Annex 5.

14. Investment guarantee funds must also comply with the minimum requirements stated in the investment principles, as provided in Annex 5.

15. In the event of the substitution of any Entity under Contract before the end of the contract with the National Concessionaire, the new entity shall be liable for its

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share of funding the abandonment costs, in accordance with the applicable mechanisms under the contracts with the National Concessionaire.

ARTICLE 15 (Abandonment funds in accounts other than escrow accounts)

1. Any abandonment funds deposited by Operators in an account other than an Escrow Account prior to the publication of this Statute must be transferred by the National Concessionaire to an Escrow Account.

2. The said Escrow Account must be established by the Operator and by the National Concessionaire in accordance with Annex 5 to this Statute, and for this purpose the funds must be transferred within 90 (ninety) days from the date of opening of the Escrow Account.

3. In the case of abandonment funds already deposited in bank accounts in Angola other than the Escrow Account, they must be transferred to Escrow Accounts established in Angola.

CHAPTER VIII Final Provisions

ARTICLE 16 (Coverage)

This Statute applies to all petroleum concessions from the tax year following its entry into effect.

ARTICLE 17 (Repeal)

All legislation contrary to the provisions of this Statute is repealed.

ARTICLE 18 (Doubts and lacunae)

Any doubts and lacunae arising in the interpretation and enforcement of this Presidential Decree will be resolved by the President of the Republic.

ARTICLE 19 (Entry into force)

This Statute will come into force on its publication date.

Considered at the Council of Ministers at Luanda on 28 February 2018.

To be published.

Luanda, 26 March 2018.

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The President of the Republic, JOÃO MANUEL GONÇALVES LOURENÇO.

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ANNEX 1 Technical Directives

Control of changes

Revision Description

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0.1

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History of Revisions

Responsibility

Revision Prepared by:

Name Reviewed by:

Name Approved by:

Name

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Date: Date: Date:

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Date: Date: Date:

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Date: Date: Date:

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Date: Date: Date:

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Date: Date: Date:

1. Introduction

The Oil and Gas Industry has made efforts with regard to well abandonment and the dismantling of installations with particular regard to environmental issues and forecasting the costs involved.

An issue which has been dominant is the necessary funding for the decommissioning and abandonment of installations and oil and gas production wells, so that at the end of their lifetime expenses of that nature are not attributed to entities other than the Entities under Contract.

The aim of this document is to establish guidelines in order that it may be possible to proceed adequately with the decommissioning of installations and abandonment of onshore and offshore oil wells in the Republic of Angola.

In view of the non-existence of standards and procedures for the activities of well abandonment and decommissioning of petroleum installations, operators proceed in accordance with the policies of their companies and/or countries.

In order to make these activities uniform in Angola, operators need a planning guide with requirements for the operations of decommissioning and abandonment focused on the specific features of the industry in the country.

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2. Plan and objective

A well-structured plan for the dismantling of installations and abandonment of oil and gas production wells is an essential tool which must be developed at the beginning of the abandonment project, guaranteeing that the targets and objectives to be achieved in order to guarantee the safe and economic removal of these onshore/offshore production installations are clearly defined. Planning makes it possible to prepare abandonment projects the following objectives:

guide Operators on the standards and procedures to be complied with during the activity of abandonment of a petroleum project;

define the strategy, policy, philosophy, targets and objectives for the abandonment programme;

identify the applicable legislation; identify potential environmental issues, risks, safety and other issues which

must be resolved; identify cost factors; interact/discuss with the Ministerial Departments involved, potential

alternatives under analysis and their consequences; communicate to the company management the magnitude of the potential

problems which must be overcome;

The objective of this document is to guide operators regarding the standards and procedures to be followed at the time of the activity of abandonment of a petroleum project.

The Entities under Contract are required to present a provisional abandonment plan on the basis of criteria of production and/or reserves as established in the Production Contracts. The provisional abandonment plan will be perfected over time and will become the Final Abandonment Plan, which is a comprehensive document which may be used for the execution of the work. Both the partial and final abandonment plans are comprehensive documents which may be used to execute the work.

The typical content of those documents is summarised in Annex 2.

Figure 2-1: Development of the Abandonment Plan

[See figure in original]

[boxes at top] Preliminary Provisional Plan; Abandonment Plan; Updates to the Abandonment Plan; Final Abandonment Plan; COP/End of the Concession

[text in arrow] Period (~10-15 years) (1); Update every 3 years (2), (3); Period (2 years)

Strategic Feasible

Notes:

1) Estimate of time for guidance only as the actual time is based on factors such as: 1) criterion of production and/or reserves defined in the Production Contracts, and/or 2) scale and complexity of the scope of dismantling and abandonment.

2) Any modifications relating to the intention of abandoning the field, partially or permanently, must be included in the subsequent updates of three years submitted by the Contractor Group. Both the Final and Partial Abandonment Plans must be feasible.

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3) The Provisional Abandonment Plan will be updated every three (3) years if within 10 years from the COP; if the Plan is required at a time beyond 10 years from the COP, the updates may be extended to a maximum frequency of five (5) years. The updates of the Abandonment Plans may be made with greater regularity, in particular on a date nearer the actual performance of the work, if the Operator determines that this is required by the circumstances (e.g. changes to the scope, market conditions etc.).

3. General Principles of Dismantling of Production Installations and Well Abandonment

The dismantling of petroleum installations generally occurs after the completion of the oil and gas production operations; a set of activities with the objective of permanent well abandonment, removal and transport of inoperative petroleum production installations, used during production operations, to another site or keeping them at the site. A situation may arise in which a specific field or specific equipment within a field presents safety and/or environmental problems or ceases to be economically viable for the Entities under Contract to continue to operate, which requires the performance of abandonment operations while petroleum operations continue in other wells or fields within the Development Area.

3.1. Well abandonment

The activity of abandonment consists of isolating the appropriate geological formations by means of barriers which guarantee the integrity of the well, preventing leakage of liquid or gas.

The removal of the structure of wells (casings, completion, wellheads) must be dealt with in accordance with current environmental regulations. The objective of permanent abandonment of wells is to prevent the spillage of hydrocarbons into the environment and contamination of drinking water. The abandonment of wells is related with the isolation of rock formations which have potential for drainage and is achieved by restoring adequate cap rock by means of fitting P&A (Plugging and Abandonment) barriers. P&A barriers must be placed adjacent to the adequate cap rock and a total lateral covering (rock to rock) must be placed in the whole of the well. The P&A barrier must be at a depth with a fracture gradient exceeding the highest forecast future pressure of the intervals being abandoned. The material, number, position, length and placing of the P&A barriers and the appropriate technology (e.g. drill or selection of tools) must be based on an assessment of the condition of the well, formation fluids, pressures, strength of the formation, potential flows, sustainability of the potential flow and environmental impact. P&A barriers (well and ring) must be verified (for example, pressure tested, marked, logged or other procedure, as appropriate for the specific element of the barrier in question).

Well abandonment is not strictly connected with the end of the lifetime or the economic limit of the field, and there is a possibility that it may be performed in the initial exploration or development phase. Well abandonment may be temporary or permanent.

3.1.1 Permanent abandonment

This consists of permanent plugging for the cessation of activities in the well arising from the work programme or due to mechanical or geological problems (end of

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the lifetime of the well, excessive gas production, economic limit, end of the concession licence).

Figure 3-1: Principles of a P&A Barrier

CASED HOLE


[left hand side, from top to bottom] Surface plugging > 10 m; Single plugging (for isolation of an aquifer) >30 m; Double plugging (isolation of hydrocarbons >60 m (or 2 x >30 m); Existing barrier through the cap rock; Single plugging >30 m; Sufficiently deep barrier to prevent bypass by fracturing of rock/schist.

[right hand side, from top to bottom] Base to prevent the cement sinking (for example: obstruction plug or pill consisting of a high viscosity fluid); Confirm existence and effectiveness (for example: pressure test or contact); The abandonment scheme must consider the reloading/estimated pressurisation of the reservoir.

Figure 3-1: Principles of a P&A Barrier

OPEN HOLE


[left hand side, from top to bottom] Surface plugging > 10 m; Single plugging (for isolation of an aquifer) >30 m; Double plugging (isolation of hydrocarbons >60 m (or 2 x >30 m); Existing barrier through the cap rock; Single plugging >30 m; Base to prevent the cement sinking (for example: obstruction plug or pill consisting of a high viscosity fluid).

[right hand side, from top to bottom] Confirm existence and effectiveness (for example: pressure test or contact); The isolation plug, in the case of an open hole, must be extended inside the casing, permitting the pressure test.

Entities under Contract also have to provide the isolation of aquifers and formations of economic or public interest, by means of the installation of permanent barriers. Figure 3-1 illustrates the principles of permanent barriers.

With permanent abandonment, the Entities under Contract will isolate from the surface, from the seabed or from any zone of potable water, formations with a potential for flow, installing a minimum of 2 (two) permanent barriers. Additionally, when the cross flow is considered to be unacceptable, each formation with a potential for flow must be isolated from the other by at least 1 (one) permanent barrier.

In relation to formations with potential for fracturing of the footing of the final casing or of any formation above this, the Entities under Contract must place a minimum of 2 (two) permanent barriers between the top of this formation and the footing of the final casing or the base of the formation at risk of fracturing. These must be installed in order to prevent spillage into the external environment of the fluids from the deposits or intervals with a potential flow of hydrocarbons.

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Two permanent abandonment barriers may be joined into a single combined barrier, provided that it is as effective and solid as both barriers. In this case, a combined annular barrier must also be checked.

The cement plugs must be installed on an appropriate base (for example, mechanical plug for obstructing the well (bridge plug), viscous reactive pill), to prevent deterioration of the cement.

A surface plug must also be installed at the least deep end of the casing if the wellhead is removed and the rings contain oily fluids.

The Entities under Contract must position permanent barriers adjacent to the verified annular cement (or collapsed schist/verified salt), and through a natural seal to the zone to be isolated. Barriers must also be placed at sufficient depth to have a fracture gradient which exceeds the forecast highest future pressure of the intervals to be abandoned.

The positioning of barriers must be according to the geometry of the well, the pressure of the formation, the strength of the rocks and the hydrostatic gradient. According to the characteristics of the reservoirs, a combination of barriers will be permitted, i.e. to elect a single barrier to isolate two different production or injection zones.

Figure 3-2


[column 1, from top to bottom] Double barrier solution; Secondary barrier for Zone B; Primary barrier for Zone B and secondary barrier for Zone A; Zone B; Primary barrier for Zone A; Zone A.

[column 2, from top to bottom] Combination barrier solution; Combination barrier for Zone A and B; Zone B; Zone A.

[column 3, from top to bottom] Insufficient fracture strength; Barrier solution; Secondary barrier for Zone A; Primary barrier for Zone A; Zone A.

[column 4, from top to bottom] Additional permanent barrier somewhere inside the casing tube necessary to seal completely the section of the unlined well; Combination barrier solution; Single barrier (of the combination) for Zone A; Zone A.

