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Independent Process and Transparency Review for the Government of the Islamic Republic of Afghanistan Ministry of Mines Amu Darya Oil Tender. Details of the Review were published in a public disclosure by the Ministry of Mines in January 2012 and may be viewed here.

A brief summary is provided below.

Amu Darya Process and Transparency Review Final Report - Public Disclosure – Executive Summary

Introduction. The Government of the Islamic Republic of Afghanistan Ministry of Mines initiated a Tender for the award of a single Exploration and Production Sharing Contract for hydrocarbon operations in three blocks, Kashkari, Bazarkami and Zamuradsay in the Amu Darya Basin in northern Afghanistan. H.E. Wahidullah Shahrani, Minister of Mines, and members of the Inter-Ministerial Commission placed strong emphasis on the fairness, openness and transparency of the Tender process as a means of attracting quality global investment. Minister Shahrani included a third-party Independent Process and Transparency Review in the Tender to ensure the credibility of the transparency process and conformance with the Afghan Hydrocarbons Law, Hydrocarbons Regulations and international best practices. 

Key Activities of the Tender. On March 29, 2011 twelve firms submitted Expressions of Interest to the Ministry of Mines. On April 11, 2011 the Inter-Ministerial Commission (IMC) approved the prequalification of five international firms: Buccaneer Energy Ltd; CNPC International Ltd; PEL (Pakistan), Schlumberger Ltd, and Tethys Petroleum Ltd. Four of the firms submitted formal bids in accordance with the Tender Process on July 3, 2011 and these bids were opened in a public session at the Afghan Geological Survey on July 4, 2011.  

The bids were evaluated by a Contract Evaluation Team (CET) consisting of Afghan experts selected by the IMC. At the completion of the evaluation the CET recommended the preferred bidder to the IMC who approved the CET recommendations and forwarded the recommendations to the Council of Ministers. The Council of Ministers approved the CET recommendations on August 22, 2011 and authorized the Minister of Mines to enter negotiations with the preferred bidder, CNPC International Ltd. The Ministry of Mines team was successful in negotiating the Exploration and Production Sharing Contract to the advantage of the citizens of Afghanistan including the formation of an Afghan corporation with 25 percent ownership by the Watan Group of Afghanistan. IMC approved the negotiated contract on October 16, 2011 and The Peoples Republic of China subsequently approved the contract on December 8, 2011. The Council of Ministers approved the formal contract on Dec 26, 2011 and the contract between Government of the Islamic Republic of Afghanistan and CNPC International Watan was signed on December 28, 2011. The public notice of contract award was published in the Anis Daily, Hewad Daily and Kabul Times newspapers on or about January 4, 2012.

The Independent Process and Transparency Review. The Independent Process and Transparency Review Team (the Independent Review Team) had full and open access to all Tender documentation and to all Tender activities throughout the Tender process. The Independent Review Team directly observed many of the activities in Kabul including: bid receipt, control of documents, bid opening, bid evaluation including the activities of the Contract Evaluation Team, preparation of evaluation findings for presentation to the IMC, and the meetings of the IMC for approval of CET recommendations and EPSC to the Council of Ministers. Additionally, the Independent Review Team had multiple office interviews with Minister Shahrani and his senior staff. At the recommendation of Minister Shahrani the Independent Review Team suggested real-time transparency improvements during the Tender process and these suggestions were welcomed and adopted immediately.

The key objective and observations of the Independent Process and Transparency Review include:

Objective independent review of the transparency of the Tender processes, and conformance with Afghan Hydrocarbons Law, Hydrocarbons Regulations 2009 and international best practices.
The Independent Review Team observed the Tender processes to be designed and executed with transparency as a principal attribute in accordance with Article 12 of the Regulations. Key Tender processes were described in the Tender Documents and were closely followed in execution. The principal participants in the Tender processes were aware of and generally conformed to transparency protocols. The Tender Documents conformed to the Hydrocarbons Law and Hydrocarbons Regulations 2009. In practice, the Minister of Mines directed broader participation in the Tender decision process and more stringent transparency processes than prescribed by the Law and Regulations. The IMC Secretariat maintained a well established records keeping process that provided an excellent audit trail of Tender proceedings. The Tender was conducted in accordance with international best practices for fairness and transparency – a testament to the commitment of the Minister of Mines and the IMC and their staffs. The Tender has produced an Exploration and Production Sharing Contract with the potential to maximize revenues from Amu Darya for the GIRoA over the 25 year contract as well as contribute to the nation’s workforce development.

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