Decision No. 38/2005/QD-BCN Issuing Regulations on Classification of Oil and Gas Resources and Reserves and Preparation of Oil and Gas Reserve Reports

DECISION OF THE MINISTER OF INDUSTRY

Issuing Regulations on Classification of Oil and Gas Resources and Preparation of Oil and Gas Reserves Reports

and Preparation of Oil and Gas Reserves Reports

 

THE MINISTER OF INDUSTRY

 

Pursuant to the Petroleum Law dated July 6, 1993 and the Law Amending and Supplementing Certain Provisions of the Petroleum Law dated June 9, 2000;

Pursuant to Decree No. 48/2000/NĐ-CP dated September 12, 2000 of the Government detailing the implementation of the Petroleum Law;

Pursuant to Decree No. 55/2003/NĐ-CP dated May 28, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Industry;

At the proposal of the Director of the Energy and Oil Department,

 

DECISION:

 

Article 1. These Regulations on Classification of Oil and Gas Resources and Preparation of Oil and Gas Reserves Reports are hereby issued together with this Decision.

Article 2. This Decision shall take effect fifteen days from the date of publication in the Official Gazette. All previous provisions contrary to this Decision are abolished.

Article 3. The Director of the Office of the Ministry, the Inspector General of the Ministry, Heads of Departments, Directors of Bureaus under the Ministry, Directors of Provincial Industrial Departments, Central City Departments, General Directors of the Vietnam Oil and Gas Corporation, and Heads of other relevant units are responsible for implementing this Decision./.

 

REGULATIONS

 

Classification of Oil and Gas Resources

and Preparation of Oil and Gas Reserves Reports

(Issued together with Decision No. 38/2005/QĐ-BCN dated December 6, 2005

of the Minister of Industry)

PART I

GENERAL PROVISIONS

Article 1. Purpose

These Regulations uniformly stipulate the classification of oil and gas resources and the preparation of oil and gas reserves reports.

Article 2. Scope of Application

These Regulations apply to all organizations and individuals permitted by the Government of the Socialist Republic of Vietnam to conduct exploration, development, and production of oil and gas on land, islands, inland waters, territorial seas, exclusive economic zones, and continental shelves.

Article 3. Explanation of Terms

In these regulations, the following terms are understood as follows:

1. "Current economic conditions" means economic indicators including norms, unit prices, costs, and other indicators applied at the time of reserve calculation.

2. "High reliability" refers to the level of confidence corresponding to a probability not less than 0.85 on the cumulative distribution curve according to statistical probability methods.

3. "Low reliability" refers to the level of confidence corresponding to a probability not greater than 0.15 on the cumulative distribution curve according to statistical probability methods.

4. "Medium reliability" refers to the level of confidence corresponding to a probability approximately equal to 0.5 on the cumulative distribution curve according to statistical probability methods.

5. "Cumulative production" means the total amount of oil and gas produced from the start of production up to a specific point in time.

6. "Play" is a group of oil and gas prospects within defined geological and geographical limits, sharing similar reservoir, trap, and seal characteristics.

7. "Flow test" is the process of testing oil and gas wells to obtain comprehensive results regarding product formation parameters such as oil, gas, water flow rates, pressure, temperature, and other necessary parameters.

8. "Formation test" is a technique for studying formations under dynamic conditions to determine their flow capacity and product formation parameters.

Chapter II

CLASSIFICATION OF OIL AND GAS RESOURCES

Article 4. Oil and Gas Resources

Oil and gas resources refer to the total quantity of oil and gas in place at a given time, comprising the quantity of oil and gas contained or extracted from discovered accumulations and the estimated quantity of oil and gas likely to exist in undiscovered accumulations.

Oil and gas resources are classified into:

- Discovered resources;

- Undiscovered resources.

Article 5. Discovered Resources

Discovered resources refer to the total quantity of oil and gas calculated at a specific point in time within oil and gas accumulations that have been discovered through drilling. Discovered resources include recoverable quantities and potential recoverable resources.

1. Recoverable quantities are the amounts of oil and gas already recovered and expected to be commercially recovered from discovered accumulations using reasonable technology and techniques selected in accordance with current economic and legal conditions.

Recoverable quantities consist of produced quantities and remaining reserves at the calculation point.

Remaining reserves include verified reserves (P1) and unverified reserves (P2 and P3) as defined in Clause 1, Article 5 of this Regulation.

2. Potential recoverable resources are the quantities of oil and gas discovered but not yet commercially exploitable at the calculation point due to technical, technological, economic, environmental, and other criteria. Potential recoverable reserves are classified into verified levels (P4) and unverified levels (P5 and P6). The determination of potential recoverable resource levels is based on similar conditions as those for recoverable reserves.

Article 6. Undiscovered Resources

Undiscovered resources refer to the estimated quantities of oil and gas at a specific point in time, forecasted to exist and be discovered in accumulations through future exploration wells.

Undiscovered resources include anticipated recoverable undiscovered resources (R1) and theoretical recoverable undiscovered resources (R2).

1. Anticipated recoverable undiscovered resources (R1) are estimated recoverable oil and gas resources evaluated at a specific point in time from mapped prospects where the existence of oil and gas has not been confirmed by drilling results or reservoirs located beneath productive layers of operating fields under geological conditions considered favorable for oil and gas accumulation but not yet drilled.

2. Theoretical recoverable undiscovered resources (R2) are estimated recoverable oil and gas resources evaluated at a specific point in time for predicted oil and gas accumulations theoretically existing within a play set with favorable geological conditions for oil and gas accumulation but not yet mapped.

Article 7. Oil and Gas Reserves

Oil and gas reserves are the remaining quantities of oil and gas in natural accumulations containing oil and gas, which can be calculated at a specific point in time, discovered with varying degrees of confidence depending on geological exploration results.

