REPUBLIC OF GHANA PETROLEUM (EXPLORATION AND PRODUCTION) ACT, 2016 (ACT 919)Petroleum (Exploration and Producti ) Act, 2016 Act 919 ARRANGEMENT OF SECTIONS Section General Provisions 1. Scope of the Act 2. Object of the Act 3. Title to petroleum 4. Management of petroleum resources 5. Conduct of petroleum activities no 10. Il. 12. 13. 14. . Change of ownership 16. TH. . Pre-emption 19. 20. 21. 22. 23. 24. 25. a Area Management . Reference map . Opening of area . Closure and redefinition of area Reconnaissance Licence . Reconnaissance licence Petroleum Agreement Petroleum agreement Petroleum activities by the Corporation Contract area Operator Duration Assignment Sub-contracting Transfer of assets to the Corporation Review of terms and conditions Exploration Exploration period and extension Relinquishment of contract area Minimum work obligation Exploration drilling Notification of petroleum discovery and appraisalAct 919 Petroleum (Exploration and Production) Act, 2016 43. 45. 46. 47. 48. 49. Development and Production Prudent exploitation . Plan of development and operation . Restrictions on approval of plan of development and operation . Postponement of development . Commencement of petroleum production . Production programme and permits . Utilisation of associated natural gas . Restrictions on flaring . Co-ordination of petroleum activities and unitisation . Cross-border cooperation and unitisation . Third party use of production facilities . Measurement of petroleum obtained Transportation, Treatment and Storage . Licence to install and operate facilities for transportation, treatment and storage of petroleum . Application to install and operate facilities . Conditions for granting of a licence to install and operate facilities . Landing of petroleum . Third party use of transportation, treatment and storage facilities Cessation, Decommissioning and Removal of Facilities Decommissioning plan Decision on the decommissioning plan Decommissioning fund Plugging and abandonment of well Restoration of affected areas Liability for decommissioning Compliance General Requirements for Petroleum Activities . Petroleum operating standards Supervision and inspection . Ownership of petroleum data . Samples, data and information 2Petroleum (Exploration and Production) Act, 2016 Act 919 . Reporting . Information concerning petroleum activities . Petroleum register . Mortgaging of participating interest . Security for fulfilment of obligations . Liabilities . Employment and training of Ghanaian citizens . Use of Ghanaian goods and services . Technology transfer . Local content plan . Establishment of the Local Content Fund . Object of the Fund . Sources of money for the Fund . Management of the Fund . Accounts and audit . Annual report and other reports . Incorporation of local company . Domestic supply requirement . Interference with lawful activities, compensation and access to land Health and Safety, Security and Environment . Safety requirements and standards . Safety precautions . Emergency preparedness . Emergency preparedness against deliberate attacks . Safety zones . Suspension of petroleum activities . Measures to ensure safety . Qualifications The Environment and Liability for Pollution Damage . Environmental principles and protection . Impact assessment . Liability for pollution damage . Compensation for pollution damageAct 919 Petroleum (Exploration and Production) Act, 2016 ee Fiscal Provisions 85. Payment of royalties 86. Annual fee in respect of acreage 87. Tax 88. Bonus payments 89. Additional oil entitlement Miscellaneous Provisions 90. Natural resources other than petroleum resources 91. Transactions between contractor and affiliates 92.~ Insurance 93. Offences and penalties 94. Authority to issue Regulations, guidelines and stipulate conditions 95. Interpretation 96. Transitional provisions 97. Repeal and savingsAct 919 REPUBLIC OF GHANA. THE NINE HUNDRED AND NINETEENTH ACT OF THE PARLIAMENT OF THE REPUBLIC OF GHANA ENTITLED PETROLEUM (EXPLORATION AND PRODUCTION) ACT, 2016 AN ACT to regulate petroleum activities and to provide for related matters. DATE OF ASSENT: 19th August, 2016. PASSED by Parliament and assented to by the President: General Provisions Scope of the Act 1. This Act applies to petroleum activities within the jurisdiction of the Republic of Ghana, including activities in, under and upon its terri- torial land, inland waters, territorial sea, exclusive economic zone and its continental shelf. Object of the Act 2. The object of the Act is to provide for and ensure safe, secure, sustainable and efficient petroleum activities in order to achieve optimal long-term petroleum resource exploitation and utilisation for the benefit and welfare of the people of Ghana. 5Act 919 Petroleum (Exploration and Production) Act, 2016 Title to petroleum 3. Petroleum existing in its natural state in, under or upon any land in Ghana, rivers, streams, water courses throughout Ghana, the exclusive economic zone and any area covered by the territorial sea or continental shelf, is the property of the Republic of Ghana and is vested in the President on behalf of and in trust for the people of Ghana. Management of petroleum resources 4. The management of petroleum resources by the Republic of Ghana shall be conducted in accordance with the principles of good governance, including transparency and accountability and the object of this Act. Conduct of petroleum activities 5. Subject to section 11, petroleum activities shall be conducted only in an open area under a licence or petroleum agreement and in accor- dance with applicable enactments. Area Management Reference map 6. The Minister, shall in consultation with the Commission, prepare a reference map showing areas of possible accumulation of petroleum within the jurisdiction of Ghana and those areas shall in the map be divided into numbered areas, each of which shall be described as a block. Opening of an area 7. (1) The decision to open an area for petroleum activities shall be made by the Minister. (2) The Minister shall, in collaboration with the Commission and other agencies, undertake an evaluation of the various interests in the relevant area before the area is opened for petroleum activities. (3) The Minister shall prepare a report on the evaluation which shall include a strategic assessment of (a) the impact of the petroleum activities on local communities, (b) the impact of petroleum activities on the environment, trade, agriculture, fisheries, shipping, maritime