=== dc2017-pages-21.ppm === security hazard to infrastructure and process identification, prevention and mitigation assessment. Section 2. Abandonment and Decommissioning a. The Operator shall submit an abandonment plan and establish a corresponding sinking fund in the form of a trust account with a reputable commercial bank in the Philippines in favor of the DOE, the amount of which shall be equivalent to the estimated abandonment and decommissioning cost, starting three years (3) years before the end of the POM term if without any plan for renewal or at any point whenever an immediate withdrawal from the Natural Gas Facility is made without any transferee; and No Natural Gas Facilities for which a Permit has been issued shall be abandoned or withdrawn from service by the Operator without obtaining prior written authorization from the DOE and approval by the DOE of an abandonment and decommissioning plan based on Philippine or Internationally Accepted Standards at that time. The Operator shall complete the abandonment and decommissioning in accordance with the approved abandonment and decommissioning plan. Section 3. Assignment or Transfer of Interest of Operatorship Assignment or transfer of interest of Operatorship shall be allowed only upon prior written approval of the DOE Secretary based on the requirements of Guideline 7.a.4 of the Permit Application Guideline. a. RULE 16. CONSULTATION AND ARBITRATION The DOE and Operator (Parties) shall make their best efforts to amicably settle any dispute arising from the performance or interpretation of any provision hereof. Disputes arising between the Parties relating to this Circular or any Permit, the interpretation and performance of any of their provisions or conditions, which cannot be settled amicably, shall be settled by arbitration. The Parties shall each appoint one (1) arbitrator and so advise the other Party within thirty (30) days after receipt of a written request to do so. Such two (2) arbitrators shall appoint a third arbitrator. If either Party fails to appoint an arbitrator within thirty (30) days after receipt of a written request from the other Party to do so, such arbitrator shall be appointed, at the request of the other Party, by the President of the International Chamber of Commerce. If the first two (2) arbitrators appointed as aforesaid fail to agree on a third arbitrator within thirty (30) days after receipt of a written request from the other Party to do so, such third arbitrator shall be appointed, at the request of ejther Party, by the President of the International Chamber of If an arbitrator fails or is unable to act, his successor will be appointed e€ manner as the arbitrator whom he succeeds. Unless the Parties agree ise, Singapore shall be the venue of the arbitration proceedings. Page 21 of 23 === dc2017-pages-22.ppm === c. The English language shall be the official language to be used in the arbitral proceedings. All hearing materials, statement of claim or defense, award and the reasons supporting them shall be written in English. d. The decision of a majority of the arbitrators shall be final and binding upon the Parties. Judgment upon the award rendered may be entered in any court having jurisdiction or application may be made to such court for a judicial recognition of the award and an order of enforcement as the case may be. Each Party shall bear its respective cost of arbitration unless the arbitrators decide otherwise. e. Except as provided in this Rule, arbitration shall be conducted in accordance with the Rules of Arbitration of the International Chamber of Commerce, then in effect and administered by the International Chamber of Commerce. Rule 17. INCENTIVES To attract foreign and domestic investment into the PDNGI, the Government offers various incentives through the Board of Investments (BOI) pursuant to Executive Order (EO) No. 226 or its successor, otherwise known as the Omnibus Investments Code of 1987 or pursuant to RA 7916 or the Special Economic Zone Act of 1995. The Operator, with the assistance of the DOE, may avail of these incentives subject to compliance to its inclusion and registration as either part of preferred areas of investments, pioneer or non-pioneer, export production as well as those rehabilitating and expanding its existing operation. RULE 18. OFFENSES AND PENALTIES Section 1. Offenses An offense is committed by an Operator who violated: a. Any section or rule of this Circular; b. Any condition of a Permit; and c. Any relevant order of the DOE. Section 2. Penalties Commission of an offense under Section 1 of this Rule shall be subject to the imposition of penalties by the DOE in accordance with existing laws. Each day of non- compliance analtee eonsidered a separate violation. In addition he DOE may suspend or cancel the Permits issued under this Circular including tecommendations for the cancellation of the relevant permits and clearances from the other Government Agencies; Page 22 of 23 === dc2017-pages-23.ppm === Section 3. Enforcement of Rules The DOE shall conduct investigations upon its own initiative or upon receiving a complaint in writing and under oath of any allegation of violation under Section 1 of this Rule in accordance with Department Circular No. 2002-07-004 otherwise known as the Rules of Practice