Ghana - Petroleum Regulatory Authority Bill

8/12/2019 Ghana - Petroleum Regulatory Authority Bill

1/130

Gh~na etroleum Regula~ory.t\~thority ill

MEMORANDUMThe purpose of this Bill is to establish an independent body theGhana Petroleum Regulatory Authority to regulate upstream andmidStream oil and gas activities. The Bill is also to create an enablingenvironrnelltfor inCreasedprivate sector participation and investment inthe petroleum sector and to strengthen the regulatory framework for

healthy comp;~titionand quality assurance.The Bill will establish a body with responsibility for the regulationoversight and monitoring of activities in the petroleum upstream and

midstream sector. Upstream is defined in l use 186 to includeexploration development and production of petroleum and midstreamactivities. Midstream is defmed to include petroleum activities betweenthe well-head and refinery transportation and storage of petroleum.Oil and gas ate some of the most valuable energy sources usedworldwide to drive industries co:niiiierceand trade. GlobaIisation andinternational trade liberalisation means that countries endowed with

valuable natural resources such as oil arid gas are well placed to harnessthe economic benefits accruing from thes-eresou;ces for the benefit oftheir people. As oil prices continue to reach new highs the importanceof this valuable resource islikelyto determine the fate of many economiesboth developed and developing across the globe. It is importaii.tthat therecent oil find in this country should present a blessing and not a curse. Itis therefore imperative that the petroleum sedor is managed in such away that not only the current population benefits but also that thefoundation is laid for future generations to benefit.

Unique challenges are presented by the upstream and midstreampetroleum sector. The setting up of a separate regulatory body solely forthe upstream and midstreams ector will enable the regulator and midstreambuild the needed capacitytoeffec~vely undertake .thetasks assigned to it.

. It isexpectedthat theregulator will focusits energyto e~erciseeffectivesupervision of activities in the upstream and mIdstream sector. Inaddition this will convey the importance the government attaches to theemerging petroleum industry.The effective management of revenues accruing to the countrYfrompetroleum is critical for the development of the nation. It is thereforeimportant to establish a sound platform for the revenue to be maximisedfor the benefit of currcnt and future generations. The principles that


2/130

Ghana Petroleum Regulatory utho rity Bill

)vern the management of petroleum revenues must be transparent.c:gu1arrevenue management audits as well as regular publication ofvestment and balances are necessary.

Distortions of the general economy occur due to the utilisation of:tro1eum revenues and an over concentration on petroleum to the:triment of others. It is therefore essential to create a balance thatomotes growth on all fronts and enSUresthat petroleum revenues do)t create significant distortions in the national economy. To this end,parate legal arrangements willbe made fora revenue management fundbe established by Act of Parliament.

The establishment of a Fund in place before the revenue starts tolpact on the economy will help ensure that oil revenue does not fuelflation or destabilise the economy.The recent discovery of premium quality oil in sizeable quantitieshich is likely to be realized in two years or more has brought into sharpcus the need to prepare the legal framework to ensw.:ethat maximum

:nefit is obtained from the oil revenue in the national interest and forture generations. The need to avoid the follies encountered in the oildustry by countries like Equatorial Guinea and Nigeria cannot be.Linsaid.The current legal framework spans the period of two decades. Thews that govern the operations of the petro1eumindu,stry include thehana National Petroleum Corporation Act, 1983 PNDCL 64) and the:tro1eumExploration and Production Act, 1984 pNDCL 84). Otherse the Petroleum Income Tax Act, 1987 PNDCL 188) and the Internalevenue Act, 2000 Act 592). The Ghana National Petroleumorporation Model Petroleum Agreement concludes the current legalImework. .Following two world-class discoveries by the Ghana National:tro1eumCorporation and its partners in 2007, Government organizede first ever oil and gas forum in Accra earlier this year to solicit views

ld opinions of industry experts, academia and the general public as to)w the new resource should be managed for the benefit of current andture generations. Since then, a number of seminars and workshopsIvebeen held.11


3/130

Ghana Petroleum Regulatory uthority ill

The role of Ghana National Petroleum Company in the emergingupstream petroleum activity has become very important. The law thatestablished the Ghana National Petroleum Company assigned to theCorporation the right to undertake exploration, development, productionand disposal of petroleum. The Petroleum Exploration and Production)Act, 1984 pNDCL 84) allows the Corporation to develop the hydrocarbonresources, either alone or in partnership with other companies. Otherfunctions include the operation of the Ghana N atiOIial PetroleumCorporation on sound commercial lines. The Ghana National PetroleumCorporation is the national oil company. The traditional role of the GhanaNational Petroleum Corporation has been the monitoring and regulationof petroleum on behalf of the Ministry of Energy. However, the discoveryof oil and gas has brought to the fore factual issues related to theCorporation s role as regulator and player in the upstream and midstreampetroleum sector. The call has been for the separation of the Corporation sregulatory function from its commercial function. The Corporation wasconverted to a company under the Statutory Corporation Conversion toCompanies Act, 1993 Act 461) but the successor company has not beenset up and the Corporation has not changed its mode of operating. Thesuccessor company will be expected to issue :sh~res to the Republic or anyother person to raise capital for its operations. It ;ill also take over theproperty, rights, liabilities and obligations of the erstwhile Corporation.

Under the Petroleum Exploration and Production) Act, 1984 PNDCL 84) the regulation of the upstream and midstream sector resideswith the Minister for Energy though the work is carried out by the GhanaNational Petroleum Corporation. The sector Minister hastlIe. right toprescribe and enforce Regulations that relate to exploration and productionof petroleum. Other functions include the secondary recovery andprevention of waste of petroleum to maximize the ultimate recovery ofpetroleum from a petroleurn field.Currently, there are no Regulations that govern the upstream andmidstream sector. The sector is regulated by a set of Regulations fromthe Environmental Protection Agency, the Internal Revenue Service andthe Ghana Standards Board. The absence. of Regulations for the upstream


4/130


d midstream sector has led to the incorporation of various Regulations:0 the petroleum agreemen,t which makes the agreement unnecessarilylrdy and voluminous.The existence ofa regulatory body to regulate the petroleum upstreamd midstream sector will improve efficiency in the sector through thelciency, transparency and predictability to be provided by the Authority.le full implementation of the Bill will provide the appropriate regulatoryviroilment to attract companies with the requisite fmandal and:hnical capabilities into the petroleum sector.

The Bill seeks to include the provisions in the draft amendment toe Petroleum Exploratiotl and Production) Amendment) Bill to\J nc L 84 and conso1id


5/130


It is also to develop mechanisms for proper consultations and partnershipwith communities for proper health safety and environmentmanagement.

l use 3 to 6 deals With petroleum rights. l use 3 vests the entireproperty control of petroleum in its natural condition on land or waterin this country in the Government on behalf of the Republic.l use 4 prohibits the conduct of petroleum explorationdevelopment production or operation without a licence. The exploration

development and production of petroleum is to be done in accordancewith a petroleum agreement. A contravention of this provision is anoffence which attracts a fine of not more than eighty thousand penalty.units or a term of imprisonment of not more than ten years or to both.In the case of a body corporate a contravention attracts a fine of notmor~ than twenty thousand penalty units.l use 5 provides for agreements with the Republic. The Authoritymay enter into an agreement on behalf of the Republic. Other conditionsare that the agreement is consistent with the Act for the grant of a licencethe conditions are for the grant or renewal of a licence and the conductby a company or contractor for exploration or development operationson behalf of a person to whom a licence may be granted.l use 6 deals with Graticulation of the earth s surface. The surface

of the earth is to be considered to be divided into graticular sections inthe manner set out in the First Schedule.l use 7 establishes the Ghana Petroleum Regulatory Authority as abody corporate with the normal attributes.l use 8 provides for the object of theAuthority. The Authority is toregulate oversee and monitor activitiesin the upstream and midstreampetroleum sector and support the country s policy objectives in theupstream and midstream petroleum sector.The functions of the Authority are provided for in cl use 9. Thefunctions include .the provision of an enabling environment for increasedprivate sector participation and investment in the upstream petroleumsector and the strengthening of the regulatory framework for healthycompetition and quality assurance in the sector. Other functions are the

v


6/130


rticipationln the initiation, negotiation and administration oftroleum agreements, assessment of Field Development Plans and theministration of petroleum data. The Authority is responsible for the:ertainment of the cost oil due to licensees and the promotion ofmned, well executed and cost-effiCientoperatio~.s. The Authority isa to ensure optimal utilisation of existing and planned infrastructure.l use 10 provides for the governing body of the Authority which is~Board. The Board comprises nine people, the Chairperson, the Chief:ecutive,the Chief Executive of the Company and six others appointed

the President on the basis of their expertise. The Board is to perform~functions of the Authority.l use 11 provides for the independence of the Authority. Thelthority is independent of the control or direction of any person orthorityother than the Minister who may give policy directions. Theinister concerned is the Minister a~signedresponsibilityby the President.

le policy directions are not to adversely affect or interfere with the:lependence of the Authority or the performance of its functions. Thissimilar to the position of the Central Bank.l use 12 to 14 provides for the tenure of office of members of thelard, meetings of the Board and disclosureof interest respectively.l useprovides for the establishment of committees. Pro~o:q. is made for a

ecialized committee to deal with the vendor development programme.l use 16relates to allowances ofmembers of the Board and memberscommittees of the Board.l use 17 provides for the appointment of a Chief Executive of thelthOrity. The Chief Executive may delegate any functions of officebutnot absolved from final responsibility. Functions of the Chief Executive:;the contents of cl use 18. Provision is also made for a secretary of the ard and other staffin cl use 19. l use 20 deals with funds of the Board.l use 21 deals with tax exemption and cl use 22 with expenses ofc Authority.l uses 23 and 24 provide for the standard provisions for accountId audit and annual report and other reports.