and other industries and risk of pollution, and (©) the potential economic and social impact of the petroleum activities.Petroleum (Exploration and Production) Act, 2016 Act 919 (4) The Minister shall publish the evaluation report in the Gazette and in at least two state-owned daily newspapers and may publish the report in any other raedium of public communication. (5) The report shall specify the area proposed to be opened for petroleum activities, and the nature and extent of the petroleum activities. (6) A person who has an interest in an area which is the subject of an evaluation report shall, within sixty days after the publication of the report, present the views of that person to the Minister. (7) The Minister, having taken due consideration of the report and the views of an interested party, shall determine whether or not to open the area. (8) The Minister shall publish the decision in the Gazette and in at least two.state-owned daily newspapers and may publish the report in any other medium of public communication. (9) The Minister may reserve a block, part of a block or a number of blocks in an open area for the Corporation. Closure and redefinition of area 8. (1) The Minister may (a) close an area; or () redefine the boundaries of an area which has been declared open under section 7 but which is not covered by an existing petroleum agreement or authorisation. (2) The Minister shall, before closing an area or redefining the boundary of an area, publish a notice of the decision to close the area or redefine the boundary of the area in the Gazette and in at least two state- owned daily newspapers and may publish the report in any other medium of public communication. (3) A person who has an interest in the affected area may make a representation to the Minister on the closure or redefinition of the boundary within sixty days after the publication. (4) The Minister shall, after taking due consideration of any repre- sentation made under subsection (3), determine whether or not to close an area or redefine the boundaries of the area. (5) The Minister shall after the expiration of the sixty day period, publish the closure or redefinition of the boundaries of the area in the Gazette and in at least two state-owned daily newspapers and may publish the closure or redefinition of the boundaries in any other medium of public communication.Act 919 Petroleum (Exploration and Production) Act, 2016 (6) The closure or redefinition of the boundaries of an open area shall not affect another area covered by a petroleum agreement or authorisation existing at the time of the decision. Reconnaissance Licence Reconnaissance licence 9. (1) The Minister may, in consultation with the Commission, grant to a person, a petroleum reconnaissance licence in respect of a defined area. (2) A reconnaissance licence grants to the licensed person a non- exclusive right to undertake (a) data collection including seismic surveying and shallow drilling, and (6) processing and interpretation or evaluation of petroleum data in the area specified in the licence. (3) The Minister may in a special case grant to a person an exclusive right to undertake reconnaissance activities in a defined area not covered by an existing reconnaissance licence, but the grant of that right does not affect any proprietary rights of the Republic to data or preclude the rights of the Commission or the Corporation to undertake reconnaissance or other petroleum activities within that area. (4) The Republic may enter into a petroleum agreement with a per- son who has the requisite technical competence and financial capacity to fulfil the obligations of the reconnaissance activities and other require- mints as prescribed. (5) A reconnaissance licence shall be for a period of not more than three years but the Minister may, where necessary, extend the licence for a period not exceeding two years. (6) A person shall not commence a reconnaissance activity in relation to petroleum unless that person has complied with (a) the relevant statutory requirements on environmental pro- tection prescribed in the Environmental Protection Agency Act, 1994 (Act 490); and (b) any other applicable enactments. (7) Subject to subsection (8), a reconnaissance licence shall not grant to a person a right to acquire data in an area covered by a petroleum agreement or an authorisation. (8) The Minister may, in consultation with the contractor, grant to a person other than the contractor a reconnaissance licence for the acqui- 8Petroleum (Exploration and Production) Act, 2016 Act 919 sition of data in an area covered by a petroleum agreement on condition that the reconnaissance activities of that person do not unreasonably interfere with the activities of the contractor. (9) The Minister shall not be held liable by a third party for fees or for other losses that arise as a result of the reconnaissance licence granted to that third party under subsection (8). (10) A petroleum agreement may be entered into with a third party in respect of an open area covered by a reconnaissance licence. (11) Unless the Minister otherwise determines, the right granted under a reconnaissance licence to acquire new data in the open area referred to in subsection (10) shall terminate from the effective date of a petroleum agreement and an obligation to refund fees or liability for other losses shall not arise as a result of the termination. Petroleum Agreement Petroleum agreement 10. (1) A body corporate shall not, unless otherwise provided in this Act, engage in the exploration, development and production of petro- leum except in accordance with the terms of a petroleum agreement entered into between that body corporate, the Republic of Ghana and the Corporation. (2) A contractor shall, subject to the provisions of this Act, carry out petroleum activities in the contract area as provided in the petroleum agreement. (3) A petroleum agreement shall only be entered into after an open, transparent and competitive public tender process. (4) Despite subsection (3), the Minister may on stated reasons decide not to enter into a petroleum agreement after the tender process as prescribed. (5) Where all or part of the area offered for tender in a public tender process has not become the subject of a petroleum agreement, but the Minister determines that it is in the public interest for that area to be subjected to a petroleum agreement, the Minister may initiate direct negotiations with a qualified body corporate