and Procedures before the DOE RULE 19. REPEALING CLAUSE DOE Circular 2002-08-005 or the Interim Rules and Regulations Governing the Transmission, Distribution and Supply of Natural Gas and all other rules and regulations or parts thereof, which are inconsistent with the provisions of this Circular are hereby repealed or modified accordingly. RULE 20. SEPARABILITY CLAUSE Should any provision of this Circular be subsequently declared invalid or unconstitutional, such parts not affected thereby shall remain in full force and effect. RULE 21. EFFECTIVITY This Circular shall take effect fifteen (15) days after its complete publication in at least two newspapers of general circulation and submission of a copy to the University of the Philippines Law Center. Done this __ of __, 2017 in Bonifacio Global City, Taguig City, Metro Manila. 4 nk An/ LFONSO G. CUSI = Secretary en Republic of the Philippines 4 L) DEPARTMENT OF ENERGY IN REPLYING PLS. CITE: DOE-AGC-17005568 WN UONAQOUNL VAN r " rt kes ‘ ol . git Page 23 of 23 === dc2017-pages-24.ppm === ANNEX A PERMIT APPLICATION GUIDELINE 1. Coverage This Guideline shall apply to the determination of the legal, technical and financial qualifications of an Applicant, the evaluation of applications and the grant of permits to construct, expand, rehabilitate, modify, operate and maintain Downstream Natural Gas Facilities referred to in Rule 5 of the Philippine Downstream Natural Gas Regulation (PDNGR). 2. Downstream Natural Gas Review and Evaluation Committee (DNG-REC). The DNG-REC is hereby constituted to carry out the responsibilities as set forth in Rule 12 of the PDNGR and shall be composed of the following: Chair : Supervising Undersecretary, Oil Industry Management Bureau or as otherwise designated by the DOE Secretary Vice Chair: Supervising Assistant Secretary, Oil Industry Management Bureau or as otherwise designated by the DOE Secretary Members : Director, Oil Industry Management Bureau (OIMB) : Director, Legal Services (LS) Director, Financial Services (FS) Director, Information Technology and Management Services (ITMS) is) . Responsibilities of the DNG- REC. a. Examines, evaluates, and reviews the legal, technical and financial capabilities of Applicants and recommends to the Secretary the issuance of Downstream Natural Gas Permits, namely NTP, PCERMs and POMs; b. Recommends to the Secretary the issuance of directives to qualified Government Agencies in their capacities as investing arms to spearhead the development of the PDNGI Value Chain in case it is imperative to catalyze its development within the timeline given; c. Recommends to the Secretary the issuance of standards and policies on facility, product and practice to ensure safety, quality, efficiency and economy; d. Supervises fd monitors the progress of construction and operation of Downstream vironment Inspection and Monitoring Team (PIA-HSSE IMT); === dc2017-pages-25.ppm === e. Addresses any inquiry that maybe raised by the Secretary in connection to the permits, policies and programs endorsed for the Secretary's execution and approval; f. Recommends for approval of the Secretary and in coordination with the ERC the applicable rates or schedule of prices for the use of Transmission and/or Distribution Pipelines functioning as Public Utility; g. Resolves issues in relation to the legal, technical and financial capabilities of Applicants; and h. Implements all other necessary measures allowed under existing laws, rules and regulations. 4. DNG-REC Secretariat. The DNG-REC Secretariat shall assist the DNG-REC in all activities related to PDNGI and shall be composed of the following: Head : Assistant Director, OIMB Members : Head, Natural Gas Management Division, OIMB ; Head, Downstream Conventional Energy Division, LS Head, Downstream Conventional Energy Division, FS Head, Information Services, ITMS 5. Special Evaluation Committee or Technical Working Group. The DNG-REC shall recommend to the Secretary the creation of Special Evaluation Committee or Technical Working Group to support the DNG-REC in the implementation of this Guideline. 6. Application Procedures and Periods a. Notice To Proceed (NTP) 1. The Applicant shall submit a letter-request for a pre-application conference addressed to the DNG-REC Chair; 2. The DNG-REC shall, within three (3) working days from receipt of the letter- request, send a reply-letter to the Applicant stating thereof the schedule of the pre-application conference, 3. During the pre-application conference, the Applicant shall present the general project concept to the DNG-REC including the discussions on any clarification @ rules and requirements of the permit application; Page 2 of 20 === dc2017-pages-26.ppm === 4. The Applicant shall submit the application with all the documentary requirements, including the payment of processing fee, addressed to the DNG-REC Chair; 5. The DNG-REC shall, within thirty (30) working days from receipt of the application, evaluate, resolve and inform the Applicant whether or not it has submitted completely all the documentary requirements. A complete application shall qualify for further substantive legal, technical and financial evaluation while incomplete submission shall be automatically rejected without prejudice to the right of the Applicant to re-apply; 6. The