Collapsed schist, salt or stabilised baryte may be accepted as part of a barrier instead of cement, provided that they have been qualified (e.g. logging or hydraulic test).

The Entities under Contract must assess and mitigate the risks of compacting or sedimentation on the integrity of permanent barriers.

In highly deviated (> 60 degrees) drill sections, the planned length of the P&A barrier must be of a such a length as to ensure satisfactory isolation and not to compromise the final vertical density of the installed barriers. It may be necessary to

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carry out engineering work to verify that the highly deviated cement plugs are not damaged by the pipe through the highest lateral point of the well or ring (for example, due to the presence of water in the cement), and carry out repairs if necessary.

The permanent barrier may only be positioned inside the liner hanger if this is cemented outside the annular space along its whole length.

It will be permitted to apply T shaped cement plugs above the liner hanger or to use an appropriate base below the cement plug applied above the lining.

Figure 3-3


The Entities under Contract will have to draft and update documentation relating to the well handover.

One of the generic procedures for plugging and abandoning wells may be the following:

1. Wells must be "dead" by resorting to injection of seawater, brine or other fluids to displace the hydrocarbons.

2. Removal of tubing. If removal of the tubing is not achieved, cement must be pumped to seal the space between the tubing and the production casing. The cement barriers in the outer ring must be confirmed to be in place by testing and/or primary cement log in this case, to confirm the totally lateral P&A barriers.

3. If necessary, execute a cement tightening in the whole formation using a drill tube, reel or by means of tubing.

4. Confirmation that the appropriate annular cement is installed at a depth at which permanent barriers must be installed (e.g. by means of primary cement logs, executing the log of circumferential connection, performing a communication test). Note that this may require the strings of the internal casing to be removed by means of cutting and pulling, milling of the section etc. If appropriate, define and test a retention device of the cement plug within the casing to prevent the cement from degrading.

5. Pump a cement plug within the casing.

6. Test the cement plugs by means of a weight test, typically at 10,000 pounds, if a drilling tube is being used.

7. Test the pressure of the cement plugs, typically at a minimum of 500 psi above the emptying pressure of the formation below the barrier, for 15 minutes. Secure and recover the intermediate wrappings 90 m below the mud line (if the wellhead is removed).

8. Secure and recover the casing to the surface a minimum of 10 metres below the mud line (if the wellhead is removed).

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9. Pump 10 metres of the surface cement plug (if the wellhead is removed).

10. Perform a comparative assessment if it is not necessary to remove the subsea wellhead at depths of water less than or equal to 400 metres.

11. If the wellhead is not removed, install an anticorrosion cover.

12. Perform a survey of the area with an ROV, drones or other available technology with approval from the Concessionaire.

3.1.2 Temporary Abandonment

This consists of temporary plugging for the closure of well activities owing to mechanical or geological problems, or as a function of the work programme (fulfilment of obligations of the exploration period, reservoir studies and definition of the concept of development), aligned with subsequent development activities.

For any temporarily abandoned well, a monitoring programme must be established on the basis of a risk assessment.

The duration of the temporary abandonment must not exceed 5 3 years, unless a reasoned report is submitted to and approved by the Concessionaire to justify a longer period of time.

Adopt procedures to physically isolate access to the interior of the wells on the surface of the seabed to prevent situations and conditions which may cause incidents, without prejudice to other abandonment procedures. Draft and keep up to date the documentation relating to well handover for the next stage of its life cycle.

3.1.3 Characteristics of Wells for Abandonment and Placing of Barriers

The characterisation of wells for abandonment must be made according to the architecture (casing design), type of finish and characteristics of the formation, which will make it possible to group them for the better implementation of the abandonment procedures with a view to the installation of barriers at appropriate locations and the optimisation of time and costs.

Figure 3-4

[See figure in the original]

[horizontal axis caption] Pressure

[vertical axis caption] Depth

Pores Fracture

3.1.3.1 According to the casing

Wells may be designed with a casing in the reservoir (cased hole) and without a casing in the reservoir (open hole).

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According to their finish, wells may be defined as SAS (stand-alone screens), OHGP (open hole gravel pack), CHGP (cased hole gravel pack), ESS (expandable screens), monobore and others.

3.1.3.2 According to the characteristics of the reservoir

The production wells to be abandoned must have a minimum of 2 (two) P&A barriers above the zone of potential flow of hydrocarbons.

3.1.3.2.1 Open Holes in the Reservoir Zone

Wells with this architecture must be abandoned with a minimum of 2 (two) P&A barriers above the zone of potential flow of hydrocarbons. The primary well barrier may be a plug of uncased cement, provide that the second plug is installed inside the casing.

The contracted Entities under Contract must isolate the formations with potential for cross flow of fluids between the formations.

3.1.3.3 Abandonment according to the type of finish

In general, control or injection cables must be removed from intervals in which permanent barriers are installed. The multiple cutting of cables which leaves many intervals without cables in the barrier is also acceptable. Leaving uninterrupted cables within the barrier requires an analysis of the degradation of the barrier system in the long term and a documented risk analysis.

Figure 3-5:

[See figure in the original]

3.1.3.4 Abandonment of radioactive sources

In the case of retraction or BHA rupture with negative results at the fishing level, the atomic energy regulatory authority must be notified immediately for the obtainment of the proper authorisations.

The part of the BHA with the tool that contains nuclear sources must be cemented on site where this is technically possible (preferably using coloured cement).

3.1.4 Construction and integrity of barriers in well abandonment

For the construction of permanent barriers, the Entities under Contract must use materials with the following characteristics:

a) impermeability to fluids; b) isolation properties that do not deteriorate with the passage of

time; c) resistance to the fluids of the formations (H2S, CO2 and

hydrocarbons); d) adequate mechanical properties to accommodate the loads to which

they will be subjected; e) they do not suffer contraction which compromises their integrity;

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f) adherent to the casings and formations around them.

P&A barriers must be tested to guarantee well integrity. The hydrostatic pressure test must be carried out free of obstructions which may possibly be detrimental to their functionality. The pressure exerted in the test, during 15 minutes, must not be, in general, lower than the test pressure of the casing conducted prior to the commencement of work in the well. The position of the top of the cement plug must be verified by tagging (or in other ways).

Individual well abandonment barriers must have a minimum length of 30 m (100 feet). Joint well abandonment barriers must have a minimum length of 60 m (200 feet). If the cap rock in the zone to be isolated is less than 30 m, the cement plug must be placed along the total height of the cap rock.

In order to reach the necessary length of the barriers, adjustments must be made to the volumes of cement pumped, allowing for uncertainty during placing. It may be necessary to place up to 150 m (500 feet) of cement in order to achieve 30 m of good cement. In the same way, it may be necessary to place 250 m (800 feet) in order to achieve 60 m of good cement.

3.1.5 Risk analysis

During the activity of well abandonment and dismantling of installations, the Entities under Contract have to act in order to guarantee the safety of the operations and adopt the necessary measures to prevent and minimise the occurrence of potential dangers and/or damage; in this case, every effort must be made in advance to identify these and reduce them in a timely and controlled manner, keeping them within acceptable safety limits.

The Entities under Contract must draft, document and implement the procedures for managing the risks associated with well integrity management.

Identify the dangers jointly and analyse the associated risks, in the different stages of the lifetime of the well, using recognised methods, duly documenting the results.

Identify the necessary actions and make recommendations for the mitigation and reduction of risks to an acceptable level.

The Entities under Contract must prepare and present to the National Concessionaire a risk analysis report, including as a minimum the following elements:

a) identification of the company which carried out the analysis; b) objective and scope of the study; c) description of the well or sets of wells which have undergone

analysis; d) method used in the risk analysis; e) premises of the study; f) identification of the dangers; g) forms of detection of dangers; h) identification of accident scenarios;

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i) classification of risks; j) existing safeguards, control measures and mitigation measures; k) recommendations and conclusions.

The risk analysis report must be submitted to the Ministry with supervisory responsibility for information.

3.1.6. Well integrity

In all abandonment situations, Entities under Contract are required to guarantee the integrity of the well throughout its life cycle.

For the purposes of the previous paragraph, the Entities under Contract must draft, document and implement acceptance criteria, plans and procedures for inspection, verification, maintenance and monitoring of the integrity of the wells in accordance with internationally accepted best practice in the industry.

Guarantee that the barriers and other systems, and also critical equipment, are functional, appropriate and available for use.

Perform the verification of the barriers by means of a test.

Guarantee that the cutting equipment is able to cut tubular parts or cables lowered into the well.

Make available information relating to the cutting capacity.

Make available contingency procedures jointly with the mitigation of risks in the case of passage of elements which cannot be sheared by the cutting elements.

Guarantee the replacement of cutting elements for subsea wells which do not have the safety margin of a riser.

Guarantee that the plans and procedures for inspection, verification, monitoring and maintenance related with the management of well integrity present as a minimum:

a) clear instructions for the conduct of activities in safety; b) procedure based on risk; c) conformity with the manufacturer's manual; d) they comply with the best industry practices, standards and

procedures established by the Entities under Contract.

Establish, implement and document preventive and corrective actions to deal with discrepancies (deviations) identified during the execution of the plans and procedures.

Guarantee that the treatment of identified discrepancies (deviations) is based on risk, establishing the minimum periods and defining the persons responsible for the implementation of actions.

3.1.7 Procedures

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It is the responsibility of the Entities under Contract to guarantee that all the activities involved in the management of well integrity throughout the life cycle are covered by procedures which comply with the legal requirements and they follow best industry practice.

Draft, document and implement clear and concise procedures, with specific instructions for the safe execution of the activities involved in well integrity management, considering the operational specificity and complexity.

Have manuals, standards and specific procedures of well control for the phases of construction, intervention and abandonment.

Have manuals, standard or specific procedures for the management of the pressure of annular rings for the production phase.

Develop a methodology which defines criteria of criticality of the well together with additional control measures to be established in these cases.

Have manuals, standards or procedures of communication which permit interruption of the activities when a loss of integrity of elements of the barriers and/or control of the well is detected.

Guarantee that the workforce involved in the management of the well integrity is appropriately trained in the procedures and their revisions.

Prepare a methodology in order that the supervisors and managers of the workforce can assess compliance with the critical procedures.

Prepare, document and implement corrective and preventive measures if inadequate performance is found.

3.1.8 Well data

In order to guarantee the reliability and currency of the information, the Entities under Contract must update the identification documents of the well, which must include the following information, without being limited to this:

a) general details of the well (field, installation, nomenclature); b) criticality of the well; c) forecast lifetime; d) up to date schematic drawing of the well; e) schematic drawing or diagram of the barriers; f) description and function of the barriers; g) dimensions, depths, top and base (TVD and MD) of all tubular

elements and all barriers; h) mechanical properties of the rocks where the barriers are installed; i) manufacturer and model of the equipment acting as a barrier; j) manner of actuation (manual/automatic) and operation

(open/closed) of the valves; k) state of integrity of each barrier;

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l) procedure for verification of the integrity of the barriers during their life cycle;

m) acceptance criteria of the barrier; n) date of last verification, results and evaluation of the barriers; o) top and base of the reservoirs and formations with potential for flow

and their respective pressures, temperatures and fluid data; p) maximum and/or minimum admissible pressure on each barrier; q) the highest pressure which the casing ring can withstand, measured

at the wellhead; r) identification of the primary barrier and the secondary barrier; s) log of events or important incidents which may compromise integrity

during the life cycle of the well; t) field for observations and comments (anomalies, exceptions etc.).