for a petroleum agreement. (6) The Minister shall publish an invitation to tender or an invita- tion for direct negotiations in the Gazette and in at least two state-owned daily newspapers and may publish the invitation in any other medium of public communication.Act 919 Petroleum (Exploration and Production) Act, 2016 (7) A body corporate who wishes to submit a bid or Participate in negotiations shall submit an expression of interest to the Minister, as prescribed. (8) Where the Minister receives more than one expression of interest, a tender Process in accordance with subsection (3) shall be undertaken. (9) Despite subsection (3), the Minister may, in consultation with the Commission, determine that a petroleum agreement may be entered into by direct negotiations without public tender, where direct negotiations represent the most efficient manner to achieve optimal exploration, development and production of petroleum resources in a defined area. (10) The Republic May enter into a petroleum agreement with a body corporate that has the requisite technical competence and financial capacity to fulfil the obligations of the petroleum agreement and other Tequirements as prescribed. (11) The Minister may require a consortium as a condition for entering into a petroleum agreement. (12) The Minister shall tepresent the Republic of Ghana in the negotiation of the terms of a petroleum agreement arid shall enter into a petroleum agreement on behalf of the Republic. (13) A petroleum agreement entered into by the Minister shall not be effective if it is not ratified by Parliament in accordance with article 268 of the Constitution. (14) A petroleum agreement shall contain a term that the Corpo- ration shall (a) hold an initial Participating carried interest of at least fifteen Per cent for exploration and development, and (&) have the option to acquire an additional Participating interest as determined in the petroleum agreement which @_ may be exercised within a specified period of time following the declaration of commercial discovery, and (ii) shall bea Paying interest in respect of costs incurred in the conduct of petroleum activities other than exploration costs. 10Petroleum (Exploration and Production) Act, 2016 Act 919 (15) Any borrowing exceeding the cedi equivalent of thirty million United States Dollars for the purpose of exploration, development and production shall be approved by Parliament and shall be in consonance with the Petroleum Revenue Management Act, 2011 (Act 815). Petroleum activities by the Corporation 11. (1) Subject to the authorisation of the Minister and any terms stipulated by the Minister, the Corporation may undertake petroleum activities in an area opened under section 7 but which is not covered by a petroleum agreement. (2) An authorisation by the Minister is not effective unless it is ratified by Parliament in accordance with article 268 of the Constitution. (3) Where the Corporation undertakes petroleum activities, the operations of the Corporation shall (a) be carried out in accordance with approvals or permits granted under this Act and applicable enactments, and (b) be in accordance with a long-term exploration and produc- tion programme and annual programme drawn up by the Corporation and approved by the Minister, in consultation with the Commission, in respect of each area. (4) The Corporation may employ sub-contractors to perform the functions of the Corporation but these sub-contractors are not entitled to any share of petroleum produced as a result of their operations. (5) Where the Corporation conducts petroleum activities not in association with a contractor, a contractor may subsequently be included as a party under a petroleum agreement in accordance with section 10. Contract area 12. The area subject to a petroleum agreement shall be specified in the petroleum agreement and may cover one or more blocks or parts of one or more blocks. Operator 13. (1) The Minister shall approve the operator before the execution of a petroleum agreement under section 10. (2) The Minister shall appoint an operator where the parties cannot agree on the choice of an operator. iAct 919 Petroleum (Exploration and Production) Act, 2016 (3) An operator shall be a contractor, the Corporation, a body corporate owned by the Corporation or a body corporate owned by the contractor and the Corporation. (4) The Minister may approve a change of an operator upon the request of a contractor or the Corporation. (5) The Minister shall, in consultation with the Commission and the Corporation, change an operator in circumstances where that operator ceases to meet material requirements of this Act, other applicable enact- ments and a petroleum agreement. Duration 14. (1) A petroleum agreement shall, subject to subsection (2), be for a period of not more than twenty-five years. (2) Where production from a field is projected to extend beyond the original term of the petroleum agreement, the Minister may (a) approve an extension of the petroleum agreement on the terms agreed by the parties; or (b) execute a new petroleum agreement by direct negotiations in accordance with section 10, to ensure optimal production from the field. (3) The extension of a petroleum agreement or the execution of a new petroleum agreement is subject to ratification by Parliament. Change of ownership 15. A contractor or sub-contractor shall not transfer a share of that contractor’s or sub-contractor’s incorporated company in the Republic to a third party or affiliate without the written approval of (a) the Minister, in the case of a contractor, or (b) the Commission, in the case of a sub-contractor, if the effect of the transfer would be to (c) give the third party or affiliate control of the company, or (@ enable the third party or affiliate to take over the interest of a shareholder who owns five per cent or more of the shares of the company. Assignment , 16. A contractor or a licensee shall not without the written approval of the Minister, directly or indirectly assign the interest of the contractor under a petroleum agreement, whether in whole or in part, to a third party or an affiliate. 