The current production license status as of March 2018, including phase expiry dates can be downloaded here:

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Acreage rentals are payable annually in advance. Rents vary, depending on whether Production licences were awarded as a result of a competitive licensing round or as the result of an open-door invitation. Note that although these rentals are defined by legislation, the Falkland Islands Government may consider negotiating rents under the right circumstances in order to encourage continued activity in instances where licensees can demonstrate that set payments may be detrimental to exploration activity.

For the production licences awarded in 1996 (under competitive bidding) the acreage rentals are:

Licence phase

Rent

Comments

Phase 1 (Years 1 through 12, or for as long as the extended Phase 1 lasts beyond 12 years)

US$30 per km2 per annum

Phase 1 was extended beyond the end of year 7 to allow licensees to acquire farm-in partners

Phase 2 (seven years following on from the end of the extended Phase 1)

US$60 per km2 per annum

Phase 2 will commence 6 months after a new farm-in partner joins any licence.

There is a notional 50% acreage relinquishment before Phase 2 commences, but actual percentages can be negotiated.

Phase 3

US$600 per km2 per annum

There is a notional 50% acreage relinquishment before Phase 2 commences, but actual percentages can be negotiated.

During development

US$375,000 per development area.

Rentals are payable only until first royalties are paid from production.

 

 

For the production licences awarded under open-door access since 2001, the acreage rentals are:

Licence Phase

Rent

Comments

Phase 1 (of 3 to 5 years depending on work programme)

US$30,000 per annum for first licence held, plus US$10,000 for each additional licence

Work programmes will determine length of first phase – seismic only results in a 3 year initial period, while a drilling commitment provides 5 years.

A licence can cover up to an entire 1° by 1° quadrant of 30 blocks.

Phase 2

Fees as per Phase 1

 

Discovery area

US$375,000 per annum per discovery area.

A discovery area can be held for 5 years to allow for development planning and/or appraisal drilling.

Field production

US$375,000 per annum per square kilometre of a production field.

Rentals are payable only until royalty payments start on production

 

 

The Designated Exploration Area (see Fig.1) covers over 400 000 Km2, roughly the size of Texas and approximately 50% larger than the UK North Sea. The area is based on a preexisting fisheries conservation zone; the western boundary adjacent to the eastern limits of the Argentine EEZ.

The Designated Area is subdivided into quadrants based on one degree of latitude by one degree of longitude (Map of Quadrants/Blocks), each of which is subdivided into thirty Blocks. The numbering system used for the quadrants and blocks is similar to the UK North Sea, and wells are numbered in a similar fashion; for example, 14/09-1 refers to the first well in Quadrant 14, Block 09.

 

 Fig.1: Falkland Islands Designated Exploration area (click to enlarge)Fig.1: Falkland Islands Dsignated Exploration area

 

What they allow

Production licences permit the search for and extraction of petroleum.

They are area-specific and provide exclusive rights for surveying, drilling and production within that area.

Although the licence permits extraction of hydrocarbons, approval must be sought for any development plan before commercial production commences.

Coverage of existing production licences

The areas covered by existing production licences can be downloaded here:

Date 2014-01-09
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Existing production licence holders/operators are:
 

Borders and Southern Petroleum plc

Rockhopper Exploration plc (and subsidiary companies Falkland Oil & Gas Ltd and Desire Petroleum Ltd)

Noble Energy Falklands Ltd

Premier Oil Exploration and Production Ltd

Edison International 

Contact details for any of the above license holders can be found on our contact page.

Previous operators have included Shell, Amerada Hess, BHP Billiton, Lasmo and IPC/Lundin Oil, together with their respective partners.

Operatorship

The licence holders must appoint an operator acceptable to the Governor.

The operator must organise, supervise and be responsible for all activities.

The operator is not allowed to commence any survey or commence, abandon or recommence the drilling of or completion for development of any well without the consent of the Governor. Such consents are obtained by completion of the relevant operations notices, downloadable below.

Good oilfield practices must be observed at all times.

Licence holders must comply with additional conditions to the licences as detailed in Petroleum Operations Notices issued from time to time by the Government.

Situations requiring an additional exploration licence

Production licence holders require an exploration licence to conduct work outside the geographical limits covered by any of their production licences, but do not require an exploration licence to conduct work themselves within the production licence's geographical limits.