7/130


l use 25 relates to the Ghana National Petroleum Company, i1successor company to the Ghana National Petroleum Corporation andprovides for related matters. The Corporation established under theGhana National Petroleum Corporation Act, 1983 PNDCL 64) wa~.converted to a company limited by shares in accordance with the StatutoryCorporations Conversion to Companies Act, .1993 Act 461). The assetsproperties, rights, liabilities and obligations of the Corporation are tovest in the successor company. ..

Part Two of the Bill deals with licensing. l use to 57 deals withPetroleum Exploration Licence. l use 26 requires the Government toensure that an evaluation is undertaken of the various interests involvedin an area and that preliminary geological, geophysical and environmentalassessments are undertaken before the opening up of new areas with aview to the grant of a petroleum exploration licence. The evaluation is toinclude an assessment of the impact of the petroleum activities on trade,industry and the environment and of possible risks of pollution as well asthe economic and social effects that may result from petroleum activities.

l use 27 provides for a petroleum exploration licence. A person whointends to carry out geological, geophysical, petrophysical, geochemicalor geotechnical activities is to apply to the Authority for a petroleumexploration licence which is either exclusive or non-exclusive. Thepetroleum exploration licence confers on the licensee the right to explorefor petroleum and to carry on the operations and e2 ecute the works thatmay be necessary for exploration in the exploration area. The licence issubject to the provisions of the Bill and to the conditions specified in thelicence or to which the licence relates, while the licence remains in force.

l use 28, among others, provides that an application for a petroleumexploration licence is to be submitted to the Authority in a mannerprescribed by regulations. The application is to be in writing and beaccompanied with an application fee prescribed by the Authority. TheAuthority is to confirm in writing to the applicant that the application iscomplete within thirty days after receipt of the application for a petroleumexplotation licence. ..

l use 29 provides for activities authorised by a petroleumexploration licence. A petroleum exploration licence is to authorisegeophysical geological,. petrophysical, geochemical and geotechnical

l


8/130


:tivities including shallow drilling. The clause empowers the Authoritylimit an individual petroleum exploration licence to apply to particularpes of exploration. The Authority is to make it a condition of a:troleum exploration licence that information is to be given to theuthority about the sale or exchange of exploration results. It is also toipulate conditions for the implementation of exploration activities undere petroleum exploration licence.

lause30 requires a licensee to pay an annual fee in respect of the:ence area as may be prescribed by the Authority. lause31provides for the contents of a petroleum exploration licence.le contents include the dateof grant of the licence, the block or blockswhich the licence relates and the conditions on which the licence isanted. lause32 empowers the Authority to set out any terms, conditionsld limitations to a petroleum exploration licence in the exploration:ence. lause33 provides that a petroleum exploration licence is to remainforce for the period specified in it, but not more than two years or forrenewal period of not more two years unless otherwise determined byrrrender or cancellation. lause34 empowers the Authority to amend a petroleum exploration:ence. It may vary the duration of a licence, add to or remove terms,mditions or limitations of the licence at any time after it has informed

e licensee of the course of action to be taken and after it has given thecensee reasonable opportunity to be heard or to give writtenpresentations .. lause35-50dealswith petroleum exploration and production licence,

lause 35 enjoins the Authority to announce the blocks for which plications for petroleum exploration and production licences are to betbmitted. The announcement which may be published in the Gazette a~wspaperof national circulation or an international petroleum industry:agazine or publication, is to stipulate the time limit within which plications may be filed and also contain other information considered~cessaryby the Minister.

VIII


9/130

hana etroleum Regulatory Authority Bm

l use 36 provides for the application for a petroleum explorationand production licence. It requires a person who intends to explore andproduce petroleum to apply to the Authority for the requisite licence.

l use empowers the Authority to grant an exploration andproduction licence in relation to a block based on conditions to bedetermined by the Authority. The licence provides the licensee with theexclusive tight to the area to which the licence relates. A petroleumexploration licence is granted for a maximum period of thttty years.l use 38 provides that a petroleum exploration and productionlicence may be granted to two or more persons.l use 39 provides that a co-operation agreement entered into forthe purpose of application for a joint petroleum exploration andproduction licence is to be submitted to the Authority. The Authoritymay require alterations to be made in the agreement as a condition forthe grant of the licence.l use 40 provides that a petroleum exploration and productionlicence isto be granted on the basis of the technical competence experience

and financial capacity of the applicant and the applicant s plan forexploration and production in the area for which the licence is sought.Where the applicant is or has been a holder of a petroleum explorationlicence theAuthority may take into consideration any form of inadequateefficiency.or inadequate responsibility that may have been demonstratedby the applicant as a licensee. The criteri3.forthe grant of a licence are tobe applied in a nOn discriminatory manner among the applicants.

Where two or more applicants are regarded to .beequal on the basisof the criteria stipulated by the Authorityj other relevant objective andnon- discrirtlinatory criteria that will make a final choice possiblebetweenthe applicants may be used as a basis for the grant of the licence.

l use 41. provides for. the conditions. and requirements for apetroleum exp1oration andproduction1icenc~Conditions andrequirements forthe grant of a petroleum exploration and productionlicence and for the conduct of petroleum activities under a petroleumexploration and production licence are to be based 011 the need to ensurethat the petroleum activitieswithin the area of the petroleum explorationand production licence are carried out in a proper manner.


10/130


The conditions for the conduct of petroleum activities under apetroleum exploration and production licence are also to be based on~onsideration for national security economic and efficient operationsJublic order public health transport safety environment protectionafety of facilities and employees protection of biological resources andtlational treasures of artistic historical or archaeological value andystematic resource management.

l use 42 among others requires a licensee to pay an area rental fee~a1culated per square kilometre for a petroleum exploration andproduction licence. The fee is to be paid within the period of validity of~helicence.

l use 43 enjoins the Authority to grant a petroleum explorationmd production licence on conditions which give effect to the applicationmdthe requirements of the Act.The Authority may grant a petroleum:xploration and production licence on the conditions that it determines.

l use 44 enjoins a licensee to maintain a company which has the~apacity to independently. manage the petroleum activities from the::ountry unless otherwi~e decided by the Authority. The Authority may;tiplllate specific requirements including its capital in respect of the::company.

The licensee is to ensure that the circumstances permit organisedlabour activity to take place among its employees-and the personnel of::contractorsand sub-contractors in accordance with the Labour Act 2003~Act65l .

Petroleum activities are to be conducted from a base in the countryand the licensee maybe ordered to use bases .designated by the Authority.

l use 45 empowers the Authority to appoint or approve an operatoriuring the grant of a petroleum exploration and production licence. Achange of operator is to be approved by the Authority and when warrantedfor particular reasons the Authority may undertake the change ofoperator.

Under cl use 46 a petroleum exploration and production licence:::onfers on the licensee exclusive rights to carryon explorationdevelopment or production operations in the block to sell or otherwise

x


11/130


dispose of the licensee s share of petroleum recovered. The licensee hasthe right to carry on operations and execute works in the block as arenecessary for or in connection with the exploration, development, orproduction activities or sale or disposal of the licensee s shares. The- exclusive rights are subject to the Act and to the conditions specified inthe licence or to which the licence is otherwise subject.

l use 47, among others, requires a holder of a petroleum exploration- and production licence to carry out activities in accordance with thepetroleum exploration and production licence, the Act and regulationsmade under the Act.The licensee is to meet the requirements on the work and expendituresetDut in the licence or in a petroleum agreement as regards the petroleum

exploration and production area.l use 48 empowers the Authority to grant the renewal of a licence

on the conditions that it considers appropriate. The Authority is not togrant the renewal of a petroleum exploration and production licence ifthe licensee is in default, unless the Authority considers that specialcircumstances exist which justify the grant of the renewal despite thedefault. The licence renewal is to stipu,Jate what part of the area is coveredby the petroleum exploration and production licence.

l use 49 provides for the transfer of a petroleum exp4;>ration andproduction licence and related matters. This is to be done with the writtenconsent of the Authority. .

l use 50 provides for the relinquishment of areas. The Bill affords alicensee the option to relinquish parts of the area covered by the petroleumexploration and production licence d .,lring the period of a petroleumexploration and production licence. The licensee is to give the Authority- three months notice of the intention to relinquish parts of the area. Alicensee may take this action at the end of each calendar year.