12Petroleum (Exploration and Production) Act, 2016 Act 919 Sub-contracting 17. (1) A contractor or sub-contractor shall not enter into a petroleum sub-contract without the written approval of the Commission. (2) The Commission shall approve the threshold for the value of petroleum sub-contracts as prescribed. (3) A sub-contractor shall register with the Commission as prescribed. (4) A contractor shall not award a petroleum sub-contract to a company that is not registered with the Commission. (5) A contractor shall not enter into an agreement with an affiliate for the lease of a petroleum facility to be used for petroleum activities without the written approval of the Commission. (6) A person shall not without the written approval of the Com- mission directly or indirectly assign, whether in whole or in part, a right or obligation under a sub-contract to a third person or an affiliate. Pre-emption 18. (1) Where a contractor enters into an agreement to dispose of all or part of the interest of that contractor directly or indirectly under a petroleum agreement, the Corporation shall have a pre-emption right to acquire the interest on the same terms as agreed with the potential buyer. (2) Where the consideration agreed is not in monetary terms, the Corporation may pay the corresponding monetary value of that consid- eration. (3) Where a contractor has entered into an agreement to dispose of all or part of the interest of that contractor under a petroleum agree- ment, the contractor shall notify the Minister, the Commission and the Corporation immediately of the consideration and other terms agreed. (4) The Corporation shall notify the contractor of the election of the Corporation to exercise the pre-emption right within ninety days of the receipt of the notification. ‘Transfer of assets to the Corporation 19. (1) Ownership of physical assets purchased, installed or con- structed by a contractor for petroleum activities shall be transferred to the Corporation at the option of the Corporation either when the full cost has been recovered in accordance with the terms of the petroleum agree- ment or when the petroleum agreement terminates. 13Act 919 Petroleum (Exploration and Production) Act, 2016 (2) The contractor is entitled to further use of the assets for purposes of operations under the petroleum agreement and remains liable for maintenance, insurance and other costs associated with the use of the assets. (3) The contractor is in any of the events specified under subsection (1) responsible for the decommissioning of the assets. (4) A physical asset that is used by a contractor in a petroleum activity as a capital or financial lease shall be treated as a purchased asset. (5) Where at least fifty percent of the cost of a physical asset has been recovered in accordance with the terms of an existing petroleum agreement, the Corporation may have the title to the asset transferred to the Corporation by the contractor on the payment by the Corporation of the unrecovered portion of the cost of the asset. (6) A contractor is not required under this section to transfer to the Corporation, equipment or any other assets rented or leased by the contractor for use in petroleum activities and which are of the type cus- tomarily leased for use in accordance with petroleum industry practice. (7) A lien, charge or an encumbrance on an asset shall lapse upon the transfer of that asset under this section, however, the rights of use established with the prior approval of the Minister shall remain in force. Review of terms and conditions 20. (1) The terms of a petroleum agreement may be reviewed by the parties to the agreement where there is a material change in the circum- stances that prevailed at (a) the time the agreement was executed, or () the last review of the agreement. (2) A petroleum agreement that is reviewed under subsection (1) is subject to ratification by Parliament in accordance with article 268 of the Constitution, if the review results in material change. Exploration Exploration period and extension 21. (1) A petroleum agreement shall contain as a term of the agree- ment, a provision that specifies that the exploration period is, subject to subsection (5), not more than seven years from the effective date of the agreement.Petroleum (Exploration and Production) Act, 2016 Act 919 (2) The exploration period shall consist of working periods, com- prising an initial exploration period and up to three extension periods as provided for in the petroleum agreement, within the total exploration period. (3) On the fulfilment of the work and expenditure obligations stipu- lated in a petroleum agreement for a relevant working period under subsection (2), the contractor may enter into the subsequent working period and shall exercise that option by written notification to the Com- mission before the expiration of the relevant working period. (4) The Commission may extend each working period on application by the contractor and the extension shall be granted on the condition that the contractor has carried out substantial parts of the work programme stipulated in the petroleum agreement in a prudent manner and to the satisfaction of the Commission. (5) The Minister in consultation with the Commission may extend the exploration period beyond seven years from the effective date of the petroleum agreement, (a) where a discovery of petroleum is made in the last year of the exploration period, and an extension is necessary to enable a determination to be made of whether the discovery is a commercial discovery; or (b) in exceptional situations as prescribed. (6) An extension in subsection 5 (a) shall (a) only apply to the reduced area encompassing the geological structure in which the discovery is located; and (b) be limited to the time period necessary for the determina- tion of whether the discovery is a commercial discovery. (7) Where a contractor before the expiration of the exploration period has not submitted to the Minister, a declaration that the petroleum discovered in a contract area is a commercial discovery, the petroleum agreement shail terminate. Relinquishment of contract area 22. (1) A contractor may submit to the Commission a proposal to relinquish a contract area or part of a contract area. (2) The Commission may approve the proposal in accordance with prescribed conditions. 