3.2 Dismantling of installations

The Contractor Group or the entity responsible for the abandonment and dismantling of onshore and/or offshore production fields must be legally and contractually formalised, with technical experience to propose procedures, identify the available technology which may be used to carry out the work, incorporate conclusions of the Environmental Impact Study of the block, field or part of this, address operational factors which affect production and safe operation, such as: operational issues, mechanical conditions, considerations of integrity of structures and assets, an estimate of the duration of the activities and costs, according to the plan and final budget of abandonment.

3.2.1.1 Onshore installations

During the process of dismantling of onshore installations, the contracted Entities under Contract must comply with the laws, regulations, procedures and other necessary measures to prevent and reduce to the maximum contamination of the terrestrial environment.

Prior to the decommissioning and dismantling of onshore installations, the following aspects, among others, must be considered:

Carry out a population survey of the area; Evaluate the state of the lines and the impact of their removal, if they are

located in residential zones and nature reserves.

The Entities under Contract or the entity responsible for abandonment must present in detail the method of cleaning of the lines, the type of fluid used for cleaning, and the manner of storage or elimination of these by-products (chemical, toxic or radioactive) which may be generated during the production activity.

3.2.1.2 Offshore installations

Installations existing in shallow waters are platforms whose topsides are supported by steel piled jackets fixed to the seabed. These platforms serve as wellhead, production or injection installations and are all fabricated in steel.

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Installations existing in deep waters are of the CTP (compliant piled tower), TLP (tension leg platform), FPSO, FSO, or FPU types, CALM buoys, accommodation vessels, subsea pumps, subsea separators and other subsea systems fabricated in steel and cement.

3.2.2 Dismantling and abandonment of onshore installations

The dismantling and abandonment of onshore installations may affect the local population and the surrounding environment. Table 3-1 summarises the disposal of the components of onshore installations in order to clearly indicate that components:

will be removed, irrespective of their location; may be totally or partially removed or abandoned on site, depending on

the results of a comparative analysis which determines the most viable option;

may safely remain on site after being cleaned.

For installations requiring a comparative assessment to determine the most viable option, indicated as the "Best Option" in Table 3.1, a study will have to be carried out of the population in the area in order to determine whether the installations to be abandoned are situated within a nature reserve or near dwellings or community buildings where people congregate, such as churches or schools. Additional studies may be carried out, such as those relating to the technical feasibility of the dismantling or whether other users of the area need to use all or part of an installation (for example, roads, buildings, electricity lines or foundations). The complete studies will be incorporated into a comparative assessment which will assess the overall environmental and safety risk, the technical challenges, economic factors and impacts on other users of the area. The Entities under Contract must determine the most feasible option by means of a comparative assessment, which will be submitted for approval in the abandonment plan.

Prior to the activities of dismantling or abandonment, the Entities under Contract must present, in detail, the method of cleaning of the installations, the type of fluids used in the cleaning, the products derived from the activity of cleaning and the form of storage and disposal of these derivative products which may have been generated.

3.2.2.1 Onshore piping

Onshore installations use tubing within the area of operation to transfer oil, gas or other liquids from wells to the installation or from one installation to another. Table 3.1 summarises the disposal of onshore piping. Surface tubing will be removed after cleaning. Pipes buried at a depth of at least 0.9 metres or more may be abandoned on site safely after being disconnected from all sources of hydrocarbons and after the pipes have been freed from hydrocarbons by purification or cleaning.

Table 3-1: Disposal of Onshore Installations

Component of the Installation

Use on Land

Inside Nature Reserves

< 800 m(1) from Dwellings or

Community Buildings Other Locations

Storage tanks Remove Remove Remove

Surface equipment (e.g. separators, generators, pumps, motors) Remove Remove Remove

Surface tubing Remove Remove Remove

Underground tubing (<0.9 m below the surface)(2) Best Option(3) Best Option(3) Best Option(3)

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Underground tubing (>0.9 m below the surface)(2) Best Option(3) Keep Keep

Buildings Best Option(3, 4) Best Option(3, 4) Best Option(3, 4)

Infrastructures inside installations (for example, roads, galleries, land work, electricity transmission lines, services)

Best Option(3, 4) Best Option(3, 4) Best Option(3, 4)

Removal of Foundations and Underground Equipment (e.g. stakes, cement, cable supports, power supply cable, instrument cable)

Best Option(3, 4) Best Option(3, 4) Best Option(3, 4)

Water wells Best Option(3, 4) Best Option(3, 4) Best Option(3, 4)

Notes:

1. ASTM E1527 Phase 1 minimum distance from brownfields or voluntary cleaning. 2. Pipes buried at a depth of at least 0.9 metres may be safely abandoned on site after cleaning/purification. 3. The most viable option to be determined by the operator on the basis of a specific comparative assessment of each site.

4. Without prejudice to these requirements, the installations may be left wholly or partially at the site where they will have a new use (such as the recovery of live resources) or may be left without causing unjustified interference with other users, in accordance with Note 3.

3.2.3 Dismantling and Abandonment of Offshore Installations

The objective of the dismantling of offshore installations is to complete the necessary activities, according to Law, in environmental protection and users of the sea in the safest and most efficient manner.

Following the principles of the United Nations Convention on the Law of the Sea and the International Maritime Organization, all offshore installations (fixed platforms such as SPJs, CTPs, floating units such as TLPs, FSOs, FPUs, FPSOs, buoys etc.) used during the production process of oil fields must be wholly removed at the end of the lifetime of the fields, except when non-removal or partial removal is permitted in accordance with these directives. In the event that the dismantled installations contain NORM, the handling and disposal of these must be in accordance with the environmental laws of the Ministry of the Environment and the Regulations of the Involved Government Agencies.

The process of dismantling of offshore production systems consists of three practical phases:

The first phase consists of making the installations depressurised and free from hydrocarbons, performing the abandonment of the well, the removal of the conductors and/or risers, washing and cleaning of the processing systems and preparation of the components for operations of hoisting, when submerged, and removal;

The second phase involves the dismantling and removal of the installation and the associated components;

A third phase involves the restoration and monitoring of the site.

At the time of the dismantling of the offshore installations, Entities under Contract must comply with the laws, regulations, procedures and other necessary measures to prevent and reduce to the maximum the impact on the marine environment.

Establish the method and procedure for dismantling the installations, taking account of:

a) the age and current structural integrity of the platform; b) the location and depth; c) type of platform; d) the weight of the structures; e) climatic and oceanic variations; f) international and national laws and regulations; g) evaluation of costs;

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h) analysis of risk and complexity of the operations.

Determine that the selected method guarantees the performance of the activities in an efficient and safe manner, taking account of environmental conservation, both with respect to total removal, partial removal, topple in place, and leaving the structure in place for alternative use.

Have specific manuals, regulations and procedures for the implementation of the selected option.

Define the specifications and execute the activities in accordance with what is established.

Prepare, document and implement clear and concise procedures, with instructions for the safe execution from the personal and environmental point of view during the phase of the activities of dismantling of installations.

Guarantee that the workforce involved has adequate knowledge and procedures for the activities to be performed.

Hold the available environmental authorisations for the performance of dismantling.

Table 3-2 summarises the disposal of the components of offshore installations as better described in the following sections. There are 3 (three) basic options for installation components: removal, partial removal or keep. Determining which of the options is the most viable implies the assessment of various criteria. Whenever the "Best Option" is indicated in Table 3-2 the Entities under Contract must perform a comparative study using an acceptable process for the industry to determine the most viable option. The comparative study must evaluate the following 5 (five) criteria to determine the most viable option:

Safety; Environmental; Technical; Other Sea users; Economic.

Table 3-2 Disposal of Offshore Installations

Installation Component Water Depth

< 400 m > 400 m

Topsides Remove Remove

Floating Units (FPSO, TLP, FSO, FPU, CALM, etc.) Remove Remove

Oil offloading lines (OOLs), fluid transfer lines (FTLs), other connections between Floating Units

Remove Remove

Substructures (SPJ, SCPT, all others fixed to the sea bed) Total or partial removal(1, 2, 4) Total or partial removal(1, 2)

Subsea well head and production equipment Best Option(2) Best Option(2, 6)

Umbilicals including associated risers and structures, such as SCM, SDU, UTA, etc. Best Option(2) Best Option(2, 6)

Mooring systems for floating installations (wire & chain, tendons, suction piles etc.)

Best Option(3) Keep

Export pipes, field flow lines Best Option(3, 5, 8) Keep

Risers/riser components and associated structures with pipes/flow lines, such as F/PLET, F/PLEM, valve manifolds etc.

Best Option(7) Keep

Notes: 1. Partial removal is permitted as indicated in Annex 1 if it is determined to be the best option on the basis of the specific comparative assessment of the location (see Section 3.2.3). The options of reefs are applicable in both cases of total or partial removal. The directives of IMO Resolution A.672(16) establish the necessity of an unobstructed column of water of not less than 55 m above any partially removed installation or structure. 2. The operator will determine the most viable option on the basis of a specific comparative analysis of the site. 3. Establish the necessity that there is an unobstructed water column at a depth of under 55 m above any partially removed installation or structure. 4. In the case of fixed installations installed after 1 January 1998, in less than 400 m of water and weighing more than 4000 MT in air, excluding the

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deck and superstructure, they may be partially removed. Notwithstanding these requirements, the installations may be kept totally or partially at the site where they will have a new use (such as the recovery of a live resource) or may be left without causing unjustifiable interference with other users of the sea in accordance with Note 2. 5. The Entities under Contract will determine the most viable option for the correction of each crossing of the coast. A crossing of the coast is defined as the region in which a pipe transits from the sea to land. 6. In depths of water >400 m, the Entities under Contract may select an abandonment in situ or "Keep" as the Best Option, and they must present a comparative evaluation of the specific site. 7. For risers/riser components and structures only at <400 m (such as F/PLET, F/PLEM, valve manifolds etc.), the Entities under Contract must carry out a comparative assessment of the specific site in order to determine the Best Option. 8. In the case of export pipes and flow lines located in areas where trawling is not usually practised, and in areas where these lines are buried, partially buried or corroded, the Entities under Contract may select abandonment on site or "Keep" as the Best Option.

3.2.3.1 Dismantling of topsides

Topsides are defined as parts of all offshore installations above the water level in which equipment is installed and include staff accommodation, production processing units, anchoring and stability systems, in addition to energy generating and gas compression units and other equipment.

The topsides of all installations must be removed ashore in order to be recycled or disposed of on land.

The topside dismantling plan must be accompanied by an environmental impact study for the activities which describes the methods of cleaning lines, the type of fluid used for cleaning, the by-products resulting from the production activity and the environmental impact of the equipment to be abandoned on site. Processing and storage systems must be inspected to guarantee that no gas or oil remains in the systems prior to the commencement of the dismantling operations.