The Authority is to require the obligations stipulated in the petroleumexploration and production licence and the conditions on which it hasbeen granted to be fu1:filledbefore relinquishment.

l use 51-57 deals with the obligations and duties oflicensees. l use51 enj oins a licensee to carry out exploration and development operationsXl


12/130


in the exploration or development area in a proper and safe manner andin accordance with good oil field practice. It also requires a licensee toamong other things take reasonable steps to secure the safety healthenvironment and welfare of persons engaged in those operations in theexploration or development area and treat pollution where it occurs ordisperse it in an environmentally acceptable manner.

The licensee is required to submit a detailed report to the Authorityan the technique to be employed an estimate of the time to be taken thematerial to be used and the safety measures to be employed before thelicensee drills a well.

l use 52 empowers the Authority to allow a licensee to flare and nt natural gas in accordance with the terms of the instrument of consent.The licensee may flare natural gas in an emergency where the flaring iscequired to safeguard the health and safety of persons in the explonitionJr production area or to prevent damage to the property of any person the exploration or development area. .

l use 53 provides for the abandonment of a well by licensees. Aicensee is to submit to the Authority reasonable notice of the licensee sntentlon to abandon a well. The closure or plugging of a well is to be:arried out with. the prior consent in writing of the Authority in themanner approved by the Authority.

l use 54 deals with offences by licensees. it provides that a licenseeAlhocontravenes; fails or neglects to comply with a requirement of section51 and 53 commits an offence and is liable on summary conviction to aJne of not more thail one million five thousand penalty units. It is10wever a defence if in proceedings on aprosecution for the offence theJerson charged proves that reasonable steps were taken promptly to complyvith the requirements of section 51 52 and 53.

l use 55 provides that the Authority may at any time by notice invriting served on a licensee direct the licensee to carry out a survey ofhe position of a well structure or equipment specified in the notice andubmit a report in writine; of the survey promptly to the Authority.Where the Authority is not satisfied with a report of a surveyubmitted by a licensee the Authority may by notice in writing served

Xll


13/130


on the licensee direct the licensee to promptly submit further informationin writing in connection with the survey.

Where the licensee fails to comply with the directive of the Authoritythe Authority may cause the survey to be carried out and surcharge thelicensee with the expenses incurred. The expenses may be recovered in court as costs even if the licensee concerned is convicted of an offenceunder this clause

lause 56 requires a licensee to measure weigh or calibrate thepetroleum produced and saved from a licence area. The licensee is to usea method or methods customarily used in good oil field practices approvedby the Authority. A licensee is not to alter the method of measurementweighing or calibration used by the licensee or in appliances used for thatpurpose without the consent in writing of the Au~ority. The Authoritymay require that an alteration is not to be made except in the presence ofa person authorised by the Authority on the occasions or at the intervalsand by the means specified in the direction.

A measuring weighing or calibrating appliance found to be false orunjust after the consideration of a representation is to be considered tohave existed in that condition during a period that is represented by halfof the period from the last occasion when the appliance was tested orexamined to the date when the appliance was found to be false or unjustand any royalty and other moneys payable under the licence for that periodare to be adjusted accordingly.

lause57 requires a licensee to notify the Authority of a meeting_ between licensees not later than fourteen days before the proposed dateof the meeting. The Authority may attend the meeting an as observer.Part Three deals with exploration development and production operations. lause58 provides that the holder of a petroleum exploration

and production licence may explore the relevant area. The holder mayuse geological geophysical and any other acceptable methods ofexamina tion to identify the prospects for petroleum and within sixtydays after the date of the grant of the licence if not earlier commenceexploration operations in accordance with the terms of the petroleum.agreement.

XIII


14/130


lause59 provides that a licensee is not to carry out a seismic surveyIn a licence area unless the licensee has been issued a permit for datamrvey by the Authority in a form and manner prescribed by the Authority.1.\ permit is to be obtained in respect of each licence area .

lause 60 provides for the commencement of drilling operations.rhe licensee is to notify the Authority in writing of the proposed site inlccordance with the Regulations issued by the Authority as soon as the:ite of a well has been decided, for the approval of the Authority. The.I.\uthority may withhold permission and give reasons to the licensee forhe refusal. lause61 among others, provides that each well is to be identified by

1. unique designation for which the licensee shall obtain the prior approvaln writing from the Authority. The designation is to consist of the nameJfthe field in which the well isto be drilled, followed by the serial numbervhich indicates the chronological order in the drilling sequence for theJlock. The names are to refer to a geographical, topographical or other~eneral feature in the vicinity of the field and maybe chosen from thelames of the flora and fauna. .. .

A field is not to be named after an individual without permission invriting of the Authority, and P1any case, a field is not to be named after. person who is alive or after a person who is not a citizen of Ghana. lause62 prohibits the operation of adriIling rigor. other drillingquipment without a valid licence granted by the Authority and the priorpproval of the national security co-ordinator. lause63 provides for development. A licensee who intends to developpetroleum field is to submit a plan for field qevelopment and operation, the Authority Jor approval. The plan is to be in a format designed by

11eAuthority and is to contain an account of economic aspects, resourcespects, technical, safety related, commercial and environmental aspects,s well as information as to how a facility may be decommissioned and:isposed of when the petroleum activities have ceased. lause64 empowers the Authority to limit the approval of the fieldevelopment plan to apply to individual phases. A licensee is not to

ischarge substantial contractual obligations and not commen~onstruction work until the plan for development and operation ispproved. The licensee may however do so with the consent of the

X


15/130


Authority. The licensee is to inform the Authority of any significantdeviation or alteration of the ter:ms and preconditions on which a planhas been submitted or approved and any significant alteration of facilitiesfor the approval of the Authority.

Under clause 65 where the petroleum reservoir straddles two or morelicensed blocks the Authority is to direct the licensees in the blocks toenter into an agreement in writing to develop a petroleum reservoir as aUnit in accordance with Regulations by the Authority. Unit developmentmeans the co-ordination of operations for the recovery of petroleumbeing carried on or to be carried on in adeve10pment area in.which thereis part of the reservoir in one block and the other part in another block.

lause66 empowers the Authority to direct the holder of a petroleumexploration and production licence to take the necessary and practicablesteps to recover petroleum. The Authority is to issue the directive wherepetroleum is not being recovered in a development area and the Authorityis satisfied that there is recoverable petroleum in that area.

Under this clause the Minister or the Authority may where petroleumis being recovered in a development area by notice in writingserved.onthe holder of the petroleum exploration and production licence directthe holder to take the necessary and practicable steps to increase the rateat which the petroleum is being recovered to a rate not 1llorethan thecapacity of existing production facilities that the Authority specifies inthe notice.

