Malaysia legislation
Section 14
Section 14
(2)
A contract referred to under subsection (1) shall require the prior approval of the Governments.
(3)
Subject to subsection (4), a contract referred to under subsection (1) for the purpose of the exploration and exploitation of petroleum shall be a production sharing contract and shall include, amongst others, the following terms and conditions:
(a)
for the purpose of section 7, payment in the amount of ten per centum of gross production of petroleum by the contractor to the Joint Authority as royalty in the manner and at such times as may be specified in the contract;
(b)
fifty per centum of gross production of petroleum shall be applied by the contractor for the purpose of recovery of costs for petroleum operations;
(c)
the remaining portion of gross production of petroleum, after deductions for the purposes of paragraphs (a) and
(b)
, shall be deemed to be profit petroleum and be divided equally between the Joint Authority and the contractor;
(d)
the contract shall be valid for a period not exceeding thirty-five years but shall not exceed the period of validity of the Agreement;
(e)
all costs of petroleum operations shall be borne by the contractor and shall, subject to paragraph (b), be recoverable from production;
(f)
a minimum amount that the contractor shall expend on petroleum operations under the contract as a minimum commitment as may be agreed to by the Joint Authority and the contractor;
(g)
payment of a research cess by the contractor to the Joint
Authority in the amount of one half of one per centum of the aggregate of that portion of gross production which is
Malaysia-Thailand Joint Authority 15
applied for the purpose of recovery of costs under paragraph (b) and the contractor’s share of profit petroleum under paragraph (c) in the manner and at such times as may be determined by the Joint Authority, provided that such payment shall not be recoverable from production; and
(h)
any disputes or differences arising out of or in connection with the contract which cannot be amicably settled shall be referred to arbitration before a panel consisting of three arbitrators, one arbitrator to be appointed by each party, and a third to be jointly appointed by both parties.
If the parties are unable to concur on the choice of a third arbitrator within a specified period, the third arbitrator shall be appointed upon application to the United Nations
Commission of International Trade Law (UNCITRAL).
The arbitration proceedings shall be conducted in accordance with the rules of UNCITRAL. The venue of arbitration shall be either Bangkok or Kuala Lumpur, or any other place as may be agreed to by the parties.
(4)
The Joint Authority may vary any of the amounts referred to in paragraphs (3)(b), (c) and (g) in respect of any contract with the approval of the Governments:
Provided that there shall be no variation of any of these amounts in respect of a subsisting contract without the agreement of the contractor.
(5)
For the purposes of this section, “gross production” with reference to gas means gross proceeds of sale of gas.