3.2.3.2 Dismantling of substructures

3.2.3.3

A substructure is defined as parts of all sea installations below the water level which structurally support the topsides and are typically fixed to the seabed. These include steel piled jackets (SPJ), compliant tower platforms (CTO), monopods/cofferdams, etc.

Substructures must be wholly or partially removed as shown in Table 3-2.

The option to be selected depends first on the relevant legislation and on factors to be considered in the selection of a method for the removal of each platform, and these include:

the age of the platform and current structural integrity; the location and depth of water; the configuration and type of platform; the weight of the installations to be lifted; climatic conditions; laws and regulations; costs; distance from the coast; complexity of the operations.

Various options for the removal of substructures in the marine environment may be considered:

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total removal with disposal on land; total removal with reefing at a site designated for reefing; partial removal; submersion in situ; leaving the structure at the site for alternative use; total removal.

Total removal of the platform is typically a process of installation in reverse. The main operations relating to total removal are cutting, hoisting, loading and disposal of the sections. The installation may be cut into one or more parts, depending on the size and capacity of the vessels involved in the operation.

This option, depending on the location, requires the removal of masses up to a sufficient depth below the seabed (approximately 5 metres) so as to eliminate any interference with other users of the site, such as fishermen and vessels.

The cutting methods typically considered for the removal of platforms include but are not limited to mechanical separation and separation by blasting.

The options of mechanical separation include abrasive water jets, sand cutters, diamond wire saws, carbon cutters, shears, saws and guillotines. This type of separation constitutes a large part of all the removal operations, but some of the methods can be considered to be more expensive and slow. Separation by blasting will depend on the volume of the materials used in the construction of the platform.

All the options must be assessed to determine the most efficient cutting method. Where explosives are used, the Entities under Contract must present a plan for their use, including measures for the protection of human and marine life in the proximity of the blasting.

After total removal, the area surrounding the removed platform must be wholly clear of the debris resulting from the installation and the operation of the field.

There may also occur an accumulation on the seabed of drilling waste arising from the drilling activity. This is drilling rubble which is deposited on the bed until after the end of production and it may contain oil-based or synthetic drilling fluids of the countless drilling activities. The Entities under Contract must collect samples of this drilling waste and develop a plan for its disposal on the basis of a comparative assessment of the specific site.

Another option for the subinstallations removed is their transport and disposal in areas designated for the creation of a reef, a process called "reefing".

Figure 3-6: Dismantling of Substructures


[from left to right] Removal and hoisting of modules; Transport of modules; Disposal of modules on land.

3.2.3.4 Partial Removal

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Partial removal is an option for installations with a weight exceeding 4,000 tons. The substructure may be partially removed, provided that it results in an unobstructed depth of 55 metres. The exact depth is illustrated in Table 3-2 and will depend on the legal requirements.

Another option would be to perform the reefing of the substructure at an approved site. However, there must be a benefit for the marine environment, principally if it is used together with programmes of artificial reefs owing to the fact that the part of the structure left at the site will provide a habitat for marine life.

Figure 3-7: Reefing at the Site of the Substructure


Cutting of the structure

3.2.3.5 Local Submersion

The abandonment of the substructure by submersion is quite similar to partial removal. It consists first of the removal of the topsides which may be reused or abandoned on the seabed or sunk with the structure.

Subsequently, it requires the submersion at the site of the whole of the substructure, observing the existence of a free water column in order not to interfere adversely with the activities of fishing and sailing.

The high degree of accuracy and control necessary for the procedure of submersion of the substructure to be safe increases the degree of complexity of this option.

Explosive charges or mechanical cutting may be used to section the critical members in a controlled sequence of cuts, allowing the jacket to be submerged at the site. At times it is necessary to use a tug in order to provide extra force for the submersion of the substructure to occur.

Figure 3-8: Reefing of Substructures by submersion at the site


3.2.3.6 Dismantling of Floating Installations

The Entities under Contract must dismantle floating installations in accordance with the provisions of Table 3-2. These installations include FPSOs, FSOs, FPUs, TLPs, export buoys and any interconnection lines (such as oil offloading lines (OOLs), fluid transfer lines (FTLs) etc.). The final disposal of the moorings associated with these installations is also identified in Table 3-2. The Entities under Contract must carry out a study of the implications of the abandonment of these structures owing to the fact that many of these serve as central processing installations. These installations are easy to decommission as they are floating units with mobile capacity. Consequently their main operational difficulties relating to dismantling are related with subsea systems.

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3.2.3.7 Dismantling of Subsea Production Equipment

Entities under Contract must assess the complexity of the subsea system to determine the appropriate method for the dismantling of subsea production equipment.

Subsea production equipment in this category is typically installed on the seabed and includes but is not limited to the following:

a) wellheads; b) Christmas trees; c) subsea separators; d) multiphase subsea pumps; e) production manifolds.

At the end of the useful life of production oil fields, subsea production equipment and associated structures must be dismantled and properly cleaned. Dismantling must take place at a time prior to the processing of the primary production installations in order to make it possible for the waste arising from the cleaning of the subsea equipment may be treated in these.

The cutting technologies to be used and the removal procedures must be previously approved by the National Concessionaire. An assessment must be made of the degree of corrosion, incrustation and burial of the subsea equipment to assess the degree of environmental impact. Marine incrustations must be removed from the installation while they are still in the sea, if this is technically possible, owing to the fact that the elimination of this material on land often presents other environmental implications.

In some cases, subsea equipment at a depth of less than 400 metres may be abandoned at the site owing to the conditions, such as a high level of embankment, which makes the operation of removal very difficult or even impossible. In these cases, the Operator must present the comparative assessment with technical support and environmental impact studies, if it considers that the partial removal or non-removal of the subsea structures is the only option with technical, economic, and environmental feasibility and safety, which must be approved by the Ministry with supervisory responsibility, by means of an opinion of the National Concessionaire and other involved Government Agencies.

For depths greater than 400 metres, subsea equipment may be abandoned at the site, having been previously washed, the lines filled with sea water and all the valves closed, following procedures defined by the company which is executing it and approved by the Ministry with supervisory responsibility, by means of an opinion of the National Concessionaire and other involved Government Agencies.

The option of removal or disconnection of the anodes may be evaluated according to the proportion of the remaining cathodic protection material in order to facilitate the process of degradation. If the removal of this is necessary, the company executing the work must present the duly justified removal plan to the National Concessionaire for approval. The Entities under Contract must:

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establish the technical and environmental procedures for the dismantling of the structures to be abandoned on the seabed;

present environmental studies, confirming that the recommended alternative will not damage the environment, or be an impediment to the use of the reinstated area by other users of the sea.

The disposal of this subsea production equipment on land is a possibility, however, very often it has other environmental implications.

An assessment must be made of the degree of corrosion, incrustation and subsidence of the subsea equipment in order to evaluate the degree of environmental impact if it is elected to remove them, marine encrustations must be removed from the installation while they are in the sea, where that is technically possible.

3.2.3.8 Dismantling of pipes/flowline and riser

It is the responsibility of the Entities under Contract to guarantee the use of the necessary means and equipment capable of performing the cleaning, dismantling and final disposal of export pipes, field flowlines with their risers and associated structures such as PLEMs, PLETs, FLEMs and FLETs, valve manifolds etc. Table 3-2 indicates the final disposal of these lines.

The final dismantling plan must include methods of washing and cleaning, elimination of fluids resulting from washing and cleaning, and any final corrective measures necessary to stabilise the lines.

Risers must be dismantled, cleaned and abandoned on the seabed, in accordance with the technical and environmental procedures previously approved by the National Concessionaire.

3.2.3.9 Umbilicals

As they are generally buried, umbilicals must be abandoned on the seabed after dismantling and being duly cleaned, preventing environmental impacts as far as possible. Table 3-2 indicates the final disposal of umbilicals.

The final dismantling plan must include methods of washing and cleaning, elimination of fluids resulting from washing and cleaning, and any final corrective measures necessary to stabilise the umbilicals.

4. Removal and Use of Substructures

All offshore material up to a depth of 400 metres may be wholly removed. The partial removal of substructures will require that the proposer demonstrate by means of a comparative assessment that this is the only viable option in technical, economic, environmental and safety terms, and prove that the recommended option will not cause any damage to the environment or prevent the use of the zone by other users of the sea (sailing, fishing, tourism or others).

4.1 Artificial Reefs

33

Dismantled subsea equipment may be utilised and used as installations for the formation of artificial reefs, and may be deposited in areas previously authorised by the Involved Government Agencies.

An application which has been considered for small jackets and large sea platforms is the concept of rigs-to-reef, installing the structure, partially or totally submerged on the seabed, in such a way as it acts as an artificial reef.

The Contractor Group must guarantee and prove to the National Concessionaire that the dismantled subsea equipment to be placed at the reefing site or left at the site is not susceptible of creating constraints of an environmental nature, and may be utilised and used as structures for the formation of artificial reefs.

Certify that the selected areas for the creation of artificial reefs are not marine protection zones.

5. Environmental Aspects

The dismantling and abandonment of production oil fields always entails an environmental risk owing to the nature of the equipment and the products resulting from these activities. Prior to the commencement of the activities of dismantling and abandonment, the types of chemical products, heavy metals, radioactive, toxic and other products which are hazardous to the health of the personnel involved and the environment in the zone of dismantling, storage or disposal must be identified and quantified by carrying out an Inventory of Hazardous Materials (IHM) or a comparable study.

The entity responsible for abandonment must present a waste management plan detailing the manner of treatment and storage or disposal of all resulting products and it must be in accordance with the provisions of Angolan legislation on oil production activities and the international principles covering abandonment.

Oil and gas processing and storage installations, depending on their exposure to production, may contain naturally occurring radioactive material (NORM), low specific activity (LSA) material, heavy metals and organic substances. Technical conditions must be created for the identification and treatment of these by-products in order to prevent or limit their impact on the whole of the system downstream of the disposal process and until final disposal.

For environmental impacts associated with onshore oil and gas production operations, potential soil, surface waters, underground waters and other impacts are resolved using risk-based scientific solution targets which safeguard the protection of human health and the environment.

5.1 Dangerous Waste

Owing to the fact that some installations are operating for a long period, the risk may exist that they contain hazardous waste, such as asbestos, mercury, low specific activity (LSA) materials and dyes, etc.

5.2 Other Considerations

34

The treatment, handling and storage of chemicals, radioactive materials and toxic products is not limited to the substances mentioned above, nor only to the methods indicated. All other substances susceptible of causing the same effects must be treated in accordance with current regulations and environmental laws.

5.3 Waste Management Options

Applications for the disposal of waste or other materials must demonstrate that due consideration has been given to the following hierarchy of waste management options, which implies an increasing order of environmental impact:

a) reuse; b) recycling off-site; c) destruction of hazardous components; d) treatment to reduce or remove hazardous constituents; e) elimination on land, in the air and in water.