However, should the production licence holder appoint a third party contractor to acquire exploration data on their behalf within the area covered by the production licence, the contractor must hold an exploration licence in their own right.

Other general conditions applicable to production licences

No licence or interest in a licence may be assigned without the permission of the Governor.

Applications are welcomed from companies and consortia worldwide. No preference or discrimination will be made for or against any applicant.

All applications will be appraised on a technical and financial basis by the Department of Mineral Resources.

Whilst the participation of Argentine oil companies is welcomed and considered desirable by the Falkland Islands Government, it is unlikely that an award would be made to any applicant group comprising more than 49% Argentine interests, or with an Argentine registered operator.

Notification and data requirements

Production licence regulations require the holder to supply copies of all data to the Governor (or more usually to the British Geological Survey). See downloads for various operations notices, guidance forms, legislation, etc. 

All data will be held in confidence by the Falkland Islands Government for a period of five years but may then be released to the public.

Types of production licence

Production licences fall into two types:

Competitive round production licences – issued as a result of a competitive bidding process in 1996

Open-door production licences – issued as a result of individual negotiation since 2001.

The terms and conditions of the two types of production licences are summarised in the table below.

 

Licence type/summary of terms

Competitive round production licences

Open-door production licences

How to apply

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

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

Work programmes

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

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

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

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

Exploration Phase 1

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

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

Exploration Phase 2

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

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

Exploration Phase 3

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

This does not apply to open-door licences.

Discovery area

This does not apply to competitive round licences.

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

Exploitation phase

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

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

Acreage rentals

Variable according to phase of licence – click on link for details

Variable according to phase of licence – click on link for details

Date 2013-09-04
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Fiscal Terms

The Falklands fiscal system comprises:

  • a variable acreage rental
  • 9% royalty on production
  • 26% corporation tax on profits, with the usual allowances, etc.

Purpose

Exploration licences are designed to allow companies to acquire speculative and/or proprietary seismic, gravity, magnetic, geochemical and sea-bed data. They do not allow drilling deeper than 350 m below the sea bed.

They are governed by the Offshore Petroleum (Licensing) Regulations 2000 and the Petroleum Survey Licenses (Model Clauses) Regulations 1992 which can be downloaded here.

Application

Exploration licences are not area specific and can apply to all of the Designated Area (or smaller areas as agreed). 

Activities undertaken under an exploration licence may extend into a production licence area only with the consent of the production licence holder.

If a production licence holder is using a third party to acquire data on its behalf within its production licence area, it must ensure that the third party holds an exploration licence in its own right in order to conduct such surveys. Production licence holders do not require an exploration licence unless they intend to conduct surveys themselves outside the confines of their production licence areas.

Duration

An exploration licence is normally issued for one year, renewable for up to three years.

Notification and data requirements

The Director of Mineral Resources (DMR) must be notified of all surveys to be conducted under an exploration license at least 30 days in advance of operations beginning. The proposed survey information will be circulated to relevant stakeholders for comments, this is likely to include, but is not limited to, the Department of Fisheries, Department of Environmental Planning and British Geological Survey. Operators must complete a PON3 (Notification of Geophysical Surveys) form according to the PON3 guidance available below.

Holders of exploration licences are required to supply copies of all data to the Governor (or more usually to the British Geological Survey). All data will be held in confidence by the Falkland Islands Government for a period of five years (or longer as determined by negotiation) but may then be released to the public.

The Falkland Islands Government, in collaboration with the South Atlantic Research Institute (SAERI) also requests that a metadata record is submitted to the IMS-GIS data centre for any environmental survey (i.e. benthic sampling). The metadata form is included in the downloads below, more information can be obtained from the SAERI website or from DMR. A further download describes the adopted policy for data management, only applicable to non-commercial environmental data. Standard Operating Procedures for the collection of environmental data are currently being produced.

Applications for an exploration licence

An application for an exploration licence can be made at any time by submitting three completed copies of an application form obtainable from the Director of Mineral Resources (or downloadable below), enclosing an application fee of £1000 (cheques made payable to the Falkland Islands Government).

Date 2012-08-15
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Record and sample requirements for surveys and wells

Date 2012-08-12
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Reporting Procedures  (Revised July 2010)

Date 2012-08-12
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Date 2013-09-05
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Date 2012-08-12
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To be submitted before the completion of an exploration licence

Date 2016-10-05
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Date 2017-04-03
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Production Licenses Downloads