Can a Magnetometry or Gravimetry survey run outside a block in to open areas (not in blocks) and would these survey points still add to the bid score?

Yes, magnetometry and gravimetry surveys can run outside the specific block the company is pursuing. Yes, these surveys still add to the work Unit count for such block. Nonetheless, such Work Units i.e. surveys do not grant any rights in regards to the areas outside the proposed or sought block. Also, at least 51% of the total Work Units counted towards a bid have to be inside the proposed or sought block.

Are you planning to upload on the website an English translation of the documents in Spanish (Contracts, Terms of Reference and Qualification Requirements)?

English versions will be provided as soon as possible. Nonetheless, the versions in Spanish are the one seen as “official”. If there is any clarification with regards to any clause of the Contract, please do not hesitate to request such clarification at any time. If any concern or request for modification is expressed during the timeframe of questions and is deemed reasonable by the State, the appropriate changes will be made to the Contract and such change will be published and notified to all participants. Nonetheless, we don’t foresee any changes to be made to the fiscal regime but want to make sure other clauses or terms do not represent a “poison pill” of sorts that we might have missed and that will inhibit or diminish the interest and/or participation in the round.

Can you clarify the process for “block observations” and determining the “final version of the blocks” (set for 10/21/2019 on the timeline)? What will that process be based on?

“Block observations” refers to the allotted timeframe within the official Round schedule during which the State, through the Ministry of Energy and Mines, will receive any requests for 1) the modification in shape, form or size of any of the current proposed on-shore or off-shore blocks and for 2) the complete addition of an all-new block, whether on-shore off-shore, that the participant feels should be added to the process and the participant is eager to bid for. Neither of these cases, and/or the fact that any observation or proposal for a block is made constitute and obligation to bid and/or participate in the process. Though, obviously, the proposal of changes or an entirely different block will “suggest” there is interest from the participant in question, no expectation and/or legal obligation is derived from the action of proposing a new block and/or modifications thereto. The final day in which this two (2) type or requests can be made is September 13th, 2019.

The “final version of the blocks” will be the result of a process carried out by the Ministry by which the initial blocks and all proposals are analyzed and a decision will be made and informed to all taking into consideration the best interest of the State. At the prescribed time the decision will be announced together with and updated map. Again, even when a proposal for modification has been accepted the participant that requested that change has no obligation or additional rights as regards to that block, so the participant can bid on such block if that participant sees it fit. The aforementioned decision will be made on October 21st, 2019.

Can a geochemical sampling run outside a block in to open areas (not in blocks) and would these survey points still add to the bid score?

Yes, a geochemical sampling can be performed outside the specific block the company is pursuing. Yes, these sampling still add to the work Unit count for such block. Nonetheless, such Work Units i.e. geochemical sampling do not grant any rights in regards to the areas outside the proposed or sought block. Also, at least 51% of the total Work Units counted towards a bid must be inside the proposed or sought block.

Would two geochemical samples from the same locations, but using different analytical methods and premise, count as one for the work programme score? (two different techniques to back each other up)

If different processes, object and value of running different processes exists, the sampling will count for as many as significant geochemical processes (for oil & gas exploration) are performed. Two different methods for identifying the same geochemical variant (ex. Total carbon content) will not count as two different processes as they have the same object. Two different processes one for identifying total carbon content, and other for gas biomarkers, for example, will count as two different samples and/or processes since they both carry exploratory value and their object is different.

Article 34: Valuation of Hydrocarbos sold to Third Parties. We note that, according to the model provisions, the Contractor’s oil sales agreements with third parties would be subject to MEM approval. We would find this very difficult to work in the international crude oil market and we do not normally find our or other producers’ sales being subject to State agreement. We need to have an unfettered right to sell our oil entitlement. Can this right of MEM approval be dropped?

The part of the article that refers to MEM’s necessary approval will be eliminated. The local tax authority will nonetheless have the right to verify that sale to associated third parties is made under normal market conditions as per Dominican law transfer pricing provisions.

Can you please post a link to the report so we can be sure which report it exactly is?

No, we cannot provide a link to the report since it is protected by copyright. Nonetheless, the report is available at a cost at the Energy Intelligence Group. We will also confirm any request by companies to verify if they are included in the top 100 of the report that is used by the MEM and that is the report of the Energy Intelligence Group issued on November 2018. Furthermore, according to the terms of reference of this process, companies that are within the top 100 of the report are waved and/or not required to present any documents for technical, economical-financial and Safety and Environment qualification.

Do you have access to the report? If not, what are bidders expected to provide as proof that they are listed there?

We have access to the reported list of the Top 100 world oil companies. In order to waive the provision participants don’t have to actively do anything, but if they don’t have access to the report that is used by the MEM and that is the report of the Energy Intelligence Group issued on November 2018, a request for verification by MEM can be made by interested companies.