An authorisation for the elimination of waste or other materials must be refused if the competent authority determines that there are adequate opportunities for reusing, recycling or treating waste without undue risks to human health or the environment or disproportionate costs. The practical availability of other means of elimination must be considered in the light of a comparative assessment of the risks involved in elimination and alternatives.

6. Post-abandonment Monitoring

Inspections will be carried out after abandonment. The scope and frequency of post-abandonment inspections in the sea (offshore) must be determined by the Entities under Contract but, as a minimum, they must be carried out twice (using an ROV, drones or other available technologies) within 15 months from the completion of the whole of the abandonment work. The first inspection must take place within 90 days from the completion of the abandonment work. The second inspection must take place when a minimum period of 12 months, but not more than 15 months, has elapsed from the completion of the abandonment work.

Any requirement for an additional inspection within the period set out above will be based on the stability, degradation and environmental impact of the materials remaining at the site.

_______

ANNEX 2 Abandonment Plans

Preamble

The Contractor Group/Operator shall be responsible for drafting Provisional, Partial and Final Abandonment Plans for the installations and wells in the Block or in the Concession Area, and for the Updates of those Abandonment Plans.

35

The Provisional Abandonment Plan (Technical Study) is a strategic document whose main focus is the prospect of Cessation of Production (COP) (as described by the exhaustion of the reservoir, economic aspects and issues related with the installations, associated with reduced/diminished production when compared with the initial expectation), operational and mechanical issues, integrity of the assets and structures, and the time interval/dates for the execution of the work. The Contractor Group/Operator may prepare a sketch of this plan, which is more appropriate for the scope of the work. A summary of the content is presented below:

Provisional Abandonment Plan

Prospect of COP and time interval/dates Review of COP in the light of existing development/estimated ultimate

recovery (EUR) and new opportunities Identification of range of dates for COP Overview of the installations Identification of the installations of Development Areas and development

phases (history of the field) Identification of common installations Scope of work (Installations + Plugging and Abandonment) Number/types of wells for Plugging and Abandonment Installations to be removed/kept Regulatory basis (i.e. in accordance with the directives of ACEPA, etc.) Expected comparative assessments for the support of the bases and time

for the assessments Participation Plan (SNL/interested parties) Forecast of communications, participation and commitments planned with

SNL Mapping of interested parties to identify other participations Calendar of Execution/Strategy/Fundamental Stages Calendar/strategy of Plugging and Abandonment — platform vs. subsea

wells Scheduling/strategy for the removal of installations Fundamental stages to be included — submission of the Final Abandonment

Plan, etc. Estimate of Cost (cf. Annex 3) Model initially submitted Degree of certainty Costs of Opportunities/Vulnerabilities (objective = efficiency/ scope of

lowest cost) Identification of issues which have a potential considerable impact on

costs, such as methods of design/execution of Plugging and Abandonment, removal of limits of topsides/availability of appropriate vessels, handling/elimination of NORM etc.

Fundamental Technical Issues/Challenges Intends — the removal of topsides (SPJs, FPSOs, TLPs, CALMs, CPTs etc.),

removal of jackets, removal of other subsea/deep water installations (e.g. risers, moorings, umbilicals etc.)

Waste management (in particular NORM) Environmental Impact.

36

When the Preliminary Abandonment Plan has been approved by the National Concessionaire, the Contractor Group will continue to develop the Plan by submitting updates to the Abandonment Plan until it becomes the Partial or Final Abandonment Plan, the main focus of which is the execution of the work and it is considered to be a fully executable plan. The Updates to the Abandonment Plan and the Partial or Permanent Development [sic] Plans will be submitted in accordance with the model below, and must be adjusted according to the scope of the work.

The Tables and Figures provided in this model are intended to summarise the information of each section. The Contractor Group/Operator may adjust the style of the Tables and Figures, as necessary, to summarise in an appropriate manner the information on the installations and Wells, provided that the objectives of the content are achieved.

Depending on the time of submission, some information requested in the model may not be fully available, consequently the Contractor Group/Operator may indicate those sections as "Not applicable". The final version of the Partial or Final Abandonment Plan must contain the information relating to all sections.

The Final Abandonment Plan must contain the following minimum content:

a) description of the history of the oilfield; b) geographical location of the installations and wells; c) complete inventory and description of the installation, oil pipelines

and wells, including the location, depth and type of material of the Installations to be abandoned;

d) variation of climatic conditions in the region; e) Environmental and Socio-economic Impact Study, including the

results of specific studies relating to benthic fauna, hydrocarbons and heavy metals resulting from the operational activities;

f) inventory of hazardous chemical materials found in the installations and plans for their removal;

g) description of production logs and deposits; h) consideration about the possibility of continuing the production

operations, covering technical, financial, safety, environmental and socio-economic aspects;

i) description of the dismantling options, in relation to the technical, economic, environmental and safety aspects, and assessment of the impact on other users of the sea and land (including the possibility of use of the installation for other activities in the area, such as fishing, agriculture and industrial activities);

j) presentation of the preliminary process of public consultation to the respective users.

1. Detailed description of the recommended dismantling solution, including:

a) description of the methodology of comparative assessment and the results of all the compared assessments;

b) measures and procedures for the correct dismantling, removal and disposal/reuse of the installations, in accordance with current practice in the petroleum industry;

37

c) measures and procedures to mitigate the environmental impact and appropriately rehabilitate the landscape, in accordance with the applicable law and current practice in the petroleum industry;

d) procedures for the removal of hazardous chemical materials, neutralisation and disposal;

e) list of safety measures on the basis of a documented risk analysis; f) aspects related with the management and supervision of

abandonment plans; g) time horizon and schedule for the implementation of the dismantling

activities.

2. Methodology used for preparing the estimate of abandonment costs, estimate of costs and opportunities/vulnerabilities in relation to costs.

3. Post-abandonment monitoring plans.

ANNEX 2 Partial or Final Abandonment Plan and Updates to the Abandonment Plan

1. Terms and abbreviations

Include a table of terms and abbreviations used in the document

Abbreviation Meaning

Figures and Tables

Include a table of figures and tables used in this document.

2. Annexes

Include a table with the Annexes which form an integral part of this document, and the original copies of the electronic file supporting this document.

Annexes Description Format

1 State approvals Document

2 Environmental Impact Study Document

3 Risk Analysis Document

4 Installations Design Management System Database (software)

5 Structural Model Database (software)

6 Reliability Model, Availability and Maintenance of the Equipment

Database (software)

7 Oilfield Management Model Database (software)

8 Reservoir Model Database (software)

9 Well and Equipment Inspection Reports Database (software)

3. Executive Summary

3.1 Abandonment Plans/Combined Abandonment Plans

This document contains ____ Abandonment Plan for the installation (or installations) ____ and _____ conveyance lines.

38

Combined Abandonment Plan: supply a clear declaration confirming that there is a separate plan for each set of associated instructions.

3.2 Prospect of Cessation of Production (COP)

Summary of time interval/dates for the Cessation of Production (COP).

3.3 Requirements for the Plan for Dismantling of Installations and Well Abandonment.

Describe.

3.4 Introduction

Insert introductory paragraphs describing the context of the proposal of dismantling containing information about the Platforms (topsides and substructures), Floating Units, subsea installations, other production installations. Pipes/Tubes and Well Abandonment (as applicable).

3.5 General view of the field and Installations/pipes to be dismantled and wells to be abandoned.

Preferably through a three dimensional drawing of the installations, including the wells and subsea equipment.

3.5.1 Installations and Wells

Table 3-1: Installations to be Dismantled

Offshore

Fields: Product Type

(Oil/Gas/Condensates)

Area (m2) Depth (m)

Surface Installations

Number Type* Weight of platforms (t) Weight of legs (t)

Subsea Installations Number of wells

Number Type** Platform Seabed

Notes:

* Platforms with fixed/floating legs/FPSOs etc.

** Model/manifold with multiple pipes/WHPS/manifold with multiple pipes etc.

Onshore

Fields: Product Type

(Oil/Gas/Condensates)

Area

Installations

Number Type* Weight (Te)

Number of wells

Number Type** Location

Notes:

* Separator, tank, compressor, etc.

** Injector, Gas Producer

39

Table 3-2: Details of Partners

Name of the Partner in the Consortium

Operator Participatory Interest (%).

Where this is zero, indicate 0%

3.5.2 Pipes

Table 3-3: Pipes to be abandoned

Number of pipes (See)

Table 3-4: Detail of Partners of Pipes

Common Title of Partners Operator Participatory Interest (%).

Where this is zero, indicate 0%

3.6 Summary of the Proposal of the Abandonment Plan

Complete Table 3-5

Table 3-5: Summary of the Abandonment Plan

Selected Option Reasons for Selection Proposed Solution for Abandonment

1. Deck

2. Jackets / Floating Structures (FPSOs etc.)

3. Subsea Installations

4. Pipes, tubing and umbilicals

5. Wells

6. Other

7. Interdependences

Provide (as appropriate) comments on any interactions between the different elements of the dismantling plan, e.g. Drilling Model.

3.7 Location of the field, including layout of the field and adjacent installations

Figure 3–1: Location of the field in Angola.

Include a figure showing the location map of the field in Angola.

Figure 3-2: Layout of the field

Insert a diagram showing the layout of the field, including the subsea installations (see example).

Note: adjacent installations refer to installations which may suffer some impact through this plan.

40

Complete Table 4.6 listing any adjacent installation

Table 3-6 Adjacent Installation

Owner Name Type Distance/Direction Information Present State

Impact on the Dismantling Proposals

Describe the impacts which the adjacent installations may have on the dismantling proposals, where appropriate.

Figure 3-3: Adjacent Installations

Insert a diagram showing the specified adjacent installations, where these exist.

3.8 Industrial implications

Supply a summary describing the strategy of acquisition/contracting of the means for the execution of the abandonment.

4. Cessation of Production (COP)

Consideration on the factors affecting the Cessation of Production (COP), including depletion of the reservoir, economic aspects and issues related with the installations, associated with reduced production/minimum production when compared with the initial expectation. A complete description of the interval of time/dates for COP and the execution of the abandonment work.

5. Operational Issues

Consideration on the factors which affect production and safety of the operation, and also a description of the reasons for which specific assets must be dismantled or abandoned owing to:

operational issues; mechanical conditions (e.g. breakdowns in the wells); integrity of assets; and considerations of structural integrity.

6. Description of the items to be dismantled

6.1 Installation(s): Surface installations installed offshore (surface equipment/jackets/FPSOs, etc.)

Complete Table 6-1: Details of the Surface Installation

Details of the Surface Installation

41

Repeat for each installation included in the plan. Indicate N/A (not applicable) or N/D (no data), as applicable.

Table 6-1: Details of the Surface Installation

Name Type of Installation* Location**

Surface Equipment/ Installations

Jackets (where applicable

Weight (Te) No of

Modules Weight

(Te) No of Legs

Weight of Foundations

Present Situation***

Notes

* Fixed steel jacket/Installations/FPSO etc.

** Geographical coordinates to three decimal places and in degrees

*** Present state with the last structural and inspection report

6.2 Installation(s): Onshore Installations

Complete Table 6-2. Repeat for each installation included in the plan. Indicate N/A (not applicable) or N/D (no data), as applicable.