15Act 919 Petroleum (Exploration and Production) Act, 2016 (3) Where the contractor elects to enter into the first extension period, the contract area as of the effective date of the petroleum agree- ment shall be reduced by at least fifty percent. (4) Where the contractor elects to enter into the second or third extension period, the retained contract area shall not exceed twenty-five per cent of the contract area as of the effective date of the petroleum agreement. (5) Relinquishment under subsections (3) and (4) shall occur at the end of each relevant working period despite any extension granted under section 21 (4). (6) The Minister may, in exceptional cases and in consultation with the Commission, determine that the area to be relinquished should be smaller than the requirements set out in subsections (3) and (4). (7) The determination under subsection (6) shall take into account the size, location or nature of the contract area. (8) The area relinquished shall, unless otherwise determined by the Minister in consultation with the Commission, be contiguous and compact and of a size and shape that will permit the effective conduct of petroleum activities in the relinquished area. (9) The area to be retained at the end of the exploration period to the extent possible shall include geological structures containing discoveries in the contract area and shall be of the size and shape approved by the Minister in consultation with the Commission. Minimum work obligation 23. (1) A petroleum agreement shall include a term on the minimum work obligations, with a corresponding minimum expenditure amount, to be fulfilled by a contractor during each working period of the explora- tion phase. (2) Where a contractor fails to fulfil the minimum work obliga- tions within the time period stipulated in a petroleum agreement, and the Commission has not extended the duration of that working period as provided under section 21 (4), the contractor shall pay the Corporation the amount required to complete the unfulfilled portion of the work program for that working period. (3) The Minister may in the circumstance specified under subsection (2) terminate the petroleum agreement. 16Petroleum (Exploration and Production) Act, 2016 Act 919 Exploration drilling 24. (1) A contractor shall submit an application to the Commission for a permit to undertake exploration drilling. (2) The contractor shall commence drilling operations after the contractor has received a drilling permit from the Commission. (3) The contractor shall commence the exploration drilling after complying with the relevant statutory environmental requirements as prescribed in the Environmental Protection Agency Act, 1994 (Act 490) and other applicable enactments. - (4) Each well or field:shall be identified by a unique designation assigned by the Commission. (5) The contractor shall not change the designation, status or classification of a well or field without the written approval of the Commission. (6) This section applies to the Corporation where it undertakes petroleum activities under section 11 (1). Notification of petroleum discovery and appraisal 25. (1) A contractor shall furnish information requested by the Minister or the Commission and submit periodic reports on any explo- ration carried out under a petroleum agreement as prescribed. (2) Where exploration activities result in a petroleum discovery, the contractor shall (a) within forty-eight hours after the discovery submit written notification of the discovery to the Minister before notifi- cation to a third party; and (®) provide the full particulars of the discovery in writing to the Minister and the Commission as soon as practicable and in any event within one hundred days after the discovery, stating whether the discovery merits appraisal or not. (3) The date of the written notification to the Minister shall be the discovery date. (4) Where the contractor has stated in the particulars required by subsection (2) (b) that the discovery does not merit appraisal, the contractor shall with effect from the date of notification relinquish the contract area encompassing the geological structure in which the discovery is located. 17Act 919 Petroleum (Exploration and Production) Act, 2016 (5) A contract area relinquished under subsection (4) shall not reduce the contract area to be retained in accordance with section 22. (6) The delineation of the contract area to be relinquished is subject to the approval of the Commission. (7) Where a contractor has indicated in the notification submitted to the Minister and the Commission under subsection (2)(b) that the discovery merits appraisal, the contractor shall prepare and submit to the Commission, with a copy to the Minister, a programme and schedule to carry out an adequate and effective appraisal of the discovery. (8) The programme and schedule shall contain information that -will enable the contractor to delineate the extent of the accumulation of petroleum and to determine whether the discovery constitutes a com- mercial discovery. (9) The appraisal period shall be specified in the petroleum agree- ment and shall not exceed two years from the date of discovery. (10) The Commission may in special cases recommend to the Minister to grant an extension of the appraisal period beyond two years and may stipulate conditions for the extension as prescribed. (11) An appraisal programme is subject to the approval of the Commission and the Commission may stipulate conditions for approval as prescribed. (12) Unless otherwise permitted by the Commission, a contractor shall not commence an appraisal programme or enter into binding obligations relating to an appraisal programme until the appraisal programme has been approved by the Commission. (13) The contractor shall prepare and submit to the Commission not later than ninety days after completion of the appraisal programme the results of the appraisal programme stating whether the discovery is commercial or not, and the basis for the decision. (14) Where a contractor declares a discovery not to be commer- cial, the contract area encompassing the geological structure in which the discovery is located shall be relinquished by the contractor by notifi- cation in writing to the Commission within five days from the date of the declaration that the discovery is not commercial. 