The provisions of this clause on the requirements of any dire ctiongiven under this clause are not to be constrUed to require the holder of apetroleum exploration and production licence to do anything which is

~ not in accordance with good oil field practices or to refrainfrom doing- anything which is in accordance with good oil field practices.

lause67 provides that the production of petroleum is to be done so- that as much as possible of the petroleum in each individual petroleum

deposit or in several deposits or in combination will be produced.The production of petroleum is to take place in accordance with

prudent technical and sound economic principles and in a manner that


16/130

Ghana Petroleum Regulatory Authority ll

vaste of petroleum or reservoir energy is avoided. The licensee is requiredo carry out continuous evaluation of the production strategy and~chnical solutions and is to take the necessary measures to achieve this. -

lause68 provides that a licensee is not to flare or vent petroleum in~cess of the quantities needed for normal operational. safety unless .pproved by the Authority. This clause furtherprovides for the conditions which the Authority will tonsent to the disposal of gas by flaring orenting for normal operational safety. The consent of the Authority is,ot required in the case of an emergency. A licensee who contravenesbis section commits an offence and is liable on summary conviction to ane of not more than three penalty units for each one thousand cubic :etof gas flared.

lause69 empowers the Authority to approve theprod.uction schedulend issue a production permit to the licensee before productionommences. The Authority is to stipulate the quantity of the petroleum.rhich may be produced or injected on application from the licensee forxed periods of time. Other matters related to the production schedulere also provided for under this clause

lause 70 provides for conditions based on which the Authority is torant a petroleum exploration and production licence. A petroleum;{ploration and production licente is not to be granted unless, amongthers, the development plan of the applicant ensures the most efficient,eneficial and timely use of the petroleum resources concerned and takesroper account of good oil field practices and safety factors. Adequatenancial resources and technical and industrial competence and:;:perienceto carryon effective production operations and the applicant siJility and willingness to comply with the conditions on which a licence[ould be granted, must also be present.

lause71 provides among others, that where a petroleum deposit\:tends over more than one licence area with different licensees, efforts,e to be made to reach agreement on the most effiCient co-ordinationp the petroleum activities in connection with the petroleum deposit asell as on the apportionment of the petroleum deposit.

xv


17/130

h n PetroleumRegulatory Au.tho~iijr,B~1l

This applies similarly when joint petrqleum activi,tie~-w9~tdl>,~:moIeefficient in the case of several petroleum deposits. Agre~rtlehts(:mjointexploration drilling are to be submitted to t;h~Aumoriw. , .Clause provides for postponement ofdeve1op~ep.tor productionof a field in consultation with. the licensee. The proVisionsre 1a:ted toextension of the licence, extension of the time liririt set foI lInpleme.ntingthe work obligation and payment of area fees duting anexten~ioll,periodapply.

Clause 73 proviejes among others that a petroleum explpratl.l:1n.:,andproduction licence is not to preclude the grailt to petsons, btl1ef :t1J.an:thelicensee of rights to undertake eXploration for and production ,ofIiafutalresources other than petroleum resources if it does not cause unreasonableinconvenience to the petroleum activities conductedbya licensee underthe petroleum exploration and production licence. .,

The right to undertake exploration for andptoductlonOfnaturalreSources other than petroleum resources, inc1udess2i e.ntificTes~Mcl1.

Clause74-78 deals with the testing ofpetr6leum. Thes~ cl~uses,~I6videfor inspection and sampling of petroleum, purpose_oftesting alldrestrictions, testing officer, manner of testing and certificate of .testing.

Clause79-81 deals with national requirements and localpricing. plaNe79 provid~s for supplies to cover national require:rn:entswhilc:ildust .sJ30and 81 provide for supplies in the event of war; threat ofwai;IIidpri,Cingof petroleum respectively. , . . .,

Clause 82-88 deals with transportation ofpettQieum;, (;ldiise 8i ~l1d83 provide for licence to install and operate facilities fot transpdrt andstorage of petroleum and landing of petr6letlm. Clause :84~88:deals ,Wi,thlicence for transport of petroleum by pipeline, survey 6fpjplitiei orites,right to construct, operate and maintain pipelme,pipelih tariffni.ndlicence to transport petroleum other than by pipeiirte:,, . , ,, / ,

Clauses 89 and 90 provide for storag~ oipe~oleum ; Tn~~;eiatl sec;deal with the licence to store petroleum and th~Je(ruir~menftd:useapproved methods and practices to confine pettbleuIhobtiliiieg..

Clause91 - 137 deals with decominissioning, statepa.tti6ipa tfortandnational content, registration and mortgaging, liability fordamag(l duex vi i


18/130


pollution surface rights and compensation safety information andlcu:inentation.lause 91 requires a licensee to decommission the facilities used introleum activities upon the cessation of petroleum activities submit acommissioning plan to the Authority before a development plan isproved or a specific licence to install and operate facilities is approved.lau e 92 establishes the decommissioning fund for each development.d production area for the purpose of costs related to the implementation

a decommissioning plan. Contributions into the fund are tommence from the calendar quarter and are to be paid into an Escrow~count opened at a bank agreed between the licensee and the Authority.lause 93 enjoins a licensee to notify the Authority of the time ofmination if the use of the facility is expected to terminate permanentlyfore the expiry of the licence.lause 94 deals with disposal of decommissioned facilities. The

lthorityis to decide on the disposal of decommissioned facilities andpulate time limit for the implementation of the decision. The decisionto consider technical safety. ~nvironmental and economic aspects as:11 as on the consideration for other users.lause 95 enjoins the Authority by notice in writing served on therson who is or was the holder of the licence to direct that personthin the period specified in the notice to remove or cause to be removed

m the area property brought into that area and perform other acts.lause 96 provides for the removal and sale of property by the:thority while clause 97 provides for liability for damage oronvenience caused wilfully or negligently in connection with disposalthe facility or other implementation of the decision.lause 98 provides that where the Government requires removal of aility any lien charge or encumbrance on the facility is to lapse and the

11tsof use established with consent ofthe Authority are to-remain ince except where the Authority determines otherwise.lause 99 provides for assumption. of ownership of facilities by

vernment and matters incidental to. the assumption of ownership.lause 100-06 deals with government and private partiCipation and

:dor development programmes in petroleum activities. These clausesxviii


19/130


provide for participation of the Republic in petroleum activities throughthe Company. The interest of the Ghana National Petroleum Company,transfer of assets to the Company are dealt within these clauses. Theprovisions of goods and services by national entrepreneurs, training andtechnology transfer and employment and training of citizens of Ghanaare provided for under this heading.

Clause 107-110 deals with registration and mortgaging. Clause 7establishes a register of licences to be known as the Petroleum Register.The Authority is to keep a register of the licences issued in the PetroleumRegister.

Clause 108 provides that the Authority may consent to the. mortgageby the licensee of the whole licence or the licensee s share of the licence aspart of the financing of the activities associated with the licence. It mayin special cases, permit the financing to include activities under a licenceother than the one which is mortgaged, .

Clause 109 provides for the scope of mortgage. The mortgage of thewhole licence comprises the rights which are in respect of the licence andany other right of the mortgagor in connection with any activity carriedout in accordance with the licence.The mortgage does not comprise a right in relation. to.a facilityregistered another register of mortgages or rights in relation to~afacility

that is subject to private property rights. The Mortgages Act 1972 (NRCD96) applies to mortgages under this Act.

Clause 110 requires the Authority to give a mortgagee notice inwricing of the revocation or surrender of a licence or of a participatinginterest in a licence together with the information that the mortgage willlapse where a forced sale is not requested in time.

Where a forced sale is requested in time, a new licence is not to begranted to the detriment of the mortgagee s rights. The mortgagee s rightsis not to be transferred or mortgaged, made the subject of distrait, arrest,debt settlement proceedings or included in the mortgagee s estate inbankruptcy without the consent of the Authority.

Clause 111-117 deal with liability for damage due to pollution. Clause111 defines pollution damage as damage or loss caused by pollution as


20/130

Ghana Petroleum Regulatory uthodty ill

aresult of effluence or discharge of petroleum from a facility including awell. This clauSe also defines a vessel used for stationary drilling or usedfor storage or transportation of petroleum as a facility or part of a facility.Clause 112 provides for an oil spill response fund to be managed. bythe Authority and licensees. Licensees are to contribute to the fund asdetermined by the Authority. The purpose of the fund is for the clean upof oil spills resulting from the operations of the licensees. The clausefurther provides that the contributions are not to count as petroleum costor cost oil as the case may be.Clause 113 provides that clause 111 applies to liability for pollutiondamage from a facility when the damage occurs in this country oraffects a Ghanaian vessel or a Ghanaian fac;ilityin adjacent areas.The Authority may by agreement with a foreign state issue rulesthat relate to liability for pollution damage caused by any petroleumactivity under this Act. The Rules are not to restrict the right to

compensation provided in respect of an injured party over whom theGhanaian court has jurisdiction.Clause 114 provides for the liable party in po~ution matters and the

extent of liability and for related matters; This tel flUS e makes a licenseeliable for pollution damage without regatd to fa It. futhe case wherethere are several licensees under a licence and one 0 them is the operatorthe.claim for compensation is to be initially dire ed to the operator.

Clause 115 provides that where pollution damage occurs in apetroleum activity and the activity has been conducted without a licencethe party that has conducted the petroleum activity isliable for the damageregardless of fault. This provision applies to any other person who hastaken part in the petroleum activity and who knew or should have knownthat the activity was conducted without a licence.Clause 116 provides that the liability of a licensee for pollutiondamage may only be claimed in accordance with the Act and cannot beclaimed against a person who by agreement with a licensee or thatlicensee s contractors has performed a task or work in connection with apetroleum activity OT who has manufactured or delivered equipment t~be used in a petrolet ~ctivity among others.

xx


21/130


Under clause 117 a licensee is not to claim recourse for pollutiondamage against a person who is exempted from liability unless that personor any other person in his or her service has acted willfully or by grossnegligence. Recourse .liability may be mitigated to the extent that it isconsidered reasonable in view of manifested conduct economic abilityand the circumstances in general .