Depending on decreasing levels of confidence, oil and gas reserves are divided into verified reserve levels and unverified reserve levels.

1. Verified Reserves (P1)

Verified reserves are the commercially recoverable quantities of oil and gas calculated at a specific point in time with high confidence in discovered accumulations and expected to be developed under current technical, technological, economic, and social conditions.

Reserves are classified as verified when they meet the following conditions:

- The oil and gas reservoir boundaries are determined with reasonable confidence based on geophysical, geological, and drilling data.

- The permeability, storage capacity, and hydrocarbon saturation of the oil and gas reservoir are confirmed by well logs and core samples.

- At least one well test produces commercial flow rates.

2. Unverified Reserves

Unverified reserves include probable reserves and possible reserves.

a) Probable Reserves (P2)

Probable reserves are commercially recoverable quantities calculated at a specific point in time with moderate confidence and not yet confirmed by well tests.

Probable reserves for each oil and gas reservoir are determined according to extrapolation principles consistent with the specific geological conditions of the reservoir (Annex II).

b) Possible Reserves (P3)

Possible reserves are commercially recoverable quantities calculated at a specific point in time with low confidence and not yet confirmed by drilling.

Possible reserves for each oil and gas reservoir are determined according to extrapolation principles consistent with the specific geological conditions of the reservoir (Annex II).

A classification scheme for oil and gas resources and reserves is presented in Annex I of this Regulation.

Chapter III

PREPARATION OF OIL AND GAS RESERVE REPORTS

Article 8. Content of Oil and Gas Reserves Report

1. The Oil and Gas Reserves Report shall be prepared by the Operator or a competent consulting agency and approved by the Contractor.

2. Contents of the Oil and Gas Reserves Report.

The Oil and Gas Reserves Report includes a comprehensive report and a summary report.

The comprehensive report consists of two Parts:

- Part I - Explanatory Section

- Part II - Appendix including tables, charts, and necessary accompanying documents.

The detailed contents of the Reserves Report and its appendices are stipulated in Appendix III of this Regulation.

Article 9. Boundaries for Calculating Oil and Gas Reserves

1. The report on calculating oil and gas reserves must state the grounds for the principles used to determine the boundaries of oil and gas reservoirs for reserve calculation.

In cases where similar methods are applied, original data and explanations for the applicability of such original data to the reservoir or the reservoir body to be calculated must be provided to affirm the correctness of the method selection and calculation parameters.

2. Classification of oil and gas reserves levels according to Chapter II of this Regulation.

Article 10. Methods for Calculating Oil and Gas Reserves

1. Calculation of oil, gas, and condensate reserves may apply volume, material balance methods, and other appropriate methods based on geological models and available data, with the volume method being mandatory while other methods depend on specific conditions but require justification for their selection. Oil and gas reserves must be calculated using Monte Carlo simulation, with reserve values presented at Minimum, Expected, and Maximum levels.

2. For recalculating the reserves of an oil and gas field, a comparison of parameters at the time of recalculation with previously used parameters and an analysis of discrepancies must be conducted.

3. Oil, gas, condensate, and their components must be calculated separately for each product type within each reservoir body, each rock type, and the entire field, with an assessment of the feasibility of bringing these calculation subjects into production.

4. When calculating reserves, calculation parameters must follow a unified system of units. The final reserve figures must be presented in the metric system (SI).

Chapter IV

PROCEDURES FOR SUBMISSION AND REVIEW

OIL AND GAS RESERVES REPORT

Article 11. Submission Procedures

Prior to requesting approval of the Oil and Gas Reserves Report, the Contractor or the authorized Operator must agree with PetroVietnam on the content and submit through PetroVietnam to the Ministry of Industry for review by the authorized Contractor or Operator.

Article 12. Report Documentation

Documentation for the Oil and Gas Field Reserves Report, Recalculated Reserves Report, along with PetroVietnam's request for review sent to the Ministry of Industry includes:

a) A complete report (in Vietnamese or English);

b) A summary report (in Vietnamese and English);

c) CDs containing all content and digital data of the report;

d) Agreement opinion of PetroVietnam.

Article 13. Review and Approval

Based on the application of the Contractor or the authorized Operator and the agreement opinion of PetroVietnam, the Oil and Gas Reserves Review Board chaired by the Ministry of Industry will conduct a review of the Oil and Gas Reserves Report. After the Reserves Report meets the requirements following the review, the Ministry of Industry will submit it to the Prime Minister for approval.

Chapter V

REGISTRATION OF OIL AND GAS RESERVES

Article 14. Registration of Oil and Gas Reserves

After receiving the Prime Minister's decision approving the calculation results of oil and gas field reserves, the Contractor or the Authorized Operator must register the approved reserve value with Vietnam National Oil and Gas Group for monitoring, consolidation, and reporting in accordance with current regulations.

Article 15. Registration and Recalculation of Oil and Gas Reserves

For oil and gas reserves of fields already approved by the Prime Minister, during the process of assessment, development, and exploitation, if there is a change in oil and gas reserves, the Contractor or the Authorized Operator must register such changes with Vietnam National Oil and Gas Group. In cases where the change in oil and gas reserves exceeds 15% compared to the most recent approval, the Contractor or the Authorized Operator must prepare a recalculation report and submit it for approval in accordance with Chapter IV of this Regulation. The recalculated reserve results will be recorded using the forms attached in Appendix V of this Regulation.

Chapter VI

IMPLEMENTING PROVISIONS

Article 16. During implementation, if there are any issues or difficulties, organizations and individuals involved in oil and gas activities, as well as Vietnam National Oil and Gas Group, shall propose written recommendations to the Ministry of Industry for research and appropriate amendments and supplements./.