18Petroleum (Exploration and Production) Act, 2016 Act 919 (15) The contract area to be retained in accordance with section 22 shall not reduce on account of the relinquishment. (16) The Commission shall approve the delineation of the con- tract area and relinquishment takes effect from the date of notification by the contractor as approved by the Commission. (17) This section applies to the Corporation where it undertakes petroleum activities under section 11 (1) and the Minister may determine the appraisal period, which may exceed the limitation set out in subsec- tions (9) and (10). Development and Production Prudent exploitation 26. (1) A contractor shall develop and produce petroleum in a man- ner that will ensure the maximum long term recovery of the petroleum. (2) The contractor shall ensure that development and production of petroleum is conducted in accordance with best international practice and sound economic principles, and in a manner that will ensure that waste of petroleum or loss of reservoir energy is avoided. (3) The contractor shall conduct continuous evaluation of the depletion strategy and technical solutions to problems arising from the exploitation and shall take the necessary measures to optimise the petro- leum resources. (4) This section applies to the Corporation where it undertakes petroleum activities in accordance with section 11 (1) Plan of development and operation 27. (1) A contractor shall, where a discovery is declared to be com- mercial, submit to the Minister for approval a plan of development and operation in respect of any petroleum field to be developed. (2) The Minister shall set a deadline for the submission of the plan. (3) The plan of development and operation shall contain a description of the development programme and production programme together with an environmental report approved by the appropriate institutions in accordance with applicable enactments. (4) The description of the development and production programme shall provide detailed information on the economic, reserves, 19Act 919 Petroleum (Exploration and Production) Act, 2016 technical, operational, safety, commercial, local content and environmen- tal components of the proposed development, including (@ & (G) @) s © oO @ a) @ @ @ Y (™ @ () @ @ @ 6 @ @) a description of development strategy and concept; an economic assessment of the different development methods, estimated investments, operational costs and selection criteria; a plan covering the total development, where the develop- ment is proposed in two or more phases; an assessment of the potential for development of further petroleum resources within the contract area to ensure the maximum long term recovery of the resources; tie-ins with other petroleum fields where applicable; area studies for the possibility of co-ordination of petroleum activities including the development of nearby petroleum fields; proposed drilling and well completion plans; geological parameters and reservoir engineering method- ology; facilities for production, storage, transportation and delivery of petroleum; a development schedule; a long-term production schedule; a description of technical solutions including possible solutions for enhanced recovery; a description of capacities of facilities; solutions for the efficient use of energy, and the prevention and minimisation of environmentally harmful discharges and emissions; the disposal and use of associated gas where applicable; management systems, including information on the plan- ning, organisation and implementation of the development; operation and maintenance; a description of fiscal metering systems; petroleum marketing plan; security plan; a financing plan for the development; 20Petroleum (Exploration and Production) Act, 2016 Act 919 (v) a health and safety assessment report; (w) an emergency preparedness plan; (x) facilities for transportation, utilisation or treatment of petroleum; () decommissioning and disposal of facilities; (2) any applications for permits and licences required under applicable enactments in connection with petroleum activities related to the plan; (aa) a local content plan; and (bb) an employment and recruitment programme and a tech- nology transfer plan. (5) The Minister may require the contractor to ensure that a marginal field delineated before and after approval of the plan of development and operation, is optimally developed and produced. (6) The plan of development and operation shall include details for the construction of facilities to avoid gas venting or flaring under normal operating conditions. (7) In consultation with the Commission, the Minister may in the national interest limit the approval to the development and production of individual reservoirs or phases and the development and production may be subject to conditions determined by the Minister, including requirements relating to additional capacities for additional resources or third party access. (8) The Minister may revise the long term production schedule if the revision is warranted by resource management considerations or significant socio-economic considerations. (9) Unless otherwise permitted by the Minister, a contractor shall not (a) enter into contracts relating to the plan of development and operation, or (6) commence construction works until the plan of development and operation has been approved by the Minister. (10) A plan of development and operation becomes effective upon the prior written approval of the Minister. 21Act 919 Petroleum (Exploration and Production) Act, 2016 (11) The contractor shall promptly notify the Minister in writing of any deviation from the assumptions and preconditions on which a plan has been submitted or approved. (12) Any deviation or alteration to the plan of development and operation or material alteration to the facility requires the written approval of the Minister. (13) The Minister may require a new or amended plan of develop- ment and operation to be submitted before the approval of any deviation or alteration. (14) Where a contractor does not submit a plan of development and operation within the time limit set by the Minister in accordance with subsection (1), and the Minister has not extended the time limit, the area encompassing the field to be developed shall be relinquished by the contractor. (15) This section applies to the Corporation where it undertakes petroleum activities in accordance with section 11 (1). Restrictions on approval of plan of development and operation 28. (1) The Minister shall not approve a plan of development and operation unless (a) the plan would ensure efficient, beneficial and timely exploitation of the petroleum resources concerned; (b) the plan takes into account good petroleum industry practice and safety factors; (c) the contractor has adequate financial resources and technical and industrial competence and experience to undertake effective development and production operations; (d) the descriptions and proposals of the contractor under section 27 (4) are satisfactory to the Minister; (e) the contractor is able and willing to comply with the condi- tions on which a plan of development and operation is approved; @ the local content plan, the proposed employment, recruit- ment and training of Ghanaian citizens and the technology transfer plan have been approved by the Commission; and (g) the contractor has adequate insurance cover; and (h) the Minister has received recommendation from the Com- mission and relevant agencies. 