DNG-REC shall conduct, within forty five (45) working days, the substantive legal, technical and financial evaluation and recommend, for approval of the DOE Secretary, the issuance or non-issuance of the NTP; 7. The DOE Secretary shall, within fifteen (15) working days from date of receipt of the recommendation from the DNG-REC, review and decide on the recommendation for approval or non-approval of the NTP. The DOE Secretary may, within an appropriate additional period given to the DNG-REC, require further explanation, clarification or re-evaluation of the recommendation; . Permit to Construct, Expand, Rehabilitate, and Modify (PCERM) 8. Upon approval and issuance of the NTP, the Applicant shall be given an NTP period of six (6) months from date of issuance of NTP, extendable for up to a maximum of six (6) months upon approval of the DNG-REC, unless extended again due to Force Majeure, to secure permits or clearances from the other Government Agencies and Financial Closing (NTP Conditions); 9. Within five (5) working days from the end of the NTP period, the Applicant shall submit, for validation of the DNG-REC, its compliance to the NTP Conditions; 10.Upon validation of the fulfillment of the NTP Conditions, the DNG-REC shall then recommend, for approval of the DOE Secretary, the issuance or non- issuance of the PCERM as an authority of the Operator to proceed with the construction or expansion, rehabilitation or modification, whenever applicable, of the Natural Gas Facilities; 11. The DOE Secretary shall, within fifteen (15) working days from date of receipt of the~ recommendation from the DNG-REC, review and decide on the fremont for approval or non- approval of the PCERM. Page 3 of 20 === dc2017-pages-27.ppm === The DOE Secretary may, within an appropriate additional! period given to the DNG-REC, require further explanation, clarification or re-evaluation of the recommendation; 12.To monitor the progress of the project, the Operator is required to submit regular progress report, as required under guideline no. 10 of this Annex A, to the DNG-REC and, in coordination with the PIA-HSSE IMT, shall conduct on- site progress validation. The completion of construction shall be within the approved construction timeline; c. Permit to Operate and Maintain (POM) 13.Within thirty (30) working days from the practical completion of the construction, the Operator shall submit an application for POM attaching the Requirements for the issuance of POM under Guideline 7.2.3 of this Annex A; 14.The DNG-REC, in coordination with the PIA-HSSE IMT, shall verify the completion of construction and compliance to the testing and commissioning requirements under the EPC contract and that the Natural Gas Facility otherwise complies with applicable regulation. Upon verification, the DNG- REC shall recommend, for approval of the Secretary, the issuance of POM; and 15. The DOE Secretary shall, within fifteen (15) working days from date of receipt of the recommendation from the DNG-REC, review and decide on the recommendation for approval or non- approval of the POM. The DOE Secretary may, within an appropriate additional period given to the DNG-REC, require further explanation, clarification or re-evaluation of the recommendation; and 16.By the authority of POM, the Operator shall proceed to the commercial operation of the Downstream Natural Gas Facilities for an initial period of twenty (25) years renewable for up to a maximum of twenty five (25) years subject to the following conditions: i. That the Operator and the Natural Gas Facilities continue to be legally, technically and financially competent to operate for the renewal period; and ii. That the Operator shall submit the renewal application at least six (6) months before the expiration of the POM. 7. Documentary Requirements neral Information Page 4 of 20 === dc2017-pages-28.ppm === 1. The Applicant shall refer to (1) any local and/or foreign individual company, or (2) incorporated joint venture Company, or (3) the designated member of an unincorporated joint venture or consortium, which is authorized for the purpose of engaging in the Downstream Natural Gas Project and wishes to secure any Permit under this Circular. The ownership and operation of the transmission and distribution pipeline considered as Public Utilities shall comply, however, with the ownership requirements pursuant to Section 3, Rule 7 of the PDNGR; 2. If the Applicant is an unincorporated joint venture or consortium, it shall, in all cases and stages of the application, construction or operation, designate from among them an Applicant who shall, in behalf of the joint venture/consortium, apply and represent the joint venture/consortium in all its dealing with the DOE; 3. The Applicant may include the submission of the qualifications of its Applicant Group; 4. Assignment or transfer of interest of Operatorship shall be allowed only upon prior written approval of the DOE Secretary based on the following documentary submissions: i. Letter to the Secretary and attention to the DNG-REC of the notice of assignment/transfer of interest and the reasons thereof; li. Original Copy of the assignee’s Corporate Secretary's Certificate showing assumption by the assignee of all the rights and obligations of the Operatorship and attached thereof is the certified true copy of the assignment agreement; iii. Submission of assignee’s complete legal and financial documentation as set out in the Permit Application Guideline; iv. Description of the assignee’s project management team; and v. Proof of its financial closing to continuously fund the Downstream Natural Gas Project. 