.An agreement on further recourse in respect of a person against whomliability cannot be claimed is not valid.

lause118 provides for the legal venue for an action for compensationfor pollution damage. The action is to be brought before the Court withinthe jurisdiction where theeffiuence or discharge of petroleum has takenplace or where damage has been caused.

lause119-124 deals with surface rights and compensation. lause119 provides for restrictions and rights of others and related matters whileclause 120 provides for right to surface activities.

lause121 enjoins a land owner of any land or the holder of a licencein an exploration or development area to retain the right to subsurfaceactivities if the subsurface activity does not interfere with exploration ordevelopment operations in the area.

lause122 provides fQr acquisition of exclusive rights. It permits aholder of a petroleum exploration and production licence to obtain alease of the land or other right tou se it on t:ernis in respect of the rent tobe paid the duration of the lease or the extent or area of tlte land towhich the lease or other right re1atesor between the holder and the landowner or .failing an agreement .as may be determined by arbitration.

lause123 provides extensively for compensation for disturbance ofrights. The clause deals with the payment of rent or compensationconsideration for compensation and basis for compensation.

lause124 provides for handling of claims. lause125 provides for safety. It enjoins a licensee to identify andevaluate hazards and risks associated with petroleum activity carried out

under the licence. The risk must constitute a hazard to the heal~ of aperson employed for that purpose.

XXI


22/130


Clause 126 empowers an operator to take the necessary precautionsto ensure the safety of an employee or a person who is present in thevicinity of an installation. Other precautions are for the protection ofthe environment and natural resources and the prevention of pollution.

Clause 127 provides for emergency preparedness and ~njoins a licenseeor participant engaged in petroleum activity to maintain efficientemergency preparedness. This is to deal with accidents and emergencieswhich are likely to lead to loss of lives, personal injury, pollution ordamage to property. Other responsibilities of the licensee under the chmseinclude the taking of measures to prevent. or reduce harmful effects orreturn the environment to the condition in which it was before the accidentoccurred. The clause also empowers the Authority to make Regulationsfor emergency preparedness and the fostering of co-operati9nbetweenlicensees in matters of emergency preparedness.

Clause 128 deals with emergency preparedness against deliberateattacks. A licensee is to initiate and maintain security measures to avoiddeliberate attacks against facilities. A licensee ..s to have at l,lltimes acontingency plan to deal with an attack. Other duties include theplacjngof facilities at the disposal of public authorities for drills bya licenseeand the participation in drills by the licensee. -

Clause 129 provides that a safety zone is to be provided in eachpetroleum activity facility. The Authority is to -establish ore]{.tend safetyzones in cases of accidents and emergencies. The clausefiirtherp~ovldesthat the Authority is to have safety zones in the country even where thefacility in question is located outside the country. Also, the sa tjzone isto be established within a reasonable time before the placement ofa facilityand around and above abandoned or-dumped facilities or parts of-thefacility. -

Clause 3 deals with the suspension of petroleum activities. In casesof emergency or an accident, a licensee or person responsible for theoperation of a facility is to suspend activity for as long as necessary. Inspecial circumstances, the Authority is to suspend operations or imposea particular condition to allow the continuation of the activity. -

Clause 131 enjoins a licensee to prepare a plan for the docUl1)eptationon the implementation of work and submit it to the AuthOrity as part ofthe regulatory safety supervision. .

XXll


23/130


24/130

Gh,~ la~~tr()leu~lRegulatfJ YJ\uthorityBill

;mmercial conficience and commercial terms. A required fee is to becid' before thepro~iQn'of the information.

lause 137prpmdes, for the confidentiality of data. A licensee is to:ep data subinlttedto '~overnment in coD,fid~nce.

A partytoan_agreeD,J~ntunder the Actis not to reproduce or discloseltato athir4 PartY exc:eptwith the prior written consent of the Authority.he Atitho;rity i~ equ~l1yenjoined to disclose data prior to the,-linqlllshfu~t of an'exploration area with the prior written consent of,e liCensee. . laus e137 (4)provides for the disclosure of information bya licensee

) an affiliated company, the home Government of the licensee, aepartment, agency or instrumentality required by law, the recognisedock xc1].angeon which the shares of the licensee or its affiliated companyce traded, a financial institution; professional adviser and arbitrator who experts under the Act., .

The Authority is to make a disclosure to an agency of therovemment, a financial institution or a consultant or professional advisei') the GOVeIl1Inent.

Under the cla1,lse,disclosure of data to a third party ,is allowed on;rms which ensure that the data is treated as confidential by the recjpiellt.'ubclause(lO) proV;idesthat a party is not to publish or disclose to a thirdarty the performance agreement and coilfidential information of a partyrhich;becomeskllown'to the other party without the former party's;rritten consenturiIess the other party can commuriicate to a lawyer, .anccountant,prqfe~siol1al consultant, an underwriter, lender, agent,'censee or shipping company.

Subclause } defines confidential information for' the purposes,fthe section,t()IDchid,c information identified as confidential1:JY thelaIty origiJiaI1y in PQssession of it and disclosed to another party butxcluciesmformation previously known to the other party or infOrmationvhichis within the Pu 1:>~comaiIi or th(l.t comes into the possession ofne other .party t1:rr.()ugh. breach of the confidentiality undertal9ilg.T te:onfidentiClliw J;equrreJP.,entsare to expire on the relinquishinentofthe-reatowfuch theirifoimation relates. . , .

XXIV


25/130

GJl ana Petroleum Regulatory Aqthority ]lill

Clause 138 - 145 of the Bill deals with fiscal arrangements. C1au$e j38provides that an annual charge calculated in a mannertheiAuf11o~tYdeterm,Ules i$ to be paid by a registered holder of a lic;enCe. TJ1.e:~liatge'isto be paid on the grant of a licence and subsequently On an ap1J,p~l1;>'a$isoti'Ule apniversary of the grant until the termin,atio:p. of th.li~eti(;e.~':


26/130

Ghana Petroleum Regulatory uth rity Billlicensee with an ord.er for the prohibition of removal of, or the dealing inor with petroleum from the area concerned.

Clause 145 provides for the recovery of royalty. The Court isempowered to recover royalty payable as a debt. A certificate by theAuthority which certifies that a specified amount of royalty is to be paidis to be received as evidence of the fact, despite the right to adduce evidencein rebuttal. .Clause 146 to 149 deals with cross border activities. Clause 6

empowers the Authority to reach agreement on the most efficient coordination of petroleum activity in connection with petroleum depositthat extends over more than one block with different licensees or on tothe continental shelf of another state.

Clause 147 provides for sharing activities. The Authorityis to decidethat a facility comprised in the plan for development and operation ofpetroleum deposit, transportation and utilisation.owned by a licensee isto be used by other licensees for the efficient operation. or benefit of societyif warranted by considerations.The Authority is to impose conditions and issue orders related toaccess for each individual case. An agreement on the use of a facility isto be submitted to the Authority for approval unless otherwise determinedby the Authority. Subclause 4) of this clause allows the Authority tostipulate a tariff, impose a condition or subsequently after a conditionthat has been approved or stipulated in order to ensure that theimplementation of a project is carried out with due regard to

considerations. Other issues related to resource management to beconsidered are to provide the owner of the facility with a reasonable profitand also investment and risks taken.The clause further provides. that a person who needs to use the facility

of another party on non-discriminatory conditions ~s to have a right tothe use in accordance with. the Act. Profit from production is to beprimarily earned by the producing field, the owner s incentives to maintainthe capacity of the facility, to make sensible investment and to ensureadditional capacity.