22Petroleum (Exploration and Production) Act, 2016 Act 919 (2) A plan of development and operation shall not be approved if a contractor is in default under a petroleum agreement. (3) Where a plan of development and operation is not approved, the Minister shall by written notice to the contractor state the reasons for non-approval. (4) Where a plan of development and operation is not approved by the Minister, the area covered by the plan of development and opera- tion shall be relinquished by the contractor. (5) This section applies to the Corporation where it undertakes petroleum activities under section 11 (1). Postponement of development 29. (1) Where public interest or national interest requires, the Minister may, after consultation with the contractor, postpone the development of a field. (2) In the event of a postponement under subsection (1), the term of the petroleum agreement shall be extended for the period of postpone- ment, and the obligation to pay acreage fees during that period shall be suspended. (3) This section applies to the Corporation where it undertakes petroleum activities under section 11 (1). Commencement of petroleum production 30. (1) Production of petroleum shall not commence without the written approval of the Commission. (2) The Commission shall, before granting approval for the com- mencement of petroleum production, consider whether the contractor has developed the field in accordance with the plan of development and operation and with any conditions specified in the approved plan of development and operation. (3) This section applies to the Corporation where it undertakes petroleum activities under section 11 (1). Production programme and permits 31. (1) A contractor shall not produce or inject petroleum if the contractor does not have an annual permit granted for that purpose by the Commission. 23Act 919 Petroleum (Exploration and Production) Act, 2016 (2) The annual permit shall be obtained by application in writing to the Commission. (3) The form and content of the application for an annual pro- duction permit to produce and inject petroleum shall be as prescribed and shall include a long-term production forecast updated from the plan of development and operation. (4) The Commission shall, upon receipt of the application from the contractor, issue an annual production permit stipulating the quantity of petroleum which may be produced or injected. (5) The stipulation of the quantity specified in subsection (4) shall ‘be based on the long-term production schedule in the plan of develop- ment and operation, unless new information on the reservoir or other new relevant circumstances warrant otherwise. (6) The Commission may include in the production permit the permission to flare or vent petroleum as provided in section 33. (7) The Commission may upon receipt of the application made by a contractor approve test production of a petroleum field and the duration, quantity and other conditions for the test production shall be determined by the Commission. (8) The Commission may require a contractor to submit a report on field related matters, including alternative schemes for production and where applicable, the injection and the total recovery factor for the various schemes. (9) The Commission may direct a contractor to take appropriate steps to increase or reduce the rate of petroleum production to a rate that will enhance optimum recovery of petroleum from the field and that will not exceed the capacity of existing production facilities. (10) The Commission in consultation with the Minister may direct the modification of the long term production schedule approved in accordance with this section when the national interest so requires. (11) The Minister shall, where the decision is related to several fields and requires a reduction in production, endeavour to apportion the reduction proportionately among those fields to the extent possible. (12) This section applies to the Corporation where it undertakes petroleum activities under section 11 (1). 24Petroleum (Exploration and Production) Act, 2016 Act 919 Utilisation of associated natural gas 32. (1) Any natural gas produced in association with crude oil may be used in petroleum activities as agreed between a contractor and the Corporation, in consultation with the Commission and in accordance with applicable enactments, good petroleum industry practice and approved production plans. (2) This section applies to the Corporation where it undertakes petroleum activities under section 11(1). Restrictions on flaring 33. (1) A person shall not flare or vent petroleum, unless that person is authorised under subsection (2) or (3). (2) The Commission shall after consultation with the Environmental Protection Agency authorise a person to flare or vent petroleum where (a) it is necessary in the interests of normal operational safety of the petroleum activities; (b) it is necessary in order to comply with a requirement imposed under an Act; or (c) it is warranted by exceptional circumstances. (3) In case of an emergency, and where there is insufficient time to request an authorisation from the Commission, a contractor may flare or vent petroleum without the approval of the Commission under subsection (2), but shall ensure that the flaring or venting is done in accordance with prescribed procedure and kept at the lowest level possible. (4) Where petroleum has been flared or vented in an emergency, the contractor shall immediately inform the Minister, Environmental Protection Agency and the Commission of the event. (5) This section applies to the Corporation where it undertakes petroleum activities under section 11 (1). Co-ordination of petroleum activities and unitisation 34. (1) Where an accumulation of petroleum extends beyond the boundaries of one contract area into one or more other contract areas, the Minister in consultation with the Commission may, for the purpose of ensuring optimum recovery of petroleum from the accumulation of petroleum, direct the relevant contractors, to enter into an agreement to develop and produce the accumulation of petroleum as a single unit. 25Act 919 Petroleum (Exploration and Production) Act, 2016 (2) The agreement shall be entered into within a period specified by the Minister and shall be submitted to the Minister for approval. (3) Where two or more accumulations of petroleum are in proximity to one another but are (a) in different contract areas, or (®) in one contract area and an area not covered by a petroleum agreement, the Minister may require the accumulations of petroleum to be developed and produced in a coordinated manner in order to ensure efficient petro- leum activities. (4) Where an accumulation of petroleum extends beyond the boundaries of a contract area into an area not covered by a petroleum agreement or an authorisation under section 11 (1), the Minister may authorise the Corporation to enter into a contract for the development and production of the accumulation of petroleum, and require the accumulation of petroleum to be developed as a single unit. (5) The Minister may stipulate conditions and make appropriate directions to the Corporation and the contractor as prescribed for the unitised development and such conditions, if significantly different from the conditions of the adjoining contract area, shall be ratified by Parliament. Cross-border cooperation and unitisation 35. The Republic may, where an accumulation of petroleum extends onto the land or the continental shelf of another country, seek to reach agreement with that other country on the most efficient co-ordination of petroleum activities in connection with accumulation of petroleum as well as the apportionment of the accumulation of petroleum. Third party use of production facilities 36. (1) The Commission may direct that facilities which are owned by a contractor or the Corporation may be used (a) by others if warranted by considerations for efficient opera- tion and resource management, or (b) for the benefit of society where the use would not unreason- ably interfere with the usage requirements of the contractor or the Corporation or of any person who has already been granted the right of use. 26Petroleum (Exploration and Production) Act, 2016 Act 919 (2) An agreement on the use of facilities shall be submitted to the Commission for approval and the Commission may, as a condition for approval, modify the tariffs and other conditions agreed between the parties, having due regard to resource management considerations and a reasonable return on investments for the owner. (3) The Commission may, where an agreement for use is not reached within a reasonable period of time, stipulate the tariffs and other conditions for use, having due regard to resource management consider- ations and a reasonable return on investments for the owner. (4) Where required for resource management considerations, the Commission may alter the conditions of a previously approved agree- ment for third party use to ensure the implementation or continuation of projects. (5) In stipulating new conditions, the Commission shall have due regard to resource management considerations and a reasonable return on investments for the owner. (6) The rights and obligations of the contractor under this section apply to the Corporation where it undertakes petroleum activities under section 11 (1). Measurement of petroleum obtained 37. (1) A contractor shall measure and analyse the petroleum pro- duced, transported and sold from a field by a method customarily used in good international petroleum industry practice and in applicable enactments. (2) The Commission shall after consultation with the Standards Authority approve the measurement system which may be verified as prescribed. (3) A contractor shall not alter the (a) method of measurement, or (2) calibration of any equipment used for measurement with- out the written approval of the Commission. (4) The Commission may require an alteration to be made only in the presence of a person authorised by the Commission. (5) The Commission may direct that the method of measuremeat or the calibrated equipment be tested or examined by the relevant agency occasionally, or at the intervals and by the means prescribed. 27Act 919 Petroleum (Exploration and Production) Act, 2016 (6) A test or examination under subsection (5) may be done in the presence of a person authorised by the Commission. (7) Where a measuring method or calibrated equipment is found to be incorrect, that method or calibrated equipment is considered to have existed in that condition during a period that is represented by half of the period from the last occasion when the method or equipment was tested or examined to the date when the method or equipment was found to be incorrect. (8) Royalty and any other payments due to the Government, the Commission or the Corporation under the petroleum agreement for that period shall be adjusted accordingly. (9) A contractor who knowingly uses an inaccurate measuring method or an uncalibrated equipment commits an offence and is subject to penalties under section 93. (10) The Commission shall install facilities to monitor production. (11) This section applies to the Corporation where it undertakes petroleum activities under section 11 (1). Transportation, Treatment and Storage Licence to install and operate facilities for transportation, treatment and storage of petroleum 38. (1) A person shall not install or operate a facility for transporta- tion, treatment or storage of petroleum without a licence granted by the Minister unless there is an existing right to install and operate the facility derived from the approval of a plan of development and operation. (2) A person shall not commence installation and operation of a facility if that person does not have a permit granted by the Commission. Application to install and operate facilities 39. (1) Subject to subsection (4), an application for a licence to install and operate a facility for transportation, treatment or storage of petroleum shall specify a description of the facilities and be supported with a scoping report approved in accordance with applicable enactments. (2) The description shall contain detailed information on economic, resources, technical, operational, safety related, commercial, local content and environmental components of the proposed project and a scoping report approved in accordance with applicable enactments, including (a) information on the destination of pipeline, route, landing point, dimension and transportation capacity of the facility, as well as the relevant assumptions and selection criteria; 28