5. A foreign-registered Applicant shall submit its legal, technical and financial documents in English language and duly authenticated by its embassy which has operational coverage of the Philippines; 6. The application must be both in paper, with two (2) complete sets of legal, technical, and financial documents, and digital (USB Drive in PDF format). Recommended format is the use of the Times New Roman at 12 font and in single line spacing, figures in A4 size and maps at an appropriate scale; Page 5 of 20 === dc2017-pages-29.ppm === 7. A non-refundable processing fee shall be paid by the Applicant in accordance with the latest DOE approved schedule of fees and charges (Annex A-1), upon submission of the application and its supporting documents. Payment may be made in cash, manager/company check or by wire/bank transfer payable to the Philippine Department of Energy. All payments should be net of all applicable foreign and local bank and financial charges. Application is not considered accepted by the DOE without full payment of the processing fee; and 8. The application shall be sent by courier, registered mail, or hand-delivered, stamped-received by the DOE Records Division and addressed to: The Chair Downstream Natural Gas-Review and Evaluation Committee Department of Energy Energy Center, Rizal Drive, Bonifacio Global City, Taguig City, Metro Manila, 1632, Philippines b. Documentation 1. Requirements for the Issuance of NTP The Applicant shall submit the following documents to the DOE and shall keep all such documents and other information forming part of an application confidential in accordance with Section 5, Rule 6 of the PDNGR: i. Legal Documentation 1. Duly filled-out covering information sheet showing a brief profile of the Applicant (Annex A-2); 2. Certified true copies of the Securities and Exchange Commission (SEC) Certificate of Registration, Articles of Incorporation and By- Laws, and latest Certificate of Amendment, if applicable; or their foreign equivalents. The corporate purpose of the Applicant shall include the authority to construct and operate Downstream Natural Gas Facilities; 3. Certified true copy of the updated General Information Sheet (GIS), or their foreign equivalent, and stamped-received by the Securities an xchange Commission (SEC) within twelve (12) months from te of the filing of application; and Page 6 of 20 === dc2017-pages-30.ppm === 4. Original Copy of the Secretary's Certificate showing authority of the Applicant's representative to apply, negotiate, sign and execute documents in relation to the application. ii. Technical Documentation 1. Applicant Profile The Applicant shall submit a duly notarized description of its own, or if necessary including that of the chosen member/s of the Applicant Group, experience and technical capability relevant to carrying out the proposed Project, specifically: a. A summary of the company profile, business direction, strategy and major accomplishments in the downstream Natural Gas industry; b. A summary and description of all gas-related projects completed and pending, if any, for at least the past three (3) years preceding the date of the application including the assessment of the performance of their construction, operation and economic feasibilities; c. Description of the qualifications and experience of key management, professional and technical personnel in the Downstream Natural Gas Facility construction and operation; d. Disclosure of any pending or determined with finality major safety or environmental enforcement actions by relevant authorities; e. Description of existing Natural Gas supply sustainability program and arrangements; f. If Applicant Group's technical capability will be used, the Secretary's certificate of the chosen member/s confirming a board resolution authorizing the commitment of the identified technical capability to the proposed Project; g. Other information that the Applicant may deem necessary to support its application or as maybe required by the DNG-REC. 2. Construction Plans and Designs a. General Project Description; b. Locational zoning clearance subject to the local government ing ordinance; Page 7 of 20 === dc2017-pages-31.ppm === . Quantitative risk assessment report for safe distance requirements; . Environmental (land, air, water and people) impact identification, prevention and mitigation assessment report of the proposed infrastructure and processes on the proposed site consistent with the Philippine Environmental Impact Statement System Law (EISS) and its implementing rules; . Geologic, Oceanographic, Seismic, Atmospheric, and Security hazard identification, prevention and mitigation assessment report: Distribution Impact Study (DIS) and Distribution Asset Study (DAS) or embedded power plant construction plan for power supply requirement; . Front End Engineering Design (FEED) and detailed building and equipment plans and designs (as developed during FEED and together with evidence of