We are looking to confirm the formulas that are stated in Article 24.2.i.b. and Article 24.2.ii.b.

The formula stated in Article 24.2.i.b when Price is within 40 and 130$ is Rminm = 0.0788 x Pb – 1.888. When we use this formula, we calculate a value that is smaller than the Rminm % in Article 24.2.i.a of 5%, when Price is less than 40$. The equation for calculating a slope when you know a point on a line is y=mx+b. The graph below demonstrates how the revenue should be share when linked to oil price and production.

Based on the points known from the line, you can calculate the slope and constant using the y=mx+b formula. m=slope; and b=value of y when x=0

Focusing on the line for production for 5mbopd, the slope(m) can be calculated as 0.0778%.

Calculation Example

m= (12%-5%)/(130-40) = (7%/90) = 0.0778%

However, the value of b can be calculated as positive 1.888, whereas Article 24.2.i.b has negative 1.888.

Calculation Example


5% = 0.0778% x 40 + b

5% = 3.12% + b

b = 1.88%

When you also look at the graph above, you can extrapolate the blue line and see that when x=0 and the line crosses the y-axis, that y is a positive number.

For Article 24.2.i.b, if I use the formula 0.0788 x Pb + 1.888, I get a value that is now between 5-12%.

Question – given the above, should the formula written in Article 24.2.i.b “Rminm (%) = 0.0788 x Pb – 1.888” be changed to “Rminm (%) = 0.0788 x Pb + 1.888”? and should the formula written in Article 24.2.ii.b “Rmax (%) = 0.1818 x Pb – 1.366” be changed to “Rmax (%) = 0.1818 x Pb + 1.366”?

Note that this may also be the same with the equivalent gas calculation.

There was a mistake in the formulas in articles Article 24.2.i.b and Article 24.2.ii.b for onshore contract. These formulas have been changed according to the written proposal. From now on it should be read as:

–              Article 24.2.i.b — Rminm (%) = 0.0788 x Pb + 1.888

–              Article 24.2.ii.b — Rmax (%) = 0.1818 x Pb + 1.366

There is a definition of “Administration System” used in the PSC.

The English translation reads: “2.109. Administration System: Means the integral set of interrelated and documented elements whose purpose is the prevention, control and improvement of the performance of a facility or group of them in terms of industrial safety, operational safety and protection of the environment in the Hydrocarbons sector.” Can you please provide more details on what this is and do you have an example?

We have changed the term, for clarification purposes, to Health, Safety and Environment Policy. An example of it would be any control, or standard or procedure that operator have for HSE in a facility or group of facilities.

On paragraph 6.1 of the Terms of Reference, it is specified the Minimum Exploratory Program as 400 work units for onshore and 800 for offshore. On paragraphs 7.3.1 and 7.3.2, we have the conversion tables to calculate the work units credits for purposes of submitting a bid. As an example, in the case of offshore 2D seismic, the Measurement Unit is Km and the Unit Value is 0.24.

Does this mean that the Minimum Exploration Program would need to be 3,334 km of 2D seismic (3334 x 0.24 = 800)?

It is correct. For clarification purposes work units are a reference value of for all the activities related to the exploratory program, which might not be limited only to 2D seismic program, but to all activities detailed in paragraphs 7.3.1 and 7.3.2.

However, companies are free to decide what kind of activities are carried out, as long as the Minimum Exploratory Program work units amount are performed. Nonetheless, such work does not grant any rights in regards to the areas outside the proposed or sought block. Also, at least 51% of the total Work Units counted towards a bid must be inside the proposed or sought block. 100% of the Minimum work units per area must be performed and 20% of the additionally proposed work units (as per the winning bid) must be performed.

Likewise, on the offshore table there is a Value (US$/uint) stated of 1,200, and on paragraph 7.7 is stated that the reference value of a work unit is US$ 5,000. Can you please clarify the purpose of these values and how they should be applied in a bid?

For example, every work unit is equal to US$5,000 so, as a km of seismic is valued at US$1,200 per km, every km is equal to 0.24 work units. The purpose of these values is to calculate the value of the guarantee for the exploration commitment. The important thing for a bid is to have at least satisfy the minimum work requirement. Competition with other bidders will be solely based on additional work units offered. Also, the guarantees should be calculated taking into consideration the dollar value of the work units proposed.

In the Model PSC under Article 24.2.iii.a , it is stated that when Qm is less or equal to -5 kbpd. Is this negative 5 kbpd a typo? We do not see under what circumstances you would have negative production? This negative 5kbpd features in both the Spanish and the English contract versions.

Yes, that was a typo. It has been already corrected in both contracts. Now it is stated when Qm is less or equal to 5 kbpd.