ClaUse148 is on sharing. Where as a result of exploratory drilling bya licensee, a discovery is made that indicates the presence of a comrnenfield between two Governments, the two Governments are in consultation

XXVI


27/130


with the respective licensees to negotiate. on the rtlanner in which theproceeds from the common field are to be apportioned.l use 149 deals with immunity and facilitation of non-nationals.The Authority istorecortlmend the grant of immunity to a non-nationaand any special privilege in connection with measures for the preventionand action against illegal acts of persons who pose as a safety threat tothe petroleum activities of Ghana;l use 150 to 158 deals with offences. l use 150pr6hibits thedisclosure of information furnished or contained in a report submitted

by a licensee to another person that is not an Authority or public officerwithout the consent of the licensee~Acdntravention of this provision isan offence which attracts a fine of not rtlore than fIfty thousand penaltyunits or a term of imprisonment of not more than five years or to both.A licensee who fails to provide information onits vendordevelopment programme commits an offence and is liable on summaryconviction toa fine of not more than fifty thollsandpenalty units or to

imprisonment fbr a term of not more than five years or to both.It is a defence for a person chargedvvith an offence to prove thattheinformation disclosed and to which the prosecution relates was withoutthe disclosure known to the public.l use 151 prohibits the obstruction of an authorised officer oUheAuthority in the exercise of powers under the Act.. A person whoknowingly or reck1e~slymakes a statement or produces a document that

is false or misleading in a material particular to the Authority or anauthorised officer commits an offence. A contravention of this provisionattracts a fme of not more than five hundred penalty umtsor a teim ofimprisonment of not more than two years or both. :l use 152 prohibits the obstruction of a licensee. A person whowithout reasonable excuse obstructs molests hinders or prevents a

ligenseefrom doing an act which the licensee is authorised to do connnitsan offence which attracts a fine of not more than fifty penalty units orimprisonment fora term of not more than six months or both;l use 153prohibits the direct or indirect attempt to acquire or holda licence or interest in a licence or a share in a corporate body that is

XXVII


28/130


~ntitled to carry an exploration or development operation in this country.1-\ contravention of this provision attracts a fine of not more than fivelundred thousand penalty units or to imprisonment for a term of notnore than five years or to both.

Clause 154 restricts the removal of petroleum. Petroleum is not to beemoved or disposed of in any manner from the area from which it hasJeen obtained to any other area unless it is done by a licenSee with thelVrittenconsent of the Authority for the purpose of sampling or analysis.

Clause 155provides for offences committed by body corporate. Clause 6 provides for orders for forfeiture. Where a person is convicted of anJffence under the Act, a Court is to impose an additional penalty for .orfeiture of a vehicle, aircraft, vessel or equipment used in the:ommission of the offence. An additional order for the forfeiture ofJetroleum recovered in the course of the commission of the offence,Jayment by a person to the Government of an amount equal to, theJroceeds of the sale of the petroleum received is to be made by the Court.

Oause 157 provides that a person who willfully or negligently:ontravenes a directive issued under the Act commits an offence andlttracts a fine of not more than five thousand penalty units or a term ofimprisonment of not more than five years or to both.

Clause 158 deals with miscellaneous offences. Offences stated in the::lause include the giving or permitting of false or misleading information\ be given by a person knowingly or recklessly in connection with an .ipplication under the Act or licence, the inclusion either knowingly orrecklessly offalse or inisleading information in a report, return or affidavitmbmitted for a licence or in Rursuance of this A


29/130

Ghana Petroleum Regulatory Auth ority Jill

requirements in respect of the company and its capital. The clause alsocontains provisions that relate to the permission of trade union activitiesamong employees and personnel of contractors and subcontractors inaccordance with the Labour Act, 2003 Act 651).

Under cl use 161, the Authority is empowered t6 ~arry outregulatoi:ysupervision in the foim of the issue of orders to ensure compliance withthis Act. Expenses related to the regulatory superVision is to be coveredby the licensee or by the party where the supervision in each case is directedat or where it takes place.l use 162 enjoins a licensee to maintain the stnictures, equipmentand other property in the area of the licence in good condition and repair.A licensee is to remove from the area any structure, equipment and otherproperty that is not in use for the operations. Finally, a licensee is to takesteps to warn persons in the vicinity of a structure, equipment or otherproperty of the presence of the structures and the hazards likely to resultfrom the activities of the licensee.The clause states that a contravention of this subsection is an offence

which attracts a fine of not more than one thousand penalty units.l use 163provides for agreements between affiliated companies. The

Authority is to consent to a licensee who enters into an agreement whichauthorises a parent company or a company with which the licensee isaffiliated in a similar manner to undertake activities on behalf of thelicensee. The condition for the consent is that the arrangement is not toresult in less revenue to the Government.

l use 164provides for security for fulfilment of obligations. Wherea licence is granted and at any other time, the Authority may subsequentlydecide that a licensee is to provide security as approved by the Authorityfor the fulfilment of the licensee s obligations as well as fot possible liabilityin connection with the petroleum activities.l use 165specifies the responsibility for commitment. Licensees whohold licences jointly are jointly and severally responsible to theGovernment for financial and other obligations which .arise o\1tof

petroleum activities under the licence.l use 166provides that where liability in respect of a thir4party isincurred by a person who undertakes a task for a licensee, the licensee IS

XXIX


30/130

Ghana Petroleum Regulatory uthority Bill

lble for damages to the same extent and is jointly and severaUyliable asle perpetrator and if applicable the etrlployer -of thepetpetrator.la se167provides for directions to be given by the Authority whiche to be by notice in writing to the licensee and are to be consistent with)od oil field practices to ensure proper production of petroleum and

lcourage good conseryatiorr practi.ces a licensed area:~ .la se168provides for compliance with directions. Wherealicenseeils or neglects to comply with directions given, the Authority is to ensurelat all the things to be done or required by the direction to be done areJne. Also, costs and expenses incurred in obedience to the directions

e a debt due to the Authority to be recovered in a Court despite the:ensee being convicted of the offence.lause 169 deals with information required by the Authority. The

l s empowers the Authority to require a person who is in possession: information or data that relates to exploration or developmentJerations, petroleum obtained or the value of .petroleum to provide theuthority with the information or data.The Authority is also to request the person to attend before theuthority to answer questions related to the operations. Failure toJmply is an offence which attracts a fine of not more thanfour thousand~nalty units or imprisonment for a term of not more than five years orJth. .. . // ..lause 170 provides for powers of the Authority and authorisedficers. The Authority or an authorised officer of the Authority is tome directions in writing and impose restrictions on a licensee or annployee with respect to the health and safety of employees of the licensee

. in connection with exploration, development or production activities.The Authority is also empowered to order in writing the cessation, operations and withdrawal of persons from a structure or building

,at is being used for exploration, dev~lopment or production operations.ther powers are to order discontinuance of the use of machinery orluipment which are unsafe until the necessary action to ensure safety isken and completed.

An authorised officer of the Authority is to produce personal identitya person in charge of the area, structure, vehicle, vessel, aircraft,xxx


31/130

hana etroleum Regulatory Authority Bill

building machinery or equipment or thing in respect of which the poweris about to be exercised before giving the order or direction.Powers of appeal are also given to persons who are aggrieveo.by~such decision direction or order of the Authority.l use 171 provides for evidence for certificate. The Authority is togive a certificate which states thata licence was granted cancelled or. transferred from a date specified in the certificate. The Authority is alsoto give a certificate that a condition specified in the certificate is acondition on which any consent or approval specified in the certificate

was gIven.l use 172 provides for scientific investigation. The Authority is toconsent in writing to the carrying on by any .person of geoscientificinvestigations in the country. The instrument of consent is to authorisethe person to whom it is issued to carryon geoscientific investigationsand the exploration operations specifiea in the instrument in the areasubject to conditions specified in the instrument.l use 173provides for service of documents. A document or noticefor an individual is to be served personally on the individual or by post atthe usual or last known place of abode or business of the person.In the case of the Authority service is to be in the mannerpresmbedfor a bodycorporate by leaving it at the registered or principal office ofthe body corporate by post or by delivery to an individual in theemployment or acting on behalf of the body corporate authorised toaccept service.l use 174indemnifies the Republic and Government against actionsclanns and demands that may be brought against the Republic by theactions of the licensee under this Act or a licence.l use 175empowers the President in accordance with article 278 ofthe ConstitUtion to .appoint .a commission. of inquiry where a serious

accident occurs .in.~onnection with petroleum activfties. Theincidentsto be inquired into must have 1edto seriousd.ariger iric1udingloss of lifepollution or major d:ariiageto prOperty.

l use 176 e:p.joinsallcensee to surrender a petroleum explorationand production licence after givingthree months.notice to the Authority.


32/130

GhanaPetrolelltn Regulatory AlJ thority :tJill

qlause 77 provides for the revocation of licences,a,pprovals and.permits by the Authority where there is a serious or repeated cOntraventionof the Act or Regulations made under the Act.

Clause 178 provides that the revocation of a licence, sUrrender ofrights orlapse of rights for other reasons do not entail releas~ fronithefinancial obligations under the Act or Regulations made under the Act.

The Authority is to demand full or part payment of the amollIit.which fulfillment of a work obligation or an obligation includingdecorimrissioning would have cost if the obligation is not. fulfilled. TheAuthority is to prescribe the amount payable.Clause 79 provides for the useoffacilities by others. The Authorityis to issue directives for the use of sections of a facility which are owned

by a licensee by others ifwarrantedby considerations for efficient operationodor the benefit of society .The use should not constitute an unreasonabledetriment of the licensee s requirements.Clause 180 deals with the right of others to place facilities. A licenseeis not to oppose the laying of pipelines, cables or wires of various kindsor the. placement of other facilities on, in or above the area covered by

the petroleum exploration and production licence. The facilities are notto cause unreasonable inconvenience to the licensee.Clause 18 provides for the amendment of the Schedule which is tobe done by legislative instrument.Under clause 182, a licensee and other persons engaged inpetroletim

activities are to comply with the. Act,. Regulations and .administrativedecisio ns issued through the implementation of necessary systematicmeasures .. A licensee is also to ensure that other persons workingpersonally or through employees, .contractors or subcontractors coniplywith the Act.

Clause 183 spells out the supremacy of the Act. Subject to theEnvironmental Protection Agency Act, 1994 (Act 490), the EnvironmentalAssessment Regulations, 1999 (L.L 1652) and the Ghana MaritimeAuthority Act, 2002 (Act 630), this ACt is to take precedenceovetanyexistiilg Act that relates to upstream and midstream petroleum activities.Accordingly, an Act which contradicts this Act is modified toconfotmto the provisions of this Act.

XXXII


33/130

hana etroleum Regulatory Authority Bill

l use 184 provides for compliance with conditions of a petroleumexploration and production licence. The Authority is empowered to directa licensee who contravenes a condition of a petroleum exploration licenceto comply with that condition. Also, a directive for compliance is to begiven to a licensee by the Authority where there isacontravehtionof arequirement under this Act or Regulations, codes or sdindarcIS made underthe Act. A directive requiring compliance is to be sent to the licensee andother directly affected parties. The directive is to contain the relevantcondition of the petroleum exploration licence or requirement of theAct, regulations, codes or standards to which the contravention relates.The directive is also to contain the acts, omissions, other facts whichconstitute the contravention of the condition or requirement and specifya period within which representations or objections are t ) be made bythe licensee or directly affected parties. The directive is also to specify theperiod within which the licensee is to rectify the, breath or contravention.

l use 185 provides for frustration of licensee. A failure on the partof a licensee to fulfil a condition of a licence mainly as a result of an actof war, hostility, insurrection, storm, flood, earthquake or other naturalphenomenon which is beyond the reasonable control of the licensee isnot to constitute a breach of the licence, the Act or agreement. The licenseeis enjoined to immediately notify the Authority bfthe occurrence of thecircumstances specified and give particulars of the failure and its cause.

The clause is made inapplicable for requirements under a licence orthe Act for the payment of royalty, annual charges, rent or fees.

l use 186 and 187 provide standard provisions on Regulations andinterpretation respectively. Under cl use 186, the Authority, by legislativeinstrument, is to make Regulations for the effective implementation ofthe Act among others. The matters for Regulations are work conditions,confidentiality, the licensee s obligation to provide information on theactivities under the Act available to the public, the form and content ofand conditions for applications for the grant or renewal of licences.Others include the secondary or tertiary recovery of petroleum from areservoir and the methods to be used in the recovery, the safety and welfarestandards and the heath and safety of employees in connection with theexploration for or the production or conveyance of petroleum. The fees .to be paid in respect of a matter or thing done under this Act as well as

XXXlll


34/130

hana Petroleum Regulatory Author~tyill

le division of the geographic area of Ghana into graticular sections areISO to be provided for under regulations.

Clause 187provides for interpretation and clause 188 is on repeals.lause 189 provides for transitional provisions. Staff of the Companyoncemed with the regulation of upstream and midstream petroleumctivity may be transferred to the Authority as necessary for theerformance of its functions.

Clause 190 provides for continuation of licences. A licence issuednderthe Petroleum Exploration and Production Act, 1984 (p.N.D.C.L.4) which is in force immediately before the commencement of this Act. saved.

Clause 191 provides for the declaration of essential services. Inccordancewith section 174ofthe LabourAct; 2003(Act651)theMinister~sponsib1efor Labour is to declare upstream and midstream petroleum(~tivitiesas an essential serviceand the provisions of the Labour Act are) apply.Finally, clause 192 provides for commencement. The Act is to

ommence on a date to be determined by the Minister by publication inle Gazette. Until its commencement, the Company is to be responsible)r the functions of the Authority.

JOE GHARTE {,M.P.Attorney-General and Minister for Justice

)ate: 3rd 09tober 2008.

XXXIV


35/130

hana etroleum}tegulatory Aut~9dty:QilE .- ,; ,._. ;. :::. ,.

ARRANGEMENT OF SECTIONS , . , ,Sections

,~. .;

PART ONE .: - , :;.. : : :-. .PRELIMINARY MA ITERS AND INS1TfUTION.AL:AR.RANG~MENTS

Application and environmental prihCiples ;:1. Application


36/130

Ghana Petroleum Regulatory Authority Bill

P RT TWOLICENSING

Petroleum exploration licence26. Opening up of new areas27. Petroleum exploration licence28. Application for petroleum exploration licence29. Activities auth.orisedby petroleum exploration licence30. Annualfee31. Contents of petroleum exploration licence32. Conditions of ~ petroleum exploration licence33. Duration of a petroleum exploration licence34. Power of the Authority to amend a petroleum exploration licence

Petroleum Exploration and Productt on Licence35. Announcement of licensing .36. Application for petroleum exploration and production licence37. Grant of petroleum exploration and production licence38. Licence to be issued jointly)9. Disclosure of agreements with a view to applying for petroleumexploration and production licenceW Criteria for the grant of a petroleum exploration and Productionlicencen Conditions and requirements for a petroleum exploration andproduction licence.12. Surface area rental fee13. Specification of petroleum exploration and production licence[4. Protection of national Interest[5. Operator~6. Rights conferred by petroleum exploration and production licence}. Duties of petroleum exploration and production licensee8. Grant of renewal of petroleum exploration and production licence9. Transfer of petroleum exploration and productionJicenceO. Relinquishment o areas

Obligations and duties of licensees. Work practices for licensees.. Licensees and natural gas2


37/130

Ghana Petroleum Regulatory uthority Bill

53 . Abandonment of well54. Offencesby licensees55. Survey of wells56. Measurement of petroleum obtained57. Notification of licensee meetings

PART THREEEXPLORATION DEVELOPMENT AND PRODUCTlONOPERAriONS

Exploration58. Exploration and drilling operations59. Permit for acqutsition of data60. Appraisal programme and commerciality61. Approval for identification of well62. Permit to operate drilling rig63. Development .64. Appraisal offield deveIopment plan65. Unit development66. Directions as to :recoveryof petroleum67. Production of petroleum68. Restrictions on flaring and venting69. Production perinit70. Restrictions on grant of petroleum exploration and productionlicence71. Co-ordination of activities across licence boundaries72. Postponement of development or production73. Natural tesources other than petroleum resources

Testing of petroleum74. Inspection and sampling of petroleum75. Purpose of testing and restrictions76. Testing officer77. Manner of testing78. Certificate of testingNational requirements and local pricing79. Supplies to cover national requirements80. Supplies in the event of war or threat of war81. Pricing of petroleum

3


38/130

Ghana Petroleum Regulatory Authon ty Bill .. Transportation of petroleum82., 'LiCence to install and operate facilities for transportation and,st011lge :ofpetroleum83. ,LaJlC;litig of petroleum 84. tiCeIlCeiQrtramport of petroleum by pipeline85.. SUl:'Vey:ofpipelineroutes '86. Rtght to construct, operate and maintainpipe1ine87. Pipeline tariffs ' '88. Licen.ceto transport petroleum other than by pipeline

Storage of Petroleum89. ' LiGenceto ~t9repetroleum90. Req~irementto use approved methods and practices for confiningpet,roletlm obtamed 'Decommissioning ,

91. DecomniissioniIlgplan92. Decoqunis$ioning fund93.,.~9tificii q:Q:of. t~rminatioti Qf use94: ,PisposaI of decommi&siolledfacilities.95. Removal of property by licence holder96. Removal and sale of property by the Authority97,' Lia1)llity , ,98. 'Encumbrances99. 'Ass~ption of ownership of facilities by GovernmentGovem1 ne1Jt:andprivczte participation, vendor development programme in

.,:petroleum aFt vities ,100. Particrpaijonof the RepubJ,icin petroleum activities101. Interest of the Republic . , ,,' '102. Transfer of'assets to the 'Ghana National Petroleum Company103. Provision of goods and serviCesby national entrepreneurs104. Tr~and technology tiinsfer . .105. Employment and training of citizens of Ghana106. Illtinigrant quotas

Registration and mortgaging107. Registr~tion of licences108. Mortgaging of licences109. Scope of mortgage110. Rights of mortgagee

4


39/130


Liabt ity jOr damage due to pollution111. Definition of pollution damage112. Oil spill response fund113. Scope and applicable law114. Liable party and extent ofliability115. Undertaking petroleum activities without a licence. 116. Channeling of liability117. Recourse for pollution damage118. Legal venueSurface rights and compensation119. Restrictions and rights of others120. Rights to surface activities. .121. Rights to subsurface activities122. Acquisition of exclusive rights123. Compensation for disturbance of rights

124. Handling of claims Safety125. Safety126. Safety precautions127. Emergency preparedness128. Emergency preparedness against deliberate.attacks129. Safety zones130. Suspension of petroleum activities131. Requirements to safety documentation132. Health safety and environmental standards

Infonnation and documentation133. Information reports and records134. Duties on termination of licence135. Records to be kept136. Availability of information to the public137. Confidentiality of flata

Fiscal arrangements138. Annual charge in respect of licence139. Payment of royalties140. Payment of tax


40/130

Ghana Petroleum RegulatQty uthon ty Bill

141. . Additional )il entitlement142. Payment terins143. Penalty for late payments144. Prohibition on disposal of petroleurri145. Recovery ofroyaJty .