Table 6-2: Details of Onshore Installation

Name Module* Location** Weight (Te) No of Items of Equipment

Notes:

* Compression, separation, storage etc.

** Geographical coordinates to three decimal places and in degrees

6.3 Installations: Subsea, including Anchoring Equipment

Complete Table 6.3. Indicate N/A if not applicable.

Table 6-3: Subsea Installations and Anchoring Equipment

Subsea Installations

including Anchoring Equipment

Number Dimensions/Weight (Te) Location** Comments/Present

Situation***

Others (Brief description)

Notes:

* Manifold of multiple pipes, Christmas trees (set of valves, reels and fittings) , etc.

** Geographical coordinates

*** References to the last inspection report in the Comments/Present Situation

6.4 Pipes

Complete Table 6-4 with the information on the pipes, flow lines and umbilicals.

Table 6-4: Information on Oil Pipes, Gas Pipes, Pipes/Flowlines/Umbilicals

Description Pipe

Number (by PWA)

Diameter (inches)

Length (km)

Description of the Parts

of the Components1

Products conveyed2

Start and End Point

Present State of Burial3

Present State of

the Pipe4

Present Product5

Notes:

1 E.g. concrete, steel; Umbilical, Flexible, Packing

2 E.g. Oil, Gas, Water, Chemicals

3 E.g. installed on the seabed, entrenched, entrenched and buried, large scale

4 E.g. Operational, out of use; Provisional Pipe System ("IPS")

5 E.g. clean, lubricated (finished), hydrocarbons and/or chemicals

Table 6-5: Pipe Anchoring Structure

42

Anchor Structure Total Number Weight (T) Location Exposed/Buried/Condition

6.5 Wells

Complete Table 6-6

Table 6-6 Data of Wells

Well Platform Designation1 Present State Category/State of the Well2

(Identifier) Production Wells In production

(Identifier) Production Wells In production

Subsea Wells

(Identifier) Production Wells Abandoned

(Identifier) Production Wells Suspended

Note:

1 E.g. Production, Injection, Oil, Gas

2 As defined by the Contractor Group

6.6 Estimates of Inventory

Supply a table or graph (pie chart), with an estimate of the remaining inventory for the dismantling plan specified in this document. [These figures are by way of example. The Contractor Group/Operator may choose an appropriate method of exposure to its installations]

Figure 6-1: Pie Chart of the Estimate of Inventory (Installations)


[from top to bottom] Iron; Concrete; Plastic; Non-ferrous; NORM/Haz*; Other

Insert the value of the total mass in tons (- x T)

* NORM/Hazardous Waste

Figure 6-2: Pie Chart of the Estimate of Inventory (Pipes)


[from top to bottom] Iron; Concrete; Plastic; Non-ferrous; NORM/Haz; Other

Insert the value of the total mass in tons (- x T)

7. Methods of Removal and Disposal

According to the hierarchy of waste, the reuse of an installation (or parts thereof) is first among the preferred dismantling options. The reuse of installations is encouraged where possible, and it is expected that the dismantling plan will demonstrate that the potential for reuse has been carefully examined.

The plan must therefore include a declaration on how the principles of the hierarchy in waste will be complied with, including to what extent the installations (or parts of these) will be reused, recycled or dismantled.

43

7.1 Surface Equipment

7.1.1 Overview of the Dismantling of Surface Equipment

Indicate N/A if there is no surface equipment. Describe concisely the surface equipment and the method of dismantling. Include a diagram to illustrate the method. Repeat for each item of surface equipment included in the plan.

Note: in relation to floating installations, provide a brief description of the methodology of dismantling.

Description of the Surface Equipment:

Figure 7-1: Diagram of the Surface Equipment

Preparation/cleaning: Indicate in Table 8-1 the methods that must be used to clean, clear or clean (sic) offshore surface equipment prior to removal to land.

Table 7-1: Cleaning of Surface Equipment for Removal

Type of Waste Composition of Waste Route for Disposal of Waste

Methods of Removal: Surface equipment must be completely removed prior to sending it ashore. Possible methods must be indicated in Table 8-2. Indicate the methods which must be considered for the dismantling of surface equipment. Subsequently describe concisely the methods applicable to your project.

Table 7-2: Method of Removal of Surface Equipment

1) HLV (semi-submersible crane ship) - 2) Monohull Crane Ship - 3) SLV (large surface ship) - 4) Small components - 5) Other (brief description).

Method Description

Method of removal and the proposed route of the waste (ensure that this section is in bold)

Describe the proposed method for the removal and disposal of surface equipment, indicating the potential problems related with the cross-border transport of waste. Indicate if more than one option is being used in the ambit of the tender. If so, add the phrase "The final decision on the method of dismantling will be taken after the tender".

7.2 Jackets

7.2.1 Review of Jacket Dismantling

Indicate N/A if the item is not a jacket. Provide an overview of the method of dismantling of the jacket. Include any special observations relevant to the options. Include a diagram to illustrate the methodology. Repeat the plan for each jacket.

Figure 7-2: View of the Hoisting of a Jacket

7.2.2 Method of Dismantling a Jacket

Indicate the different methods considered for the removal and disposal of the jacket. Complete Table 8-3 describing the dismantling of the jacket. The piles must be cut below the natural level of the seabed, at a depth which guarantees that they will

44

very probably not be uncovered. The depth will depend mainly on the current conditions of currents on the seabed and underwater currents.

Table 7-3: Methods of Dismantling of Jackets

1) HLV (semi-submersible crane ship) - 2) Monohull Crane Ship - 3) SLV (large surface ship) - 4) Small components - 5) Other (brief description).

Method Description

Method of removal and the proposed route of the waste (this section must be in bold)

Describe the method for the removal and disposal of the jacket, indicating the potential problems related with the cross-border transfer of waste. Indicate if more than one option is being used in the ambit of the tender.

7.3 Subsea installations and stability equipment

Complete Table 7-4 with the items which will be dismantled.

Table 7-4: Subsea Installations and Stability Equipment

Subsea Installations and Anchoring Equipment

Number Option Disposal and Route (if

applicable)

Other (brief description)

7.4 Pipes

Dismantling options: Table 8-5 summarises the pipes or groups of pipes included in the dismantling plan. Include a reference to Table 2-3.

Table 7-5: Dismantling Options of Pipes or Groups of Pipes

Pipe or Group of Pipes (by PWA) Conditions of the pipe/

Conditions of the Installation Group/In a trench/Buried

Pipes or Part of a Pipe Options considered for

Dismantling*

* Basic options

7.5 Pipe Anchoring Equipment

Indicate in Table 6-7 [sic] how the items will be dismantled.

Table 7-6: Pipe Anchoring Equipment

Equipment Number Options Method of Abandonment (where

applicable)

7.6 Wells

Provide a brief description to demonstrate your approach to well abandonment.

Table 7-7: Well Abandonment

Wells which must be permanently abandoned, as indicated in Section 7.5 (Table 7.6) must be plugged and abandoned in accordance with Annex 1.

Other relevant technical aspects:

45

Risk Analysis Method: Briefly describe the method used to carry out a risk analysis. The method must describe the process and the basis for determining the potential probability and impact of situations and/or scenarios.

Result of the risk analysis: provide a table similar to the example of Table 8-8 below for each well or group of wells, summarising the results the risk analysis. Identify the mitigation options and level of risk. Repeat for each group of wells.

Table 7-8: Risk Analysis Results

Well or Group of Wells Recommended Options* Justification Risk Mitigation Actions

7.7 Waste

Provide a summary in Table 8-9, describing how the main chains of wastes of the proposed plan will be managed. If appropriate, indicate any potential challenges related with the cross-border transfer of waste. Also complete Table 8-10 detailing the planned final disposal of the product of the installation(s) and piping.

Table 7-9: Waste Management Method

Waste Methods of Removal

Table 7-10: Disposal of Inventory

Total Tonnage of Inventory Forecast of Tonnage on the Land Surface

Forecast Tonnage of Waste

Installations

Other

Include a summary/graphics/table indicating your estimates of the percentages of materials which will go to the land surface and which must be reused, recycled or disposed of in a landfill.

8. Environmental Impact

8.1 Environmental Sensitivity (Overview)

Complete Table 9-1 describing the most important/sensitive environmental characteristics of the place of reception where the dismantling activities will be carried out. Make reference to the details in the Environmental Impact Assessment, which must be mentioned as a supporting document.

Table 8-1: Environmental Sensitivities

Environment of the Place of Reception Main Sensitivities

Interests to be preserved

Seabed

Fish

Shoals

Marine Mammals

Birds

Communities on the Land Surface

Other users of the seas

Atmosphere

46

8.2 Potential Environmental Impacts and their Management

Summary of the Environmental Impact Assessment: provide a summary of the main impacts identified in the Study, taking account of the data of the impacts consulted, according to the Responsibility Matrix.

Overview:

Complete Table 8-2, identifying the main environmental impacts associated with the dismantling of each installation, summarising how they will be managed.

Table 8-2: Environmental Impact Management

Activity Main Impacts How resolved

Removal of Surface Equipment

Removal of Jackets/Floating Installations

Removal of Underwater Installations

Dismantling of pipes

Dismantling of Surface Equipment

9. Comparative Assessments

When carrying out a comparative assessment, the Operator must select the most clear and direct methodology of dismantling and abandonment recognised by the industry (for example, Assessment Method A: Narrative/Red-Amber-Green (RAG), Oil & Gas UK "Guidelines for Comparative Assessment in Decommissioning Programmes") to support the decisions of the "Best Option". The Operator must describe the selected methodology and the reason for the option.

Summary of the results of all the comparative assessments.

10. Consultation with the Interested Parties

Summary of the Consultations: (This section must be updated when the consultation phase has been completed).

1. Summarise the comments of the mandatory consultants received so far. Provide copies of the public notice and correspondence of the mandatorily surveyed persons in an Annex.

2. Include brief summaries of other consultations made so far and make reference to any supporting documentation. In "Reply"" indicate how the concerns of the interested parties have been addressed and/or influenced your decision making process.

3. You may also go to the website https://abandono.sonangol.co.ao/ default.aspx and the website discussion area to clarify any concerns and reply to questions.

Table 10-1: Summary of Comments by Interested Parties

Who Comment Response

Informal Consultation

Mandatory Consultation

47

11. Project Management

11.1 Project Management

Provide a summary of the project management plan.

11.2 Schedule

Project Planning: insert a Gantt chart indicating a simplified schedule of the project, with the definition of the main dates and stages. Include the contracting, with the appropriate public tender procedures.

11.3 Costs

An overall estimate of costs must be supplied, in accordance with Annex 3 to these Regulations. The cost opportunities and vulnerabilities must be clearly identified.

Table 11-1: Gantt Chart of the Project Schedule

[See table in original]

[column 1, from top to bottom] Stages; Field abandonment plan; Planning of EOFL1; Alternative Methodologies/Analysis of technology; Preparation of drill; Plugging and Abandonment of the Well; Plugging and Abandonment of subsea wells; Cleaning/Preparation for Removal/Disconnection; Abandonment/Removal; Dismantling of subsea equipment/tubing; Cleaning of site/monitoring.