Form of Bid Bond. Can you please confirm if the form of securities required is same for bid bond as for performance bond OR if the following would be accepted;

  • PCG?
  • Bank guarantee from non-domiciled DR bank e.g. UK / US bank

The individual bidder or consortium of foreign companies must issue in favor of the MEM a guarantee of seriousness of proposal, this must be satisfied with the delivery of a bank guarantee equivalent to one hundred thousand dollars of the United States of America (US$100,000.00) for each area that is being subject to a proposal/offer, regardless whether it is an onshore or offshore area. The aforementioned bank guarantee may be issued by a financial entity that is not necessarily domiciled in the Dominican Republic, as long as it is irrevocable, renewable and issued in United States dollars. It should have a term of validity established in article 14 of the Terms of Reference.

Wording of Bid Bond. Is there a draft form or do we need to submit wording for approval prior to any bid?

We will be providing a draft with the necessary wording of the bid bond to pre-qualified entities.

PSC includes Pro-forma (Appendix B) for the Guarantee wording. Under Point 3 within the guarantee draft, the bank accepts that if they cause any delay in honouring the guarantee they will compensate the beneficiary by paying interest at the “Tasa Activa Banca Múltiple” rate published by Central Bank. Banks are unlikely to agree to this, can you remove this point on charging interest?

We will eliminate it from the contract the wording related to charging interest.

PSC Article 29.3: Please provide indicative amounts of what the preliminary bonds could be i.e. what would be the level of compensation to land owners?

The overall wording of paragraph 28 & 29 has been simplified. Please read and send any pending questions. It is calculated on a preliminary manner (subject to judicial review) by the MEM and is calculated based on damages inflicted by the necessity of restriction of the property rights of the land owners and/or other legitimate occupants (tenants). This model has been used for mining projects for over 40 years.

Clause 40.2: We suggest making the minimum criteria a “minimum credit rating of A-/A3” rather than investment grade.

Minimum credit rating of A-/A3 will be allowed.

Unforeseen Circumstances or Force Majeure is not defined, which will be needed to qualify if this event has happened.

It will be included in the contract the below definition:

“Force Majeure” shall mean any event beyond the reasonable control of the Party claiming to be affected by such event which has not been brought about at its instance and which has caused such non performance or delay in performance and, without limitation to the generality of the foregoing, includes acts of God, natural phenomena or calamities, earthquakes, floods, tsunamis, epidemics, quarantines, fires, wars declared, or undeclared, hostilities, invasions, blockades, riots, strikes, insurrection, civil disturbances, mining of the seas, piracy, international disputes affecting the extent of the Contract Area and any governmental action or inaction, that would prevent the performance of an obligation or ability of the Contractor to export Hydrocarbons.”

Article 6.3 (xxiv) to avoid unnecessarily large amounts of data collation, transmission and processing, can this please be more focussed “To supply MEM all the relevant material technical and economic…”

Yes, we will add to this part of the contract “all relevant material technical and economic gathered as consequence of the Contract execution will be supplied to MEM, alongside with other relevant information requested by MEM or Ministerio de Hacienda.”

Article 29 does not have any details added around timing for the process. Can this be added? This would help speed up operations, and not delay investment. We have changed the wording, please verify new changes made to the contract, and send us any other additional question or comment.

Once a company has submitted its qualification documents, if prequalified, will it be issued a qualification certificate?

Once the company has delivered the documents to MEM within the scheduled frame time, MEM will review the documents and will confirm the company if all requirements established in the Terms of Reference of this process are met. If not, then the company will be informed of this fact so documents are corrected and submitted again for review and approval.

Revision of document will be subject to workload of MEM and answer will be given case by case as soon as possible within the scheduled timeline.

After MEM confirms that all documents have met the requirements of Term of Reference of this process, then, a qualification certificate will be issued and sent by e-mail to the qualified company.

If higher resolution gravity (i.e. FTG) were acquired in preference to conventional gravity, would it carry a higher Work Unit value?

Work units have already been changed in the Terms of Reference, considering the different methods to acquire magnetometry/gravimetry data per lineal kilometer. The new work unit values for the different acquisition methods are:

Onshore                                 Unit Value

–    Magnetometry/Gravimetry Helicopter     0.05

–    Magnetometry/Gravimetry Fixed Wing     0.03


–    Magnetometry/Gravimetry Helicopter     0.050

–    Magnetometry/Gravimetry Fixed Wing     0.030

–    Magnetometry/Gravimetry Ship           0.007

PSC Article 40.1: There are a limited number of international banks in DR so we may have to look for an option to hold the fund with an international bank with minimum credit rating of A-/A3 in an offshore location e.g. New York, London?

We have made the wording so that international banks are allowed.

Can you clarify how the cost recovery works under the PSC? Are none-recoverable costs deductible for income tax purposes? Are none-recoverable costs deductible for the Minimum State Participation tax?

This contract does not have a cost of oil concept or profit oil. All cost can be deduced for income tax purposes either in the year they are incurred (opex) or through depreciation (capex). Companies can deduct for income tax up to 95% of net revenues. The uncover balanced can be carried forward indefinitely.