Cross border activities146. Cross border activities147. Sharingfaci1ities148. Sharing149. Im~unity and facilitation of non-nationals

Offences150. Prohibition against disclosure of information151. Obstr Jction of the Authority152. Obstruction of licensee153. Conflict of interest154. Restriction on removal of petroleum155. Offences committed by body corporate156. Orders for forfeiture157. Violation of decisions and orde:rs issued under this Act158. Miscellaneous offences

Dispute resolution159. Dispute Resolution

Miscellaneous provisions160. Management of petroleum activities to be in Ghana161, Regulatory supervisionc;>f petroleum activities162. Maintenance of property163. Agreements between. affiliated companies164. Security for fulfilment of obligations165. Responsibility for commitments166. Liability for damage caused167. Directions by Authority .168. Compliance with directions169. Information required by Authority


41/130


172 Scientific investigation173 Service of documents174 Indemnity of the Republic of Ghana175 Commission of inquiry176 Surrender oflicence177 Revocation of licences approvals and permits178 Consequences of revocation surrender of rights or lapse for otherreasons179 Use of facilities by others180 Rights of others to place facilities181 Amendment of Schedule182 Obligation to comply with this Act183 Supremacy of this Act184 Compliance with conditions of petroleum exploration andproduction licence185 Frustration of licensee186 Regulations187 Interpretation188 Repeal189 Transitional provision190 Continuation of licences191 Declaration of Essential Service192 Commencement

FIRST SCHEDULEGRATICULATION OF THE SURFACE OF THE EARTH


42/130


BILLENTITLED

GHANA PETROLEUM REGUL TORY UTHORITY CT8

AN ACT to establish the Ghana Petroleum Regulatory Authority toregulate oversee and monitor activities in the upstream andmidstream petroleum iridustry; provide for licensmg in the sectorand provide generally for upstream and midstream oil and gas inthe best interest of the people and future generations of Ghana andfor connected purposes

ENACTED by the President and ParliamentP RT ONE

PRELIMINARY MATTERS AND INSTITUTIONALARRANGEMENTApplication and environmental principles. pplication1 This Act applies toa upstream and mids~eam petroleum activities in connectionwith petroleum resources of the Republic of Ghana; a l

8


43/130

Ghana Petroleum Regulatory Authority m

b petroleum activities within and outside Ghana where apetroleum deposit extends beyond the continental shelf ofthe Republic of Ghana.

Environmental principles Each contractor and person who performs a function, discharges aduty or exercises a power under this Act in relation to the exploration,development and production of petroleum resources shall take intoaccount and give effect to the environmental principles prescribed by theEnvironmental Protection Agency Act, 1994 Act 490), the EnvironmentalAssessment Regulations, 1999 L r 1652) and any other relevant legislationwhich shall be modified as necessary to apply to petroleum activities.Petroleum rightsVesting of petroleum3 The entire property in, and the control of petroleum in its naturalcondition on or in any land or water in Ghana is vested in the Governmenton behalf,of the Republic of Ghana.Prohibition of operations without licence4 1) A person shall n t carry out any petroleum exploration, develop-ment, or production operations in or on any land in Ghana except with

a licence and in accordance witha petroleum agreement.2) A person shall not c;arry out any exploration, development or

production operations in Ghana except in association with the GhanaNational Petroleum Corripany and in accordance with the terms of apetroleum agreement entered into betWeen that person, the Republic andthe company.3) A person who contravenes subsection 1) commits an offenceand is liable on conviction .

a if an individual, to a fine of not more than eighty thousandpenalty units or imprisonment not exceeding ten years orboth; and

b if a body corporate, to a fine of not more than five hundredthousand penalty units.

Agreements with the Republic5 The Authority shall on behalf of the Republic only enter into anagreement with a person that is consistent with this Act as regards:a the grant of a licence;

9


44/130

Ghana Petroleum Regulatory Authority Billb) the conditions for granting orrenewing a licence ;c) the conduct by the Company or a contractor of exploration

or development operations on behalf of any person to whoma licence may be granted and the arrangements for aproduction sharing system or the royalty tax system or acombination of the two systems; and

d) any other matter incidental to or connected with a licence.:Traticu1ation of the earth s surface

6. For the purpose of this Act, the surface of the earth shall be deemedo be divided intograticular sections in the manner set out in the First:chedule.Establishment and jUnctions of the Ghana Petroleum Regulatory Authority

:stablishment of the Authority7. 1) There is established by this Act, a body to be mown as the Ghanaetro1eum Regulatory Authority.

2) The Authority is a body corporate with perpetual successionnd a common seal and may sue and be sued in its corporate name. 3) The Authority may for the performance of its functions acquirend hold movable and immovable property and may enter into a contract

r :iny other transaction not related to petroleum. 4) Where there is hindrance to the acquisition of property, the

roperty may be acquired for the Authority under the State Property and:ontracts Act, 1960 C.A.6) or the State Lands Act, 1962 Act 125)andle costs shall be borne by the Authority.)bject of the Authority8. The object of the Authority is to regulate, oversee and monitorctivities in the upstream and midstream petroleum sector and supportle national policy objectives of the upstream and midstream petroleum~ctor.unctions of the Authotity9. 1) To achieve the object of the Authority, it shall. a) make the upstream and midstream petroleum sector andthe agencies operating in that sector more efficient;

b) provide an enabling environment for increased private sectorparticipation and investment in the upstream and midstrea:w.petroleum sector;

10


45/130

Ghana Petroleum Regulatory Authority Billc pramate. a vendar develapment pragramme ta enhancenatianal participatian in the supply chain process;d strengthen the regulatary framewark far healthy campetitian

and quality assurance in the upstream and midstreampetroleum sectar;e initiate,.negatiateand administer petraleum agreements;f assess and approve appraisal programmes;g assess and approve field develapmentplans;h assess and apprave tail-end praductian and fieldabandonment;i administer the management .ofpetraleum data;j assist in the measurement estimatian and assessment .ofrayalty and profit ail due ta. the State;k ascertain the c9st ail due ta licensees;1 ensure that licensees uphald laws, Regulatians, rilles andcantract terms;m ensure that licensees prepare and implement natural gasutilisatian plans;n callabarate with the Enviranmental Pratectian Agency, theGhana Maritime Autharity and relevant agencies;0 ensure health, safety and enviranmental standards ill oil andgas aperatians;P ensure .optimallevels .ofresaurce explaitatian;q build the capacity .ofits staff ta perfarm thefunctians .ofthe Autharity;r callabarate and disseminate infarmatian fram licensees tathe relevant agency;s pramate planned, well executed and cast-efficient.operations;t ensure .optimal utilisatian .of existing and plannedinfrastructure;u provide ta the Minister respansible far Fmance, infarmatian

relevant ta the callectian aftaxes and fees fram oil and gasactivities;v ensuretheimplementatibn .ofthis Act;w acquire, promate .orassist in the acquisitian .ofdata for use

in pramating unlicensed aryas; andx peifarm anY ather functian except any cammercial aspectthat is ancillary ta the abject .ofthe Authariryandassignedta it under this Act.

11


46/130


2) The Authority shall consult and co-operate with Ministries,.epartments and agencies of Government that have duties, aims or func;:msrelated to those of the Authority.Jroverning body of the Authority10. 1) The governing body of the Authority is a Board consisting ofa the chairperson,

b the Chief Executive,c the Chief Executive of the Company, andd and six other persons, .at least two of w

Ghana - Petroleum Regulatory Authority Bill

Documents

Transcript of Ghana - Petroleum Regulatory Authority Bill