1. EOFL, End of Field Life

[column 2, from top to bottom] Plan submitted

[column 3, from top to bottom] Selection of the disposal method; Drill; Planning

[column 4, from top to bottom] Commencement of Plugging and Abandonment (P&A); Implementation; Planning; Planning

[column 5, from top to bottom] Removal of installations

[column 6, from top to bottom] Completion

12. Inspection and Post-Abandonment Monitoring

Include a declaration on these verifications.

Provide a declaration on how post-abandonment monitoring will be carried out and the sequence of activities.

13. Supporting Documents

48

Provide a list of supporting documents and software (e.g. supporting diagrams, graphics or other material) referred to in the plan which are not presented in the Annexes.

Table 13-1: Supporting Documents


1 Government Approvals Document

2 Environmental Impact Assessment Document

3 Risk Analysis Document

4 Description of the Installations Drawings and documents, as necessary

5 Comparative Assessment Document


5 Inspection reports of wells and equipment Document

These supporting documents must be published on the internet at https://abandono.sonangol.co.ao/default.aspx.

Comfort letters from the members of the Contractor Group. Comfort letters from the present owners of the participation in the field

must be supplied here. The originals must be submitted with the final version of the Plan.

[See table in original]

[column 1 from top to bottom] Timeframes Field abandonment plan; EOFL Planning Alternative Concepts/Review of Technology Preparation of Drill Plugging and Abandonment of wells Plugging and Abandonment of subsea wells Cleaning/Preparation for removal/Disconnection Abandonment/Removal Decommissioning of subsea equipment/tubing Site cleaning/Monitoring [column 2 from top to bottom] Year -5; Submission of plan [column 3 from top to bottom] Year -4; Selection of the concept of; Drill; Planning [column 4 from top to bottom] Year -3; Commencement of plugging and abandonment P&A; Update; Planning; Planning [column 5 from top to bottom] Year -2; Removal of installations [column 6 from top to bottom] Year -1; Completions

49

Basis of Estimate: Important Data Assumptions Description of the installations

Name of Field

Development Area(s)

Depth of Water (m)

Number of wells

Number of drilling points

Common installations FPSO, TLP, CALM

Other

Description:

Including all common installations

Photos:

Important dates of the schedule/timeframes

Cessation of production Start End

Plugging and abandonment (P&A) of wells

Offshore campaign No 1

Offshore campaign No 2

COP Subsequent Opex

Comments: Details of removal of offshore equipment/abandonment campaign, critical path and other principal factors which influence the schedule. Excluded units / Limits of estimate Specify limits for the installations included in the estimate and list units which are included or excluded

50

Basis of Estimate: Important Data Assumptions

Main Assumptions

PM&E (Production machinery and equipment): Typically a percentage of the overall cost, e.g. 5+%

Opex post COP (Cessation of Production): Fuel, personnel, logistics (ships & helicopters), maintenance of installations

Plugging and Abandonment of the well: Types of wells (production, water injection, gas injection). Class of drill, days needed to plug and abandon each well, by main activities, non-productive time (NPT)

Preparation and safeguarding of the installations: Permanent teams on the platforms or ships, class of ships

Removal of installations: Weight of the surface equipment, weight of jackets, weight of piles, option of abandonment/removal, class of ship deployed (typical name of ship) for each offshore removal/abandonment campaign, days of work necessary for each main activity, estimate of non-working days owing to bad weather

Discarding of installations: Forecast of inventory / quantities of recyclable and hazardous material, recycling/disposal plans (in the country or abroad)

Repair and monitoring at the site: Class of ship, days necessary for the primary activities

Post-abandonment monitoring (exploration ships, divers, ROV or other)

Specific studies (benthic fauna, quantity and hydrocarbons which may be ingested by marine fauna, reaction of heavy metals in water, environmental impact)

Cost of removing and transporting to the final transport repository: cost of temporary repositories and final repository

Contingency: 30% is necessary for all initial estimates. In the final cost estimate, the value must be justified with a risk analysis and the respective risk mitigation plan.

Brief description of the ship and rates

Days Costs $M

Mob/demob Hours worked Total Daily rates Total

Plug and abandon wells

Identification of ship

Removal and abandonment of installations

Heavy lift vehicle (HLV)

Ship for launching and reeling piping

Diving support vessel (DSV)

Anchor handler (AHT)

Multi-purpose support vessel (MSV)

Other types of vessel (describe)

Total 0

Summary of costs

Activities Costs ($) Comments

Production Machinery & Equipment

Opex post Cessation of Production 5% of total cost

Plug and abandon well Class of vessel

Preparation and Safety of Installations Based on experience

Removal/Abandonment of Installations Primary class of vessel

Disposal of installations Assumption of location

Repair and monitoring at the site Needs of site survey

Post-abandonment monitoring

Specific studies

NORM treatment cost

Contingency 30% of all estimates is necessary

Total $ -

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ANNEX 4.A MODEL OF CERTIFICATE OF ABANDONMENT OF WELLS AND DISMANTLING OF INSTALLATIONS AND EXONERATION FROM LIABILITY OF THE ENTITIES UNDER

CONTRACT

From:

Sociedade Nacional de Combustíveis de Angola, Empresa Pública, hereinafter referred to as the "National Concessionaire", a company incorporated in Luanda, Republic of Angola, in accordance with Decree 52/76 of 9 June, in the capacity of National Concessionaire and in representation of the Republic of Angola;

To:

XYZ, a company incorporated under the laws of ____ (hereinafter ___);



(jointly, the "Entities under Contract").

For the purposes of this Certificate, all the expressions used herein in capital letters shall have the meanings attributed to them by Presidential Decree No [__/__] of [______].

RECITALS:

WHEREAS the National Concessionaire and [_________], in its capacity as the Operator, in representation of the Entities under Contract, are parties to a Contract, called [_________], entered into on [__/__/__] relating to exploration and production activities in Block [__] offshore of Angola (the "Contract"), approved by [Decree/Decree-Law] No [__/__] of [__/__] (the "Contract").

ACKNOWLEDGING that nothing in this Certificate should be interpreted to the detriment of the rights, obligations, prerogatives and privileges of the Entities under Contract under the Contract with the National Concessionaire;

WHEREAS,

By virtue of the cessation of the effective period of the Contract with the National Concessionaire, the National Concessionaire has directed the Entities under Contract to carry out and complete the work of dismantling of installations and abandonment of wells in the [Development Area/Concession Area] of Block [__], in accordance with the Abandonment Plan approved by the Ministry with supervisory responsibility.

The National Concessionaire declares, acknowledges and certifies that:

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• The work of Dismantling of Installations and Well Abandonment described in the approved Abandonment Plan have been successfully executed by the Entities under Contract and, as the period of monitoring by the Entities under Contract has elapsed and as the due [Inspections/Audits] have been carried out, it confirms and accepts the completion of the work of Dismantling of Installations and Well Abandonment in accordance with the approved Abandonment Plan and with the provisions of Presidential Decree No [__/__] of [__/__];

• It has knowledge of its current state and it fully accepts it for all legal purposes.

On these terms and on those provided in the Contract with the National Concessionaire, the National Concessionaire confirms and certifies that:

It exonerates from liability and defends the Entities under Contract, by means of this document, for the execution of the work of Well Abandonment and Dismantling of Installations in the [Development Area/Concession Area] of Block [__], and thus also exonerates the [Operator/Entities under Contract], subsidiaries, branches, affiliates, and parent companies, from any liability, claim or legal action, and obligation whatsoever resulting from or in any way related with said activities and undertakes to defend, protect and reimburse the [Operator/Entities under Contract] in cases in which the following situations occur:

i) force majeure; ii) act of God; iii) damage caused through the exclusive fault of third party agents.

IN TESTIMONY WHEREOF, the National Concessionaire has issued and delivered this CERTIFICATE OF ABANDONMENT OF INSTALLATIONS AND EXONERATION FROM LIABILITY OF THE [OPERATOR/ENTITIES UNDER CONTRACT] to [_____] on its own behalf and on behalf of the rest of the members of the Entities under Contract, at Luanda on [__/___/__].

Signed for and on behalf of:

Sociedade Nacional de Combustíveis de Angola, on behalf of the Republic of Angola.

Represented by:

Position:

Signature:

53

ANNEX 4 B MODEL OF CERTIFICATE OF HANDOVER OF WELL(S) AND INSTALLATIONS AND

EXONERATION FROM LIABILITY OF THE [OPERATOR/ENTITIES UNDER CONTRACT]

From:

SOCIEDADE NACIONAL DE COMBUSTÍVEIS DE ANGOLA, EMPRESA PÚBLICA, hereinafter referred to as the "National Concessionaire", a company incorporated in Luanda, Republic of Angola, in accordance with Decree 52/76 of 9 June, in the capacity of National Concessionaire and in representation of the Republic of Angola;

To:




(jointly, the "Entities under Contract").

For the purposes of this Certificate, all the expressions used herein in capital letters shall have the meanings attributed to them by Presidential Decree No [__/__] of [______].

RECITALS:

WHEREAS the National Concessionaire and [_________], in its capacity as the Operator, in representation of the Entities under Contract, are parties to a Contract, called [_________], entered into on [__/__/__] relating to exploration and production activities in Block [__] offshore of Angola (the "Contract"), approved by [Decree/Decree-Law] No [__/__] of [__/__] (the "Contract").

ACKNOWLEDGING that nothing in this Certificate should be interpreted to the detriment of the rights, obligations, prerogatives and privileges of the Entities under Contract under the Contract with the National Concessionaire;

WHEREAS,

[OPTION 1]:

Alternative A: By virtue of the cessation of the effective period of the Contract in relation to the [Development Area/Concession Area] of Block [__], the National Concessionaire has directed the Entities under Contract to carry out the Handover of the Well(s) and Installations in the [Development Area/Concession Area] of Block [__], which are in production or in a condition to produce, in a good state of conservation and operation, without prejudice to normal wear and tear.

54

Alternative B: The National Concessionaire has decided to carry out the Dismantling of Installations and Abandonment of the Wells located in the [Development Area/Concession Area] of Block [__], [directly/through a third party designated by it].

[OPTION 2]:

The National Concessionaire has directed the Entities under Contract so that, through the Operator, they may execute the work of Well Abandonment and the Dismantling of Installations in the [Development Area/Concession Area] of Block [__], and in the meantime the guarantee funds provided in the Escrow Account for the purpose of Abandonment have not been made available to the Entities under Contract, thus making the execution of the work of Dismantling of Installations and Well Abandonment impossible, on the terms specified in the approved Abandonment Plan.

The National Concessionaire declares and acknowledges that:

[OPTION 1 — Alternative A]:

The Entities under Contract have fulfilled their obligations and responsibilities in accordance with the activities specified in the schedule agreed with the National Concessionaire, relating to the Handover of the Well(s) and Installations on the terms and for the purposes of the provisions of this Legal Statute. The National Concessionaire has inspected, requested the audit of the Well(s) and also of the Installations in the [Development Area/Concession Area] of Block [__], and has knowledge of their current state, and accepts them fully for legal purposes.

[OPTION 1 — Alternative B]:

The Entities under Contract have fulfilled their obligations and responsibilities prior to the decision of the National Concessionaire, in carrying out the Well Abandonment and Dismantling of Installations [direct/through a third party designated by it], including the provisioning of the Escrow Account, on the terms provided in the Final Abandonment Plan and approved by Presidential Decree No [__/__] of [_____], it being the exclusive responsibility of the National Concessionaire to execute or cause to execute the Abandonment Plan, in particular to accept liability for all the costs and expenses connected with the execution of this and with the subsequent inspection and audit.

[OPTION 2]

The funds provided in the Escrow Account have not been made available and thus the execution of the work of Dismantling of Installations and Well Abandonment provided in the Abandonment Plan becomes impossible, for these purposes the National Concessionaire assumes total responsibility for the conduct of future work of Well Abandonment, and also the Dismantling of Installations, thus exclusively assuming fully responsibility for the execution of the work of Well Abandonment and Dismantling of Installations as provided in the final Abandonment Plan approved by Presidential Decree No [__/__] of [____].

On these terms and on the terms provided in the Contract with the National Concessionaire, the National Concessionaire confirms and certifies as follows:

55

The assumption of the responsibilities listed in the subsections below does not extend to claims, demands or requests for indemnification by judicial or other action, if this results from acts which are confirmed to be intentional and/or of gross negligence performed by the Entities under Contract, which have occurred prior to the Handover of the Well(s) and Installations.

It becomes fully responsible, on this date, for the execution of the work of Well Abandonment and Dismantling of Installations in the [Development Area/Concession Area] of Block [__], and thus it exonerates and undertakes to defend the [Operator/Entities under Contract], their subsidiaries, branches, affiliates, and parent companies, from any liability, claim or legal action and obligation whatsoever resulting from, or in any way related with, the Dismantling of Installations and Abandonment of Well(s) in the [Development Area/Concession Area] of Block [__], to execute by the Concessionaire, [directly/through a third party designated by it, and undertakes to defend, protect and reimburse the [Operator/Entities under Contract].

This Instrument will produce its effects from its date of issue, corresponding to the date on which:

[OPTION 1 — Alternative A and Alternative B]: The Entities under Contract proceed to hand over the Well(s) and/or Installations in the [Development Area/Concession Area] of Block [__], in a good state of conservation and operation to the National Concessionaire, and the latter proceeds with the issue of the respective certificate of handover.

[OPTION 2]: The Entities under Contract notify the National Concessionaire of the impossibility of continuing with the work of Dismantling of Installations and Well Abandonment, thus transferring to the Concessionaire total responsibility for the preparation, development and execution of these.

In testimony whereof, the National Concessionaire has issued and delivered this Certificate of Handover of Well(s), Installations and Exoneration from Liability of the [Operator/Entities under Contract] to [_____], on its own behalf and on behalf of the other members of the Entities under Contract, at Luanda on [__/__/__].

Signed for and on behalf of:

Sociedade Nacional de Combustíveis de Angola, in representation of the Republic of Angola,

Represented by:

Position:

Signature:

56

ANNEX 5 SPECIFICATIONS OF THE ESCROW ACCOUNT

CLAUSE 1 (Principles of escrow)

1. The aim of the Escrow Account is to ensure that the reserved abandonment funds remain available at all times and are allocated exclusively for the funding of abandonment operations. Escrow funds will not be used for any purpose other than the funding of abandonment costs.

2. The National Concessionaire and the Operators agree that the escrow agreements will complement the provisions of the Contracts with the National Concessionaire and will be implemented in such a way as to meet the requirements of funding abandonment established in those contracts.

3. After the selection of the Bank and prior to opening the account, the National Concessionaire must request the opinion of Banco Nacional de Angola, in its capacity as the Foreign Exchange Authority of the Republic of Angola.

4. The funds deposited in the Escrow Account(s) will be kept separate from any other accounts opened or used by the National Concessionaire or by the Entities under Contract. Additionally, the funds will be kept separate from other entities or third parties which are not parties to an escrow agreement to mitigate exposure to third party creditors.

5. The Escrow Account will be exclusively opened and held in United States dollars and will be credited with funds deposited or transferred by the Operator on behalf of the Entities under Contract.

6. The entity which will provide the escrow services (the "Escrow Agent") will be selected by the National Concessionaire and by the Entities under Contract by a competitive evaluation process. The National Concessionaire and the Entities under Contract will determine jointly the selection criteria for the Escrow Agent to supply the escrow services.

7. The Escrow Agent must have a minimum long term credit rating of at least A (S&P), A2 (Moody's) or A (Fitch) (the "Minimum Requirements").

8. The National Concessionaire and the Entities under Contract may agree to designate one or more Escrow Agents and allocate the abandonment funds among them, exclusively according to the criterion which they will both adopt.

9. The Escrow Account must be opened in the name of the National Concessionaire. The account will be managed by the Escrow Agent in accordance with the provisions of the Escrow Agreement entered into, which must include the compulsory joint signature of the National Concessionaire and the Operator for any

57

disbursement of funds from the Escrow Account, as established in clause 2 of this Annex 5.

10. In the case of a change of Operator, the Escrow Account must be adjusted so that the operator may be replaced as the holder of the account and joint signatory by the new operator.

11. In the case of a change of Operator, having other members as partners in the Contract with the National Concessionaire, the signature powers of the Operator will be transferred to the member of the Contracted Entities which holds the largest participatory interest in the Concession.

12. In the case where the National Concessionaire has taken over the responsibility for execution of the abandonment, the Ministry of Finance will become the second signatory on the Escrow Account.

13. In the case where the Escrow Agent ceases to meet the minimum requirements, the National Concessionaire and the Entities under Contract must appoint an Escrow Agent to replace it, provided that that Escrow Agent meets all the minimum requirements. The funds held in escrow will be transferred to the Escrow Agent who meets the minimum requirements.

14. A separate Escrow Account will be held for each Development Area or Concession Area. However, the National Concessionaire and the Entities under Contract may agree to join Development Areas in a single Escrow Account if the Escrow Agent is able to separate the funds allocated to each Development Area for information purposes.

15. Interest, capital gains and returns on investment will be recorded in the accounts as forming part of the abandonment fund and all amounts will be deposited in the respective Escrow Account.

16. For the calculation of the obligations of provision for abandonment, the reserves used will be 2P [Proved plus Probable] until the end of the concession period.

17. In order to avoid any doubt, neither the balance of the Escrow Account nor any investment made with the abandonment funds may be used as a guarantee or any other form of guarantee, by any party, and must remain at all times free from all encumbrances and/or charges. Any party in breach of this obligation shall be required to indemnify the other parties for any claims by third parties in relation to the balance of the Escrow Account.

CLAUSE 2 (Disbursement of funds)

1. The National Concessionaire and the Entities under Contract will disburse the funds of the Escrow Account jointly. The disbursement of funds will take place in the following circumstances:

a) Partial Abandonment by the Operator

58

During the exploration or production period, the National Concessionaire and the Entities under Contract may agree on the necessity of abandonment of wells and/or dismantling of installations in a Development Area or Concession Area ("Partial Abandonment"), in which case the Entities under Contract may request the disbursement of funds from the Escrow Account to fund those abandonment activities.

b) Permanent Abandonment by the Operator

In the case where the National Concessionaire requests the Operator to carry out the abandonment of the installations and wells, the escrow fund in the Escrow Account will be made available gradually and in a timely fashion to the Operator, as the latter performs the effective abandonment of the installations.

c) Continuation of Operations or Abandonment by the National Concessionaire

In the case where the National Concessionaire requests the Entities under Contract to deliver to it the possession of the installations and/or wells, or when the latter decides to perform the abandonment of wells or dismantling of installations itself, the disbursement of the abandonment fund to the National Concessionaire shall be subject to the delivery, by the National Concessionaire to the Entities under Contract, of a Certificate of Exoneration from Liability in respect of any future liability.

2. The National Concessionaire and the Entities under Contract agree that in all other situations, the Escrow Account will only be closed after the satisfactory completion of the effective operations of abandonment, irrespective of the party responsible for implementing those abandonment operations.

CLAUSE 3 (Principles of Investment)

1. The National Concessionaire and the Entities under Contract may jointly elect to invest the funds for the abandonment in securities which meet financial and other specific criteria. If the National Concessionaire and the Entities under Contract elect this alternative, the following Principles of Investment will be applicable to the execution and implementation of this investment strategy:

a) investment decisions will be taken jointly by representatives of the National Concessionaire, the Entities under Contract and the Ministry of Finance;

b) the Manager of the selected Investment must invest the funds in one or more fixed-interest collective funds (the "Collective Funds");

c) each of the Collective Funds must include fixed-interest securities issued or sponsored by the Government, or issued by companies, with a risk rating of at least AA- of Standard and Poor's, Aa3 of Moody's Investor Services or AA- of Fitch;

d) the securities held by each of the Collective Funds must be denominated in United States dollars;

e) the Collective Funds must not allow exchange rate speculation; f) the credit risk rating of each of the Collective Funds, based on the

average ratings of the securities must be at least AA-/Aa3 by two of

59

the three main credit risk rating agencies (Moody's, S&P and Fitch). All the individual securities of the Collective Funds must have a minimum long-term rating of Baa3/BBB or a minimum short-term rating of A-1/PA/F-1, from two of the three major rating agencies (Moody's, S&P and Fitch), on the date of purchase;

g) all the gains of the investment strategy will be reinvested Escrow Account;

h) the target duration of the Collective Funds will be determined taking into account the objective of ensuring that the funds are available, when necessary, in the Escrow Account to the National Concessionaire or the Entities under Contract;

i) the use of derivative instruments is expressly prohibited.

2. For the purpose of contributing to the development of the Angolan economy, investments in Angolan sovereign debt below the credit risk rating required in accordance with clause 3.1(f) of this Annex 5, are considered to be appropriate for investing 5% to 15% in Angolan sovereign debt quoted in United States dollars or euros, on the understanding that improvements must be implemented to mitigate the risk associated with this, such as appropriate principles, directives and financial mechanisms. The principles, directives, financial mechanisms and improvements must contain as a minimum the following criteria:

a) define principles which ensure the availability of funds for fulfilment of the obligations of abandonment when necessary;

b) define the mechanisms for the restitution of funds invested in Angolan sovereign debt, and also their respective guarantees;

c) determine principles which define the limits of overall investment in Angolan sovereign debt.

3. For the purposes of the provisions of the previous paragraphs of this clause 3, a multisectoral Working Party must be set up, consisting of representatives from the Ministry of Finance, Ministry of Mineral Resources and Petroleum, Banco Nacional de Angola, the National Concessionaire and the Entities under Contract to evaluate and define appropriate principles, directives and financial mechanisms.

4. In accordance with the previous paragraph, the said Working Party must be set up within 60 (sixty) days from the publication of this Statute.

The President of the Republic, JOÃO MANUEL GONÇALVES LOURENÇO.