completion of the FEED stage) and their corresponding work program and budget; 1. Conceptual plans and designs of buildings, other facilities and equipment, with descriptions and flow diagram of their construction and installation processes including the integrity and safety engineering methods and technology applied with due consideration of the results of the assessments made from items guideline 2.a to 2.f above; 2. Summary list with sufficient description of the Philippine or Internationally accepted codes and standards specifically used as basis on the formulation of the plans and designs for the construction of buildings and other facilities and the installation of equipment including the materials used therein; 3. Planned Construction Schedule; 4. Plot Plans and list of key buildings, other facilities, equipment, access roads, safety zones and distances: 5. Manpower and construction equipment requirements; 6. Management of change system; 7. Maintenance of records system; Page 8 of 20 === dc2017-pages-32.ppm === h. Third party quality assurance program validation: 1. Safety and Quality Assurance Certifications of the plans and designs of the buildings, other facilities and_ installed equipment; 2. Safety and Quality Assurance Certifications of the material used on the construction, facilities and equipment; and 3. Safety and Quality Assurance Certifications of the applied engineering and technology for the construction, installation and operation of the buildings, facilities and equipment; i. A summary of the execution plan for the establishment of a professional project management team for construction, installation, testing and commissioning; j. A summary report prepared by the Applicant on other Government agencies’ permitting requirements before construction and before operation; and k. Other relevant studies or assessment reports that the Applicant may deem necessary to support its application. 3. Health, Safety, Security and Environment (HSSE) Assessment and Management Plan (Construction and Equipment Installation Phase) Submission of HSSE Management Systems, management and employee structure, manpower complement, qualification and competency / training development program and mitigation plans to address the risks at ALARP levels in the following areas: a. Environmental Risk Assessment and Management Plan Consistent with the Philippine environmental regulations and/or International Standard, a comprehensive assessment and management program shall be established to address project- specific risks and potential impacts to the environment. Potential environmental issues associated with the construction and installation of LNG equipment which includes, but are not limitéd to, the following: Page 9 of 20 === dc2017-pages-33.ppm === Threats to aquatic and shoreline environments; Hazardous material management; Wastewater; Air emissions; Waste management; and SEE Re Pe ae Noise. . Occupational Health and Safety Risk Assessment and Management Plan Occupational health and safety issues shall be part of a comprehensive hazard identification, risk assessment and management study which include but is not limited to Hazard Identification study (HAZID), Hazard and Operability study (HAZOP), and qualitative and quantitative risk assessments shall be conducted as appropriate. The results of these studies shall be used as input to the Health and Safety Plans (HASP) specific to construction and equipment installation phases. The HASP shall include but is not limited to environmental and safety processes, and safe systems of work/ procedures which shall be prepared, communicated and implemented to manage the risks. Occupational health and safety issues associated with the construction and installation of Downstream Natural Gas Facilities which includes, but are not limited to, the following: Fire and explosion; Roll-over; Contact with cold surfaces; Chemical hazards; Confined spaces; Working at heights; Lifting and rigging; Excavation; and SO AS? ST 2 Be aR So Other construction and installation related hazards. 7 ity Security Risk Assessment and Management Plan Page 10 of 20 === dc2017-pages-34.ppm === e. Facility security assessment shall be conducted to identify threats which include but is not limited to criminal and terrorist. The vulnerability of the facility/ location against identified threats shall likewise be assessed and corresponding plans shall be put in place. . Disaster/ Emergency Preparedness and Response Plan Based on the HSSE assessment, a plan shall be put in place to prevent, mitigate, respond to, and maintain continuity from an incident that threatens life, property, operations and the environment. Incident as defined is anything that has the potential . to cause interruption, disruption, loss, emergency, crisis, disaster or catastrophe; and Other areas of concern that the Operator may deem necessary. Financial Documentation The Applicant shall submit the following financial reports for each application: 1: Economic/Financial Feasibility report with clear demonstration of the projected revenue versus the costs associated with the project; and . Financial Closing methodology report covering the entire proposed work program and budget with clear demonstration of ability to meet funding requirements; Supporting Documents: